What Is Happening to the Internet Business Model?

Chris Dixon says the internet business model is breaking, and he puts the start of the break maybe in the last decade while calling the break especially sharp now. He names the old arrangement the internet's covenant, a deal between the distribution side, Google and Facebook, and the content side, news sites, travel sites, and other publishers. A site would give Google a snippet, let Google index the page, and Google would send clicks back. A Google search now returns an answer, and social networks try to keep people on the platform instead of linking out.

Websites that make money on ads and conversions can no longer do that. Stack Overflow and some other websites saw traffic drop precipitously once AI replacements arrived. People will still book travel and still get a recipe. He leaves open whether a person or an agent visits the travel site, and whether a recipe arrives some other way. Many of the transactions will still happen. They will not happen the way they used to, so businesses built on the human attention economy face near-term pain.

Over the next decade, the internet goes through a great reconfiguration of how the economics work, how attention flows, how knowledge is shared, how people produce things together, and how organizations interact online. Mobile grew the internet from 500 million people to 5 billion, raised engagement, and put information in a pocket. In his view the coming shift is much more dramatic: painful for some, and a large opportunity for entrepreneurs who rebuild from first principles around people empowered with AI.