Scale Slows Down Time

  |  September 10, 1999   |  Comments

Big business still doesn't get the web. But they think they've figured out a way to take it anyway. The word is scale. Scale means a site takes time to set up. Scale means there must be money for meetings, capital for acquisitions. Scale is the barrier that keeps out new TV networks and newspapers in local markets. Thanks to its huge success attracting capital, most consumer web sites now have scale.

Big business still doesn't get the web. But they think they've figured out a way to take it anyway.

The word is scale.

Scale means a site takes time to set up. Scale means there must be money for meetings, capital for acquisitions. Scale is the barrier that keeps out new TV networks and newspapers in local markets.

Thanks to its huge success attracting capital, most consumer web sites now have scale. They require expensive connectivity immediately. They require big databases, filled at opening with products or data, and integrated with vast warehouses. Most important, they require huge marketing budgets to be heard over the din.

Scale has the effect of slowing time. Back in Internet time, a major new competitor could appear from anywhere, at anytime. With scale required, the ramp-up takes six-to-nine months. That's plenty of time to see a coming opponent and prepare a strategy. On the consumer Internet, it now takes that much time for a new outfit to convince the capital markets they're serious, to test-market a program's message through dozens of idiots, to get the database mavens working and to secure a reservation at Above.Net.

Scale is something big businesses understand. Scale reduces their fear by cutting the number of potential competitors.

The best example of scale in this week's news is the pending merger of Viacom and CBS. Before the deal, Viacom was planning on spinning-out its interactive units as MTVi, while CBS was still trying to figure out what to do with its stakes in Marketplace and Sportsline. Remember it got them mainly for promotional considerations - the sites provided the management.

All this will take time to sort out. The fact is, now, that Viacom and CBS have plenty of time. Scale makes that possible.

Scale was behind the long-awaited announcement of a head for Disney's Go.Com web unit. The choice was ABC Inc. president Steven Bornstein. Scale was also behind Microsoft's appointment of Rick Belluzzo to head its web efforts. Belluzzo and Bornstein know how to run large organizations. They can learn the web - junior executives will teach them.

Evolution tells us that the great dinosaurs moved slowly, but because they were huge and nothing could challenge them they were very successful. The web's very success has come back to haunt it.

There is one reason for hope, however. While big consumer niches can be scaled and devoured by big business and their reptilian sidekicks, the lawyers, the web is not entirely like TV or print.

Unlike those industries, which are simply niches in the larger business ecosystem, the web is the whole ecosystem. All business is part of the web. That means there's plenty of room for other life forms - virtual birds, small mammals, insects, parasites and even cockroaches. These life forms thrive on markets too small for the dinosaurs to be interested in. And when there's an explosion, a meteor strike, a great fire, or a plague, it's these small life forms that survive.

In a world of dinosaurs, it's hard to be mammal (or a cockroach), living in what Steven J. Gould so memorably called the nooks and crannies of the dinosaurs' world. An individual doesn't stand much chance in such a world, but it's the species that count. If you're small, if you're smart, and if you adapt, you'll survive and win in the end.

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ABOUT THE AUTHOR

Dana Blankenhorn

Dana Blankenhorn has been a business reporter for more than 20 years. He has written parts of five books and currently contributes to Advertising Age, Business Marketing, NetMarketing, the Chicago Tribune, Boardwatch, CLEC Magazine, and other publications. His own newsletter, A-Clue.Com, is published weekly.

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