It’s been 15 years since the Internet became a mainstream phenomenon
and began revolutionizing modern life in so many different ways — from
how we find information to how we communicate with other people to how
we consume news to to how we buy books and music to how we find a
compatible life partner. Along the way, the Internet has completely
upended entire industries, killing off or reducing many of the existing
power brokers, removing the middle men, and ushering in new leaders —
the digital powerhouses of the 21st century.
Still, it’s easy to forget that, from a broader perspective, we’re
only in the second or third inning of the Internet. There’s a lot of
transformation that’s waiting to happen in the years ahead.
In the same
way that the Internet has unleashed sweeping changes in newspapers and
magazines, music sales, and book sales, there are entire industries that
have been only lightly touched so far but are destined to be caught in
the eye of the storm eventually. Here are four of them.1. Movies
The movie industry has been under intense pressure over the past
decade as large-screen television sets have come down in price and high
definition movies have made the home experience feel more and more like a
small movie theater. However, the movie industry has been through this
before. The arrival of the television, the VCR, and the DVD were all
predicted to kill the movie theater at one point or another, but it
never happened for two reasons — 1.) Going to a movie is an experience
where people purposefully want to get out of the house, and 2.) The most
anticipated films still show up in the theaters months before they come
to pay-per-view, disc, and premium channels. The latter is the most
important reason why movie theaters still have such a strong business.
It’s all about controlling distribution of the content. That’s likely to
change soon. Hollywood is experimenting with the idea of selling movies directly to consumers at home
(streamed over the Internet) at the same time the movies arrive in
theaters. Of course, movie studios will charge a higher fee (possibly
$30). But, since many families already pay $50 or more to go to the
movies and others would rather save time and watch it in the comfort of
their own homes, there is definitely consumer demand for direct
delivery. Thirty dollars may be too high, but this will happen
eventually, and it will likely result in more people watching movies
from home than traveling to a theater. Theaters won’t go away, but they
will likely decrease in number and turn into much more of a premium
experience.
2. Healthcare
It’s pretty embarrassing that in 2011 we’re still talking about
automating healthcare. It’s an industry that thrives on the latest
scientific research and cutting edge equipment to improve people’s
health, but can’t adequately transfer patient information between
healthcare providers and remains snowed under an avalanche of
inefficient paperwork that drives up costs and wastes time — at least
that’s the case in the U.S. However, the U.S. government is trying to
push for an electronic medical record
(EMR) for everyone in the U.S. by 2014. Although this latest push has
already been over two years in the making, the details are still working
themselves out and there are some legitimate concerns about it.
Nevertheless, the move to electronic medical records — and a portable
EMR that the patient (not the healthcare provider) controls — is long
overdue. And, when it happens, it will not only shift the investment in
healthcare dollars away from old processes and products and into a lot
more IT systems, but it also has the potential to give patients more
ownership of their own healthcare experience, which could
have unforeseen consequences for pricing, provider choice, and provider
accountability. In short, this is a major industry game-changer waiting
to happen, and not just in the ways that the politicians are yapping
about (see: Memo to the health care industry: The jig is up).
3. Book publishing
Amazon has completely changed the way most people buy books, and it’s
done it in two ways. First, it made it fast and easy to buy books
online, and at a huge discount. Because of Amazon, book-buying was one
of the first things people become comfortable purchasing over the
Internet. A big part of that was because Amazon offered deep discounts
like the big chain stores, Barnes & Noble and Borders, but carried a
much larger selection of obscure titles like many of the independent
booksellers. Second, Amazon’s Kindle has popularized e-books, which
takes the process of delivering paper goods completely out of the
equation. Instead, the Kindle delivers electronic files over the
Internet to an e-reader, tablet, or smartphone. While this has been a
revolution for consumers, the Internet has done very little to
revolutionize the publishing process for books. It is still ruled by
publishing houses, who serve as the gatekeepers and filters for what
gets published and decide which titles deserve the most promotion (and
potential sales). However, just as it did for news publishing, the
Internet is about to completely democratize the publishing process for
books. The combination of e-readers, electronic audiobooks, and
print-on-demand have lowered the barriers to entry and made it so that
authors no longer need publishing houses. They can take their work
straight to the masses — or, more accurately, straight to their niche
audiences, in most cases. This completely changes the economics of book
publishing for an author by making it very profitable to sell only
5,000-10,000 books. In the old publishing world, that’s about the
average for most books and the author makes hardly any money and the
publishing house considers it unsuccessful (the big titles are
responsible for most of the sales and most of the payments for authors).
In the new Internet world, there are going to be a lot more books
published (as e-books) and lot more titles to sort through, but it’s
also going to become a much more democratic process and there will be
room for more people to make a living as niche authors. The traditional
publishers will morph into promotional agents for the really big titles.
4. Financial payments
It’s not that financial transactions have been completely unaffected
by the Internet. Stock trading has been totally revolutionized. PayPal
and eBay have had a major impact on the peer-to-peer exchange of goods
between people and how they pay each other for them. Most people now use
online banking to track their accounts, and a lot of them use it to pay
their bills. However, the way most people pay for stuff have been
largely untouched by the Internet. Most of us still carry a wallet full
of plastic cards with magnetic strips in order to connect with a
merchant and tell it which account to draw from in order to pay for a
purchase. That’s about to change, thanks to a combination of smartphones
and the mobile Internet. In what is sometimes called the “electronic
wallet” or “digital wallet,” consumers will soon be able to carry all of
their accounts as digital tokens in their smartphones and then
interface with a merchant to verify identity (with two-factor
authentication) and choose which account to pay from. There are lots of
systems and standards that are competing for a way to make this work.
Near Field Communications (NFC) is a technology that is designed for
this, but it requires new chips that would have to be integrated into
all future smartphones. Visa is running digital wallet trials,
but they’ll want to take their traditional cut of the action. I have to
think that both merchants and consumers will look for a way to cut Visa
(as well as Mastercard and American Express) out of the picture and
find a standard transaction system that can work using existing smartphones, which now make up 40% of all cellphones in the U.S.
(and an even higher percentage in parts of Europe and Asia). This
phenomenon will also make it easier for small businesses to quickly and
inexpensively go into business and be able to accept payments. So again,
this is the Internet having another democratizing effect on modern
society.
What else?
What other industries are still waiting to be transformed by the Internet? Post your picks in the discussion below.
