News, media & communications

When the network is the computer

Can you imagine what it might have been like to live in Florence during the renaissance? According to Kevin Kelly, founding editor of Wired magazine, we are, without realising it, witnessing something similar. We have already seen the creation of the Internet and we are now witnessing its early development.The next big step will be to add basic intelligence to inanimate objects and then connect them to the net. After that, the big jump will be to link everyone and everything to a single brain - the network. At this point the machine will know more about us than we know about it and we will delegate responsibility for our identity, our memory and our lives to the machine. It will be all knowing and all seeing. Does this sound like science fiction? Maybe not. In ten years time the Internet will be wired up to billions of smart chips and sensors embedded in everyday objects and many of these objects will display a rudimentary form of intelligence. Machines will then be employed to do any task that we do more than once. If you have a job that can be distilled to a set of logical rules your job will become history. Humans will then be set free to focus on those things that require intuition and imagination. But, ultimately, whose brain will we be feeding? The early signs of change can be seen already on sites like flickr.com where users upload images and teach 'the brain' how to name things. In 2004 there were 30,000 music albums and 175,000 books published in the US. In contrast there were 14,000,000 weblogs published worldwide. Overall, there are 50 million weblogs in existence and 600 billion web pages. At this rate the information flow will soon become lop-sided - we will be uploading more information than we download - at which point the concept of a consumer will become meaningless. We will all be co-creators, mixing and mashing content to feed ourselves, but at the same time feeding the machine. Let's hope the machine is nice to us in return.

The power of free speech

In case you've been napping (or not reading What's Next), Voice-Over-Internet-Protocol (VoIP) has been widely promoted as the next big idea - a killer Internet application that will reshape the global telecommunications industry and any company that comes into contact with it. A case in point is eBay's recent acquisition of VoIP provider Skype for around US $2.6 billion. Not bad for a loss-making company with expected revenues of just US $60 million this year. But that's the price companies are willing to pay to protect themselves from disruptive technologies or to align themselves with the growth opportunities offered by a rapidly maturing Internet. VoIP means that people can make telephone calls over the Internet for free - so distance and call duration are irrelevant.It's predicted that by 2015 all calls will be free, which is creating something of a headache for telecommunications companies. Traditionally, the business model employed by phone companies is to use voice as the major revenue generator and to then focus on maximising revenue per customer. However, the model used by Skype throws this out of the window. Skype's aim is to be the largest communication platform in the world. In the short term this is limited to voice communication, but there's no reason why it can't include video or text as well. Skype has no cost per customer because users buy their own hardware (a computer and Internet connection) and there's no marketing cost either because customers recruit other users. Skype currently has around 50 million users and is adding to this at the rate of 150,000 per day. This isn't the death of telephony, but it's certainly the end of telecommunication companies as we know them. In the future voice applications will probably be given away free as part of a larger bundle of services, so companies that offer mobile-only access could be in trouble. People may also ditch telephone numbers in favour of 'name addresses', much in the same way that numbers have already moved from being physically tied to a building (a house or an office) to the individual. So how long before we see Apple computer bringing out an iPhone?

Social networks

One upon a time (sometime last century) the music industry had a business model. Record companies signed up bands, paid them an advance (against which they offset all expenses - like recording albums) and sold records to adoring fans. Sometimes this didn't work, but the profitability of a handful of albums offset the many failures. Problem was, as a band, you were either a rich rock star or an invisible failure. The gap between artist and audience was also immense. Not any more. MySpace.com (just bought by NewsCorp for US $580 million) is yet another example of how the Internet is changing the rules of markets and connecting people (and, crucially, groups of people) who would like to know about each other. MySpace is a social networking or community site that converts electronic word of mouth into, among other things, album sales and concert tickets. The site has around 30 million pages of which about 400,000 belong to bands. It also has more ads than any other site on the entire web (12% if you're counting) and is signing up 3.5 million new users a month. Sometimes the site even ranks ahead of Google in terms of monthly page views. So what's going on here? Well for one thing, Generation Y isn't watching much TV anymore. In fact programmed media, TV schedules, record companies, albums and mass-marketing are becoming irrelevant, replaced instead with TiVo, P2P, AOL, iTunes and sites like Myspace. For example, a band called Hawthorne Heights recently sold 500,000 copies of their debut album without being signed to a major label and with almost zero TV or radio airplay. What they did use was MySpace, which connected the band to potential fans who could download free tracks, buy albums, T-shirts and concert tickets. Watch this space ...

e-books come of age

The idea of downloading books onto a computer has been around for ages and a handful of people regularly read books this way. However, the idea has never spread to the mainstream, largely because of the difficulties associated with reading large amounts of text on relatively cumbersome computers. In Japan this is changing fast as young people download e-books onto their third generation (3G) mobile phones. The most popular downloads are manga comic books, the animation 'cell' format of which fits well with mobile phone screens. However, serialised fiction is proving popular too. As you'd expect, most readers are aged under 30 and women make up a surprising large segment of users (as much as 70% according to some reports). Pricing is generally bundled up into a monthly membership fee that allows users to download books from a digital library. According to the Nomura Research Institute, sales of e-books to users of mobile phones will increase by about 300% in 2005. In contrast, sales to PC users will increase by 50%.