The Early History of the Internet, How it’s disrupting the TV industry

Yesterday’s class focused on the history of the Internet, the stock market bubbles, piracy, and TV. We began our class looking at the work of a Mr. Henry Blodget, an Amercian equities analyst with CIBC Oppenheimer. During the tech bubble, Blodget was accused of securities fraud, by making recommendations to others that countered what he had written about and published in the media. He paid millions in fines then went away, barred from the securites industry for life. Now, he is an editor and CEO of businessinsider.com, allowing him to earn back his millions, while the clients he worked for I doubt can say the same.

We shifted our focus from Blodget, to a timeline looking at the beginnings of the web and Internet. It looks something like this:

1993 – The internet is commercialized. Up until this point the web was private but now everyone was able to get online and set up shop. Similar to what Facebook was like when it initially came out, only open to Ivy League schools,  it soon went public and worldwide. Now it has over 800 million users and growing, as well as they are hoping to go public on the stock market this year.

1994 – The web came along in the form of the web browsers such as Mosaic, Netscape, and Internet Explorer. According to Dr. Strangelove, the browser transformed the web into something that looked like TV, something which we could already understand. This allowed mass adoption into the medium, as the familiarity of a similar looking medium allowed people to trust the web.

1997 – 1999 – The internet hype machine takes over, all types of  basic domain names get scooped up (ex. petshop.com, cars.com). Predictions that “bricks will be replaced by clicks.” What this means is people thought that retail stores would soon cease to exist, and e-commerce would become the dominant way of doing business. Dr. Strangelove had an interesting comment on this, saying that we like the “circus” of shopping, and how some have compared it to a “religious experience”, with malls, such as the West Edmonton Mall, one of the largest  in the world, serving as “cathedrals” in which we indulge in our shopping desires. Furthermore, we like to touch, feel, our clothes, and this is the one thing missing from shopping online.

With all this  faith put into the internet, it soon translated into  people throwing large amounts of money  into these compaines, creating the 2001 dot.com bubble. Blodget, and many others like him profited from this, while the retail investor suffered.

We then looked at the disruption that the Internet is doing to the TV industry. Business that use the Internet such as Netflix, Hulu, and others are changing the way we receive content through our TVs. Piracy of TV shows, by using the internet, has made distributors wary and seeking more control over their content.  However, Dr. Strangelove, brought up an interesting statistic: “80% of U.S. piracy occurs overseas in developing, developed, and uncontrollable areas, such as China.”

Strangelove also went on to say that the number of people pirating so they don’t have to pay isn’t the reason why piracy is knocking down industries, it is more because business’ aren’t adapting. Look at how many good movies have come out the last couple years?Can you name many? It was on this point I tend to agree. I can’t remember the last good movie I went to. Strangelove believes that business is sticking to a 20th century business model in the consumer’s 21 century world.

Our class finished by looking at the idea that TV essential is free (by using streaming sites online) but if it’s packaged right, we will pay for it. Paying for Netflix, which I and I know of many others close to me do, is an example of this. Therefore, we as consumers have to get the right content from our content providers, so we get the most out of our dollars. Because bundling and paying for HD at over $100, when I only want to watch sports and the news as the current solution right now, is simply not right.