Without bandwidth everything sucks. But the big bandwidth problem is not the speed of your ADSL or your 3G connection. The bandwidth of human consciousness is the real bottleneck that slows internet access. Anyone who cracks this has a chance to be rich and powerful like Steve Jobs, Mark Zuckerberg, Page & Brin or Rupert Murdoch
The human bandwidth problem has googlesque implications for the sale of content and applications on the internet. One of the best surveys of the problem can be found in The User Illusion.
We are only consciously aware of about one millionth of the data flooding into our subconscious minds from our senses. Apple, Google and Facebook grasped the issue of human bandwidth better than any other companies. Their success might lead to a golden age for media companies like New Corp. That's the good news. The bad news is it might lead to the balkinization of the internet. The human bandwidth problem is easy to describe but close to impossible to solve. Apple cracked it, which is why the iPhone is so successful. Google cracked it too, which is why it is the dominant internet company.
When you're sat at a desktop you have the time to doodle around the internet. You don’t have that time when you use a smart phone or an iPad. This year, according to Ericsson, most access to the internet will come from mobile devices. Over the coming two to three years the number of users on the internet is likely to increase from 1.7bn users to close to 3 billion - nearly half the population of the world. The masses will not be able to use smartphones and other handheld devices unless designers crack the human bandwidth problem. Make access easy and quick. This will change the nature of the internet.
The future of the Web is all around us. It is Facebook, and Facebook Connect; it is Twitter; it is the Apps Store and maybe it's Google Buzz. It probably isn’t Google Wave because this service requires too much time to master, it is aimed at Geeks. The successful applications make life easier and more convenient in a way that Google search did for the desktop. Facebook Connect allows us to use our friends and contact group to filter our content. That is the neatest way of working with our bandwidth limitations. This method also allows Facebook to learn more about us so that it can better target content, services and ads. Better targeting is good for our limited conscious bandwidth.
This could mean that content companies will find it easier to get paid. First off, there is likely to be a bidding war for good content as the world fills up with mobile devices. When the iPad launched Macmillan books were pulled off Amazon's web site because the two companies couldn't agree a price for e-books. Instead, Macmillan did a deal with Apple. A day or so later Amazon relented and paid Macmillan more. This, I think, will become the sign of the times. There will be more bidders for content as the Android fiefdom, the Facebook fiefdom and the Apple fiefdom - just to name a few- need content to keep their customers satisfied.
And what of those customers? You can still get free music and TV problems on the internet so why bother with iTunes? The reason we do is that these services make it easy to download and pay for content. We trust the service and know that we aren't breaking the law.
Apple has a payment platform that works. The iPad will see the company expand this to other forms of content, such as newspapers, magazine subscriptions and books. This means that News Corp and content providers have a platform on which they can reach an enormous audience. In a world of specialist devices, like e-readers, iPads and smart-phones, it will be easier to get paid than in a world dominated by PCs. There is evidence that consumers find it easier to use a phone to pay for something than they do a computer.
From an investment point of view it's time to look at content again. As the internet becomes more dominated by fiefdoms, controlled by Apple, Google, Amazon, Facebook or someone else content is likely to become more valuable. Apple’s attempt to win Macmillan from Amazon is therefore a sign of the times. Some of the world's biggest media companies are selling on single digit PEs, have just increased earnings and are unloved. They also have good yields and global franchises.
The flip side of all this is that the Web is going to become more corporate. Each of us is going to have to make a Satanic bargain - ease of use and richness of user experience in return for a lack of privacy and freedom. Are you prepared to make that bargain?