I get a lot of skepticism, even from technology enthusiasts, when I talk about the convergence of the Internet and video. People point out all the ways that TV is hard to distribute over today’s broadband and wireless networks, and all the business or regulatory challenges new entrants face in trying to replicate the businesses broadcasters and cable TV operators developed over decades.
That’s not the goal.

The Internet won’t completely replace television as we know it. Instead, it will mutate and extend it. Right now we’re seeing the long-promised “convergence” play out on two levels. Big phone companies are deploying digital platforms on fiber optic networks to compete with cable operators, who are rushing to add on-demand features in response. To me, though, that’s less interesting than the distributed, bottom-up activity around short video clips on the Net and wireless networks. One is about competition; the other is about transformation.

At some point, thanks to VOIP, most of the voice conversations we engage in across the network won’t be phone calls. (That’s at least part of what eBay/Skype is about.) Similarly, most of the video content we watch won’t be television. Those traditional forms will still be around, but they will become specialized, much like radio after the emergence of television.
This is what the incumbents can never appreciate. They are hard coded to assume that voice = phone calls and video = TV. The two great economic drivers of the communications industry, advertisers and users, will have no trouble adapting. AOL, Yahoo!, and Google, each in its own way, cracked the code for harnessing the text Internet as an advertising medium. Those companies, and perhaps others, are bound to do the same for the video Internet. Once they do, look out.

Media is changing. The likes of Napster and Google have, over the past few years, forced media companies to think hard about the business they are in. Media is being forced to change because the habits of users are changing. The Economist wrote in a recent survey on new media:

Last November, the Pew Internet & American Life Project found that 57% of American teenagers create content for the internet?from text to pictures, music and video. In this new-media culture, says Paul Saffo, a director at the Institute for the Future in California, people no longer passively ?consume? media (and thus advertising, its main revenue source) but actively participate in them, which usually means creating content, in whatever form and on whatever scale. This does not have to mean that ?people write their own newspaper?, says Jeremy Zawodny, a prominent blogger and software engineer at Yahoo!, an internet portal. ?It could be as simple as rating the restaurants they went to or the movie they saw,? or as sophisticated as shooting a home video.

This has profound implications for traditional business models in the media industry, which are based on aggregating large passive audiences and holding them captive during advertising interruptions. In the new-media era, audiences will occasionally be large, but often small, and usually tiny?With participatory media, the boundaries between audiences and creators become blurred and often invisible.