Industry Overview: Internet and New Media

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Posted by The Editors on December 3, 2012
Overview

It's mind-boggling to think that, up until a decade ago, the Internet was nonexistent or in its very early stages. In the early days, e-commerce was touted as a pipe dream-people would never give up shopping in stores in favor of putting their credit card numbers out into the electronic ether. Too dangerous.

Yeah, right! Just tell that to Jeff Bezos, founder of Amazon.com, or Meg Whitman, the CEO of eBay. Today, companies are selling products, publishing, and broadcasting online like crazy, to the tune of $220 billion in 2006, a 25 percent increase from the previous year. And the nature of the demand is shifting: For the first time, in 2006, apparel outpaced computers in online sales, totaling $18.3 billion. Ten percent of all clothing, shoe, and accessories purchases occur online now.

Of course, online sales and publishing are just the tip of the iceberg. Add job search services, online gaming, distance learning, and all of the other things you can do online, and you have an incredible electronic marketplace with virtually no geographic boundaries. Every day, people are finding more ways to connect and sell online. Just look at companies like YouTube, MySpace, and Facebook, which all sprang up in the last five years. Each are now multi-million dollar companies. In YouTube's case, add a "b" to that descriptor-the free video sharing site sold to Google in October 2005 for $1.65 billion.

We've all heard about the early 2000s' dot-bomb days-when ignoring the fact that companies actually have to make money to succeed caught up with greedy site creators and investors-but that turned out to be just a speed bump. Today, marketers are investing heavily online and ad revenue is up significantly. In the first six months of 2007, online advertising revenue was about $10 billion, up 26.4 percent from the same period the year before. A big part of that is generated by online search giant Google, with its targeted search result and site advertising programs. However, heavy spending is also being made in online direct marketing-creating very strategic, optimized campaigns that run at specific times on specific web sites, backed by email programs. Customizing ads based on user identity and preferences, fueled by "cookies" which track users' preferences, is part of any well-executed online campaign.

Far from being a mature industry, the Internet remains a space of opportunity. Convergence (the coming-together of various technologies-for instance, the cell phone that also serves as a gaming console, a global positioning system [GPS] device, and an Internet access device) and the human imagination should continue to create opportunities for almost any type of company.

Wireless Connectivity
Increasingly, Web surfers are accessing the Internet via wireless devices, be they Wi-Fi- or Bluetooth-enabled computers, cell phones, or personal digital assistants. Tech-savvy municipalities such as San Francisco and Philadelphia are playing with the idea of blanketing their neighborhoods with wireless hot spots, in effect making wireless Internet access possible anywhere within their geographic confines. With web-enabled phones and cellular Internet access, connectivity is now an anywhere, anytime proposition. In response, Web companies are increasingly recognizing that they need to optimize the content and functionality that they offer to users of wireless devices.

Web 2.0
Lots of people are using the phrase "Web 2.0" these days. Some companies are using it more as a marketing buzzword, to indicate that what they're doing online is distinct from what many now-failed dotcom companies were up to, in terms of their business models, back in the 1990s. Other folks are using the phrase to describe new and evolving kinds of websites and Web activity, including blogs, online video, interactive features in online communities, syndication systems (by which Web surfers can subscribe to various websites and blogs, receiving notice whenever those sites are updated with new content), user-created content tags that allow users to categorize and search for content by highly specific terms, and software that is accessed and used via subscription over the Web rather than being installed in the user's system.

While there isn't much agreement on the term's precise definition, that doesn't mean there aren't major changes taking place in terms of how people use the Internet-in most cases, having to do with increasing interactivity and customization options for users. In the "old days," websites consisted of fixed, static pages that were relatively rarely updated and did not offer much in terms of dynamic interaction with users. Perhaps the best way to talk about the Web 2.0 concept is to talk about what it's not. For instance, it's not Britannica Online, which is merely a reproduction of the print encyclopedia on Web pages. It is Wikipedia, a highly dynamic, user-created online version of an encyclopedia. Whether the term is hype or has substance, it's something you've got to know about if you want to be up to speed in terms on what's hot in the Internet space.

Video
Broadband access-now in a little more than half of American homes with Internet access-is on the upswing. Online research firm eMarketer estimates that over the next five years, nearly 90 million homes connected to the Internet (or 70 percent) will be online at high speed. That means that they don't have to wait until they grow old for a YouTube video or online game to download, allowing complex website content and functionality to become the norm.

These days, one of the most rapidly growing content areas on the Web is video. Some marketers are using vehicles like YouTube to launch marketing campaigns. Dove is a good example, with its Evolution video, which showed what models really look like before makeup and Photoshop enhancements. NBC and iTunes let you download episodes of current television episodes to play on computers and video-enabled mobile devices. Meanwhile, vlogs-video blogs, which offer users video clips for download to site visitors-are gaining in popularity. Look for an increasing use of video technology and content in coming months and years.

Multiplayer Online Gaming and Game Download Innovations
Increasingly, gamers are playing online-and can interact with other players, around the world, in the process. Massive numbers of people are playing online versions of card and board games with each other on sites like Yahoo.com, AOL.com, and Electronic Arts' Pogo.com. An even bigger trend is massively multiplayer online games. These are, essentially virtual worlds where hundreds or thousands or players or more can assume character roles and engage in gaming play within a graphic environment. World of Warcraft and Everquest are popular. Others include virtual communities like Second Life and The Sims Online, where players create avatars and do just about everything they would do in real life, from changing their clothes to buying real estate, conducting business transactions, and getting married. In October 2006, Second Life announced that a woman named Anshe Chung, using an avatar named Ailin Graef, was the first person to earn $1 million in profits from Second Life transactions.

The industry resists classification. The following breakdown is not a definitive taxonomy but rather a chance for the uninitiated to make some sense of a rapidly changing landscape.

Publishers
Online publications make money by selling advertising or subscriptions or both. Many players in this field are online ventures of already-established media brands. Some examples include the Wall Street Journal Interactive Edition, a subscription-based version of the leading business newspaper; and ESPN.com, an extension of the sports cable channel. There are also a number of important players whose primary presence is online-such as CNET and Salon. And hundreds of daily newspapers put all or part of their content on websites that are still exploring the differences between reporting for print and for the Web.

Vendors
Vendors make money by selling goods or services. The best-known online retailer is Amazon.com. Mail-order companies with websites-Lands' End, for example-fall into this category. Other sellers provide services: E-Trade and Charles Schwab act as stockbrokers, Expedia acts as a travel agent, and Autobytel facilitates car buying. Still others work in the business-to-business space; Ariba, for instance, creates customized business-to-business online auctions for large buyers of industrial parts, raw materials, and commodities.

Aggregators and Portals
Some of the busiest sites on the Web fall into this category. Search engines are aggregators (so named because they offer a huge aggregation of links to other websites). Portals (also referred to as gateways or start pages) are sites that serve as home base for Web surfers. The home page of AOL, for example, is designed as an Internet portal. In a move that typifies the fluidity and opportunism of this industry, the leading search engines, such as Yahoo, have positioned themselves as gateways. Meanwhile, so-called freestanding search engines like the behemoth Google.com have opted for search performance over the glitz and glam of gateways.

All of these sites make money from banner advertising (think billboards on your computer screen) or, increasingly, through alliances with companies that pay fees to be the gateway or aggregator's "preferred provider" of travel services, greeting cards, and so on, or to turn up in highlighted sections of search-results pages that result from searches using specific keywords. Many publishers also license content to other sites, adding another revenue stream to the mix.

As more people use the Web to shop, both online and offline-69 percent of shoppers research purchases online before buying-shopping comparison sites, such as Shopping.com, Froogle.com, and Pricegrabber.com, are becoming very popular. They allow consumers to do a search for a certain product-say, "digital camera"-and the shopping comparison site displays various shopping sites' digital camera offerings, prices, and so on, and links users to the sites they're interested in visiting.

Communities
Online communities serve as centers for people who share special interests. Facebook, LinkedIn, and MySpace, for instance, provide real estate for people looking for connections and contacts with others. Other examples of community sites include Motley Fool for small investors; BabyCenter, a site for parents; iVillage, a site for women; and PlanetOut, a site for gays and lesbians. All of these sites encourage users to sign up for memberships by offering access to chat, newsletters, and bulletin boards; some offer members the opportunity to construct Web pages, which then reside in the community's site and serve as a draw for more members. Like many other Internet concerns, these sites used to make money primarily from advertising and alliances, but are now trying to pump up revenue streams such as e-commerce and subscriptions.

Consulting and Support
Once dominated by smallish Mom and Pop operations, most Internet Service Providers today are run by telecom companies. There are still plenty of interactive agencies that do e-commerce strategy, online advertising consulting, user interface design and support. However, chances are your gigabytes are being stored on servers owned by SBC, Verizon, Comcast, Qwest, or other telecom giants.

Demand for employees is healthy as more companies focus on shifting resources online. Sure, it's competitive. But, business development, marketing, content production, and operations all offer a number of new opportunities each year. Likewise, software developers in the industry face only average job growth: More and more programming and other IT work continues to be farmed out to cheaper overseas workers.

One area where demand is strong is for database administrators, software engineers, and other techies, and that need is only going to grow as systems get bigger and more complex. Software engineering, system administration, database administration, and system analysis, all careers that can be found within the Internet sector, are considered among the fastest-growing career fields in the U.S. by the Bureau of Labor Statistics.

How Did I Survive Before the Web?
Ordering DVD rentals and movie tickets, booking a vacation, banking, creating point-to-point maps, paying taxes, dealing with parking tickets, and examining your credit report can all be done online from the comfort of your home or office. More and more people rely on the Internet for everyday activities, so growth will continue to be strong.

Changing Lives, Changing Lifestyles
It's exciting to be part of an industry that's changing the way people live and interact. Thanks to the Internet, mall-averse folks have another option when it's time to do their back-to-school shopping. Online communities are creating connections between individuals on opposite sides of the globe. YouTube is making instant celebrities out of people who do remarkable things with their webcams. Email, instant messaging, and other technologies are making it easier for friends and family to stay in touch, wherever in the world they are. Video-on-demand and other services like Netflix are changing people's entertainment-consumption habits.

In the old days, if you had a question about something, in most cases you'd have to go to the library or speak with an expert to get the information you need; today, thanks to the Internet, there's a vast library of information just a click away. The Web is even fueling social and political changes; in 2004, for instance, MoveOn.org changed the way American politicians raise money for their campaigns. Of course, the changes are not all good; for instance, terrorists in different parts of the world can now communicate quickly and easily thanks to the Internet.

As You Like It
While the Internet sector has matured since the tech bust of the early 2000s, many Internet companies are still less formal places to work than their brick-and-mortar counterparts. So go ahead: Wear your favorite eight-year-old pair of jeans. Dye your hair purple. The culture of this industry is casual and fun, and insiders wouldn't have it any other way. One caveat: If you're working in the Internet division of a more conservative company, then you should be a bit more low-key.

You Shoulda Been Here Yesterday...
Ah, the dotcom days. For many of those lucky enough to go to work for Internet companies in the early days of the Internet, dotcom work meant sudden riches, as, one after another, Internet companies with questionable business models went public with ridiculously inflated stock valuations. If you had options in your company's stock and your company went public, as so many did, odds are you're still sitting pretty, financially. Sadly, those days, the days of sudden Internet riches, are over for most folks. (There are exceptions, of course.) But good businesses still have amazing potential. Two years ago, eBay acquired Voice over Internet Protocol (VoIP) firm Skype, which was founded in 2002, for $2.5 billion. The founders of YouTube cleaned up after their purchase by Google. And Yahoo! acquired rich media company AdInterax in October 2007 for $300 million.

Life on Internet Time
Things in this field change very, very quickly. While this can be exciting, it can also leave insiders frazzled and frustrated. That project you've been working on every day for two months? Passé, and it never even got launched. Enjoy what you're doing right now? Too bad, the company's business model just changed, and it's time to do something else. Don't know the first thing about your new assignment? That's okay; you've got the weekend to learn.

Project Manager
The project manager's job is to ensure that the various pieces of a multimedia puzzle- a website, for example-stay on track. This means making sure that the creative, technical, and business people are all in sync. A project manager usually has substantial experience on the business or design side of things. Salary range: $53,000 to $77,000.

Ad Sales Rep
This entry-level position is a business basic, much like an ad sales rep at a newspaper or magazine. It's a good entrée into the online world for anyone who enjoys making deals and working with people on the business end. As with most sales jobs, the pressure to deliver can be intense. Salary range: $65,000 to $88,000, plus commissions or bonuses based on sales.

Marketing Associate
In these positions, you'll conceive and execute advertising campaigns in the virtual and physical worlds. You'll also build a site's brand. Titles vary quite a bit in marketing, but the general idea is to drive people to a company's website, and then make money by selling products or subscriptions or whatever else the site sells. A college degree and good communications skills should be enough to land you a job in online marketing. Any previous marketing experience is helpful. Salary range: $59,000 to $77,000.

Business Development Associate
Alliances and partnerships between and among sites are one of the driving features of online business. Business development folks identify possible partners, then negotiate and close deals, and maintain relationships. MBAs tend to fit well in business development. Salary range: $42,000 to $102,000.

System Administrator
As the name would suggest, system administrators run the systems that make websites go. The nuts and bolts of this will naturally vary dramatically, depending on the nature of the website. Administrators are typically required to have a few years of experience and to know how to maintain the web server(s), do backups, updates, and security maintenance. For more complex sites, knowledge of Java, other development languages, or specific databases is often necessary. Salary range: $62,000 to $102,000.

Technical Producer
Producers act as the intermediaries between creative (i.e., writing, design, marketing) and technical (engineering, system administration) teams, condensing the former's ideas into detailed layouts and technical specifications to be used by the latter. The job requires sharp communication skills to get both sides on the same page, along with a good knowledge of best practices in user interface design and a general understanding of the technology required to implement those designs, such as HTML, Flash, PHP, and SQL. Salary range: $40,000 to $101,000.

Software Engineer
This is a mid-level technical position. Engineers write code. They typically need to be experienced in Java, PHP, and/or .NET, and need to be familiar with database connectivity issues. Positions at this level typically require two or three years of technical Web experience. Salary range: $93,000 to $115,000.

System Architect or Information Architect
These are the gurus who build and maintain the most complex systems in the business. They typically have at least ten years of experience working with databases or building applications. Salary range: $137,000 to $185,000.

Production Artist
The foot-in-the-door design position. Production artists typically take a design that someone else has created in one medium and transfer it to another-for example, taking a hand-drawn design and replicating it in Illustrator. A college degree is not normally required for this position; vocational training or experience in another area of design-most often graphic design-is often sufficient. Salary range: $53,000 to $74,000.

Art Director or Lead Designer
Experienced designers work as art directors, conceiving and executing designs. They typically have a bachelor's degree in a design-related field and a few years of experience working as a designer, though not necessarily in new media. Salary range: $83,000 to $109,000.

Creative Director
The creative director takes a strategic role in determining how to best represent a company. It's very much a people-oriented job, involving development of high-level concepts for design projects. It also involves pitching designs that are based on their understaning of client needs. Creative directors usually have several years of design experience. Salary range: $119,000 to $162,000.

Knowledge of HTML, XML, JavaScript, and Java, .NET, or PHP is the bare minimum for programmers. Experience working with databases and writing in AJAX, Perl, Ruby/Ruby on Rails, or C is a big plus. Another language that programmers should know well is English-unlike some of their counterparts in the software industry, most Web programmers need to work closely with non-technical people, and solid communication skills are crucial. Finally, insiders tell us that examples of your work are far more powerful than anything else. If you haven't done any Web work, spend some time building an online portfolio before you go looking for a job in this field.

For designers, being adept at Photoshop, Flash, and Illustrator-and understanding the basics of HTML-will give you a solid foundation to work as a new media designer. Being proficient with a design-oriented HTML authoring tool such as Dreamweaver will help as well. Keep up with the latest technology by culling the Web for hot new sites and dissecting the way an effect was achieved. Is that animation AJAX or Flash? Why does one navigation system work better than another? And as one creative director told us, "If a designer can interface well with programmers, that's a big plus." This means that the more technically literate you are, the better. Being excited about technology and the possibilities it brings to design is essential.

Here are a few things you can do to make sure you connect with the job you want:

  • Impress your interviewer with your knowledge of and interest in the industry in general and the company in particular. If you're interviewing with a company whose website is central to its business, spend a lot of time surfing it and those of its competitors. Be ready to discuss your opinions and have a few specific ideas for making improvements.
  • Consider doing some volunteer work to gain skills-and valuable contacts in the industry. Find a small business or nonprofit organization and offer to help build, design, or maintain their site.
  • Don't forget to demonstrate that you'd fit well in the industry-that you are flexible, can juggle multiple projects and responsibilities, work hard, and get along well with people.