The Next Internet
Welcome to People vs Algorithms #78.
I look for patterns in media, business and culture. My POV is informed by 30 years of leadership in media and advertising businesses.
Sometimes it’s nice to read in the browser.
More “Next Internet” on the PvA podcast. Out Thursday, 8am EST.
We have many questions about the future. Among them:
What does AI do to the internet as we know it today?
How will people get paid?
How should media companies, and everyone else, be preparing for the change?
I thought I would try to capture a couple of my observations, if only embryonic. The first, a kind of mental model for the next internet. Second is how an ad model might support this new reality.
Topsy Turvie
I was reminded of a silly book we liked to read our kids called “The Topsy Turvies”. The Turvies are just an “ordinary family”, the inside flap reads, “They sleep in the kitchen, get up at midnight, go out in their pajamas, and have breakfast at the end of a lovely day.”
My mental model for the internet is similarly being turned upside down.
I used to think of the web as a place to go get things. Open a browser, type a query or destination into the navigation bar, sort through results on Google (or later, have Google do the corrective work in the bar itself) and dig down to find whatever I was looking for. Here, the browser and search engine become inextricably linked as navigational instruments to a network of interconnected endpoints — content, shopping, communication, utilities.
These endpoints live an independent existence, each their own technical, design and navigational conventions and monetization strategies. This is the “federated” web of sites we know and love. It is under a lot of pressure right now.
The federation was always a virtue and curse. The internet left a sterile and centrally planned AOL world behind. A million flowers bloomed. We embraced its open, infinite and cacophonous wonder, but missed the virtues of central government, a clean solution for identity management, probably the most important.
The federation struggled because the protocols underpinning it (HTTP, SMTP, RSS, etc) did not support the evolutionary requirements of the medium—shared identity, payments, data management, session management, content syndication—all of which would have made the web a whole lot more useful. It did create opportunity for a handful of new tech giants to emerge and gobble a huge swath of online activity and eventually way too much economic power. These few grew dominant positions managing identity (Meta), navigation (Google), commerce (Amazon), advertising (all of them). Their products were better. They won the game.
Partly in reaction to the plaque that gathered in the system described above, but mostly on account of AI technology that can do most of the browsing work for us, we are moving to a new equilibrium. The new is the inverse of the old. Rather than going out into the world to get things, everything is brought back to us with the help of smart AI that understands our needs well enough to do all of the gathering for us, with magical, personalized care.
The old internet morphs from a place where we “seek” to a place where we are “served”, sites we once visited devolve into a vast database, deconstructed and reconstituted by AI to meet our individualized whims. The open web begins to resemble your favorite social app - more algorithm, less effort. Less browsing.
A new way to browse
By necessity, the nature of the browser changes, becoming a nexus point for personalized information gathering and soon task management. Slow to evolve till now, innovators like the Browser Company and their Arc browser (see Verge review) are using the opportunity to challenge existing notions of what that window on the internet should do.
Closely related, a new breed of mobile browser style apps like Perplexity, showing what a blend of search and AI look like when they work together as personal information helpers. The Google mobile app, powered by Gemini, feels much the same. ChatGPT, both a webpage and mobile app, invites the world to build on its pipes via plugins and more recently, the roll-your-own GPT store. All are new kinds of information utilities that bring the internet world back to you.
Soon this functionality will migrate closer to the metal, becoming a fundamental component of all operating systems. Siri will find new life as a smart agent, a front end to Safari and connector of a new AI driven app world. Today’s world of discrete mobile applications will soon feel outdated and cumbersome.
In this light, the media shift to email delivery seems like a natural evolution. Email is fast, light, constrained and comes to you. Strange that twenty years of innovation of web media and adtech has delivered us to the humble email as media carrier, an end run around total Platform dependency.
All of this, of course, creates serious dislocation in a world where attention was monetized via ad placements and links on the edges of a federated network.
New money is like old money
Since the dawn of time, money has always found ways to interrupt attention flows. The AI future will be no different. New gatekeepers will have endless ways to channel economic opportunity. AI will centralize activity and constrain downstream traffic flow. Because it helps people make valuable decisions, it amplifies transactional potential. Who gets what will be a long term negotiation.
Today money flows from the search query to sites across the web via organic links and paid placements. Traffic flows to sites, SKUs and video. More and more of the economic activity is being trapped in the SERP (search engine results page). On a query like “How to buy an 8K TV”, your experience will look something like this:
Ask the same question inside of a chat-centered experience like Perplexity, admittedly in a nascent stage of commercial exploitation:
The “Sources” box and tiny inline references that tell you where the AI did the digging (the equivalent to links on a SERP page), will obviously not replace search referrals. They will be high value but will be light in volume. And, the better the AI is at meeting your needs, the less valuable they become. Why click when a personalized answer is staring at you.
Instead of organic / paid link inclusion inside of the search listings, look for monetization of 1. Assisted choices (sponsored Copilot); 2. Sources (equivalent of a search link); 3. Native product listings; 4. The “Related” queries that follow the AI response. These spots are the new gold, the new AdSense. Except, like the new AI content experience, over time more and more of a transactional process will happen next to chat.
The commercial power in the response is truly revealed in the “Related” section that follows the answer (4). The natural follow up to “Explain something to me” is “Here is how to get it” or “Here is a place with the best deals” and so on. Imagine taking that sponsored placement to an advertiser…
A future interface powered by AI will leave room for any advertising that “surrounds” the content. We tried this last time. It didn’t work very well.
There’s a simple fundamental rule with applications like these… the better they serve the needs of the user, the more integrated, “native”, useful and transactional advertising must be. Deviating too far from the customer’s need by cramming it with commercial offers will either open room for competitors with better free or subscription alternatives. Google’s exploitation of the SERP is forcing this kind of reaction today. AI is creating a new crack in the armor.
Media Darwinism
In the end, you can see all of this as an apocalyptic moment in media history or just a new chapter in how value is created in the human provisioning of content. In previous era’s the value of content creation was multiplied through a function of vast, tightly controlled distribution networks. The internet undermined this math by eliminating distribution costs and commoditizing the tools of creation. The next iteration will wipe out more of content that is just basic information processing, similar to how Wikipedia killed The Encyclopedia Britannica Company.
Advertising, the ability to bias flows through the network, will persist no matter if the flow is right side up or upside down.
And what of the consequences for media companies?
The winners here do what premium media has always done… focus on brand, on uniqueness, creatively exploiting the privilege of access / community and ruthlessly guarding IP from platform commodifiers. It seems to me we are currently experiencing a culling of the flock. An open internet let everyone be a media maker. Old media had distribution control as a velvet rope. We are currently experiencing a Darwinistic rationalization.
Once again, platforms that control the traffic flows and ad systems will benefit most, but opportunities always emerge for those that understand the guts of a new distribution system. Media is both exquisite craft and hackers domain.
All that said, should we be concerned when more and more of the world is delivered to us in an algorithmic feeding tube? That’s a question for another day…/ Troy