Let's Get This Straight: The birth of an Internet network?

Block those pundits: AOL-Netscape isn't like an NBC of the Web -- and can't be.


Scott Rosenberg
December 2, 1998 1:00AM (UTC)

Like witnesses to some rare cosmological event in the night sky, observers of the America Online-Netscape merger deal last week could barely contain their awe. We are privileged, they told us, to be alive at a wondrous moment -- the formation of the Internet's very own equivalent of a TV network.

Reed Hundt, the former Federal Communications Commission chairman, told the Wall Street Journal, "In the Internet space, this combined company is the equivalent to NBC and ABC merging." Similarly, venture capitalist Ira Machefsky gushed to the San Francisco Examiner, "This is massive -- what you're witnessing is the birth of an NBC on the Internet."

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All this network-speak may serve as convenient pundit shorthand to explain to people that, shucks, this is important stuff. But the lazy reliance on imagery and comparisons drawn from the last media revolution serves only to further muddy the already cloudy public understanding of what this latest Internet-biz frenzy portends.

AOL's purchase of Netscape for $4 billion in madly inflated stock is likely to boost the company's overall share of Web traffic or "eyeballs." Netscape's new, well-heeled owners will doubtless keep its browser alive and kicking, though AOL says its service will continue to use Microsoft's Internet Explorer software. (In exchange, Microsoft puts AOL software and an AOL icon on every new Windows PC, and why would AOL want to scotch that sweetheart deal?) The newly merged company's alliance with Sun Microsystems might even speed the arrival of consumer-friendly "Internet appliances" -- cheap devices that bypass the Microsoft-monopolized personal computer and bring the Web to the 60 percent of the U.S. population that has so far resisted its allure. (Microsoft already owns one such device and service, WebTV.)

If we must view AOL as a nascent "NBC on the Internet," then it became one long before it gobbled up Netscape -- back when it trounced its venerable rivals, Prodigy and Compuserve, in the proprietary online business, then did an about-face and transformed itself into the world's largest flat-rate Internet service provider.

But to call this deal the equivalent of "the birth of an NBC" is to misunderstand the nature and history of both television and the Internet. TV evolved almost exclusively as a commercial medium, adopted and promoted by commercial broadcasters; idealistic experiments in public-access cable came much later and never made much of a dent in the public consciousness. The essential nature of the Internet and the Web is that they are "open platforms" that evolved in a non-commercial research environment and took off among avid hobbyists and scientists long before marketers had ever heard of them.

Participation is in the Internet's DNA. Anyone can build a Web site; the tools are free or nearly so, the "how to's" are easy to find -- and today even the hosting space can be had for free, thanks to companies that have built whole businesses by selling ads in "build your own site" communities. With a do-it-yourself site, you can run a small business, contribute to the Web's vast pool of information, express yourself and have a blast.

The one thing you probably won't do is make a fortune. Yet the people obsessed with the AOL-Netscape deal gauge the health of the entire Net exclusively by that one yardstick. And the only way they can imagine the Net as a vast profitable business is for leading Web companies to coalesce into the Internet equivalent of TV networks. AOL's purchase of Netscape provides the perfect moment for them to say, "Look, see, it's happening -- we'll all start making money any day now!"

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The trouble is, there's a good chance they're misreading the market.
Consider the numbers for Yahoo, by most accountings the most popular site on
the Web. If there were a true Internet-born-and-bred network, it would
be Yahoo, not AOL. Yahoo is the company that started off as a project by a
couple of grad students and grew as the Web itself grew, building a business
exclusively on providing useful information and services to Net users. One
reason so many people prefer Yahoo is that, better than any other "portal" site, it has found the right balance of no-nonsense information delivery
and a level of marketing high enough to bolster the company's bottom line but
not so aggressive as to drive users away in disgust and horror.

Yahoo has a weekly "reach" of about 40 percent -- which means that in any given week
even the Web's most popular site gets visited by a minority of Web surfers. In
other words, Web use is radically decentralized in a way that TV watching never
has been or could be. Commerce, online sales and ad-supported Web sites are a
major part of the Internet's ecology, but there's a huge volume of Web traffic
and Net activity -- by some counts, the majority -- that remains apart from
this for-profit realm.

So at best, a "network" on the Web is going to be a hobbled giant. Look at
how today's big three TV networks are beginning to falter under the assault of
dozens of alternative cable options. Then imagine how they'd fare if your TV
screen brought you thousands or millions of alternatives, some supplied by big
companies, some by small entrepreneurs, many by part-timers and amateurs and
college students and kids. Individually none of these alternatives could ever
attract more than a fraction of the audience of a true network; collectively,
however, they dwarf the big boys.

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In the wake of the AOL-Netscape deal we have all heard a lot of puffery
about how AOL is "the premier Internet media company" that, unlike geeky
Silicon Valley companies like Netscape, "understands the consumer space." Led
by former MTV honcho Robert Pittman, AOL may flatter itself that it has a deep
understanding of what it likes to call "online programming." But AOL's unsteady
record in assembling content for its users isn't what made it top of the online
heap. And its obnoxious marketing tactics -- every time you log on to the
service, you have to squash pop-up windows you never asked for touting
products you don't need -- have not won the hearts of many customers.

No, AOL's users have put up with its promotional onslaughts and service
snafus for two reasons: One, AOL gets novices hooked up to the Internet with a
minimum of technical fuss, and it still does so better than any other company;
two, AOL provides the easiest and most convenient access to e-mail and chat for
consumers who want just that and not much more from their online experience.
AOL may have 15 million customers, but only a small fraction of them are using
AOL's Web portal, buying products from Web malls or reading sites like Salon;
most of them are chatting about TV shows or trolling for hot talk. Nothing
wrong with that -- there's a business here, all right, but it's more like a
telephone utility than a "media company."

That's why I'm not lying awake at night worrying that the AOL-Netscape deal
means (as Glenn Davis put it last week in Salon) "the death knell for the openness of
the Web" -- or insisting, as Robert Scheer has, that the antitrust police step in and stop the
merger.

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The new AOL-Netscape may present a more potent threat to Microsoft. It may
build a bigger "reach" and pile up more Web traffic than before. It may accrue
a bigger share of the least adventurous, most docile segment of the Net
audience. It may even be able to squeeze out some less successful mid-size Net
businesses, or force them into its orbit. But until it figures out a way to
prevent people from leaving a bad Web site and clicking to one they like better
-- or building one they like better -- it can't squash the medium's
vitality or freeze its creative ferment.


Scott Rosenberg

Salon co-founder Scott Rosenberg is director of MediaBugs.org. He is the author of "Say Everything" and Dreaming in Code and blogs at Wordyard.com.

MORE FROM Scott Rosenberg

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