What's At the End of the Infobahn?  | American Journalism Review
 AJR  Columns :    THE ECONOMICS OF TELEVISION    
From AJR,   May 1996

What's At the End of the Infobahn?   

Success will come when someone finds a way to get the public to regularly part with its money.

By Douglas Gomery
Douglas Gomery is the author of nine books on the economics and history of the media     


The Internet has come a long way, but a rough road still lies ahead as we move from today's wild promises of what the future online world holds to tomorrow's more likely mundane reality.

A generation ago the Pentagon created the 'Net so scientists could easily exchange research results. No one imagined that by 1996 anyone with a PC, a modem and a little cash would be able to access a vast network of bulletin boards, a limitless library catalog and a wide variety of news services.

For TV news, a new era commenced last fall when NBC, ABC and CNN led the industry online (see "News You Can Choose," November 1995).

Yet during the past six months no satisfying formulae have been developed; instead, experiments abound. Some of the more interesting have come recently.

ýne of these is NewsChannel 8's 24-hour local cable news service in Springfield, Virginia. In the Digital City produced by America Online, we can find news summaries from separate Virginia, Maryland and District of Columbia reports provided by NewsChannel 8. The online service also includes regularly updated regional weather forecasts, the latest local sports scores and even a guide for visitors to the nation's capital.

From net.radio of Minneapolis, computer users around the world now can receive FM-quality broadcasting via the Internet, including live "chat" sessions, news and classical and experimental rock music.

But these two examples illustrate the core problem. We are still in an age of experimentation, with no real success formula in sight.

ill we all have to sign up with one service, such as America Online? Or will we just be able to surf the World Wide Web via Netscape? Or both? Or neither?

It may seem we have come a long way, but TV news organizations, along with the rest of corporate America, will continue to grope their way while consumers try to follow them through an Alice in Wonderland-like maze.

Even an established company like ABC News seems unable to make up its corporate mind.

On the one hand, the news division of the world's largest media company is sticking with America Online, adding more coverage of breaking news and analysis as part of an extended exclusive arrangement.

On the other hand, ABC's overnight news program, "World News Now," is providing a live feed of its two-hour broadcast, starting at 2:00 a.m., to the Web. ABC also maintains a Web site with a growing list of interactive multimedia features.

The NBC/Microsoft alliance may provide a more accurate hint of the future, a prototype of a powerful marriage of money, distribution and content that will define tomorrow's infohighway. Here a wealthy technical monopoly (Microsoft) acquires the news gath3ring and dissemination skills of an experienced broadcaster. The plus is that NBC, owned by GE, has pockets even deeper than Microsoft's, making their eventual dominance likely.

Given the results so far, pundits such as George Gilder, an unofficial adviser to the Reagan administration, seem absurdly optimistic when they claim that within a couple of years the World Wide Web will "usurp phones, televisions and video game players entirely."

Basic economic analysis suggests otherwise. One fundamental principle is simple enough: the substitution effect. Find out what a conventional news product does for the consumer, and then seek new technology that provides a superior service faster, easier and at a lower price.

But finding that elusive substitute has been difficult. So far TV news via the Internet is not about to replace today's broadcasters.

Today, the Web does not represent a competing information utopia for news organizations, but simply an efficient new promotional outlet. As entrepreneurs continue their search for the holy grail (becoming the next Microsoft), the new and old media will happily coexist. The rise of the 'Net will not mean the "death" of today's dominant medium, television. Quite the contrary. Just as today we use radio differently than our grandparents, Americans in the future will continue to utilize a multiplicity of mass media to entertain and inform themselves.

Will the market simply fragment, or will more people get more news from more sources?

To best understand where the information superhighway is headed, think for a moment about how entrepreneurs go about making money with any new invention. Ultimate success comes only when one is able to develop a long run strategy on how to convince the public to regularly part with its money. We are just moving into that critical phase.

Promises should be judged and evaluated in the reality of the marketplace, not in the minds of techno-futurists. The ultimate winner will be a committed company that can carry useful news content to a mass audience. That may or may not prove to be through the Internet. l

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