Tweney.com - Digital Darwinism

home | latest news | back issues | who is dylan? | contact

4 . 26 . 1999

Internet business news and analysis. by Dylan Tweney

Digital Darwinism?

For top Internet stock analyst Mary Meeker, "digital Darwinism" is the theory that the Web is an economic ecosystem of sorts, and as it evolves, only the largest, strongest companies will survive [1]. Over time, the theory goes, the largest companies will come to dominate the Internet, driving smaller competitors out of business or acquiring them, until each online industry is dominated by one or two massive market leaders.

All I can say is that the people who coined this unfortunate term must have flunked out of high school biology. If bigger is better, where are all the dinosaurs? That's right -- they're *dead*.

To be fair, a Web search reveals that the term "digital Darwinism" has been used in a variety of contradictory ways. A few years ago, its primary use was in referring to artificial life and self-evolving computer programs. More recently, it has been connected with the trend of thinking about economics in biological terms -- spearheaded by Kevin Kelly and a passel of libertarian free-market capitalists (see [2,3] for good introductions). And, soon, author Evan I. Schwartz, author of the very insightful and under-appreciated book Webonomics, will be coming out with a book entitled Digital Darwinism [4].

In some ways, marketplaces *are* like ecosystems, and the Web is a marketplace, albeit with different governing rules than in the offline world. But gigantism offers no more benefits online than it does in the natural world. In fact, there are many disadvantages to enormous size on- and offline: slow speed, lack of agility, an enormous appetite, and difficulty reproducing.

Not only that, the argument flies in the face of reality. Example: people have been predicting the demise of the small independent ISP for years now. According to this logic, the telcos (AT&T, MCI Worldcom) should have dominated Internet access services by now. Instead, the largest ISP is AOL, with some 15 million subscribers. And, despite consolidation, the number of independent ISPs continues to grow -- over 5,000 at last count.

The number of independent ISPs keeps growing because small ISPs can provide local or niche markets with much more personalized attention than the large providers can. That personal and localized service is so valuable, in fact, that small ISPs can buy access wholesale from the large providers and then resell it at a higher price -- and still find customers willing to pay the price. (For a read on the relative health of the ISP industry, check out ISPCon in Baltimore this week [5].)

A similar phenomenon is happening in Internet commerce. Example: Amazon.com. It's an enormous online retailer in its own right, of course. But it also peacefully coexists with (and, in fact, is greatly aided by) tens of thousands of smaller Web commerce sites, which it calls "Associates," and to which it pays commissions for reselling Amazon.com's goods.

Sure, the Web may be an ecosystem. But like most ecosystems, survival of the fittest does not mean that a single species gobbles up everything else. Instead, a diversity of creatures large and small take advantage of niche opportunities throughout the system, in turn creating resources and opportunities for other creatures. If anything, there's an advantage in small size and great numbers -- which may be why, insect-like, a swarm of different Linux species are rapidly expanding their habitat online.

[1] The woman in the bubble: How Mary Meeker helps Internet entrepreneurs become very, very rich
(Offline link, since the New Yorker still has no real Web site - how retro)
The New Yorker, April 26 and May 3, 1999, p. 48. See esp. pp.58-62

[2] Bionomics 101: Paulina Borsook on the new economic Darwinism (Oct. 1996)

[3] Survival of the Fittest (David R. Henderson in the Red Herring, Dec. 1997)

[4] Teaser site for Digital Darwinism, by Evan I. Schwartz

[5] ISPCon Spring '99

----------

APPLE RELEASED QuickTime 4 last week, jumping on the streaming media bandwagon and hitching it to an open source horse [6]. As I wrote in last week's Tweney Report, and in this week's Net Prophet (see below), IBM, Microsoft, and AT&T have all recently launched streaming media / downloadable music file formats in an attempt to forestall MP3. Apple, curiously enough, is the only one bold enough to add open source to the mix. The company is hoping this move will help make QuickTime 4 widespread enough to be a credible competitor to Real Networks and MP3.

[6] Apple joins streaming media fray

----------

NEWS FEED /// What's been happening

An eclectic selection of notable Internet business news.

Annoying indeed:
Supreme Court upholds 'annoying' CDA provision

Oops:
E-commerce sites exposing customer information

Skip the IPO, let's go straight to the auction block:
Webzine draws $3 million eBay bid

How to burn up tens of millions in venture capital without turning a profit, get your butt kicked by a scrappy late arrival, and still get bags of cash to do it all over again in a new industry:
Net auction pioneer beset by newer rivals

Is "in your face" the same thing as "easier"?
eBay service pushes personal shopping

The Web really is world wide:
Going global overnight
(posted April 19, but worth a read if you missed it last week)

----------

INBOX /// What you're telling me

from Betsy Hecksel <bhecksel@axtive.com>:

Yada, yada, yada, the Cluetrain sounds like Animal Farm! Business as usual vs not business as usual brings to mind an incident that occurred back in the late 80's when I was at a large US based software company. The company had hired an outside group to help them reduce the time to market for software and to mobilize the engineering organization -- increase productivity, and all that good stuff. These guys must have coined the term "paradigm shift" because they used that in every other sentence they spoke. Anyway, they were telling the group all kinds of ridiculous stories about 70 yr old people running 80 mile marathons, etc. and the engineers pretty much thought it was a load of buffalo pucks.

So, someone went out and had a bunch of "buttons" made with BAU (business as usual) with a red slash mark through it as a joke. The humor was in the fact that if there was no business as usual, then what? The "consulting" group had been so busy making it clear what shouldn't be done, but the "what should be done" part of the equation was missing other than showing meaningless film clips about winning the America's cup, and running marathons. The message that most people came away with was that we were all suppose to work until we died of heart attacks! So, they had the buttons made. However, the management team for this group thought that the buttons portrayed the overwhelming success of the program and a tremendous level of "buy-in"!! LOL. Clueless!

... The one positive influence that I have seen from the Internet is that the level of customer service for the online commerce sites is outstanding compared to your average retail establishment. Service is the key, since location and convenience are no longer the issue. Everyone is the same distance on the Internet! Everyone gets more personalized attention, even if it is from a computer!

Plus: NET PROPHET: MP3 David vs. industry Goliaths

MP3 has a lot of big companies running scared. In fact, they're so scared that they've agreed to stop bashing each other in the head long enough to try and quash the grassroots threat presented by this digital audio compression format. ... click for more ...

~ Back issues ~

Online multimedia - Cluetrain feedback - Consumers, unite! (4.19.1999)

Commerce reigns at Spring Internet World - privacy legislation - online wine - Not just business as usual (4.12.1999)

The whole dang archive...

Join my free mailing list!

Just enter your email address in the box below and click the button:

Email:

Optional - your name:

-

Links worth clicking

cluetrain.com
Net market manifesto - read it!

tbtf
Tasty bits from the technology front

ditherati
Deflating industry bombast daily

posthoc.com
Upfront guide to San Francisco - way cool!

-
copyright (c) 1998-1999 tweney media
-
home | latest news | back issues | who is dylan? | contact

	home \| latest news \| back issues \| who is dylan? \| contact 4 . 26 . 1999 Internet business news and analysis. by Dylan Tweney Digital Darwinism? For top Internet stock analyst Mary Meeker, "digital Darwinism" is the theory that the Web is an economic ecosystem of sorts, and as it evolves, only the largest, strongest companies will survive [1]. Over time, the theory goes, the largest companies will come to dominate the Internet, driving smaller competitors out of business or acquiring them, until each online industry is dominated by one or two massive market leaders. All I can say is that the people who coined this unfortunate term must have flunked out of high school biology. If bigger is better, where are all the dinosaurs? That's right -- they're dead. To be fair, a Web search reveals that the term "digital Darwinism" has been used in a variety of contradictory ways. A few years ago, its primary use was in referring to artificial life and self-evolving computer programs. More recently, it has been connected with the trend of thinking about economics in biological terms -- spearheaded by Kevin Kelly and a passel of libertarian free-market capitalists (see [2,3] for good introductions). And, soon, author Evan I. Schwartz, author of the very insightful and under-appreciated book Webonomics, will be coming out with a book entitled Digital Darwinism [4]. In some ways, marketplaces are like ecosystems, and the Web is a marketplace, albeit with different governing rules than in the offline world. But gigantism offers no more benefits online than it does in the natural world. In fact, there are many disadvantages to enormous size on- and offline: slow speed, lack of agility, an enormous appetite, and difficulty reproducing. Not only that, the argument flies in the face of reality. Example: people have been predicting the demise of the small independent ISP for years now. According to this logic, the telcos (AT&T, MCI Worldcom) should have dominated Internet access services by now. Instead, the largest ISP is AOL, with some 15 million subscribers. And, despite consolidation, the number of independent ISPs continues to grow -- over 5,000 at last count. The number of independent ISPs keeps growing because small ISPs can provide local or niche markets with much more personalized attention than the large providers can. That personal and localized service is so valuable, in fact, that small ISPs can buy access wholesale from the large providers and then resell it at a higher price -- and still find customers willing to pay the price. (For a read on the relative health of the ISP industry, check out ISPCon in Baltimore this week [5].) A similar phenomenon is happening in Internet commerce. Example: Amazon.com. It's an enormous online retailer in its own right, of course. But it also peacefully coexists with (and, in fact, is greatly aided by) tens of thousands of smaller Web commerce sites, which it calls "Associates," and to which it pays commissions for reselling Amazon.com's goods. Sure, the Web may be an ecosystem. But like most ecosystems, survival of the fittest does not mean that a single species gobbles up everything else. Instead, a diversity of creatures large and small take advantage of niche opportunities throughout the system, in turn creating resources and opportunities for other creatures. If anything, there's an advantage in small size and great numbers -- which may be why, insect-like, a swarm of different Linux species are rapidly expanding their habitat online. [1] The woman in the bubble: How Mary Meeker helps Internet entrepreneurs become very, very rich (Offline link, since the New Yorker still has no real Web site - how retro) The New Yorker, April 26 and May 3, 1999, p. 48. See esp. pp.58-62 [2] Bionomics 101: Paulina Borsook on the new economic Darwinism (Oct. 1996) [3] Survival of the Fittest (David R. Henderson in the Red Herring, Dec. 1997) [4] Teaser site for Digital Darwinism, by Evan I. Schwartz [5] ISPCon Spring '99 ---------- APPLE RELEASED QuickTime 4 last week, jumping on the streaming media bandwagon and hitching it to an open source horse [6]. As I wrote in last week's Tweney Report, and in this week's Net Prophet (see below), IBM, Microsoft, and AT&T have all recently launched streaming media / downloadable music file formats in an attempt to forestall MP3. Apple, curiously enough, is the only one bold enough to add open source to the mix. The company is hoping this move will help make QuickTime 4 widespread enough to be a credible competitor to Real Networks and MP3. [6] Apple joins streaming media fray ---------- NEWS FEED /// What's been happening An eclectic selection of notable Internet business news. Annoying indeed: Supreme Court upholds 'annoying' CDA provision Oops: E-commerce sites exposing customer information Skip the IPO, let's go straight to the auction block: Webzine draws $3 million eBay bid How to burn up tens of millions in venture capital without turning a profit, get your butt kicked by a scrappy late arrival, and still get bags of cash to do it all over again in a new industry: Net auction pioneer beset by newer rivals Is "in your face" the same thing as "easier"? eBay service pushes personal shopping The Web really is world wide: Going global overnight (posted April 19, but worth a read if you missed it last week) ---------- INBOX /// What you're telling me from Betsy Hecksel <bhecksel@axtive.com>: Yada, yada, yada, the Cluetrain sounds like Animal Farm! Business as usual vs not business as usual brings to mind an incident that occurred back in the late 80's when I was at a large US based software company. The company had hired an outside group to help them reduce the time to market for software and to mobilize the engineering organization -- increase productivity, and all that good stuff. These guys must have coined the term "paradigm shift" because they used that in every other sentence they spoke. Anyway, they were telling the group all kinds of ridiculous stories about 70 yr old people running 80 mile marathons, etc. and the engineers pretty much thought it was a load of buffalo pucks. So, someone went out and had a bunch of "buttons" made with BAU (business as usual) with a red slash mark through it as a joke. The humor was in the fact that if there was no business as usual, then what? The "consulting" group had been so busy making it clear what shouldn't be done, but the "what should be done" part of the equation was missing other than showing meaningless film clips about winning the America's cup, and running marathons. The message that most people came away with was that we were all suppose to work until we died of heart attacks! So, they had the buttons made. However, the management team for this group thought that the buttons portrayed the overwhelming success of the program and a tremendous level of "buy-in"!! LOL. Clueless! ... The one positive influence that I have seen from the Internet is that the level of customer service for the online commerce sites is outstanding compared to your average retail establishment. Service is the key, since location and convenience are no longer the issue. Everyone is the same distance on the Internet! Everyone gets more personalized attention, even if it is from a computer! Plus: NET PROPHET: MP3 David vs. industry Goliaths MP3 has a lot of big companies running scared. In fact, they're so scared that they've agreed to stop bashing each other in the head long enough to try and quash the grassroots threat presented by this digital audio compression format. ... click for more ... ~ Back issues ~ Online multimedia - Cluetrain feedback - Consumers, unite! (4.19.1999) Commerce reigns at Spring Internet World - privacy legislation - online wine - Not just business as usual (4.12.1999) The whole dang archive...		Join my free mailing list! Just enter your email address in the box below and click the button: Email: Optional - your name: -
			*Links worth clicking* cluetrain.com Net market manifesto - read it! tbtf Tasty bits from the technology front ditherati Deflating industry bombast daily posthoc.com Upfront guide to San Francisco - way cool!

	- copyright (c) 1998-1999 tweney media - home \| latest news \| back issues \| who is dylan? \| contact