Fergus Cassidy

A sentimental journey

THE terminology surrounding the stock market is always baffling, but these days it would take a cryptographer to decipher the lingo. Bubbles are bursting, bears are loose about the place and options are not an option anymore. Best of all though, is the equities market coming over all sentimental.

The market is, apparently, being run on sentiment at the moment. Seems a strange way to invest. "Oh I like the look of that blue chip portfolio. The headquarters has lovely offices and the chief executive seems like a nice man. I think I'll invest all the pension fund money in it."

Sentiment is another way of saying emotional, and the strongest emotions being displayed by investors at the moment is suspicion and wariness. And who could blame them? The 'new paradigm' over the last ten years was nothing if not a giant experiment gone wrong.

With the deregulation of the US telephone system and emerging computer networks connected by phones, the sentiment was expressed from the rooftops that the world would explode with lasting economic growth. With Maggie and Ronnie gone with the wind, it seemed the old order had been overthrown and the digital revolution had arrived.

Like all great revolutions there were proponents and opponents, each replying to the others extremism with a stronger dose of extremism. And on it continued until trillions of dollars had been spent worshipping at the altar of technology. Until the high priests stepped in and delivered stinging sermons on the madness of 'irrational exuberance' and the sin of 'infectious greed'. Then they drove the analysts out of the temple.

Revolution is nothing if it's not about ending up back in the same place as before. To add to this deja vu, AOL/TimeWarner, the company that most represented the latter stages of the revolution, announced last week that it was under investigation for accountancy practices. The company has restructured and both wings are now headed up by experienced 'old media' chief executives. AOL, saw its revenue from online advertising and ecommerce plunge 42% in the last quarter.

When the merger between America's biggest internet service provider and that country's biggest media outlet was announced a couple of years ago, the word convergence never had such a day in the sun. AOL had 23m paying subscribers and Time was buying a chunk of the information superhighway all for itself. This merger was supposed to be the world of the future. A multimedia pipeline that would flow more freely and profitably than oil ever could. The pipes were indeed calling.

The revolutionary zeal multiplied after that. One side threw out the new paradigm mantra - the communications business would be turned on its head and it was goodbye to television and the print media and a big victory for the new economy. The other side countered with fears of a takeover of the infant internet by traditional media corporations and the end of a great democratising tool.

Now that the dust is settling, it's like walking into a stadium immediately after a big boxing title fight only to see nothing but staff sweeping up the evidence of a large and vociferous crowd. There is very little to reveal the kind of bruising fight that was supposed to have taken place. Did it really happen?

Net effect
Judging by the zealots these days, it appears that it may not have happened at all. Both sides have gone to ground, some to lick their wounds others to count their blessings. The revolution happened alright, it's just that nobody wants to talk about the war.

The silence of the zealots confirms this. Anyone talking about an information superhighway will be dropped off at the nearest exit. And those whipping up sentiment for the latest online wheeze can't drum up sympathy, never mind money. Those generals who lead the charge of the site brigade have scampered off to wait for the next bandwagon to roll through. They better be prepared for a long wait.

They just didn't get the internet and the technologies surrounding it. Particularly the technology. They were true believers, blinded and spurred on by their own lack of understanding of ones and zeros. And they were the smart ones. The dumb ones just took the money and asked questions later.

The stock markets and the world economy may be experiencing war reparations, but the very thing at the heart of it all is still pulsing with life. The net has emerged largely unscathed with only minor collateral damage. John Doe can still connect his computer and communicate with Sean Doe or Doe San. Easier and faster than it ever was. And both can gather enormous amounts of information on anything that takes their interest or effects their lives. Almost half a billion are now connected and that will reach 2bn in six or seven years. The internet holds out as much hope in developing countries as it ever did. Maybe more so.

As an AOL vice president told the New York Times last week: "the internet may not be doing so great on Wall Street, but it's doing great on Main Street".

People are now using the net in ways that were completely unforeseen when the network was midwifed by academics and defence scientists. A recent survey by the Pew Foundation revealed that 66m Americans go online every day. 11m said the net played an important role in choosing a school or college. A further 8m said their use of the net helped them through a job transition and another 8m said the net helped them find a place to live.

But there's more. Sentiment is driving the internet. Summed up in a nutshell by a director from MIT last week: "the move from passive to a more active paradigm [yikes!] in consumer behaviour is where the new media has had the greatest impact".

That impact will continue to be felt for a long time. Something has changed and it's the habits and expectations of those lucky enough to go online. As one of the geeks once said "the intelligence is at the edges". The network's greatest strength is its dumbness. There's nothing really there save for copper wires and some computer protocols. All the power is at the user side.

And that allows for incredible personal control and choice. It also gives the net great flexibility because it's not tethered with intelligence or hardwired at the centre. From operating system to choice of browser and other software, the user is free to choose. How to connect, when to connect and what information to choose.

This is a new and welcome world to those who have grown weary of force feeding from the cathode ray nipple. Or those who can take no more advertorials - in print or on screen. And there is an audience that itself is creating its own programs and schedules, when it suits them and where it suits them. It's not location anymore it's control, control, control.

Millions of people have participated in making the net what it is and have used technology to create a valuable addition to their lives. When the markets come back to internet-related business, and it will happen eventually, they would do well to bear in mind a new reality of the changing habits and expectations of users.

Sentiment rules.