From Dot Com to Business as Usual
One of the less gloomy speakers at Austin’s South By Southwest Interactive Conference this year was Danni Ashe, a California exotic dancer who bills herself as the only woman to have appeared on both the cover of Juggs and The Wall Street Journal. Vying for the title of the world’s “most downloaded woman,” Ashe is that endangered species, a successful Internet entrepreneur. Her company, Danni’s Hard Drive, begun in 1995 as an online fan club, has become a profitable subscription-funded website with 42 employees.
At the conference, Ashe’s smart look (grey cable-knit turtleneck, small gold earrings, ponytail) and manner were more Journal than Juggs, and in speaking of her success, she downplayed the role of her sex appeal. “The biggest reason we’re profitable is that we never had any investment capital,” she announced, and went on to briskly lay out five different business models used by adult websites to turn a profit. Running an adult site boils down to “how to handle vast amounts of traffic and how to monetize that traffic,” she said. “The adult Internet is just a numbers game.”
The charm of Ashe’s summary was that it seemed to distill the thousands of online ambitions and fantasies that have come and gone over the past few years into their pure form: the conversion of clicks to dollars. As the web bubble expanded, people apparently began to think this could be done rather easily. It was as if the Internet were going to facilitate a magically fluid interchange between brand and cash, a sort of virtual alchemy in which everyone’s home computer would host the latest, updated version of the marketplace’s secret formula.
The recent decline of technology stocks has tempered those hopes—at least when sex is absent from the equation—and this was more than apparent at the SXSW conference the second week of March. The Austin Convention Center’s cavernous lecture halls were fittingly dim, the rows of chairs were half-full, and each morning’s keynote talk was preceded by an unfortunate video, depicting a flock of robot-type figures flying over downtown Austin, whose very silliness gave it a kind of unintended pathos. As the conference wore on, the NASDAQ’s record plunge led the national news, while locally, layoffs at an Internet company called Powered were the top business story. The question wasn’t why the conference seemed sparsely attended, but whether there was any point in going, period.
There was a retrospective air to the discussions. In light of the chilly present climate and the uncertain future of web-based business, more than one speaker resorted to the long view. The tone was set during the first day’s keynote discussion between journalist John Heilemann and Industry Standard publisher John Battelle, who harkened back to those idealistic days before venture capital. “In the early 1990s the web was going to be this new medium for new kinds of communication, new kinds of expression, new types of journalism and community,” said Battelle. But the old “information superhighway” concept faded as the e-marketplace ascended, and “at the end of the day more mundane and boring things drive what new media really is,” Battelle said. “The space of interaction between customer and company is new media.”
Battelle seemed to reflect the mainstream view at the conference: The dot-com bubble may have burst, but fear not, business is still king of the Internet. “These new ideas being backed by venture capital are now being tilled back into the soil of large companies,” said Heilemann, who also noted that “places like GE, Nike, and the U.S. Post Office really are where the innovation is now.” Don’t mistake the failure of online pet retailers for the demise of the web-as-business-tool concept. The information superhighway may have lost a few strip malls, but the office towers remain.
Of course, many non-commercial ventures also continue to exist; the good thing about the Internet is that, unlike radio or television or publishing, the monied entities don’t necessarily eliminate the independent, smaller interests and voices. These two online presences seem reasonably secure: on the one hand, large companies that use the Internet for communications, branding, customer relations, and other transactions; on the other hand, the grade school class or the artist or the emu oil manufacturer that uses the Internet to publicize its work or business, without the expectation of direct profit. The great uncertainty lies in the intermediate area of “content,” as online news, music, and other forms of information/entertainment have collectively come to be known. The problem is the same for the recording industry as it is for Salon.com: Is there any money to be made in distributing creative output online?
There is much skepticism on this point, since lately it’s started to seem that unless nudity is involved, clicks simply don’t turn magically into dollars. What consumers and advertisers and sponsors pay for in an offline magazine or a CD is not just the “content” but the gatekeepers who control its availability, performing quality checks on one end and copyright protection on the other. The web, many have concluded, is simply too diffuse, and gatekeeping breaks down. In the final morning’s keynote speech (preceded by multiple showings of the robot video), Inside.com editor Michael Hirschorn predicted that given the difficulties of controlling what goes out over the Internet, companies are going to distribute copy-protected material via other, more restricted devices. “While the web will never go away, it seems likely to return to being a communitarian outpost, kind of the Montana of the information age,” he said.
The part of Montana owned by Ted Turner, perhaps. Music may become harder to download, but it’s hard to conceive of any sector of the public sphere not dominated by advertising and corporate sponsorship. As the Internet slims down, it will probably start looking the way so much of the landscape looks these days: the corporate behemoths, and then the rest of us, coexisting in this best of all possible worlds. —KO