Just as I was about to perform my punditry duty, or, if you will, exercise my pundit’s right to predict the future (without any consequence whatsoever for predicting it wrong), an e-mail from PredictIt.com crossed my desktop. This was not entirely kismet because the company is eager to get media coverage and sends lots of press releases and promotional announcements to me (and I assume to countless others).
PredictIt.com is “the leading provider of user-generated prediction services on the Internet.” Its “innovative patent-pending system objectively measures, identifies, and ranks users” – whom it calls “analysts” – “based on their prediction performance in event categories such as sports, finance, politics, and entertainment.”
It is, in a manner of speaking, sort of a test for pundits. And PredictIt actually pays you the righter you turn out to be – or, that is, the more people who think you are right, and hence, the more people who consult your predictions (in other words, the more page views you generate), the more PredictIt pays you. “A cash reward” is the phrase. If you think this through, it suggests a whole new type of media model for people who do what I do – why not measure our predictive intelligence? Just calculate it out (this time, a year ago, I predicted AOL would buy CBS – no cigar). Rate me.
Naturally, I start to wonder if PredictIt can help me predict the answer to one of the New Year’s most pressing questions – when is the Internet boom going to end? (At the same time, I find myself thinking that I can safely predict the end of the boom because of the existence of dopey companies like PredictIt.)
But predictably, I can’t figure out how to work PredictIt. The site is much more lucid about the complexities of its business model – how its sticky content (a particularly sought-after Internet oeuvre) will produce a growing mass of daily page views – than it is about how exactly to get it to make a prediction. While I wait for my wife to see if she can successfully get PredictIt.com to predict something, I proceed the old-fashioned way:
Amazon.com will be the Atari of the Internet. This possibility is not as funny as it could be because Atari is largely unknown to the present Internet generation (a sixties fashion label, my daughter guessed). But in 1982, at the dawn of the personal-computer revolution, Atari was as iconic and as admired and as economically significant as Amazon is at this moment (fact checkers, I know, will find this hard to accept – but trust me). And then it wasn’t. It was out of business.
“A handful of Internet companies account for the lion’s share of Internet value and the others exist in a state of sickening precariousness, hoping for some salvation before the certain date when they will run out of cash.”
Such a condition, wherein reasonable men can argue the merits of whether one particular enterprise will be among the most successful of the age or washed up within months, is existential. And weirdly unbusinesslike.
And indeed, Amazon is not a business in any conventional sense – that is, with any timely profit and loss obligations (Amazon’s Jeff Bezos recently remonstrated that if it weren’t for all the promotional costs, the company would be profitable; to which old-media wunderkind Strauss Zelnick observed: “And if my grandmother had wheels, she’d be a bicycle”).
The hundreds of millions of dollars spent by Amazon and its compatriots in the dot-com uprising during the Christmas quarter have a vastly more profound goal than just to sell merchandise. They call it brand-building, but that is a semantic misunderstanding. What is going on is the creation of symbols. Amazon and company are trying to make the case that they represent the future. Think Amazon, think the future of retailing.
It is like politics. Investors, like contributors, will put up more and more money if they think they have a winner. It is like war too. The dot-com companies are out to win our hearts and minds. They want people to believe in the rightness, the inevitability, the saving grace of this new form of economic activity (socialism was the new economy at the beginning of the past century).
A big danger here for the dotcomers in waging their war is that they’ll spend more of their energies and resources on creating the illusion (or delusion) of success than they will on the actual prosecution of strategic goals. The enthusiasms of the beer hall on one hand versus the reality of the Russian front on the other.
It’s not so far out on the predictive limb to surmise that most of the advertising dollars spent this past season have been wasted. There may never have been more ill-spent money for more foolish commercials (many expressing an inchoate hostility, if you ask me).
Now, undoubtedly Jeff Bezos and his mother are pleased that Time has chosen him as Person of the Year. But, in fact, this ought to be a little worrisome too. For one thing, Time has astutely changed the nature of the symbol. In Time’s story, Amazon stands less for the future than for the bubble – as Amazon goes, so goes the economy (what infamy Jeff Bezos might well have to bear). For another, the Time selection is as good an indication as any that a peak has been reached, a pinnacle attained. There aren’t too many places to hide after Time taps you.
As for me, the first time I opened Amazon to its familiar depersonalized personalized greeting and got offered a power tool, I knew what my prediction was.
It’s the media, stupid. Now, the same temptation that may bankrupt the Internet industry – to buy household recognition through television advertising – has, of course, bankrupted politics (morally, financially, and intellectually).
The justification for spending such sums is that television is the way to get known quickly, to establish credibility and play with the big boys, etc. But it is, as everyone not on television knows, just a big ego trip too.
Me, me, me.
The Gore offer (or gambit, or bluff) to suspend television advertising for the duration of the primary campaign was, motivation aside, quite possibly the most important contribution to politics since, well, the advent of television. What’s more, it turned a difficult, obtuse administrative issue – campaign financing – into an easy-to-grasp, emotionally appealing one.
Simple. The problem with American politics is television advertising. That’s why campaigns cost so much; that’s why politicians have to sell themselves to God knows who. Television (and radio) advertising corrupts politics not only because it costs too much but also because it is stupid, inane, wasteful, and boring. Who would disagree?
So there’s your issue. Get rid of television advertising. Or make it free. Everybody gets the same amount. (If everyone had the same amount, the advantages of television advertising would disappear.)
Gore will make his no-television challenge to Bush in the general election, and on this sexy anti-media issue, win.
Cash is king. The folks who benefit the most from political and dot-com advertising are, even more than the winning politicians, indeed even more than paper billionaires, the major media companies. They don’t even really have to sell this space. They don’t have to convince these eager buyers that advertising on TV will earn more than it costs (as, say, you would have to convince McDonald’s, or the Ginzu-knife people). Just like the political-ad buyers (if you’ve got it, you spend it), dot-com buyers are begging to buy this time (fighting for it! bidding for it!). Do you have any idea what the margins are on this kind of effortless sale?
There is an interesting reversal here. Because just at the moment careful marketers were judging network television to be wildly unproductive, the dot-coms (those theoretical harbingers of next-century target marketing) came along and give the networks a major cash infusion.
Again, like politicians, dot-comers see themselves as having one shot, so the marketing analysis that is applied is not cost/return but do or die. Indeed, like politicians, the dot-comers are not, in any conventional sense, marketers. They are gamblers.
Therefore, it is a logical prediction that in the same way the media took over politics – politicians devote most of their time and energy and influence to not only performing for the media but actually paying the media – the media, the old media, takes over the dot-com business (as with politicians, the dot-comers’ most important job is getting their name in the paper).
This happens because the dot-com companies, heretofore rich on paper value, will have run out of actual money (in fact, will have given their money to the old media), and if – or when – the stock market falters (remember, e-commerce companies support themselves not by selling products but by selling securities), old media will be able to buy new media for, well, cash.
So there it is. Old media buys new media in 2000. The circle is unbroken. Viacom-CBS buys AOL.
my wife, having made a diligent effort, says she can only get PredictIt.com to make sports predictions (if you think about it, she says, sports predictions are probably where the money is).
The company’s CEO, one Andrew Merkatz, returns my call from his holiday in Colorado. In fact, he says, while they’re going to be doing the stock market, and entertainment, and politics, while that functionality is all part of the big plan, only sports works so far (they’re developing “my PredictIt” too – a tool that allows people to collect predictions from their friends, families, and officemates, like “When is our boss going to get fired?”).
But big plans aside, the truth is, Merkatz explains, PredictIt.com, even though it’s a public company, is a little strapped for cash. “It’s hard to raise money,” he says, a bit of honesty that strikes me as a bracing New Year’s tonic.
The story, after all, of dot-com fabulousness, of ordinariness to riches, of Jeff Bezos turning a hope and a dream and a business plan into $10 billion, is a media confection.
We – we the media – love this story. We love the story of success (the fact that a handful of Internet companies account for the lion’s share of Internet value – one percent of the 400 public Internet companies account for 40 percent of the Internet’s $900 billion value, the Wall Street Journal reports – and that the others exist in a state of sickening precariousness, hoping for some salvation before the certain date when they will run out of cash, is beside the point). That we tell this story so often, and so well, helps move the market – it may in fact be the single greatest market mover. The media is the market (indeed, Wall Street likes nothing better these days than a company with a “good story”).
But for the media, a story moves in one direction, until, by the rules of storytelling, the rules of how you hold your audience’s attention, the story has to shift – this is called the reversal. George W. Bush is now approaching his reversal – whether it will be a temporary reversal or a dramatic, unforgiving descent, we do not yet know. But, similarly, the Internet and the new economy, having become so predictably successful, will have to reverse sooner rather than later. That’s how a story goes. We love Jeff Bezos’s $10 billion, but we will love it as much when he loses it. And that he will.
E-mail: michael@burnrate.com.