The Internet isn't a product, or even a set of products. It's a medium, like radio or TV. This is a point being missed by investors looking at web businesses of all types, whether they're based on content, commerce, or services. The medium is fluid, and the stakes are always increasing.
The product acceptance curve is Marketing 101.
Sales rise slowly at first, until the product reaches critical mass, then there’s a rush of buying. Eventually, growth levels off, and the market turns to replacements.
This curve can be traced in every product category. It was true for VCRs, and it’s true for the Internet.
Marty Chenard, author of “The Course on Advanced Direct Marketing,” uses the curve to teach you how to set prices. The formula is simple: You describe the product or service to a sample of people then ask what a fair price, a bargain price, and a full price would be. As you climb the “hockey stick” portion of the curve, where growth is fastest, you want to get full price. Once most people have the product, however, you want to move toward the bargain price.
The implication of this exercise is that new products are better than old ones. The sweet spot occurs just after all the early adopters have the product, when the buzz is loudest, and when people start rushing to the stores for it.
This year, the Internet has been hit by the back end of that curve. Most people have dial-up Internet access. It’s an established technology. This means all sorts of follow-on products based on dial-up access (like your web site) are no longer on the fast growth track, either.
That’s the conventional market wisdom. It’s why venture capitalists and commentators are so fascinated with broadband (which may just be turning the corner) and wireless data (which may be about to) but aren’t interested in you. These new technologies are near their sweet spots, where the big profits are. The assumption is that if you want your site to grow, you have to serve these new markets, even at the expense of the old.
But it occurs to me that this conventional wisdom may be wrong. That’s because the Internet isn’t a product, or even a set of products. It’s a medium, like radio or TV.
It was exciting to be in the radio business during the 1920s and the TV business during the 1950s, but the good times didn’t end there. This was especially true for those who used either medium. For the folks who write, produce, and star in TV shows, these are the good old days. The late, great Steve Allen took home a lot less in his paycheck back then than, say, Jay Leno does today.
This is a point being missed by investors looking at web businesses of all types, whether they’re based on content, commerce, or services. The medium is fluid, and the stakes are always increasing. New stars can always be made, and those stars will earn far more than the old stars did.
Your web site, in other words, isn’t like TV or radio, whose success depends on where we are along the hockey stick curve of the Internet’s acceptance. Your site is a show, living on a huge, growing, and changing medium. Prove that you’ve got talent, and the rewards will come. It’s true today, and it will remain true 30 years from now.
