Interesting. And so what does this mean for The Cable Game?
But first, a few comments on the chart above. What jumps out is the relative insignificance of e-mail, as a total of all Internet traffic. E-mail is represented by the light green in the middle, and as we can readily see, it virtually disappears as you move from left to right, covering the period 1990-2010. Other losers are FTP (orange), which was an early way to transfer files. And yet another loser, at least in terms of share, is websurfing--the red at the bottom.
But wait just a second: Such a chart is, in a way, misleading, because according to Andrew Odlyzko of the University of Minnesota, traffic on the Net, just in the US, soared from 1 terabyte to as much as 140,000 terabytes in a dozen years, through 2002.
And, Odlyzko suggests, the Net has been growing at 70 to 150 percent every year, which means that the Net might be 100 times as big today as it was in 2002.
Which is to say, there's no comparison between a given share of 1 and a given share of 100,000,000. One percent of 100 million is still a million times larger than 100 percent of 1. So it might look like e-mail has disappeared, but it hasn't--it's way bigger than ever; it's just that other things have grown way way way bigger than ever.
One of those way-big winners, as we see, has been video. It has gone from virtually zero in the mid 90s, to 51 percent of total internet usage in 2010. And as we have seen, that's 51 percent of a huge number.
OK, so that's useful contextualization of that chart.
Having said all that, Anderson might well be on to something when he says that apps and other kinds of "walled gardens"--think Apple iTunes, Kindle, etc.--are the wave of the future, at least in terms of gaining share.
And so that suggests that companies are well advised to invest in apps and other kinds of "walled gardens."
And so what does this mean for The Cable Game? I think it means that strong brands that can extend themselves, in a big way, into apps, will do fine. And it's in apps where real money is found. Apps are, after all, another word for paywall. But they are better than a paywall, because if you can convince a consumer to stay within your walled garden/paywall/app, then you've got a great and valuable customer. But if the leading brands can't or won't offer a quality service, then others will.
When the business model changes, the leaders in the old model have an obvious head start in the new model, but history says, they usually blow it. That is, they can't change from one way of doing business to another. Western Union, for example, never became either a phone company or an Internet company. Clayton Christensen wrote a whole book on this, "The Innovator's Dilemma."
