Is digital media dead? (editor's note).(Editorial)

If you look at some of the recent corporate losses and listen to some of the market analysts, you're likely to believe that the digital media industry is as dead as a dinosaur. Consider the recent announcement that the world's largest media company, AOL Time Warner, lost a staggering $54 billion in the first quarter of this year, the largest quarterly drop for a US business. Industry pundits were quick to point out that the media giant's grand vision of offering Time Warner's content to a mass market over the AOL pipeline and supporting that with advertising was a pipe dream.

Robert X. Cringely, author of Triumph of the Nerds and keynote speaker at the recent NAB conference, attributes the current Internet market slump to the slow adoption of broadband connections. "There are 170 million Internet users in the US, and only about 8 to 10 million of them have broadband connections," he says. "There will be a broadband future when there is a lot of bandwidth. When will that happen? Not this year. Not next year. Not in three years. But in five years? Maybe. In seven years? Likely. In 10 years? Sure. Unfortunately, there aren't many successful startups based on a sure thing 10 years from now."

Are such assessments valid? And should digital media developers lay low for the next five to 10 years? Not a chance. In fact, one entrepreneur who is betting that the time for digital content distribution on the Internet has already arrived is Mark Andreessen, cofounder of Netscape and chairman of Internet technology provider LoudCloud. Also keynoting at NAB, he noted that the Nielsen ratings for Internet use in January 2002 show that Americans spent 2.3 billion hours online, half of which were over broadband connections.

Such acceptance of a new technology is rare, Andreessen contends. Usually in the development of a ...