In the throes of a d-volution

In Yogi Berra’s immortal words, it’s déjà vu all over again. 2004 opens with more than a whiff of 2000 – which is to say, a booming, burgeoning internet industry.

The difference is that this time there will be no bust. I say that so confidently because every business person I talk to, no matter how much things have perked up, remains stubbornly cautious. They seem to have been taken by surprise, as much as everyone else, by the strength of the resurgence, which began last spring and has gathered considerable momentum over the past couple of months.

Online holiday sales, breaking yet more records, are just one of many indicators that the much derided “new economy” is back on track – and with a vengeance. Music downloads from the Net is another. In the US, digital music – and we’re talking legitimate, paid-for downloads rather than file swapping – has now officially overtaken the number of CDs sold. Sure, people expected this landmark to happen one day, but so soon?

Then there’s Kodak’s announcement last week that it will be making massive redundancies because the speed of the revolution in digital photography is rapidly making dinosaurs of the traditional photo processors. As with digitally downloaded music, digital photography is now officially bigger than traditional photography in the US. In both these trends, and most others in the digital domain, the UK lags behind the US only by a whisker.

Over the Christmas holiday I re-read Being Digital by Nicholas Negroponte, professor of media technology at Massachusetts Institute of Technology. Written in 1994, it turns out to have been very prophetic. The dramatic downturn we saw between 2000 and 2003 now looks like a mere blip at the beginning of a vast revolution, brought about by the mass migration of atoms (physical objects) into bits (digital formats).

A perfect example: increasing numbers of people are now giving up newspapers (atoms) in favour of online news (bits). The Independent and The Times are trying their best to fight this by promoting their new tabloid formats as the ultimate in portability. Good luck to them.

Last year I made repeated mention of wireless internet and Bluetooth – another form of wireless connectivity. Both will become mainstream in 2004. Just like broadband, once you’ve experienced wireless, there’s no going back. Notebook computers will also continue their ascent, taking over from desktops as true personal computing gains ground.

Internet-based telephony is also set to disrupt the telecoms industry this year. People are already making long-distance calls free of charge by using the voice feature on instant messaging software. Now the makers of song-swapping software KaZaA have entered the fray, with a free application called Skype.

Radio is being reinvented by the internet. There are now huge numbers of people whose “local” radio station, that is, just a click away online, may be geographically located across the world from where they are sitting.

I’ve never considered myself an early adopter – more of an early mass-market person – but I look at the fundamental shift in my own consumer behaviour over the past year and I can’t help but see this as an indicator of enormous societal change.

For instance, all of my banking is now done online; as is all of my interactions with utility companies and stockbrokers; most of my e-mails are accessed and stored online (the Web) rather than actively downloaded to my computer; and I now use a digital tape recorder rather than an analogue one, since it stores infinitely more and downloads files to a computer for easy storage, filing, access and transfer.

I’ve been using a digital camera since mid-2000 and thus store all my photos digitally. I have transferred all my music into digital format and now would only consider buying music that is downloadable from the Net. Soon my home videos will be converted from analogue tape into a computer-readable digital format.

I may be slightly ahead of the curve, but I know from both anecdotal and empirical evidence that I am moving in the same direction as most people. As Bill Gates said at a major industry event the other day: “Digital entertainment is not just for enthusiasts any more – it’s a major part of everyone’s life.”

The implications of being digital are so enormous that sometimes it is dizzying. For one thing, your life becomes a good deal less cluttered, as physical objects begin to disappear. Have I really, you wonder, just stored years’ worth of photos and music in something the size of a matchbox?

But perhaps even more radical, and of more importance to marketers in the digital age, is that the whole concept of ownership changes.

The old, atoms-based paradigm told us that it was good to own things – the more, the better. But in the new, digital paradigm, we don’t need to own them; we just need to be able to access them. Why own a huge leather-bound set of Encyclopaedia Britannica when you can have a tiny Google box in the bottom corner of your screen?

Which brings me to my final point: scarcity isn’t what it used to be. So much of yesteryear’s marketing was based on scarcity – the perceived value of something conditioned by its lack of availability. Well, that just won’t work for the digital age. Today it’s about service, innovative ideas and lateral thinking. There are so many new “markets” out there waiting to be conquered. They may seem “virtual” today, but already for people like me they are much more real than, say, a newspaper – whether broadsheet or tabloid.