The Internet as Economic Force - What does that even mean?

The internet in 2021: Unstoppable economic force or the root cause of most/all evil?

Answer: Yes.

To both. 

Because, not unlike your relationship status on Facebook back in the day 'it's complicated'.

And it's been on a mind a lot lately, and when I say lately, I mean the past year, as my task was to work on a project that estimated the value of the internet to the US economy. Daunting, yes, but this was my fourth time on the gig, so I knew what I was getting myself into. Even so, these projects always come with new brain-bending challenges, as these miscellaneous notes of mine suggest.

So...what is the value of the internet to the US economy? First, the TL;DR answer: 12% of GDP, or $2.45 trillion. The 162-page version of the answer can be accessed here, along with breakdowns of employment by US congressional district. Yes, this project goes hard.

And what's the big picture here? For starters, you're better off looking for a tech job in Seattle or Boston than, say, Montana or North Dakota. That's not too big of a surprise. But what is interesting is that the internet economy now accounts for 12% of GDP. That's up from the 2% estimated in the 2008 report, 4% in 2012, and 6% in the 2016 analysis. And when compared to the economy as a whole, the growth rate of the internet economy is 7 times that of the overall economy.

So how did we get here?

The digitization, automation, and networking of previously analog, standalone processes kind of changes everything. Simply put, the internet is getting woven into the fabric of more industries and activities, more and more. 

And then there's the iceberg issue. Which is that the part of the internet you see and know is just the tip of the iceberg. There are of course all those underlying protocols and technologies that you don't have to know about or think about, but without them, no Netflix, no comparing airfares on your iPad.

Part of the rapid rate of growth is technological capabilities, part of this is consumer expectation, part of this is the availability of capital for startups. When companies like Dropbox or Slack or Square start to take hold, they really start to take hold. And exponential growth is where venture capital dollars want to be. Yes, they 'lose' 9 times out of 10, but when they get the win it more than erases than the losses of the other 9.

It started with 'shared' music files in the late 90s (and I fully realize that sharing is a euphemism for pirated which became a euphemism for distribution and then became a euphemism for promotion and eventually found its way to the all-you-can-eat streaming of Spotify and SoundCloud and YouTube et al). As the tech ecosystem has evolved some are 'free', thanks to ads, some are free thanks to business models like freemium, some offer an uninterrupted, ad-free experience in exchange for a monthly subscription, and some are both.

Market evolution = more choices, more tiers of services, and new business models, many of which we don't even think about. I mean, how often do you think about how the people on the other end, wherever that is, are getting paid for all the stuff you do online without paying with out of pocket dollars. Probably not that much. 

As your elders told you, there's no free lunch. The truth of the matter is if you're not paying with dollars then you're paying with data. Or, you're free riding, to use another term from the dictionary of economics. Except on the internet free riding has been turned into a new kind of business model. Best example: Those up to 40 minute Zooms you're not paying anything for? It's the people who pay for the premium features that are making those possible.

When considering the runaway growth of the internet economy it's also worth thinking about all the things we do online now without even thinking about them. They're just there. As if they've always been there. Dating by swipe, banking by phone, language learning by app, ride ordering by Uber and Lyft, pushing a few virtual buttons and then magically receiving groceries, furniture, cat food, and clothes. Earlier this year crypto became the world's 5th most circulated currency. The internet is increasingly everywhere. Heck it's even in vending machines.

The full report can be accessed here.

Going back to the internet of the 90s to think about the internet of the future

It's home to permissionless publishing, constant connectivity, and peer to peer networks. 

On the internet don't need a 'them' to green light whatever it is we may want to do online. Plus we get to click on the things we want to read or watch, and ignore those things we don't want to know about. 

Well, most of the time, anyway.

At this point I think it's safe to say that we've all been on the internet long enough to know that such openness and on-demand everything can yield less than optimal outcomes. Whether it's the bad actors that manufacture disinformation or the ones responsible for ad fraud, bots, or a litany of other undesirable things, the internet exists in the contradiction that the greatest treasure trove of information ever amassed can also have a sewage pipe attached to it. That's the flip side of the ubiquitous connectivity and networks. It seems self-evident that we're infinitely better off with the internet than without it, but we're also at a point in its evolution (about 25 years in to the consumer internet phase of things) that decisions being made now, and companies being built now, will determine where this crazy experiment in global connectedness goes.

So what can we do about it now? Sometimes looking back can provide a valuable lens as we look forward, as was the case at a recent event that brought together some pioneers of the internet with an academic who has been studying online communities since they began to emerge in the 1990s.

The pioneers sharing their perspectives were David Bohnett, founder of Geocities and Caterina Fake, co-founder of Flickr. As a quick refresher, Geocities hosted tens of millions of websites at its peak in the late 90s. Some say it was a precursor to social media, with web software that let anyone create and publish a website. And it's easy to forget what a big deal that was at the time. But it really was. 

You didn't need to know how to code, you didn't have to pay extra for domain names or hosting. It was all taken care of by Geocities. As noted in a Wall Street Journal article in 2007 on Geocities: “Back then, entries were known as home pages, not profiles. But the basic, expressive elements of today’s Facebook and competitor MySpace…were all right there.” So what happened to Geocities? Well, it was purchased for $3.5 billion by Yahoo in 1999. And shut down a neat and tidy 10 years later. Its founder David Bohnett started his own venture capital firm, investing in other startups, and now runs a foundation focused on improving society through social activism.

A few years after Yahoo's acquisition of Geocities, along came Flickr. It launched in 2004 and was one of the first, if not *the* first online photo-sharing sites. You had pictures that you wanted to post online and tag? Flickr was the place to do that. Basic features were offered for free, and you could pay extra for a premium account with added bells and whistles. After a year of explosive growth Flickr was also acquired by Yahoo, though at about $25 million it fetched nowhere near the price of Geocities. 

As Caterina Fake's co-founder Stewart Butterfield put it: "Flickr missed some of the uptick in the market, as others sold for more when the market took off: Myspace sold to News Corp. for $580 million in July 2005 and later YouTube, which Google acquired in October 2006 for $1.65 billion in stock. We definitely made the wrong decision in retrospect. We would’ve made 10 times [what we did]. But it’s not like I regret it." Fret not, however. Things turned out fine for Butterfield. More than just fine. After a series of entrepreneurial ventures he created Slack, which got acquired by Salesforce for $27 billion in December 2020. Things turned out well for Caterina Fake too. She did another startup after Flickr, and it got acquired by eBay. She became an investor herself, taking bets on Uber, Etsy, and Kickstarter, among others. Today she is a partner in an early stage investing firm called Yes VC.

And with that, let's go to the event, with David Bohnett, founder of Geocities, Caterina Fake, co-founder of Flickr, author and academic Nancy Baym, and moderator Jad Esber, co-founder of the startup Koodos* for a discussion of such questions as:

• How can what we've learned from the social internet's past help us create a better shared digital future?
• If each new social platform is as a new type of 'society,' how have these assumptions shifted over the years?
• And, of course, what might be coming next...

PS And you can see the full transcript from the event here.

*Disclosure:  I'm an advisor to Koodos. And may I say it's been a fascinating ride.

8 Takeaways from 8 Episodes of the Now & Next Podcast

It’s been a year in which coming up with creative solutions to pressing problems has taken on a whole new meaning for the screen-based industries.  And Season 3 of Now & Next, the podcast that I host, has made it a priority to explore the range of ways in which people in film, TV, games, and digital content creation have been keeping things up and running during the long haul that is Covid-19. 

Not surprisingly, we found a number of common threads emerging over the course of the 8 episodes of this season:

• A new community-minded focus taking precedence for everyone from entrepreneurs to industry associations
• An awareness of the ongoing challenges of implementing diversity and inclusion initiatives that go beyond ‘ticks in boxes’
• A deeper understanding of the new demands on digital creatives working from home and for actors and crews working on set during Covid-19

As a handy guide to Season 3, here are 8 takeaways from its 8 episodes. You can click the episode number/title below to go straight to that podcast audio file, or click here to subscribe to the series on Apple Podcasts. And here we go...

Episode 1: Practicing “Safe Sets” in the COVID-19 era 

Takeaway: In a time of crisis helping the industry helps everyone

On this episode we meet a young serial entrepreneur named Alex Kolodkin who, when Covid-19 led to a shutdown of movie and TV sets across Canada, started a new company to help equip the industry with up to date and accurate health and safety information that was vetted by a team of medical professionals and that also provided certification for TV & film professionals. 

Sounds pretty straightforward, right? But there’s a twist. He isn’t charging anything for the services offered by this latest venture, called Safe Sets International. Why is that you ask? Alex explains it this way:

“I felt useless sitting at home while Covid ravaged the industry. There were times where I was just twiddling my thumbs and thinking, I wish I could do something, and the only thing I can do is sit at home…[but] when I see that there’s a challenge, my instinct as an entrepreneur is: how can I help? That’s where Safe Sets came from. My way of helping is just to get education out there for everybody, and I think it’s the simplest thing I could have done.”

Episode 2: Making on-screen racial diversity easier to achieve

Takeaway: Achieving meaningful diversity & inclusion continues to be a challenge in TV & film

“I’ve been hearing about creating diversity and inclusion since the late ’70s. I’ve sat at more roundtable discussions about increased diversity and inclusion than most people have. And the needle is moving very slowly.” Those are the words of award-winning actor and founder and Executive Director of the ReelWorld Film Festival Tonya Williams.

Tonya joined us on the podcast to talk about both the achievements made and challenges faced over her 20 years with the festival whose focus is to support and showcase the work of Canada’s racially diverse filmmaking and production community. Most recently Tonya launched Access ReelWorld, the most complete database of Black, Indigenous, Asian, South Asian, Middle Eastern, and Latin American talent in the Canadian entertainment industry.

Episode 3: Virtual production moves closer to mainstream

  

Takeaway: Boundary-pushing technology doesn’t have to mean big budgets

What if, instead of bringing all the elements of a live action set together in one place – the actors, crews, props, and locations – filmmakers could build out the production digitally, one layer at a time? That’s the promise of virtual production, the approach to filmmaking we’re exploring in this episode with the Alberta-based production team of Andrew Scholotiuk and Dylan Pearce.

In recent years this style of production has moved from the exclusive domain of mega budget, major studio movies to the more modest budgets of indie and DIY filmmakers. This is because truly cinematic visual effects can now be rendered in real time using iPhones and video game engines like Unity and the Unreal Engine. As Dylan Pearce explains in this episode:

“If you have an iPhone or a camera that utilizes face capture technology, you can start to play with creating your own face capture and digital avatar. You can open up Unreal and use your phone, and then you can start to digitally move around a character’s face in real time. There’s also an app that utilizes your phone to fully mo-cap somebody. Now, this might not be Hollywood level grade, but it’s a wonderful foundation to learn the platform and to get familiar with it so that when you do have a production, you understand it and you can put your money in the right places for it. I think that’s the first step.”

Episode 4: Staying eco-conscious on set during Covid-19

Takeaway: Production can be green even during Covid-19

On this episode we meet Clara George, a pioneer in the greening of film and TV sets. Clara has spent close to three decades working as a producer in film and TV and during this time became increasingly aware of how little things could make a big difference when it came to reducing the environmental impact of production.

Today, being in charge of sustainability initiatives is Clara’s full-time job, and she’s been able to do everything from keeping eco-consciousness on set top of mind, even during Covid-19, to reducing her productions’ overall carbon footprint by shifting from fossil fuels to the clean grid of hydroelectric power. Clara’s current plan is to take these sustainability initiatives put into place on her productions in Vancouver and create a template for the whole industry.

Episode 5: How the game industry is staying relevant during Covid-19

Takeaway: Virtual schmoozing is real, especially in the game industry

Almost every industry says it’s a relationship industry, but the game industry is probably more reliant on in-person networking and trade shows than other media and entertainment sectors. Just ask anyone who has attended events like GDC in San Francisco, E3 in Los Angeles, or GamesCom in Cologne, Germany, and you’ll likely get an earful of stories about these epic gatherings of tens of thousands of people and round the clock socializing.

And then Covid hit in March, and the game industry was one of the first to go into ‘safe mode’. Developers, designers, and project managers grabbed their headphones and computers and quickly moved to working from home. Covid meant those legendary industry events were no longer possible. But then the Canadian game industry responded, with a virtual version of a large-scale networking event that came about as a collaboration between the provincial interactive media associations across the country.

On this episode we’ll hear about how a variety of game studios have been adapting, and how the virtual networking offered by the new Canada Games Online event helped keep the industry’s momentum going by bringing studios together with publishers, investors, and other strategic partners.

Episode 6: Making movies social again 

Takeaway: Movies can be social, even when we’re home alone

Sometimes it takes a pandemic to take an interesting idea and push it to the next level. That has certainly been the case for Hilary Henegar and Fiona Rayher, the two British Columbia-based entrepreneurs behind Hoovie. The project started as small, in person screenings of ‘conversation sparking’ movies, generally from the film festival circuit. But during Covid, Hoovie has been nudged into its next incarnation, as a technology platform.

On this episode you’ll hear about how Hilary and Fiona have orchestrated the shift from a business model based on backyard and living room screenings to virtual events that aim to cultivate community by bringing a social dimension to the viewing experience as well as providing a new way for filmmakers to reach audiences. 

Episode 7: Breaking On-Screen Stereotypes from the Inside Out 

Takeaway: A 20-something from small town Saskatchewan has a few things to teach Disney

Jacob Pratt describes himself as “just a res kid”, a reference to having grown up on the George Gordon First Nation reserve, about 100 km north of Regina. These days that ‘kid’ from Saskatchewan finds himself based in Los Angeles, having recently completed a Masters degree at the University of Southern California, and running Skoden Entertainment, an Indigenous story focused entertainment production company.  

His first client? The multinational media and entertainment conglomerate called Disney.

On this episode Jacob explains his journey from the Canadian prairies to the heart of the global entertainment industry, and how he convinced Disney that the best way to break decades of on-screen stereotypes of Indigenous peoples was to work with him and his company. As Jacob puts it: “How can we reverse or eliminate those stereotypes? The number one answer for me was: Use the same medium that created and reinforced those stereotypes to reverse them.”  

Episode 8: When going to work means never leaving home 

Takeaway: The shift to work from home mode may not be as simple as it seems

We’ve all heard the saying ‘be careful what you wish for’. Well this year it’s taken on a new meaning, as millions of people no longer have to wonder about how great working from home is, or perhaps isn’t. On this episode of the podcast we meet Marie Claire LeBlanc Flanagan and Jim Munroe, two long time game arts and industry professionals whose current project is conducting research and reporting on what the shift to working from home has been like for people in the game industry.

Marie and Jim are currently putting the finishing touches on the report, and its title, “Isolation Nation”, provides a hint at some of the findings. Not surprisingly, many are feeling anxious and alone and are having to learn new skills, such as being their own boss and finding ways to keep their morale up without the usual office socializing and team building events.

Marie describes the research project this way: “People are really isolated right now, and I say that’s more the case for people making games, especially small studios. Life is easier when people can solve problems together. So the goal of this project is to gather knowledge from people making games all over Canada, in small studios, in larger studios, or people working alone. And then gather that knowledge together into one resource so that people can share the things that they’re struggling with, and how they’re getting past them.”  

Note: This post originally appeared on CMF Trends.