Why the Web and Why NOW!
Transcript of a talk given by Ken McCarthy, November 5, 1994
in San Francisco to an audience of film makers, publishers, and multimedia
producers at Pacific Bell's Yerba Buena Media Center
In the spring of 1994, the Internet Gazette's founding publisher Ken
McCarthy made an amazing discovery. Here in the Bay Area, the undisputed
capital of digital media, there was virtually no conversation between
the multimedia industry and the world's largest collection of Internet
To remedy this strange state of affairs and open a dialogue (which is
now in full throttle), Ken enlisted the aid of Marc Andreessen and Mark
Graham to introduce the multimedia world to the wonders of the Internet
and the World Wide Web. This meeting - the first major conference ever
devoted exclusively to the subject of commercial opportunities in web
publishing - was made possible by the enthusiastic support of Maurice
Welsh, Pacific Bell's Director of New Media Development and Jeannine
Parker, International President of the 3,500 member International
Interactive Communications Society.
What follows are excerpts of Ken's remarks from this now historic
meeting held November 5, 1994 in San Francisco, at Pacific Bell's Yerba
Buena Media Center.
We're here today because this year the Internet has really changed. It's become a true
medium that attracts people from all walks of life. How did that happen? Well, Mosaic
is the reason it happened and the Internet now takes its place with television, radio,
publishing, and CD-ROMs as a medium, not just as a place for computer people to hang
Of course, the number of people on the Internet now is very small relative to the other
mediums I mentioned, but that's not the point. That's not what defines a medium. It's
not just numbers. It's who shows up to play. And what the future holds.
How did this particular meeting come to be? I was amazed to discover when I did some
inquiries last spring that very few multimedia producers were even on the Internet, let
alone Internet savvy. It's a growing number, but then it was less than 20%. I thought,
that's very odd. Here we are in San Francisco, the world center for multimedia
development. The Internet, by definition, is distributed all over the world, but a lot
of the great Internet talent is right here in the Bay area. Yet there was no dialog.
Kind of strange. It's particularly strange because the Internet really needs multimedia
developers, and vice versa.
What's going to determine whether the Internet succeeds or not are not technical
issues, it's going to be content issues. Is the programming that's going to be on the
Internet interesting enough, motivating enough, enlightening enough that people are
going to want to tune in and use it? That's purely a content issue. Nobody goes to the
movies to watch the technology of the movies. They go to the movies for the story and
the action. When we think about movies we think about the Academy Awards. Hundreds of
millions of people watch the Academy Awards on TV every year. How many people know or
think about the annual SMPTE Convention? A very, very small number. And that's what's
going to happen in the Internet too.
The Internet needs compelling content. And who better to produce digital interactive
content than multimedia title producers? They're the only people on the planet who have
experience doing it, who even think about it.
But there is another reason why multimedia people should get hip to the Internet very
fast and that's because the CD-ROM business, in my opinion as a person in the
publishing business, is a lousy business to be in. It's terrible. Why? Well, let's say
you spend two hundred thousand dollars to produce a decent title. Now you've got to
press it. You've got to package it, and the packaging often costs a lot more than the
pressing. You've got to inventory it, which is like taking a big pile of money and
putting it in a closet. Not much fun. You've got to find a distributor. You've got to
beg a distributor to take your material. It's true, isn't it? I see people nodding
their heads. Then you've got to give them a big piece of the sales price. Then your
distributor has to persuade a retail store to take the disk. And to be truly effective
your persuasion somehow has to reach a $6 an hour clerk to take those titles out of the
backroom and make sure they're well stocked on the shelf, and that one link in the
chain can undo millions of dollars of promotion.
But as bad as all this is, there is even a more important reason why CD-ROMs are not a
great deal for publishers. You have no contact with your customer. You have no
relationship. Their relationship is with the store or the catalog they're buying from.
So you've gone through all this effort to produce a title, to excite somebody enough to
buy it, but at the crucial moment when money changes hands, you're not there, and
most importantly, you are not positioned to sell them your next creation. You have to
go right through the old channels of distributors and stores all over again.
Now the thing that excites me about the Internet is that it allows you direct contact
with your customers. No middlemen. You produce it, you distribute it. And you can build
up a following and profit from that following. One of the tragedies of the way our
media system is set up now is that we all have to go through film studios or recording
companies or publishers to get our work out. And these companies don't necessarily make
their decisions based on quality. They just don't. Their decisions are made with a
lifeboat mentality. They have limited resources and ferocious overhead, like
distribution and inventory, which eats up enormous amounts of capital.
So what gets produced these days is not necessarily the best, the best for society, or
even what people are really interested in, but the lowest common denominator that fits
within certain financial parameters. What fits in the lifeboat. The Internet can do a
lot to change this and we've seen some success stories already.
What I'd like to use as a point of departure for my remarks today are the Internet
stories that the media has missed this year. The media has done a great job of hyping
the Internet and getting a lot of people interested in and excited about it, but they've
gotten a few stories wrong, presented others in a confusing manner, and have left
certain key points out of others. So, since I've got a podium, I'm going to do what
I've always wanted to do, correct the newspaper.
First misconception: A lot of people are talking about "Cyberspace", and the
"Information Superhighway" with the idea that we're trying to create an alternate
environment and the measure of our success will be that everything is done there. And
that we should be gearing all our attention to creating this place that is completely
independent of the rest of the world.
That's crazy. Would you start a business that only did business on the telephone? In
other words, you wouldn't have a store, you wouldn't talk to anybody in person, you
wouldn't send mail or receive mail, you would only deal on the telephone. Would you have
a business that only had a store but didn't use the telephone and didn't use the mail
system? Of course not.
The picture of every mature business is that they use every conceivable channel
available. They use the mail intelligently, they use the phone system intelligently,
they use video intelligently, and they use the Internet intelligently. So let's get rid
of this idea that we're trying to create some alternate world that's going to be
completely independent of all the other medias that exist. What we're really
doing right now is learning how the Internet fits in amongst all these
existing medias. To integrate the different medias so that they support and coordinate
with each other.
Second crazy thing that I hear going around alot is "How are people going to find out
about what's on the Internet? How many places can we post on the Internet to tell
people what we're doing?" Well, how do people find out about your telephone number? And
how do people find out the location of your store? You advertise. And you use every
available means. You use television commercials, or radio commercials, or direct mail
campaigns, or space ads in magazines, or you put on conferences, or all the other things
that you do to get people to dial your phone number - these are some of the things
you need to do to get people to dial up your web site. So don't worry that there may
not be enough advertising opportunities on the Internet itself to get people to come to
your site, though even this is changing rapidly, just look out to all the other medias
that are available and use those to drive people to your site.
What other stories has the press gotten wrong? Demographics. Who is on the Internet and
who is not on the Internet. In the Wall St. Journal or Times recently there was this
story, "The people on the Internet have more time than money." Hey, surprise, that
defines 95% of the world, including me some of the time. I know that big companies,
like Dow Jones take comfort in demographic studies. But they make little sense in a new
exploding medium. What sense would it have made to do a demographic study of television
owners in 1949? There were 8,000 of them. Let's say you'd done a brilliant study,
and you'd wrung every ounce of data out of it, what would it have proved? Nothing. What
if you'd studied PC owners in 1978. That would've told you a lot. Not.
Yes, when an industry is mature. . . if you're trying to figure out if you should buy
an ad in Steel Making Today, then demographics are important. But with a medium that's
growing 20% a month or more, it's off the point. "Is this is a real medium? Is this
something that's going to last? Is it really going to grow?" And my answer to that is
another question: "Does it fill a need?" And the answer to that question is - yes. And
that is why the Internet is growing so fast and will continue to grow. So disregard all
demographic studies regarding the Internet. I don't see what the point there is in
them at this stage if you're making the decision of whether or not to learn how to
produce content for the Web.
There was another article in another major publication which said something to the
effect that "people are setting up Internet catalogs, but nobody's buying anything."
Did anyone see that story? Well, I'm well versed in the realities of the direct
marketing industry which includes direct mail and catalogs, and producing infomercials
and direct response television commercials, and I'll tell you right now, at least
nineteen out of twenty direct marketing ventures in the old fashioned mediums of
television and print don't work either. It's quite hard to create a direct marketing
business that works.
So it shouldn't be a surprise that some of the early pioneers of Internet cataloging
might not be getting the sales they hoped for initially. Number one, the market is a
little thin. While there are millions and millions of people with some kind of Internet
access, not all of them know how to find catalogs. And number two, a lot of the people
running online catalogs are not marketers, and take this on faith, one of the hardest
businesses, from a marketing point of view to run is a catalog business. It's a brutal
business. Every time the postage rate goes up a penny, catalog companies fail by the
hundreds. The margins are razor thin. It's tough to sell things at a distance, so it
shouldn't be a surprise that the initial attempts at selling via the Internet are
running into certain difficulties. So I wouldn't take that story seriously either.
Bandwidth limitations. I always hear about bandwidth limitations. Let me give you an
analogy. Let's say it's 1880. And we're down at the telegraph station and the train is
pulling in and you point to that train and you tell me: "Someday we're going to take
that train and shrink it down. We're going to put rubber wheels on it and create a road
system so you can take that train anywhere you want to go. And it's going to be so
cheap that everyone's going to have their own. Anyone who wants to can have their own
train, drive it anywhere they want." What do you think the reaction would have been?
"You're nuts! You've been taking too many of those opium-laced patent medicines they
advertise in the back of them fancy pulp magazines."
Now walk into the telegraph office. What was a telegraph office? It was a line of
people waiting patiently to hand their message to a technologist who, using binary
code, would send the message to another technologist who would translate it for the
receiver. Let's say you went to one of those people waiting on line and said "Someday
you're going to have your own telegraph office. It's going to be in your house.
And you're not going to need anybody to operate it for you because you're just going
to be able to speak over the line and you're going to be able to talk to anyone you
want to talk to whose got a line." Again, the reaction's going to be the same.
The human race, and I think Americans in particular, if I can be a little prejudiced,
is capable of creating all sorts of amazing leaps of technology and we're really just
talking about adding a little bit more bandwidth. We're not talking about inventing
something new, or laying the first transatlantic cable, which was quite a difficult
physical feat. We're talking about taking technology that we already have, figuring out
how to pay for it, and installing it. So the bandwidth problems. . . when they'll be
solved, I don't know, but the solutions are inevitable.
Speaking of bandwidth, more than one multimedia publisher has said to me: "I can't
distribute my CD-ROM on the Internet. What good is it?" Well, why not create a product
that works on the network as it is? The people that produced the game Doom seem to be
doing alright with this strategy. I read this week they have 500,000 store orders
sitting on their desk for their first-ever retail release. They got their start
There is a principal in direct marketing that if you can't get your product distributed
in stores, run your own mail order ads, run your own infomercials, run your own direct
response tv commercials, and, if you succeed, you can force the big retail
distribution networks to take you seriously and adopt your product. The Internet is another
viable way to force distribution. I would look at it that way, if I were you.
For a little perspective on where we are right now, let's take a look at this picture.
It's from the cover of a magazine that was published in 1925 called Radio Broadcast.
It's a very interesting thing to study. First, the topics being discussed, "A Good Four
Tube Receiver." How many people listening to the radio today have any knowledge or
interest at all in what is going on inside it? They don't care. And that's how the
Internet should be and will be.
Next topic - "Choosing a B-Battery Eliminator." Somehow this was important to people
messing around with radio seventy years ago. And then finally, the million dollar
question: "Who is to pay for broadcasting and how?" Sound familiar? Well, we worked it
out somehow and we'll work it out somehow with the Internet.
Some funny things about this picture. This could be a PC guy, right? No problem. He's
got his manual open on the floor, actually there's a pile of them, and he needs every
one. Batteries sitting behind his chair, a tangle of wires and headphones that no
longer work, but might work again some day. He's smoking a pipe, and I'll leave what
might be in it up to your imagination. And - can you see the expression on his face? -
he's extremely excited. You might even say he's wired! That was seventy years ago, and
guys like him created broadcasting, then a big question mark, now a multi multi-billion
A lot of people say the Internet is having an impact similar to the first printing
press. I don't think that's an accurate analogy. Gutenberg's Bible was more like the
first original mainframe computer. There weren't many of them and they were expensive.
Books were still the property of popes and cardinals, kings and princes. The vast
majority of people couldn't read.
The more accurate analogy to what we're living through now is the late 19th century.
What happened in the late 19th century? Because of the coming together of a lot of
different forces, print suddenly became very cheap.
We see print everywhere now, and we assume that it's always been ubiquitous. We assume
that newspapers and magazines have always been around. The fact is - that's not true.
We did not have an explosion of print as a mass medium until after the Civil War. For
example, in 1850 there were 254 newspapers in the US total. Fifty years later there
were 2600 daily newspapers, 520 Sunday newspapers, and 15,500 weekly newspapers. Before
the Civil War, most families were lucky to have a single Bible, and it was a family
Bible, passed down from generation to generation.
After the Civil War, there was a remarkable phenomenon called the Sears Catalog.
Richard Sears very intelligently realized: "We've got cheap printing. We've got a postal
service that goes everywhere. We've got a national railroad system to ship goods
anywhere. Why not make a beautiful book, put all the stuff we have to sell in it and
give it away so that it ends up in everyone's home." Think about the intelligence of
giving away a marvelous book, a luxury item, so intrinsically interesting that people
loved to page through it - and in the process bought billions of dollars of goods in
Just as low cost printing made newspapers and magazines and the Sears Catalog possible,
low cost computer networking is creating an explosion of opportunities that would have
been impossible to imagine even three years ago. And remember, as the Doom guys and
Mosaic showed, the Internet makes the distribution of free digital goodies extremely
There was one more big story that everybody missed this year. There was an invention
150 years ago that made high speed travel possible. It made mass production possible.
It was the precursor of the telephone, of recorded music, of broadcasting. One
invention. All those innovations flowed directly out of this one invention. Does anyone know
what it was? It's celebrating its 150th anniversary this year. It's the telegraph, the
first telecom device.
So many amazing things came from the telegraph culture. A lot of people don't know
that when Edison invented the phonograph he was not trying to record music. He was
trying to make a way to automatically relay telegraph messages. The wax cylinders he
used were meant to record dot and dashes. The telephone was originally an attempt to
send multiple telegraph messages on a single line.Bell discovered, "Wow, we can put a
voice through this too. Cool!" You couldn't have high speed train travel until you had
the telegraph because you couldn't very well send a train barreling down the track at
60 miles an hour unless you knew with some degree of certainty what was going on a half
hour or so away.
So the telegraph is the ancestor of just about everything modern we know today, and
this year it's 150 years old. I think it's fitting that this is also the first year
that the Internet fully sheds its experimental status and takes its place as a
fledgling medium along with print and TV. Like the telegraph, the Internet will surely
spawn all kinds of inventions and new ways of doing things, things we can't imagine
today. And someday, strangely enough, our descendants will look back at 1994, the year
of the birth of the Internet-as-medium, as the old days and wonder how in the world
we ever got by with such primitive technology!
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Guest Commentary - Jack Rickard
Guest Commentary - Jim Warren
The WWW Wins the Online Crown
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©Ken McCarthy, 2000