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More stories by this authorListening a few weeks ago to Silicon Valley venture capitalist John Hummer at the New York New Media Association's flagship "State of New York New Media" panel discussion, I began to have the sinking, vertiginous feeling that's normally associated with an acid flashback.
It wasn't so much that Hummer had a bearish opinion about Silicon Alley and it's ability to maintain its lead in the Internet space. That's to be expected from a West Coast guy. And it wasn't even Hummer's suggestion the local technology giant IBM is essentially irrelevant in the Internet age. That's the kind of hubris we've all come to expect from Silicon Valley. What set my head reeling was the sudden realization that, after four years of dizzying growth in the Internet media business, the guys from the coast -- the guys who grew up in the PC and software businesses -- still speak an entirely different language from the new media types on the East Coast. Frankly, they still don't seem to get it after all this time. Silicon Alley has always been less about New York as a location and more about an idea, the very New York-centric kind of idea that the Internet business isn't a technology business but a media and communications business. Here in the media capital of the world, it was obvious from the start that creating value in the Internet business wouldn't be about developing and owning new technologies, but would be about developing and distributing new modes of expression that use Internet technology -- and then taking advantage of the audiences created in the new medium. It's a hard idea to grasp for people who created a lot of wealth in the PC explosion of the 1980s and early 1990s. Money was made during the PC revolution by owning patented pieces of software code or chip architecture and building businesses around products that exploited those patents. The Internet industry is all about creating value by drawing a crowd. Its business models are media driven -- subscription fees, advertising, direct marketing. Now no one cares about platform. Microsoft's control of the desktop is increasingly irrelevant in a world where the Web, e-mail, PCS phone, Palm Pilot, and kiosk are all valuable platforms to be used to move Internet information around. It wasn't just a quirky twist of fate that America Online, an East Coast digital media and communications company, devoured Netscape -- once the vanguard West Coast Internet technology company. It was the inevitable endgame of a changing of the guard that's underway, a shift in the balance of power away from technology and towards media in the Internet era. The idea of Silicon Alley -- the notion that the Net is a platform for communications, not technology business -- has become received wisdom, an obvious fact. The side of right has triumphed over the powers of evil. That's the good news. Here's the bad news: Now that every one in America (that is, everyone outside of a handful of rear-guard Silicon Valley sourpusses) has come to the awareness that Internet industry ain't about technology, Silicon Alley's in for some seriously challenging times. 'Why?' you ask. New York is still the international media and advertising capital. And Wall Street boys have awakened to the Internet media thing too. They're all here. What could possibly go wrong? Here's the problem: Traditional media companies and traditional media thinking has produced very little value in the Internet age. Just as the urge to hold on to patented code has hampered the ability of companies like Microsoft to adapt to the Internet age, so has the urge to hold on to a kind of controlled audience relationship and mass advertising model hampered New York's old line media players from being successful on the Internet. And, although the Silicon Alley explosion came about when some very creative people set out to recreate media and an interactive, audience-empowering, service experience, lately the massive consolidation and retrenchment has driven those companies into conceptual retreat. Today, the leading companies in Silicon Alley are companies like DoubleClick -- essentially a traditional media buying and rep firm retooled for Web ad delivery -- or Internet advertising agencies. The fearless creative thinking that sparked the Internet explosion in New York has given way to the dull, stock market driven chase to squeeze as much new business growth out of every quarter in order to justify an IPO.
Current revolutions in Internet communications are growing up organically across the Net without the input of Silicon Alley. Take, for example, the Net's hottest trend, MP3 music distribution. Seems like a natural for NY, no? I mean, New York is the capital of the record industry. There are more music venues and artists here in a mix of genres from early music to avant punk than anywhere else in the world. But the explosion of grassroots innovation in the MP3 space is taking place not here and not in Silicon Valley, but in college dorms across the hinterlands. The fact is that now that Silicon Valley has provided the nation with the hardware and software, and Silicon Alley has provided the nation with the idea of Internet as media, the world at large doesn't need either one of us any longer. The only way Silicon Alley is going to maintain its leadership role in the Internet explosion is for Silicon Alley to maintain its role as a hotbed of Internet media experimentation. Only then will we have a decent answer for the John Hummers of the world. * Jason Chervokas is co-editor and publisher of @NYLATEST NEWS
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