shirky.com Clay Shirky's Writings About the Internet
Economics and Culture, Media and Community, Open Source
Cable Internet Access, an Over-hyped Meltdown in the Making

Cable internet access is the next CD-ROM industry: an over-hyped
meltdown waiting to happen. In the middle of this decade, CD-ROMs were
vying with the Web for multimedia supremacy, and at the time, CD-ROMs
seemed a better bet: more computers had CD-ROM drives than modems, and
CD-ROMs had been annointed "The Next Big Thing" by a blue-chip
coalition of hardware and software manufacturers, while the Web had
neither this installed base nor this commercial enthusiasm. As late as
1995,even Web-savvy outlets like Interactive Age were predicting that
revenues from the Web and multimedia CD-ROMs would be neck and neck in
the Year 2000.

The actual change during those five years has been quite different.
The Web has become the trillion dollar locus of the future economy
while CD-ROMs have disappeared as medium altogether. In hindsight, its
easy to see that CD-ROMs supposed strengths were its actual
weaknesses, and the Web's supposed weaknesses were its strengths.
CD-ROM production was limited to professional companies, while the
Web allowed amateurs to put up content. CD-ROMs were a fast way of
delivering content in one direction while the Web was a slow way of
delivering content in two directions.  CD-ROMs gave you predictable,
carefully structured interactivity, while the Web was (and is) little
but chaos. Perhaps most importantly, CD-ROMs linked content with
delivery, while the Web completely separates those two functions. What
almost no one foresaw was that people would prefer, overwhelmingly, a
chaotic two-way medium where anyone could publish anything to anyone,
over a closed one-way medium which featured only professionally
produced content. CD-ROMs were all about one-way consumption, while
the Web was also about two-way communication.

Its tempting to assume that we now know to bet on communication over
consumption and open systems over closed ones, but don't look now: its
happening again. In the fight for broadband access, the cable-vs-DSL
battle is reprising the CD-ROM-vs-Web battle, and the people betting
on cable now are making exactly the same mistakes that the people who
were betting on CD-ROMs made.  Cable is attractive to investors
because it holds out the same false hope of a walled garden that
CD-ROMs did, and cable will fail for precisely those reasons.

There are two ways of thinking about broadband - size or time.
Broadband-as-size focusses on passive downloads: "You can download
'The Titanic' in 8 minutes!". Broadband-as-speed focusses on active
communications between multiple parties -- twitch-heavy networked
games like Quake III and Unreal, sharing mp3s via Napster or Hotline,
releasing self-produced music videos to the world. Cable is squarely
in the broadband-as-size camp: the proponents of cable believe that
what the Web is really waiting to become is another form of cable TV -
a myriad of one-way entertainment choices, with little interactivity
other than placing orders. The cable companies are desperate to
suggest that users are clamoring for this kind of one-way Internet,
because thats all the cable industry knows how to provide, and because
that is the only way to extend their monopoly. They are both unable
and uninterested in providing a service which allows their subscribers
to create broadband content; they merely want their subscribers to
consume it.

DSL, meanwhile, reprises the initial advantages of the Web. DSL allows
its customers to be consumers and producers of broadband content -
with an 'always on' connection aND fast upstream bandwidth, DSL will
be the medium that allows the most amateur content, the most
interactive content, and the most two-way content. Metcalfe's Law --
the value of the network rises with the square of the number of users
-- only applies to networks where all of the users can communicate
with one another, and Metcalfe's Law favors DSL (and any other
high-speed two-way network) over cable's "Home Shopping Network++"
approach. The Web grew because amateurs jumped in, and then they
turned pro: it is impossible to say who the Yahoo or Blue Mountain
Arts of the broadband world will be -- maybe a net gaming company,
maybe a group of musicians, maybe a 'micro-films' outfit -- but you
can be sure whatever the broadband 'killer app' is, it won't come from
the cable industry. The people running the most profitable cartel this
side of OPEC are the people least likely to create a network which
allows amateur content to flourish and grow into serious businesses.

If we learned anything from CD-ROM vs. the Web in the mid-90s it
should have been this: people prefer communication to consumption.
Interactivity beats passivity. Separating content from delivery allows
both functions to grow faster. Opening a network up to amateur content
puts it on steroids. In other words, competition is good. This
conclusion wouldn't seem all that surprising in a market economy, but
the cable industry has never faced real competition before, and they
don't much relish the prospect now.  Competition is a bitch, and no
matter how much lip service people pay to competitive markets, there
will always be investors who salivate over the prospect of backing a
cartel, and that is exactly the promise cable is holding out. It will
fail, for the same reasons CD-ROMs are not neck and neck with the Web
this year; an economy where power has moved into the hands of the
individual is a lousy place for people who treat their customers as
mere consumers.




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shirky.com Clay Shirky's Writings About the Internet
Economics and Culture, Media and Community, Open Source