"The Rest of The Digital Story"

How the Web Was Won

By Leslie Walker
Thursday, August 3, 2006; D01

The Internet is transitioning to a new era, and so am I.

Nearly eight years have passed since I started this column chronicling business on the Web. While dot-coms came and went, and the Internet passed through periods of boom, bust and rebirth, the trends I wrote about in 1998 are surprisingly alive and intact today. The Web is still empowering individuals to be more creative , spawning new electronic middlemen and struggling to make advertising more personal .

As I sit to write my final column (I will be editing technology news at The Washington Post through year-end, then taking an early-retirement offer and doing personal writing while pursuing new opportunities) I have been re-reading what I wrote in the early years, when the Web still mystified most people even as it kicked off an investment stampede that ended badly in 2000.

Back then, I kept a folder on my desk labeled "big, bad bets," into which I dropped news releases about start-ups that raised gobs of money for loony ideas. The folder grew so fat I gave up trying to write about obvious losers. Remember Beenz and Flooz , creators of Internet "currency''? How about CueCat, that feline-shaped bar-code scanner that magazines thought would whisk readers from print ads to Web commercials? All are long gone. Then again, I chuckled at how I mocked CBS Corp. for investing in "the latest logic-free Internet business plan," iWon.com , which planned to give away $10 million a year to people who clicked on its links. Today iWon is a popular sweepstakes site, owned by the parent of Ask.com.

As a rule, though, I tried to focus on Internet visions with promise. Maybe that's why in reviewing my writing, I was surprised at how many old themes still make headline news. The biggest then is the biggest now -- how the Web is turning people formerly known as consumers into media producers. To me, video-sharing site YouTube and teen hangout MySpace are latter-day versions of early pioneers such as personal Web page provider Geocities. Hard to believe Yahoo paid nearly $3 billion for Geocities in 1999, isn't it? That makes News Corp.'s $580 million purchase of MySpace last year look like a bargain.

In 1998, before "blog" was even a word or MySpace existed, the 10 fastest-growing Web sites "were ones where users create the content ," I wrote. But newer services were already overtaking them, including Yahoo Clubs (still kicking), Excite Communities (bit the dust) and DejaNews (a window into the old Usenet discussions, it was sold to eBay, which closed it and sold the archives to Google, which folded it into Google Groups). Additional publishing tools soon came along, including the blog -- short for Web log -- which displayed short entries in reverse chronological order. Today the Web has tens of millions of blogs.

While citizens were using the Web to write, chat, freely distribute music and show wacky home movies, entrepreneurs were racing to transform commerce. A new breed of electronic middlemen developed giant Internet brands -- search king Google, auction queen eBay, travel assistant Expedia and local-listing service Craigslist were leaders of that pack.

Traditional media companies, meanwhile, agonized over whether to charge for content online. Last year, the New York Times put many columnists behind a subscription wall. This year, London's Financial Times is rethinking whether to go the other way and scrap its Web subscriptions. I expect it will take many more experiments before established media companies find the right Web formula, but I'm confident they will.

In retailing, the big national chains adapted to the Web much faster than I thought and sell a ton of goods online . More startling has been the expansion of niche retailing. When I received Internet Retailer magazine's annual report on the Top 500 Web retailers last week, I was surprised by how many specialty start-ups I chronicled in the early days are raking in mega-bucks. The top 500 included print dealer Art.com , discount clothier Bluefly Inc., shoe supplier Zappos.com, Mattress.com and Furniture.com. All those and more helped Web retailing surpass mail-order in sales a few years ago. Now if you count eBay's auctions, the Web claims 5 percent of all retail sales in the United States. I expect that to surpass 10 percent in this decade and eventually go higher.

Less clear is how advertising dollars will migrate from TV and other mass media into the Web's micro-formats. The future of advertising was fuzzy in 1998 and remains so today. Its evolution has packed many surprises, the biggest being the birth of search-engine ad auctions , which displaced banner ads to claim the lion's share of Internet ad dollars.

I learned my lesson in the unpredictability of Web business after visiting Google's tiny Palo Alto office in 1999 and writing about its "toddler business model" of showing links to books for sale at Amazon.com on search-results pages. But the ad breakthrough didn't come from Google, a company I was watching closely. It came from a rival I disdained called GoTo.com, which renamed itself Overture and later was bought by Yahoo . GoTo's innovation was showing search results that were mainly links to advertisers, ranked entirely by how much each merchant agreed to pay in a live Web auction. Advertisers paid GoTo only when visitors clicked on their links. Google copied the idea, with a better implementation, and pay-per-click advertising took off.

To me, though, the most fascinating story of all was how people took to the Internet to create and share information . In the past year, thousands of new Web communities have popped up offering twists on MySpace and YouTube. Partly these start-ups are the result of something I didn't anticipate -- Internet publishing costs falling through the floor, at a time when Web software grew more powerful. Some estimate that the cost of launching a Web business today is barely 20 percent what it was in 1998. Forget the nutty ideas. Falling costs will turbo-charge personal publishing even more by letting the good ones reach the Web quickly.

Just last week, I tested a new blogging service planned for release this fall. Called Vox, it aims to entice mainstream folks into blogging by offering simpler software and privacy controls for determining who can read postings. While testing it, I sensed the Vox style of blogging was like no other writing I have done. With photos scattered alongside links to private pages kept by real friends rather than electronic strangers, Vox feels more like a silent conversation than a publishing system.

Soon, it won't feel like the Web, or even the Internet. These communication tools we focused on while struggling to understand a strange new medium are already receding from consciousness. What we do with them is finally taking center stage. I don't know about you, but I'm already pondering how I will use the Net to develop " Leslie 2.0 ."

Thanks to all who read my weekly musings , participated in my online chats, visited with me in the District and sent helpful feedback. I hope you'll continue the dialogue by sending mail to leslie@lesliewalker.com .

See you on the Net.