Free Inside

By Douglas Rushkoff. Published in The New York Times Syndicate/Guardian of London on 1 September 1999

Back in the days when my dad was a kid, he’d get a free baseball card in every pack of bubble gum. It was a marketing gimmick on the order of a free toy whistle inside a box of Cap’n Crunch. But it eventually served to turn the bubble gum industry on its head.

By the 1970’s, when I was growing up, Topps was no longer known as a gum company but a baseball card empire. We’d buy ten cards per pack, along with a stale stick of gum that we’d usually throw away. The gum had lost its role as a product, and been reduced to the giveaway. Today, you don’t even get a stick of gum in a pack of baseball cards. The pink chewing product that made the cards possible in the first place was reduced to a piggyback and then eliminated altogether. Such are the dangers of creating promotions that upstage your product. In the baseball card vs. bubble gum wars, the baseball cards won.

A similar series of battles are now being waged between in the computer industry. While computer manufacturers are figuring out ways to give away Internet service to people who by their computers, Internet service providers (ISP’s) are beginning to give away computers to people who sign onto their service. Each industry is attempting to turn the other side into bubblegum.

While NASDAQ investors chew through the pages of financial publications in an attempt to determine who to “short sell” for coming fall, they’d be better off doing a simple analysis of the baseball card scenario for an indication which industry will be commoditized by the other.

The reason baseball cards won out over gum is that the cards change over time. Last season’s simply will not do. The need for new cards is built-in to the product itself. This is what the technology industry would call “novelty.” If there’s nothing new, upgradeable, or changing about the thing you’re selling, then there’s no way to make older models obsolete. This is why the computer chip industry is so desperate to design (and, ultimately, justify) new designs. They bank on our desire to use new, complicated graphics or music programs that will require more powerful chips. (It’s also why Intel funds so much music and video software development.)

Although gum needs to be bought fresh, there’s hardly a pressing need for new kinds of gum. A new flavor every few years might be interesting, but gum is gum. Baseball cards must be changed every year because the players on each team change. Bubblegum would only be required to change if our taste buds evolved dramatically over time, which they don’t.

In addition, cards have brand value. When I was a kid, it was Topps cards or no cards at all. Gum, well, it was just gum. And the kinds that didn’t get packed with baseball cards were usually better, anyway. (Bazooka, for example, was never overrun by its little comics.) Likewise, because they make an item that almost anybody can copy, computer manufacturers are caught in a competition for price, speeds, and feeds. Except for the iMac and its imitators, there is no brand value to PC boxes. And unless the PC business gets some better industrial designers, those seeking a branded box will simply pay the extra to buy a Mac. Computers, like gum, are commodities.

But the ISP industry is no better off. All ISP’s are pretty much the same. As long as you can get in 56K with a reasonably low incidence of busy signals, who cares what it’s called? And brand loyalty? Who ever thought of their ISP as a brand? Back in the days of bulletin board services, the place you received your mail was same place you’d “hang out” online. Now, one’s email address doesn’t say anything more about them than a credit card number.

So who will end up as the bubblegum? My guess is both. Neither PC’s nor ISP’s offer any consistent novelty or sustainable brand values. And soon both will be as free ˜ or at least as relatively free ˜ as web browsers.

Who will be giving them away? Why the Internet portal companies, of course. They don’t care which computer or ISP you buy, as long as you choose one portal as your “start” page. And, unlike PC’s and ISP’s, portals need to change daily ˜ sometimes every minute. Portals need to be as current as your browser’s “refresh” button demands.

The portal companies recognize their advantage, which is why they’re celebrating, even contributing towards the commidification of their peers. Check out Shop.Yahoo.Com or any of the other e-commerce aggregators online. You type in anything you want to buy and the portal does a quick price comparison of that item at every online store it can find. If you click the “buy” button, you can order the product at the best price without ever leaving the Yahoo site! If your credit card is already on file with your Yahoo membership, the whole transaction is taken care of invisibly. And since your entrusting them with your credit information, your portal better be a brand you recognize and value.

So while the PC’s and ISP’s battle to turn one another into promotional giveaways, it’s the online portals whose business plans are most likely to convert the rest of the known universe into bubblegum. And, amazingly, it’s the very companies they are turning pink who pay for precious space on portal pages.