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Web companies dark side: Few jobs


Some of the biggest Internet companies are growing like weeds, serving millions of customers a day and operating globally. But, as commentator Nicholas Carr points out, they tend to employ very few people

TESS VIGELAND: Today the social networking company MySpace announced a plan to beef up its protections for minors who use the site. MySpace is owned by Rupert Murdoch's News Corp. As part of a deal with 49 state attorneys general, it promised to change its structure to better protect young users from online predators. Similar changes will be encouraged for other sites like Facebook. Both social networking companies are big players in the new economy.

Commentator Nicholas Carr says it's too bad they don't employ very many people.

NICHOLAS CARR: There's a new breed of Internet company on the loose. They grow like weeds, serve millions of customers a day and operate globally. And they have very, very few employees.

Look at YouTube, the video network. When it was bought by Google in 2006, for more than $1 billion, it was one of the most popular and fastest growing sites on the Net, broadcasting more than 100 million clips a day. Yet it employed a grand total of 60 people. Compare that to a traditional TV network like CBS, which has more than 23,000 employees.

Or look at Skype, the Internet telephone company. When eBay acquired it, also in 2006, it had already signed up 53 million users -- more than twice the number of phone customers served by venerable British Telecom. Yet Skype employed just 200 people, about 90,000 fewer than British Telecom had in the United Kingdom alone.

One last example: Craigslist, the online classified-ad site. By the end of 2006 it was serving up 5 billion pages to 10 million visitors every month. Yet it was being run by just 22 people.

These companies can grow so large with so few employees because they're built almost entirely of software code running on the Net. Such radical automation can be a boon to consumers. What used to be expensive -- international phone calls say -- can now often be had for free.

But there's a dark side to their robotic efficiency. Each of these companies competes after all with old-line firms that employ and pay decent wages to many people. YouTube fights for viewers with media companies. Skype battles telcos for callers. Many of the ads that run on Craigslist would have otherwise appeared in local newspapers.

Past technological revolutions created a lot more jobs than they destroyed, but that doesn't seem to be happening with computerization, and if companies like YouTube, Skype and Craigslist are any indication, a lot more jobs may soon be at risk.

VIGELAND: Nicholas Carr's new book is "The Big Switch: Rewiring the World from Edison to Google." He's the former executive editor of The Harvard Business Review.




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