I’m late for everything. I was born late, I’m about to be late for this yoga class, and I feel like I’m late to the internet. But perhaps I’m not, nor are you.
I was born in 1994. The same year, Joshua Quittner registered the domain name McDonalds.com and then told McDonald's about it. Their response was, "Are you finding that the Internet is a big thing?"
InterNIC, a US quasi-government body, issued new domain names manually at the time. Josh asked them whether anything was stopping him from registering McDonalds.com, Burger_King.com, or otherwise. The person responsible for registrations at InterNIC, who was stretched with 2.5 people on his team, responded: "There is nothing that says I can stop you from doing that. … We really need some policy." In '93, InterNIC received 300 requests a month for domain names; in '94, this rose to more than 1,300 each month. In 2019, this was over 100,000 per day!
It hardly needs to be said, but 1994 was early for the internet. Nevertheless, to the guy at InterNIC, it felt late. He was inundated with requests for domain names.
Today, again, it feels that we are late for the party. But maybe we are, in relative terms, as early as Quittner.
Tim Ferris’ podcast is one of the world’s most popular, and it’s easy to think that he won because he was early. But, in fact, in an interview with Chris Hutchens last year, he points out it seemed so late:
So when I launched [the podcast The Tim Ferris Show] in 2014, I should also say there were people who said to me, "That ship has sailed. It's too late. There's no point doing a podcast," in 2014. So I think they were wrong then and the people who say that now, I also think are wrong.
… I think it's still super early. I think it's still super, super early. There are some indicators or maybe proxies that you can use for that. The percentage of say, terrestrial radio or satellite radio advertising dollars that have migrated to podcasting, is still extremely low. I don't know what the percentage is, but it's very low, I would anticipate, just based on the types of brands that you see represented. You can look at other types of media. Based on that alone, I think we are very much in the early days. Super, super early days.
Perhaps proxies can remind us that we are still 'super, super early' to the internet, too.
Of all the markets, of all the times in history, I'd expect retail sales in Q3 2021, in the US, to have the highest penetration of e-commerce. Covid must have brought this about. And Amazon and Shopify have had great years. BUT e-commerce sales in Q3 '21 accounted for just 13% of total sales! In the UK, in 2019, the split between e-commerce and physical retail was 21.8% and 78.2%, respectively. In 2021 it jumped to 37.5% for e-commerce and 62.5% for brick and mortar, but it's still overwhelmingly physical. By this measure, it’s early.
Similarly, if we look at online ad-spend vs physical, it's at 51% in the US. Just over half, but not overwhelmingly dominant, given Americans' spend over seven hours a day looking at a screen. Similarly, in the UK, we spend 6 hours 25 minutes.
The penetration of screens does not always correlate with economic penetration. The highest screen time in the world is the Philippines, at over 10 hours, but e-commerce made up only 3.4% of retail sales last year. This is all to say that even where we think the internet is everywhere and has won, it's still the misty dawn of the age of the net! Or maybe 07:15 am. Nevertheless, with upcoming crypto/web3 developments, many of our cyber-norms are bound to change.
Moreover, if we look beyond America, there have even been declines in e-commerce adoption to emerging markets. According to this report, across Africa consumer traffic fell by 5% in the three years to December 2020. Moreover, in 60% of African countries, less than 5% of the population has a credit card, which clearly blocks e-commerce adoption. Plus, mobile money adoption in Ethiopia and Morocco (<1%), Burundi (1%), Egypt and Tunisia (2%) is still tiny. Here, it’s earlier still.
Assuming the world is on course to become the metaverse, which none of us wants, of course, and we forfeit our physical reality entirely, we have a long way to go.
It's still very much day one on the internet.
Live well,
H