SXSW: Making money in the age of the Internet: Can scarcity be maintained?

I saw two high-profile talks yesterday at SXSW that dovetailed together much more tightly than I had anticipated. The first was Internet futurist guru Clay Shirky's "Monkeys with Internet Access: Sharing, Human Nature, and Digital Data"; the second was "Online Advertising: Losing the Race to the Bottom," with Jim Coudal of The Deck and John Gruber of Daring Fireball."

Shirky's talk was the only one I decided to attend based on the speaker alone, even though SXSW's Web site didn't have any information about its content. It was very entertaining, though it had the feel of a talk he's given many times before and had well practiced. It mostly consisted of a series of intriguing anecdotes, Malcolm Gladwell-style, that eventually built up to a conclusion that Things Are Changing. The gist was this: primates (including humans) seemed programmed to enjoy sharing information. We react totally different if a stranger asks for money than if they ask us for directions -- even if, at some quantifiable level, the time we spend helping someone get themselves oriented is more valuable than the handful of change we'd give a panhandler. Much of what the Internet has done -- and he used as an example Napster, which, as he joked, is unknown ancient history to many of the early twentysomethings in the audience -- transformed the act of sharing music with a friend from sharing goods (letting someone borrow a CD) to sharing information (pointing them to where they could download it).

The result of this information sharing is that things that used to be scarce, or at least not infinite (like recordings of music), can be reproduced trivially easy, and things that used to be difficult, like publicizing your writing, are now much simpler. He pointed out that many of the industries most disrupted by the Internet -- publishing, publicity -- have "public" as their root. It used to be hard to make things public. Now it isn't.

All well and good, and probably true! The question really is, what do we do with this projection of the future? What economic model will support the professional creation of content? Nobody seems to know! And maybe it's a bit unfair to demand an answer to these things -- the model established when the printing press disrupted scribal culture took decades to suss out -- but you would hope that self-proclaimed visionaries of this sort would at least have sort of an idea, or would at least sort of admit that maybe content with level of professionalism that we have come to expect in the 20th century will simply no longer be possible. (I thought about Greg Beato's comment during the death-of-the-NY-Times panel that pretty good is good enough for the Internet.)

Shirky's likes to contrast "scarcity" (the past) and "abundance" (the future/present). That's why I was sort of intrigued to see Gruber and Coudal in their talk speak up for artificially created scarcity -- of a certain kind, anyway. Just take a look at Gruber's site. It's elegantly designed (one of this main targets is the design geek) with a single subtle ad -- quite a contrast with the banner ads splattered everywhere that you get on most ad-supported sites. The Deck, the ad service Gruber uses, has more or less these design requirements for its select list of clients. Gruber and Coudal argued in essence that most ad-supported sites are inflating the amount of ad space out there untenably, resulting in (as they put it in their title) a race to the bottom among publishers. They felt that having a few lovingly curated ads can be more more lucrative than just packing in as many banners as possible. They were also fairly dismissive of the obsessive stat- and user-tracking most conventional ad networks do and try to profit from, arguing that these numbers could be too easily gamed.

Again, fair enough -- as far as it goes. But Gruber has a Website read by relatively affluent people who are at least open to the idea of buying expensive computer hardware and software, and the rest of the Deck sites are similar. What about content that doesn't reach such a demographic -- should it hop on the ride to the bottom, or is it just not worthy of publishing with the same level of care? Project Wonderful is an ad network that has somewhat similar attitudes than the Deck -- especially in only charging advertisers based on time, not on clicks or impressions -- but its target audience, comics readers, don't garner the same level of advertiser interest by an order magnitude. In the end, sites like Daring Fireball look more like illustrated manuscripts than mass-printed books. The folks at the "Revenge of Editorials" talk -- who were Web designers -- want the illustrated manuscript to be the future of the Web. There are probably more lovingly illustrated books produced now than were before the invention of the printing press -- but they're still a tiny minority of what's out there.

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