The internet is a profit- and jobs-destroying machine

[T_i_B]

http://blogs.telegraph.co.uk/news/danielknowles/100160056/the-internet-is-a-profit-and-jobs-destroying-machine/

I think that the lesson from Yell is that the internet is actually an enormous machine for destroying jobs and profit. Take a different example: Wikipedia. Not so long ago, Microsoft had a pretty amazingly profitable business selling a global encyclopedia called Encarta, which came on a CD, often free with Windows. I remember my childhood seemed to be spent looking up fierce animals and historical wars on it. Or playing the Encarta MindMaze, obviously. Microsoft stopped producing Encarta in 2009. Before Encarta, there was another big profitable business selling print encyclopedias, run by Britannica, which employed literally thousands of academics – 4,411 in 2007 – to write articles, hundreds more editors to put it together, and, for a time, salesmen to sell it door to door. The last print Britannica came out in 2010.

I looked up all of the facts in that last paragraph on Wikipedia. The global, online encyclopedia has a paid staff of 35. All that information is marshalled by unpaid amateurs. The website, even though it delivers huge and unquantifiable benefits to its users, generates no income besides what it raises in donations. Wikipedia isn't alone. All sorts of things we used to pay large sums of money for are now nearly or completely free.

This, ultimately, is the story of the internet. Highly profitable local monopolies are broken down by global competition. I should know: the newspaper industry is another victim. In Britain, we are lucky enough to have had a competitive print media already, but in the US, where newspapers are local operations, the industry is on its knees. Its customer base has turned to the web for the classified adverts that used to be known as "rivers of gold".

For consumers of information, and small business advertisers, this is, of course, great. Creative destruction is good; the Luddites were wrong. I love Wikipedia, just as I love all the stuff I get free from Google (never tried Google Docs? When you do, you will understand why Microsoft Office will be the next to die). But for investors – pensioners and so on – and employees at those companies, it's catastrophic. And it's happening so fast that I'm not sure we've quite worked out how to address that yet.

[lumberjack_jeff]

1. Only if your business sells information.

For marketing and distributing tangible goods, it's the greatest invention since the printing press.

[exboyfil]

2. A big factor is the the inability

to arbitrage information. This effectively cuts out all middle person that once benefitted from being the gatekeeper of information. Cars, real estate, life insurance, and investments are just a few examples. It has been a firewall against inflation as these middle person jobs and their salaries are squeezed out of the marketplace.

[JDPriestly]

3. But, it has created a class of unemployed, extremely poor but well educated

and industrious people.

Is the answer some sort of redistribution of our resources?

Should we compensate people from a common pool, either taxes or akin to that so that they can survive in a society that does not need their talents or labor?

What to do?

[bemildred]

4. And that is a recipe for revolution.

And that is what I expect. Could Occupy be the an early stage? Is that why it freaks out the authorities?

[provis99]

5. those comments though,

it looks like right-wing shit in Europe smells as much as right-wing shit in America.

[T_i_B]

6. Comments on the Telegraph website??

It's a right wing paper (albeit one of the more reputable ones) and as such come of it's columnists are gibbering right wing crazies such as James Delingpole, Damian Thompson & Ed West. It therefore attracts quite a large number of fruitcakes in the comment section.

Daniel Knowles isn't too bad though. Makes you think if nothing else.