The Digital Skeptic: Who Takes Gold in a Year of Bad Ideas?
NEW YORK ( TheStreet) -- If I ever get around to writing my magnum opus on the Digital Depression, this year probably won't rate even a full chapter. It wasn't the dumbest or the most brutal.
But it was an Olympic year, so what better time to fire up the national anthems, wave the flags and award the gold, silver and bronze for an Olympic-sized problem: What was big in digital idiocy -- perhaps we should call it digiotica? -- for 2012.
Will the winners please approach the podium.
Bronze medal: Ignoring the Amtrak-ization of the Google Economy.
The big news in 2012 is the Amtrak-ization of the Web. Yes, the Web-addicted still point to jumping revenues at Web companies such as search giant Google (GOOG) . The 15 ish-percent bump from Q2 to Q3 this past year is a popular point of digital pride .
But sober observers are finally seeing that nationalized railroad sort of vibe: Operating profits slid by roughly the same percent or so for the same period. And the "down and to the right" profit margin trend was mimicked by Facebook (FB) , eBay (EBAY) , LinkedIn (LNKD) and others.
Considering that Web stars such as Amazon (AMZN) long ago stopped caring about posting net margin percentages that are awfully tough to tell from zero , how long will it be before all information age companies pull into a similar razor-thin earnings station?
Remember, it was just 100 years ago that our pathetic, subsidized railroad system, Amtrak, was not just one, but a group of the most powerful and profitable private companies ever. Today, nobody is turning off the Internet no matter what. So how far are we really from being forced to adopt some sort of Amtrak/power utility-like socialized model for the Web?
History is not on the information age's side.
Silver medal: Pretending there's any money at all in the music business.
This was the year the music industry officially became the blue whale of the information age: big and beautiful, but seriously endangered.
Just consider the band that the U.K.'s Guardian and Slate, just to name a few, say was the biggest in the world: Mumford & Sons. Indeed, the English folk rock boy band posted some gaudy stats this year, including a near-record 600,000 first-week unit sales for an album called Babel.
Sure, that sounds fab -- except when you factor in the stunning ginormity of the digital music industry.
As of the end of 2012, according to Scrobble, a music consumption tracking app by London-based online music service Last.fm, Mumford & Son's content was sampled by users 50.9 million times on its service across all devices since 2002 , which is when Scrobble began tracking.
Let's assume these 600,000 units sold at $16 each, a CD-like price. Forget the fact that a mere 1.1% of all those people listening to Last.fm converted into paying customers. Do the math and you'll see the world's "hottest band" makes just 19 cents per sample of their wildly popular tracks.