Making Money on Internet

Earlier today, I was reading Joshua Topolsky’s editorial on This is my next about Apple’s “mistake” in turning their back on the Web and I kept stopping. I disagreed with basically everything.

First of all, his entire argument is based on what I believe to be a fallacy: that Apple is going to completely turn their back on Web support for iCloud. I have reasons to believe this is not the case, as I stated last week, and reiterated today. Others have since chimed in with similar notions and a bit of evidence to the contrary. While Apple may not have anything to say about web support for iCloud apps right now, let’s revisit the situation in a few months.

Beyond that, there is no denying that with iCloud, Apple is placing a very strong emphasis on native applications versus Web-based applications. You could argue this has been the case since the initial release of the App Store in 2008 (remember in 2007 when developers were told to make Web apps for the iPhone?). But I absolutely agree that the message seems more clear than ever: native is the way forward.

But as his argument progresses, Topolsky seems to do what many of us now do: interchange the meaning of the words “Web” and “Internet”. He bemoans Apple turning their back on the Web (that is, the World Wide Web — HTML documents linked together) and argues that Apple still doesn’t get and cannot compete on the Internet as a result.

I woud argue that Apple is attempting to redefine at least a part of what the Internet is with iCloud. In fact, I already have argued that.

Further, I applaud Apple for not taking an approach to the Internet that is more or less creating another Google Docs clone. Or Flickr killer. Gmail replacement. Facebook eater. Etc.

Topolsky seems to want Apple to attempt to do those things — even though, as he rightly points out, when they have tried to compete in similar ventures outside of their wheelhouse, like social, we get Ping — or syncing, we get the first iteration of MobileMe. So instead, Apple is doing what they do best: re-imagining the way things are done.

Apple is not afraid to venture forward on something while thumbing their collective nose at the conventional wisdom of the “right way” to do it. They take a concept and cut it down to its essentials and re-work an idea from there. That is why they are the most successful tech company on the planet right now. They set trends — or reset them, if they have to — they don’t follow them.

When most people (meaning the vast majority of the planet, not you and me) think about the Web, they still view it a bit of a wildcard in many ways. There’s a reason Microsoft Windows and Office are still making so much money. It’s certainly not because they’re the best products out there that are the most convenient to use at the best price. Many businesses don’t yet fully trust the Web, and neither do plenty of consumers. Apple has an opening to take what consumers trust, native apps, and infuse them with the Internet in a way that most people will not even realize.

iCloud will enable a new class of Internet apps, but many people (like Topolsky, for example) won’t even consider them Internet apps because they won’t be Web apps. Instead, the way they seamlessly keep everything up-to-date behind the scenes may as well be magic.

They will just work — better with an Internet connection but just fine without one (and better again when one is available). Unlike the Web, Apple’s Internet for these apps will be one you hardly ever think about — if at all. It will just exist in the background. To plenty of consumers content to play in Apple’s ecosystem (Mac, iPhone, iPad, or iPod touch), that will sound fantastic.

But again, I don’t view Apple’s emphasis on native over the Web as anything against the Internet itself. Nor do I believe they do. For what they see works on the Internet already, Apple is doing something somewhat uncharacteristic (at least in recent times) for them: they’re partnering up. Hence, Twitter/iOS integration.

I would argue that the move is brilliant. Had Apple tried to create a “Twitter killer”, we all would have laughed. Instead they’re leveraging what Twitter has already proven to be good at (social, syndication, etc), and tying it into what they do well (mobile, devices, user experience).

Topolsky also glosses over the fact that every iOS device (and Mac) has a Web browser built-in. In fact, as Apple is always quick to point out, they’re largely responsible for the code behind both their own and Google’s popular browsers (WebKit). Despite some paranoid theories to the contrary, Safari is not going away. And Apple is not going to stop you from accessing whatever you want on the Web through it.

Apple is not anti-Internet, they just believe that they can serve it to users better as a backend to their native apps rather than through a frontend in the Web browser. I don’t think that sounds so crazy at all. What sounds crazy is the notion that Apple has to compete with Google and Microsoft on document editing tools on the Web just because that’s what everyone else does.

And how has battling Google on their own turf — the Web — worked out for Microsoft over the past several years? Not so good.

Apple is simply making the argument (and a bet) — and I believe rightfully so — that native still trumps the Web when it comes to applications. Yes, the gap is closing, but it will take a long time to fully close — particularly in mobile. Hell, even Google’s own actions acknowledges this — that’s the reason Android exists!

Further, while it might annoy many people, Apple is in the business of selling products. They do this both by making the products themselves attractive, and by making the services that run on them attractive. It’s symbiotic. Apple focusing on Web apps would not help sell more iPads. This should be far from shocking.

The reason why this approach works for Apple is because when they make these products and services, they generally make them better than everyone else. Topolsky seems to argue that they should separate some of these services from the products and focus on the Web for the betterment of everyone. I would argue that they cannot do this. It would undermine the cohesion that makes their products so great.

“You know, if the hardware is the brain and the sinew of our products, the software in them is their soul,” Jobs said during his WWDC keynote address. Do those sound like the words of a company that is going to focus on software that can run anywhere?

The Web has given us the idea that software should be able to run anywhere, on any machine. And that’s great. But that’s not Apple. And love it or hate it, that’s not the bet they’re going to make.

But it’s a mistake to think that they don’t get the Internet as a result. With iCloud, they’re setting out to carve their own piece of it. “At long last, the brains in Cupertino seemed as if they were set to fully embrace the internet and its inherent, omnipresent power,” Topolsky writes before arguing that they haven’t actually done that. I would argue that this is exactly what they’re doing. It’s just that the front-end Web is not the entire Internet. Somewhere, we lost sight of that.

And that may not be a very popular thing to say, because the Web is open and open always equals good, right? Sure, but sometimes closed environments lead to products that are better than just “good”. And consumers tend to flock to such products — until something better comes along (as it always does). The fear that Apple’s relatively closed system will somehow lock us in forever is irrational.

Meanwhile, the notion that the Web should be the only way to use and approach the Internet is dangerous — and decidedly un-open. Such thinking would stifle innovation — innovation like iCloud.

If and when Apple does offer iCloud web apps, much of this may sound overblown and/or moot. But the underlying tension is real. Apple does believe that native apps backed by the Internet will best pure Web-based apps for the foreseeable future. It’s a big bet, but it’s not as crazy of a bet as some may have you believe.

In his headline, Topolsky asks, “can you win if you don’t play?” Yes, by changing the game.

Washington Post Managing Editor Explains Why Focusing On Direct Revenue From Consumers Is Short-Sighted

from the free-is-expensive,-but-it-can-pay-off dept

From the title of this article in Forbes, by Raju Narisetti, the managing editor of the Washington Post, you might think it was going to be another rant against "free" online and talk up the wonders of paywalls. After all, the article is called "Why Free is Very Expensive." But, the article actually is much more nuanced, and effectively explains why folks at The Washington Post think that a paywall doesn't really make much sense:

Here is why revenue from readers is unlikely to be our salvation.



-- A metered model makes your business susceptible to the will of a few readers--those who consume the most articles/pages. Often, less than 5% of these kinds of visitors account for nearly 50% of your page views. And they have very little barriers to exit.



-- Aggregators, like Huffington Post, will still find ways to deliver your content for free and often with more engaging technologies since they don't have to invest much in content creation.



-- The infrastructure for payment systems, data security, customer service, reader acquisition and retention for digital subscriptions costs a bundle to build and run, yet your consumer price points need to be low, making the return on investment a clear challenge.



-- Our Web sites were to be trusted safe havens protecting, informing and entertaining you amid a deluge of digital content. And when you came to us, we would make money off you. But that was before your friends became your trusted sources. There are 600 million of you on Facebook and we know we need to be there too with our content. We haven't even begun to fathom that monetization challenge. So, we could up end an expensive drawbridge around Web sites that are already losing their value?



-- Scrolling on Web sites has always been a poor experience for consuming news. Now, just as new devices and digital experiences--none invented by major news brands--create richer engagement outside our sites, we are talking about charging readers for sub-optimal Web site consumption.

He does point out, as everyone agrees, that it is costly to run a major modern news operation, and that the digital business models for large publications like the one he works for haven't kept pace. But, thankfully, unlike some of his competitors, he wants to look forward and not backwards. He's looking at the ways large successful internet companies are making more and more money by increasing convenience and building more value for users:

I, for one, think that the golden age of targeted digital advertising is yet to come. Do we really want to trade that larger opportunity for the much smaller and unreliable pursuit of consumer dollars? I also wonder if we aren't better off redeploying our newsroom resources to create new revenue streams and more engaging digital platforms than trying to make the traditional Web experience better and charge for it....



Free is indeed very expensive. But, what the prolonged and knee-jerk debate about free vs. paid inside our news organizations shows is that we still have what led us here in the first place: An imagination deficit. Rather than apply an �all or nothing' approach focused, perhaps wrongly, on just our Web sites, we should be willing to make creative bets on our business model. We continue to make what is being consumed--in large quantities. It is time we figured out how to make it easier, more engaging and useful. Despite their soaring valuations, Facebook, LinkedIn and Twitter don't create much, if anything at all, by way of original content. And, for that matter, neither do Google or YouTube. They simply make it easy, useful and engaging to their audiences. These are incredibly disruptive times and one thing is clear to me: There isn't time or room for incrementalism at major news organizations.

It's nice to finally see someone at a major publication recognize this point that many of us have been making for a while. For all the talk of paywalls, there's been very little done to actually increase the value of the online experience for users at these newspaper sites. There's been very little effort to build and support community. It's nice to see that at least one major paper is hopefully moving in that direction.

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