Below is an extract from something Nora Ephron wrote in 2006.

Amazing to think that Nora Ephron knew more about advertising fifteen years ago than most people who work in advertising know today:

“It interests me that every time I go to an Internet conference, there’s a piece of absolutely unarguable conventional wisdom about the Internet that sooner or later turns out to be wrong.

It’s not easy to be wrong about the Internet – the Internet consists of pretty much everything in the universe. So pretty much anything you say about it is going to turn out to be partly true in some way or other. Nonetheless it turns out not to be.

For example, when I started going to these conferences, it was a given that the Internet was going to set everyone free; this was back in the day, when we understood the Internet to mean email.

The world was full of executives and panellists who took the position that it was much simpler to return 20 emails than 10 telephone calls. But executives now return hundreds of emails every day, and life is not remotely simpler. They return emails day and night. They never go home from their email. What’s more they absorb almost nothing that happens, because the minute it does their Blackberry is blinking at them.

Then the dot-com boom began, and a new piece of conventional wisdom emerged: the dot-coms would make us rich. This was true. They did. And then, suddenly, the dot-coms crashed. So not quite true.

Time for a new piece of conventional wisdom: there was no money in the Internet.

This was confounding: it seemed that an amazing, unheard of, completely mystifying episode had occurred in the history of capitalism. A huge business had emerged, but there was no profit in it.

Warren Buffett, who is the king of the panellists, the uber-panellist, the second-richest man in America, the sage of Omaha who plays online bridge with the first-richest man in America, gave a speech during this period, and reminded all his acolytes the between 1904 and 1908 there were 240 automobile companies in business; by 1924, 10 of them accounted for 90% of the revenues. This sentence was quoted as if it had come straight from the Mount, although no one was entirely sure what it meant.

Was everyone going to go out of business, or just almost everyone? The guys who started in garages would make money, of course – they’d already made money. The guys who invented the technology and the software would be rich. But everyone who’d come afterward would be doomed.

Many panels were held on this point, and many panellists were thoughtful and interesting (and puzzled) about the bleak future ahead. But one thing was clear: there was no money in the Internet. And advertising was not the answer: advertising would never work because the people using the Internet would never ever accept it. The Internet was free. The Internet was democratic. The Internet was pure. Ads would never fly. What’s more, in the TiVo world we now live in, the ads would be blocked by Internet users who would never ever stand for them.

Which brings me to the conference on the Internet I attended last week, where, it will not surprise you to hear, there was a new piece of conventional wisdom: there were billions of dollars to be made on the Internet. It had suddenly become clear that there was a lot of advertising money out there, all you had to do was provide content so that the ads had something to run alongside of.

It crossed my mind that the actual definition of ‘content’ for an Internet company was “something you can run an ad alongside of.” 

I found this a depressing insight, even though my conviction that all conventional wisdom about the Internet turns out to be untrue rescued me from a slough of despond on the subject.”

Nora Ephron wrote that 16 years ago, maybe we’ll catch up one day: no one knows anything.