“Hypertext Mark-up Language 5 (HTML 5) is just a programming language.” A famous investor said this to me 18 months ago. The statement is true, especially if you delete the word “just.” But it misses the point.
As programming languages go, HTML 5 may be unusually disruptive. Not only is it the platform for the next generation web, HTML 5 is likely to be the foundation for Hyperweb services on the Hypernet, which encompasses not the web, but also the app model and whatever new technologies emerge in the online world.
The web needs HTML 5
Technology is one factor in favor of HTML 5, but timing may be as important. Apple’s success with iOS has left HTML 4 market leaders Google, Microsoft, Facebook and many others with no profits in app-based device market, which now accounts for half of total connected devices. I believe it’s too late for HTML 4 market leaders to build great businesses in the app world – Apple owns iOS and Google has open sourced Android to profitless prosperity – but HTML 5 is a new and open platform with the potential to compete successfully against the app model. HTML 5 represents new life for the world wide web, but it will almost certainly not be a smooth transition from HTML 4.
HTML 5 is still in its infancy. Important functionality – such as that needed for commerce – has not yet been enabled. Even though it is not ready to replace HTML 4 on wired PCs, HTML 5 enables new and wonderful experiences on mobile devices. Ironically, the coolest HTML 5 apps run only on Apple’s iOS (there is no standard HTML 5 for Android).
HTML 5 enables new content experiences
My team has created two HTML 5 apps that clearly illustrate the potential of HTML 5:
- HD video streaming without a buffer over 3G wireless networks. [We broadcast 100 concerts a year and store them all in an archive on the site.]
- Music player with 400 shows of audio
These are just snowflakes on the tip of a very big iceberg.
Pendulum of technology swings both ways
In the decade before the iPhone, the technology of web and the behavior of consumers combined to commoditize most forms of online content. Fantastic for Google’s profits, commoditization was otherwise bad for business, especially the business of those who make content for a living. Story-level engagement dropped dramatically, as consumers navigated from page to page with increasing speed. In Google’s world, publishers at all scales are captive to search engine optimization. Google transforms all content to a few lines of text in a common font, which approaches maximum commoditization. When Apple introduced iOS and the app model, content creators took advantage of new tools and a self-selected audience. Apple encouraged higher production values in apps, effectively favoring brands over commoditizers.
This shift is consistent with history. Since the early 80s, digital content has swung like a pendulum between commoditized content and highly differentiated content. Before 1984, content appeared either as green ASCII text on a black background or amber ASCII text on a black background. In 1984, Apple introduced the Mac, with Adobe’s PostScript enabling a What You See Is What You Get (WYSIWYG) display. This ushered in a 14-year wave of rising production values. Desktop publishing, Windows, PowerPoint, PhotoShop, Director, Flash, and Acrobat were killer apps in that era.
When the web took off, finding content became the top concern, enabling Google’s success with index search. Google quickly became the undisputed leader of the web, and the web economy optimized itself for Google’s algorithms. The focus on SEO reduced the incentive to invest in tools, so HTML 4 (and Flash) remained predominant far longer than would otherwise have been the case. Static tools reduced the opportunity for innovation, especially in production values, which ultimately commoditized nearly all content on the web.
iOS was a bet against the web
When Apple introduced apps, it effectively bet against the web and Google. Apple’s insight was that apps would enable consumers to find the content they want without the endless delays and unreadable type that characterizes the web experience on 3G smart phones. The bet paid off so well, that every smart phone vendor was forced to imitate the app model, including Google.
For publishers, Apple’s app model enabled a modicum of differentiation. It also pushed the pendulum of technology away from commoditization.
The impact is apparent in consumer engagement. In the search engine world of HTML 4, a huge amount of content gets discovered via search engines, and the engagement on these stories is typically 15 to 20 seconds. There is no way to monetize 15 to 20 seconds of engagement. In the mobile world of iOS, constant interactions with the web are undesirable, due to the poor data performance of 3G networks. As a result, consumers get most of their content in the form of apps, typically spending 2 to 5 minutes per text app, and far more for games.
iOS + HTML 5: Publishers need both
As the tool sets in mobile improve, app engagement could rise significantly, boding well for monetization. All of this makes iOS more attractive for publishers than the HTML 4 web, but there are costs:
- no leverage from open source
- smaller pool of developers than HTML
- loss of control to Apple through the AppStore
- 30% Apple tax on products sold in the AppStore
- not compatible with desktop
These factors are material, both in terms of cost and control. They create an incentive for content creators to move at least some of their business off iOS. HTML 5 starts with a cost/control advantage, but holes in functionality remain a barrier to adoption. Early adopters – including the New York Times – are investing in the belief that those holes will be plugged within a year or two.
HTML 5: Appification
HTML 5’s advantage over HTML 4 is in its incorporation of the functionality of Adobe Flash into the language. This is a bigger deal than it may appear, as Flash is kludgy, buggy, and slow. By incorporating the Flash functionality into the HTML standard, HTML 5 gets additional benefits, including the ability to search any pixel on the page and the ability to “appify” any pixel.
Not only will HTML 5 enable new page layouts, it will allow for better optimization of ads to content and users. It will also enable new “app” models, a few of which are as follows:
- app delivery; download games
- e-book/Instapaper: just download content to your home screen
- replace bookmarks: just download images, infographics, quotes to your home screen
- layers: publishers can preload search results (bios, company information, etc.) into content so that consumers can get more info without leaving the page
- longitudinal search: targeted search of a publisher’s past stories on a topic across time without leaving the content
- The beauty of these new “app” models is that each can monetized, in most cases at rates better than the current web standard. Imagine you are reading David Pogue’s technology product review column in the New York Times. Today, the advertising on that page is pretty random. In HTML 5, it will be possible for ads to search the page they are on for relevant content. This would allow the Times to auction the ad space to companies that sell consumer electronics, whose ads could then look at the page, identify the products and then offer them in the ad.
One might even imagine Facebook creating a Mobile Connect product that stores private identity and transaction information, such as Amazon One-Click settings. If Amazon were the buyer of the ad, then the ad could feature One-Click buttons. This way the publisher could create demand and satisfy it without the consumer ever leaving the page. That isn’t advertising in the traditional web sense, it is lead generation, which carries a much higher value in the market. This won’t happen overnight, but it will happen.
New rules, new opportunities
Even though HTML 5 is the next generation in web technology, I believe it will disrupt the current business model of the web. To compete with native apps, HTML 5 has to deliver engagement. To deliver engagement, HTML 5 must enable higher production values – and differentiation – than prevails in today’s HTML 4 web. It should favor content publishers – and the tool vendors who support them – over the gatekeepers who currently dominate the web. There is no technical reason why Google, Microsoft, Yahoo, and Facebook cannot re-invent themselves, but the cultural barriers to change are huge, as has been made clear by all four companies’ inability to port their business model to the mobile sphere.
Imagine that the Innovator’s Dilemma continues to plague the leaders of the HTML 4 web. Imagine also that Apple retains it hegemony in the world of apps. In that case, HTML 5 and the next generation web would be a new opportunity, open to anyone. From where I sit, this appears to be the most likely outcome. If so, then the new business opportunities will favor content owners who seize the opportunity to differentiate, tool vendors who enable that differentiation, hardware vendors who support them, and new web services that leverage HTML 5’s capabilities. In terms of scale, the opportunity should ultimately be larger than today’s web.
I suspect most content creators will not rush into HTML 5 because it only supports a narrow set of use cases and platforms. Others will wait because agencies have been slow to support mobile ads, despite the unprecedented growth of the iPhone and iPad. I disagree with both rationales for delay. The time to experiment is now. Failures don’t cost much at this point, and wins are likely to translate into businesses advantages that can be compounded over time. At this stage, developing for Android game apk is relatively less valuable, as Apple has effectively cornered the market for consumers who will pay for content.