Where’s All The Internet Money?

Andrew Sullivan —  May 29 2012 @ 3:18pm

Over the weekend, Douthat argued that the Internet has "created a cultural revolution more than an economic one." Ryan Avent counters:

[T]he web is a general-purpose technology, like electricity. Maybe some people imagined that the arrival of the web would launch an internet economy in which we all worked for internet companies producing internet. That's akin to a belief that the development of electricity should have given rise to an electricity era in which we all worked for electrical companies making electricity. Of course, there were big, successful electrical companies, just as there are big, successful internet companies; Google, the best example, is a hugely profitable, enormously valuable firm that employs tens of thousands of people. But the web, like electricity, is mostly a means to make the rest of the economy vastly more productive. 

Yglesias echoes:

[W]hat really makes Apple the great internet age commercial success story is that it sells complements to the virtual goods available on the Internet. The iPad is a lovely piece of software engineering and industrial design, but if the web sucked it would be a much less useful product.

The trouble with making the rest of the economy "more productive" is, of course, that it means higher levels of unemployment. What the web has done to the music, publishing and journalism business has been very very productive. So productive that the economic models behind all of them are now dead, along with the jobs countless people enjoyed because of such models. Yes, I'm an enthusiast for new media, etc, and wouldn't have started this blog twelve years ago if I weren't. But watching the industry I worked in collapse around me, and noting how online advertizing still hasn't made the crucial leap to resurrect it, I worry.