The great confusion vs. People first! News of a so‑called "Great Convergence" of television, telephones, and computers makes good copy for the nation's media. Not too long ago, these same media were going giddy over another technology with big promises of changing everything: Virtual Reality. Now that the VR hype has faded, and the wild promises of many of its pundits have been shown to be gross exaggerations, one might ask, "Is this convergence hype just more of the same?" While it is true that many of the interactive TV demos now making the rounds are mostly high‑tech fantasy, our experiences in developing and running the Habitat and American Information Exchange commercial services indicate that Cyberspace is a new medium and that it is already on the road to maturity.
Unlike the Virtual Reality field, the emerging data‑highway field has been evolving over a very long period. Its roots are in the invention and global deployment of the telephone network. Sending machine‑readable data over this infrastructure is almost as old as the computer. People have been chatting with each other using computers and modems for over 30 years.
When most interactive television advocates talk about video on demand and interactive home shopping as "killer apps", they are overlooking a primary lesson from the telephone and on‑line services industries: People don't want to connect to computers, they want to connect with each other. Like the fans of the early VR industry, many data highway enthusiasts are more excited about the technology, and less concerned with the more important questions, such as, "What is the compelling need for this?" or, more simply, "Why would anyone want to use this?" They seem to believe in that famous line from the movie Field of Dreams: "If you build it, they will come."
Consider a lesson from Prodigy: The original Prodigy concept was a flat‑fee information service based on a magazine model. Prodigy's income would be supplemented by advertising revenue from the commercials that constantly display on the bottom 20% of the screen. They initially projected that most usage would be information retrieval and interactive home shopping. This plan was not unlike the announced "killer app" schemes for interactive television. The main problem was that this model wasn't what the customers wanted. Instead of shopping or information retrieval, the primary customer use for Prodigy turns out to be the person‑to‑person services: electronic mail and discussion‑oriented bulletin boards. (Through 1991, only 30% of revenue was the result of advertising, and we can expect that percentage to decrease significantly in light of Prodigy's recently announced hourly pricing.) As a result, Prodigy has changed its pricing system (twice) to be usage based, adopting a model that is essentially the same as the rest of the industry, albeit with higher prices. This has caused hundreds of thousands of their most active customers to defect to other providers who better understand customers' needs and whose services are more aggressively priced. People want to connect with people, first and foremost.