The Scary Fast Rise of the Second Internet
The First Internet – circa 1994 – 2009 – is pretty much history, according to Los Angeles-based Wedbush Securities. Much of what we see online today is the lightning fast evolution of the Second Internet, which Wedbush calls “The Social Internet.” And, it is changing much faster than Wall Street, the news media and many of the more established brands and corporations might have anticipated.
The landmark research paper from Wedbush takes a look at it this way:
- One Million B.C. – 1993: The Offline World, moved slowly, major winners included Walmart.
- 1994 – 2009: The First Internet, moved much faster than The Offline World, major winners included Amazon and notably few of the winners from The Offline World.
- 2010 – ????: The Second Internet, moves much faster than First Internet, is much bigger than the First Internet, major winners include such companies as Huffington Post, Quora, Zynga, Kabam … and surprisingly few of the winners from the First Internet.
Wedbush believes that that most First Internet winners will not transition to become Second Internet winners, partly because the new and more social media-oriented players have a significant head-start while the more recognized First Internet leaders are asleep at the wheel.
credit: Wedbush Securities
Wedbush says successful Second Internet companies are powered by similar features, including:
- Platforms open their API to developers, giving code developers essential building blocks to enhance a site or application.
- Continuous and rapid pace of innovation (such as Facebook and Huffington Post).
- The company/brand must listen to the dialogue and participate with customers.
- Customer contribution is a large percent of the value/experience.
- Every customer has a personalized experience.
- Social graph connections drive discovery rather than search.
Not surprisingly, old and more traditional conventions – such as advertising and typical public relations – are less influential or effective in the Second Internet unless cleverly integrated with online shared content, comments, news, photos, video and discussions … and a greater “voice” for stakeholders.
What I found to be particularly interesting was Wedbush’s explanation of how Huffington Post has exploded to become one of the leading online news sources, eclipsing most other more traditional news organizations and challenging even The New York Times.
Wedbush shows how a typical Huffington Post lead story may be written by the AP, with content coming from CNN, Reuters, Fox News, MSNBC and others. People can debate the quality of the content, but you don’t become the thirty-third most trafficked site unless a lot of people approve of the content you are providing. Much of Huffington Post is driven by cleverly written search engine friendly headlines and the social media connections of users.
Click here to download a PDF of the Wedbush research.
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I see many similarities between what is being termed first and second internet companies – many of which I use both of still. While I think the social aspect of these companies is important I would argue that it is not the big game changer for many sites. Rather I think the article touches on a major point of change in internet software – Open APIs. This single change allows for the community to actually shape the site and services offered rather than waiting for the company to allocate resources to follow what the community has asked for. Open APIs change software from being reactive to proactive – this is a huge game changer.
Breanna,
I tend to agree with you.
David
WOW! I had no clue there was a differentiation or even a definition that is 1st and 2nd Generation Internet. I think I’m most intrigued by this idea but what I’m fascinated most about is the quick rise of Huffington Post. Considering the fact that the NY Times and Wall Street Journal have been around even before the rise of any form of internet, it definitely is a shocker to see how quickly HP has climbed the charts. I like the idea of how they operate though. It really makes sense to me because a lot of what works for the internet today, is the idea of being interactive. Huffington Post is definitely the most interactive of all news sites online.
While I personally find myself running towards the NY Times first, there are days where I can spend hours just reading what HP has to offer simply because of the fact that they generate news that is heavily searched by search engines. And yes, the most interesting part of all of this, is having the ability to debate the content. Not only can you sit and claim that XYZ is correct or incorrect but can even oust the news because it may just not appeal to your sensibilities.
I’m not sure if I agree with your claim however, that 1st generation internet leaders are “asleep”. I am an avid CNN.com fan but I think that has something to do with the fact that I like them as a newschannel on the television. If they do “wake up” then perhaps, they will be able to catch up. Until they, they’re just left behind while others are racing ahead at an insane speed.
Lovely insight! I’m enlightened!
The second generation internet of social websites clearly has an advantage over the first generation in that it is addictive. It does not however mean that first gen websites have to go under or disappear. Google will have a huge role to play in organization of the “tidal wave” of information as the research paper This Week in Social Media: The Second Internet, http://www.wedbush.com/weekinsocialmedia/TWISM_SecondInternet_2011-03-24.pdf
After reading this over I have decided that the graphs and charts are skewed in order to make a point, especially the section on gaming. The model works for casual gamers. However it does not take into account that most people that play video games on the pc or a console do not take Zynga games seriously. There is a chart in the research paper that breaks down traditional gaming vs. “the new model”. There are six columns: discovery, platform, access, market, pricing and engagement; the only column that was correct about traditional gaming was the platform. Yes, you need one. The basic claim is that traditional gaming is not social, which is not the case.
Some aspects of this blog and the research paper are credible but the graphs are cut to math points they are trying to make. It’s no wonder that the research paper raves about facebook, but that’s because the publisher, Lou Kerner, owns shares in the company.
This was a very interesting article. I had no clue that the internet broke into a generational gap. However after reading this, I do see the very vast differences between today’s internet, and the ‘internet’ that was around when I was growing up.
Unbelievable Progress!
The post’s account of the internet’s advancement is very insightful. It creates a time line and list of pre-internet powerful entities as well as the First Internet wave ones. The article’s distinctions between these companies, their resources, and their methods clarifies the reason behind all the recent and incredible progress. It is very enlightening for me to see the outlining of those successful features: innovation, personalized client interactions, focus on the utilization of the users’ social media connections rather than searches. These highlighted aspects would be great to consider in the near future if another start up company was interested in coming up to par with these Second Internet power beasts, e.g. Quora, Kabam, Zynga, and Huffington Post.
My only question connects back to a comment posted about Huffington Post. You state:
“People can debate the quality of the content, but you don’t become the thirty-third most trafficked site unless a lot of people approve of the content you are providing. Much of Huffington Post is driven by cleverly written search engine friendly headlines and the social media connections of users.”
I would argue whether one can truly justify a site’s credibility soley based on its large fan group. As you state, the attraction toward Huffington Post may be a consequence of its clever headlines and the connections of its users. It is possible that the users may not believe in all the stories but are just curious and wish to share them with friends for discussion of their validity. Nevertheless, I appreciate this post for its wonderful job of articulating this unbelievable phenomenon of the Second Internet. It is astonishing to make the comparisons and see that sites such as the Huffington Post have become so powerful that they almost beat the NY Times (last Figure)!