A graph of individual's average media usage in hours per year (in the US) shows that while Internet has grown steadily in the last seven years, cable and satellite TV have been even stronger, and radio also shows decent growth. The biggest loser in attention has been broadcast television. Newspaper reading has been on a slow decline, and is likely being passed by Internet this year.
The results get more interesting when combined with another chart showing total US advertising budgets in 2003, broken down by medium. While acknowledging some risk of mismatching categories due to separate sources, it's highly instructive to take the expenditures (in $m) by category and divide by the corresponding usage data. This will give an index of the relative costs of reaching an audience in the different media. This comes to roughly:
Comparative costs per viewer-hour
The loser really sticks out, doesn't it? Newspapers are way out of band on costs, and are flatlined or worse on their audience. With their non-marketing ad revenues from classifieds already seriously eroding from the likes of eBay (garage sales), Autotrader, and Friendster (personals), the entire medium looks like a short. Dead tree news rags may be under attack for their credibility, but the real story is in the numbers: They are truly 'overrrated.'
One commenter suggests first engaging the VC in the meeting by asking their view of the market, and why the company was picked to pitch. I disagree on this one. I don't want my own views reflected back at me. I want to hear the entrepreneur's view of the market and the company's value add. The situation will get interactive soon enough if we're interested. At least at our place, it's a very bad sign to get through the first 15 minutes without being interrupted by questions.
Joel Spolsky's latest is a valuable SITREP on the ongoing Platform Wars between Microsoft and everyone else. If you are a software developer or entrepreneur, read the whole thing. For others, his thesis is that Microsoft itself has destabilized developer support for the Windows APIs, heart of the platform franchise. And it has done so at a time when the Web is seen as an alternative to many 'rich client' apps, and investors are scared away from financing PC-borne software. The result is a weakening of the Windows franchise, and a shift of the platform war towards the server platform.
Though I've not had to suffer through the travails of COM and .NET as has Joel, I've seen the effects. He's dead on about the investor sentiment. The purpose of this post is to add a little historical perspective that might suggest where things go next.
Once upon a time computers were - well - computers. That is, machines mostly used for calculation. Those of us of an age carried card decks as supplicants to the glass temples of the mainframes. Later on, TTYs and 3270s replaced the card decks for data entry, and many could use the same machine at once. This was called timesharing. One machine, many users, all the same interface.
Then came the PC. The computer became personal, and as such its nature changed. Whether used for calculation (Visicalc) or writing (Wordstar, Word), it became a personal tool, an extension of the user. The computer as tool was best when it got out of the way, and presented the task in its own terms as much as possible. Hence, the rise of direct manipulation interfaces, with Mac and later Windows as their embodiment. This is the type of software which Joel calls 'rich clients'.
The advent of 'multimedia' and CD-ROMs gave the first hint of the next evolution of computers - into communications devices. This hit its full stride with the coming of the commercial Internet, the Web, and the social acceptance of e-mail. The relative asymmetry between creators and readers put more emphasis on predictability in the interface, rather than power as a tool. 'Computers as media' are following previous new media, by evolving into genre of usage which provide simple, recognizable patterns for messages (you're looking at one of them). Although some of the data elements used are called 'rich media', the computer itself is just a conduit for that data delivery.
The power of Microsoft rose with the rich, direct manipulation, GUI software of the PC age. But 'timesharing' as concept never died during that era. It faded into the background, and remained a latent competitor. How have the two styles fared as the battle moved on from computer as calculator or tool, to communications device?
It should be clear that timesharing has been reborn in new clothes. Now we call it 'salesforce.com' and 'Google'. The 3270 of old is now an HTML or XML browser. This interface has absorbed most of the new values of the communications function: Web, blogs, increasingly e-mail. The genre of the Internet are evolving to fit the limits of the browser, for better or worse. The business models are subscription, fee for service, or advertising. With the foundational layers of server software increasingly commoditized, investment flows towards value added services, and once again toward complex calculations - analytics, ad targeting, etc.
The rich client is struggling. In retrospect, the attempt to introduce 3D to the browsing interface in the mid-90s looks like a prelude to its descent. In the end, users wanted simplified access to information more than a 'richer' tool that introduced its own set of problems. The same fate has met most attempts to create 'rich' client dependencies, often in the service of advertisers. The only domain in which the full client platform is exploited and pushed is gaming. A growing business, but not one on which to balance the whole Windows franchise.
Elsewhere, the client side is stagnant and investment stays away. Though Microsoft apparently recognizes many of the information management problems that the combination of PC and Internet has created for users, its solution - Longhorn - keeps slipping out in time and losing relevance. GMail and other net-borne palliatives are already arriving.
I am not forecasting the death of the PC. Larry Ellison already tried that once. It will be with us for a long time to come, due to its overwhelming scale economies. It will still run all of the tools that we use to create information: Word, Photoshop, Powerpoint and the rest. It will be a terminal for the new timesharing, and a conduit for the Internet as medium. But it is no longer the location of new investment and innovation, and Microsoft's ability to extract revenue, margins, and strategic advantage must fade accordingly. Joel's right: The heart of the Windows franchise is rotting.
Woo-hoo! They made it - there and back again. Kudos to Paul Allen, Burt Rutan, and especially to pilot Mike Melvill, whose butt was on the line. And, of course, though this flight itself goes into the record books, it's also the warmup for an attempt on the X Prize. (Though some intervening flight tests could result, depending on the evalutions of a stuck control and cracked fairing whose significance is still undisclosed.)
For the first time in many a long year, it feels like we're on a path to space that might be sustainable for the long run. The mainstream press and the space bloggers are rightfully banging on about the potential for a 'space tourist' revenue stream that will make this all more than a very costly form of ego-boo for billionaires. For instance, Dale Amon has some worthy reflections. So perhaps I'll fill in by pointing out a few other straws in the wind that might indicate other potential revenue flows for both SpaceShipOne-like architectures, and other low-cost suborbital / LEO attempts:
Over at DARPA's Tactical Technology Office, there are a variety of relevant programs. RASCAL intends to use a space plane based on modified fighter jet engines, which will carry a conventional rocket second stage capable of launching small satellites to LEO. Orbital Express is an effort to design constellations of such small satellites that could substitute for today's megabirds. And here are some new propulsion systems scaled to the appropriate size. Another launcher program, FALCON is intended to fly suborbital payloads to anywhere in the world from the continental US. Think of it as an extremely long range JDAM.
The point isn't that any of these programs are going to match 1-1 with the X-Prize vehicles, but they do indicate a latent demand for much the same payload / energy configurations being pioneered there. And a little digging around will find some of the same private companies involved in engine and airframe development.
And though my faith in NASA is pretty small - as both a space buff and investor - they are at least nominally committed to moving in a way that will create further demand rather than competition for private space. Excerpting from T. L. James' useful summary of the Aldridge Report:
The Commission recommends NASA recognize and implement a far larger presence of private industry in space operations with the specific goal of allowing private industry to assume the primary role of providing services to NASA, and most immediately in accessing low-Earth orbit....
The Commission recommends NASA aggressively use its contractual authority to reach broadly into the commercial and nonprofit communities to bring the best ideas, technologies, and management tools into the accomplishment of exploration goals.
The Commission recommends that Congress increase the potential for commercial opportunities related to the national space exploration vision by providing incentives for entrepreneurial investment in space, by creating significant monetary prizes for the accomplishment of space missions and/or technology developments and by assuring appropriate property rights for those who seek to develop space resources and infrastructure.
And, indeed, within hours of the flight, a NASA spokesperson publicly backed the notion of prizes. That alone won't get investors jazzed - plans like Scaled Composites' aren't based on one time revenue shots - but they are a nice kicker, and prove a focus of public attention.
So the game is afoot, and the learning curve begins. For those of us who grew up with Mercury, Gemini, and Apollo, this may be a reliving of our childhood. For those growing up today, they may have more of a hope that this time it will stick to the wall.
I'm wondering a bit about Google. Orkut. Blogger is still bloggered, and has competitors like fleas. Search still rocks, and the advertising model has good traction. But the rest looks increasingly like a bag of minimally coordinated projects. Time for a little triage, post the quiet period and IPO, I would think. Schwerpunktsbildung, Herr Schmidt!
We've got four companies in various stages of follow-on financing, two in diligence, and my free cycles and 'blogging energy' are being devoted towards Spirit of America. So expect a lot less than usual through the Fourth - random linkage, if anything. Analysis pieces and random screeds are in abeyance for a while. Check the left column for some recommended alternatives, or go catch some rays - you'll be glad you did.
Atypically, Burt Rutan of Scaled Composites has preannounced that SpaceShipOne will fly on 6/21, trying to become the first privately built craft to break the 50 mile altitude that is set as the edge of space. Note that if the launch comes off, it will also have been a nine week cycle time since the last flight (the X Prize requires six). Maybe we're finally on a real learning curve.