How the Internet is Killing Our Economy

The United States is facing the most challenging economic crisis since The Great Depression of the 1930's. And if you ask me, the greatest technological invention ever, the Internet, is in no small part responsible. In fact, I believe the Internet is not only killing our economy, it's shredding our social fabric as well.

To be sure, the Internet is an incredibly useful medium. It's been a genuine paradigm shifter, altering the way we communicate, research, travel, shop and organize, educate and entertain ourselves. It allows us to do all of these everyday tasks faster, more efficiently and more cost-effectively...often times even free. And therein lies the gargantuan problem of the Internet.

As someone who's formed and runs a few businesses, I can tell you firsthand that free is not good. Free never shows up on a P&L or a balance sheet. Free doesn't fatten the company's coffers and allow for growth and expansion. And you can't pay bills with free. In short, and to use the vernacular of my 16-year-old son, free, in business, sucks.

Yet, the Internet is all about free. We can get our newspapers and magazines for free. We can watch televisions programs free. We can download movies and music free. We can book our own travel, send free mail, make free phone calls, send free greeting cards. We can, thanks to MySpace, Facebook and Twitter to name a few, even socialize for free, never having to leave the house or spend one red-cent actually socializing the way truly sociable folks used to.

Think about all the businesses, all the people, who've been slammed by this economic black hole called the Internet. Consider how much money has literally been sucked out of America's GDP by this rapacious beast which resides in our laptops, PC's, iPhones and Blackberries. Look how it's destroyed the music business, travel agencies, the publishing industry. It's killed the movie after-markets, like DVD. Look at the strikes it's caused in Hollywood, because somehow studios think that viewing content on a computer screen instead of a TV screen somehow gives license to screw writers out of their residuals.

Think of all the money not spent in cafes, bars, lounges, restaurants, clubs, video stores, and book stores because of the proliferation of impersonal, intimacy-starved social-networking sites and free-content sites. Somehow, when it came to the Internet, businesses decided the only way to truly attract a scalable audience was to give them everything free. But now that the economic shit's hitting the fan, our corporate titans may be coming to the long-overdue realization that capitalism and free are about as successful a marriage as Karl Rove and Queer Eye's Carson Kressley.

Just this week one of those corporate uber-moguls, Rupert Murdoch, announced that his News Corporation will begin charging for content on his newspaper websites within a year in a direct answer to what he calls the current "malfunctioning" business model. Citing the enviable success of the Wall Street Journal's growing online subscription revenues, Murdoch said that newspapers were experiencing an "epochal" debate over charging consumers for content. Murdoch's a guy who likes to make money. I'll bet he'll make it all work and have the last laugh. Hopefully, others will follow suit.

I'll say it again: free sucks. Nobody can make money by giving their products and services away for nothing. There can be no profit without revenue. And without revenue all you have is expense, which leads to bleeding red ink. The more people like Murdoch who wake up and smell the cyber-coffee, the sooner our economy and our once-thriving capitalist society can get back on track. When companies and individuals make money, they spend money. Just because a business operates online doesn't mean all that good old fashioned Wharton Business School stuff doesn't apply. Let's keep all the speed, the ease, and the efficiency of the internet, but how about making people pay for it all, just like everywhere else? Duh...

Comments

[Sinick]

You are absolutely right! Appealing to the lowest common denominator, "free" or "what's in it for me" cannot continue. "I want to pay no taxes," "I want everything for me," I want everything for free" (while handed to me on a silver platter), "I want the biggest house, car, etc., etc., simply perpetuates the basic human desires that we are born with (I am an infant, and if you don't pay attention to me, I will die and your genes along with it).

We cannot continue with this canon and I do my part by tolerating pop-ups and ads so that the provider of the valuable information that I am about to peruse deserves to make a living.

As much as I dislike Rupert Murdoch, he is right. Meanwhile, I am waiting for a worthwhile method for getting my news fix in a timely manner and highly disappointed that the Kindle 2 will only be offered to those that cannot get local delivery of the traditional analog news.

I value the expertise of the writers at the NYT but cannot comment on most of the articles. To me, the HuffPost offers far more value because we readers can pitch in and offer some perspective.

In summary, everybody involved needs to wake up, stop the whining and actually do something about it.

[SamSeven]

"I'll say it again: free sucks. Nobody can make money by giving their products an services away for nothing. There can be no profit without revenue. And without revenue all you have is expense, which leads to bleeding red ink. The more people like Murdoch who wake up and smell the cyber-coffee, the sooner our economy and our once-thriving capitalist society can get back on track. When companies and individuals make money, they spend money."

I cant believe what I am hearing.

Free is not good and Murdoch is correct in charging for a 'free internet.'

Sir, frankly, then you dont believe in netfreedom. You want us to pay a toll for everytime we go on the internet like cable. Frankly, it will kill the internet if you charge for it. You will have those who can afford it and those who cannot. This is the same in soceity let the rich be richer and poor become more ignorant and poor.

The reason why the Newspapers are dying because they are controlled by a handful of individuals who have a virtually monoply on the information. The NYT, the Boston Globe, LA Times, etc, actually told the TRUTH to what as happening in the world and real corruption taken place in their country and around the world then they wouldn't need the US government to bail them out.

[gypsy508]

When you are willing to become part of the anarchist revolution yourself and work every day for free, then I will agree with you.

[PopeRatzo]

Andy, even with all the "free" downloads you describe, Hollywood is making money. They're doing better, much better, than the average business in the US. It appears that all the dire predictions were false.

Plus, I've noticed that all the "free" newspaper and magazine web sites have advertisement. If that's "free" then I don't understand how CBS, NBC and ABC have made such huge profits.

I hope you didn't write this article just for a pat on the head from your superiors.