As the automobile industry sheds jobs, it comes as good news that over the last decade or so the Internet has created 1.2 million jobs, many paying higher salaries than average, a new study finds.
IT and related online business may be faring better in this recession than they did in the dotcom bubble of 2000-2002, still growing revenue but at slower pace.
Consumers are now making 10 per cent of their retail purchases online, with the exception of groceries, on the Internet, and Internet-based advertising has increased four-fold since 2002 to more than $20 billion, said John Deighton, a professor of business administration at Harvard Business School, and one of the authors of the study along with Hamilton Consultants Inc.
The study, considered independent, attempts to measure the so-called Internet economy. It was prepared for the Internet Advertising Bureau (IAB) in New York, which represents a variety of Internet and media companies.
It does not raise policy implications, but IAB officials said the data will help them make the case for self-regulation on issues such as privacy. Randall Rothenberg, president and CEO of IAB, said the report is the “first rigorous, comprehensive look at the size scope and impact of the interactive advertising ecosystem.”
Deighton said the finding could help make the case for a move away from employer-based health care, which he called something out of the Middle Ages, to a system that makes it easier for people to start new businesses without having to provide health coverage.
The study’s job estimate is based on people who work directly in building or maintaining the Internet’s infrastructure, conduct advertising and commerce over it, and other direct uses.
The number of indirect jobs supported by Internet-related activities may raise the total number of jobs by 1.54 million, or to slightly more than 3 million supported jobs.
E-commerce companies, as well as those that deliver the physical goods, were the major employers, with more than 500,000 of the 1.2 million jobs. Internet service providers followed at 181,000. Content-related employment was estimated at nearly 60,000, and software as a service, 31,500.
John Yaglenski, who runs the independent Walt Disney World travel information site Intercot.com, along with 35 volunteers, was at the announcement today and said that that regulation that imposes new requirements and restricts information collection could have a serious impact.
Yaglenski said he has privacy policies clearly outlined on his site and believes the industry is capable of regulating itself. “If the government steps in and regulates the industry to the degree that it has done in some other areas it could really affect our livelihood,” he said.
Apart from the Internet creating new jobs, it has also recently been the foundation of several innovative businesses – that have catapulted their founders to fame and fortune.
At times these ventures didn’t start out as businesses at all, but just as bright ideas.
For instance, Mat Honan, an associate editor for Wired, created his site BarackObamaIsYourNewBicycle.com as a funny present to his girlfriend.
But what started as a joke quickly became an Internet sensation.
And within days, two New York publishers called Honan to offer him a book contract. “I went out that very afternoon and got an agent,” he says, and ended up with “a nice five figure advance.”
And Honan’s success pales in comparison to that of the ICanHazCheezburger.com empire.
Ben Huh, the site’s CEO, is doing so well that he hesitates to talk about it. “I don’t want to flaunt my money while other people are having trouble,” he says sheepishly.
Begun in 2007 with a humble Web site for cat photos, Huh’s online operations have expanded into a conglomerate of nine popular sites requiring the attention of ten full-time employees.
That’s not even counting a “whole bunch of pet projects” that the company has going on the side, according to Huh. Instead of trying to create new memes, he pays attention to what’s popular and then either adapts it or buys it up.
ICanHazCheezburger was born to be a business, says Huh, who purchased the site in December of 2007.
“At the time, I had no idea what memes were, but on paper LOLcats made a lot of sense. It’s a low-cost business with very high loyalty. You can run it from anywhere, and you don’t need a lot of infrastructure.”
T-shirt and book sales make up only a small portion of the company’s profit, while ad revenue brings in plenty, Huh says.
This past April in Cambridge, Massachusetts, a very different crowd of meme makers gathered at the first annual ROFLcon – a convention celebrating the older generation of accidental celebrities made famous by embarrassing videos and unflattering photos.
Don’t Force It
If you are looking to create a profitable online business from scratch, you can’t just show up at a conference and start printing money.
Internet analyst and Quinnipiac University professor Alex Halavais warns,
“there’s no clear recipe for getting something to go viral.” He does, however, offer some general guidelines.
“It needs to be easily remembered and passed on… It needs to retain coherence. It can’t mutate too quickly. At the same time, it can’t be entirely stable.” That may sound complicated, but consider the “Where’s the beef?” phenomenon. “If it only applied to hamburgers,” Halavais says, “you’d be in bad shape.”
Since domain names are so cheap these days, Honan recommends just giving it a shot if you have an idea you think might catch on. It could go nowhere, or it could be the next Post Secret. If you don’t try, he observes, you’ll never know.
Hwang, on the other hand, suggests that aiming for sustainable Web growth and regular content is a more reliable model for profit. “Web comics are great for that,” he says, though they take a big commitment.
“Being Internet famous isn’t something that just happens,” he says. “It’s about the roll-up-your sleeves work of developing a community.”