California Here We Come

By Douglas Rushkoff. Published in The New York Times Syndicate/Guardian of London on 17 April 2008

I wasn’t sure whether the mass of cocktail-swilling Internet businesspeople were celebrating their various victories or merely trying to look that way. I had stumbled into Silicon Alley ‘99, New York City’s premier cyber-business conference, which had grown by this year – just its second – into a nearly thousand-person extravaganza.

It was plain for all to see that New York’s vast financial resources and stock exchanges had successfully conquered Silicon Valley, usurping the West Coast’s role as the epicenter of interactive technology, and making millionaires out of hundreds if not thousands of the earliest investors. But no matter how many Armani suits and Prada sheath dresses crowded the swank sushi bars in this colossal Tribeca loft, I couldn’t help but notice an air of discontent. The managers of huge stock funds seemed to wander about aimlessly, asking vague questions of almost everyone, as if attempting to figure out which new company might be bought next by Excite before Excite is bought by @home and @home is absorbed into AT&T. 26-year-olds from faraway places like Toronto and Milwaukee smiled earnestly and shook hands with everyone who would shake back ˜ brimming with equal parts of enthusiasm to get on board and fear that they may have already missed the boat.

In a sense, they have. The Internet boom, as we know it, is over. This doesn’t mean that the Internet itself is anywhere near realizing its true potential, or that tons of money will not still be made. But as surely as New York’s investment companies took focus away from the boxmakers and equipment manufacturers of Silicon Valley and onto the media companies, consolidated networks, and advertising agencies of Silicon Alley, so, too, will a new industry yank the spotlight away from New York and onto something else.

Where will it go? Most likely, Hollywood. Consider, for a moment, the way that the television industry developed earlier this century. Back when the TV was first invented, Wall Street speculators invested heavily in RCA and other companies making TV sets and components. This was quite a logical move, actually, because TV sets are the one thing that the members of a TV culture appear to have in common. But, eventually, as more and more TV’s and manufacturers emerged, the price of the tubes and other commodity-like parts dropped, along with the stock prices of the companies making them (sound familiar yet?). Besides, smart money had already moved into CBS, NBC, and the dozens of other fledgling television networks forming around the nation. These would surely be the moneymakers of the TV culture, thought Wall Street, because the TV networks will carry the signal.

But most of these networks died, leaving just three in the United States until quite recently. More money invested and lost. And where did it go after that? Into content, where it remains to this day. The people earning the most money in television are not the box-makers or the networks but the producers, actors, and, occasionally, the writers who make the content ˜ as well as the studios who produce it.

The Internet is following this same three-stage evolution, and I’d bet that the smartest investors have already moved their assets to account for this inevitable course. The rise of Silicon Valley, along with Compaq, Dell, and Microsoft, corresponded to the RCA era. As microchips got cheaper and software became relatively interchangeable, the focus shifted to networks ˜ the CBS era. Over the past year or so, we’ve watched while stocks from Lycos and Yahoo to Amazon and AOL have replaced the computer manufacturers as the darlings of Wall Street. Do these access providers and “portal sites” actually make anything? Not really. Like the television networks, they deliver the content ˜ both real and virtual ˜ of others. (Even Internet commerce is a middleman’s game.)

Eventually, as portals and dial-ups proliferate and lose whatever competitive advantage they may have over one another, it‚s the people making this content who will profit. Jerry Seinfeld could ask for whatever salary he wanted because he was irreplaceable as the star of his sitcom. Can Yahoo really say that about their Web portal, however nice it may be?

If I were asked to advise a young person out of school where to go to make money online, I’d tell him to go to his own garage. Start a digital entertainment franchise. Figure out what kinds of online content and activities people would enjoy so much that they would accept no substitutes. This doesn’t mean the best, weirdest, or most advanced technologies or special effects ˜ someone can always copy a technique or gizmo. It means coming up with ideas, a world view, characters, or insights that are unique.

A few ˜ a very few ˜ have already embarked on this path. is a movie review site with information and a sensibility not available anywhere else. The simple but unique comic strip is found only online, and currently draws over 4 million page views per month. Even text-only sites like, and (which I contribute to, myself) offer voices you can’t find elsewhere or easily imitate. The competitive advantage is built in.

And this is only the beginning. The inherent clunkiness of web-based online entertainment experiences will soon be a thing of the past. Cable networks and the telcos are competing to bring us broad-band high speed interactive access, along with fully immersive gaming, social, and entertainment spaces for a new breed of content-developer to explore. But don’t be fooled into thinking that the buck will stop with the companies who make the set-top boxes or lay the wires. As always, it will trickle down to the people who create experiences for which there are no substitutes.