War for the Web
29 11.11

Innovation

A new article in The Atlantic makes the case that the Internet isn’t actually all that innovative. In fact, the argument is that while the Internet has undoubtedly added value to the economy it has some unquantifiable attributes, like the fact that it has lowered the cost of entertainment almost across the board, in many cases to free.

Now, this argument has some problems. First of all, the Internet didn’t lower the cost of entertainment, it devalued entertainment. That is certainly true. It also isn’t a permanent state of affairs. As soon as companies figure out how to charge for entertainment over the Internet, they will. There have been some models (Netflix, Hulu, Spotify, The New York Times) but all told there is no killer strategy out there to get people to pay to view. Entertainment also still costs a lot of money to make so since the value has gone down, the margin on entertainment has gone down and it has become a much harder way to make a living. This is absolutely because of the Internet.

What the Internet really does is create access. It creates easy access to entertainment, but more importantly it creates easy access to information. While entertainment has been devalued, internet-driven retail has skyrocketed. So have other goods and services that use the Internet to connect with consumers. Companies that couldn’t have existed before can do incredibly well now. Yes, the Internet has devalued entertainment, which has lowered the price of entertainment for everyone. It hasn’t lowered the cost of entertainment, however. Eventually, however, someone will introduce a business model that forces people to pay more for good entertainment, and the price will go up.

So is the Internet innovative? Absolutely. It is also a mixed bag, it has shaken up a lot of businesses as they work to figure out what their actual value is to the consumer. I would argue that that isn’t a bad thing.

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