Content created for the internet would be just as big a money-maker as TV.
"Content is where I expect much of the real money will be made on the Internet, just as it was in broadcasting," wrote Gates in the opening to his essay.
At the time he wrote it, the internet had very little multimedia content, especially since connections were very slow. It was also not worth spending any money to advertise on the net, since only about 10 million people were online.
But Gates predicted that over time more — and much better — content would be delivered, many more people would want to see it, and it would make a lot of money through digital advertising.
Is the internet as big a money-maker as TV? Not yet, but advertising dollars are increasingly shifting to digital.
Ad spending on television will be about 38% of the market in 2016 — much of that money continues to shift online — and digital will overtake TV by the end of the 2017, according to The New York Times.
A big part of the internet would be user-generated content sites like YouTube and Reddit.
"One of the exciting things about the Internet is that anyone with a PC and a modem can publish whatever content they can create. In a sense, the internet is the multimedia equivalent of the photocopier. It allows material to be duplicated at low cost, no matter the size of the audience."
Gates didn't use the term "user-generated content" here, but that's pretty much what he described. Back then, a select few companies and institutions created most of what users saw. The average Joe who wanted to elevate his voice in 1996 wrote letters to the editor of the local paper.
But the nascent internet offered a world of democratization, Gates realized, that allowed anyone with a modem to create new and exciting things.
In 2016, a big chunk of the Internet is built by the very people who also consume it, from Reddit, Instagram, and Facebook to the various blogging platforms that give anyone a voice if they have something to say.
The internet would give small companies a level playing-field against much larger competitors.
"But the broad opportunities for most companies involve supplying information or entertainment. No company is too small to participate."
With just a handful of companies having websites in 1996, it was easy to see a world in which bigger corporations would drown out the little startups. Well, that didn't happen at all.
Instead — much like allowing for user-generated content — the Internet gave small companies the ability to get their name out there by creating cool content, often without spending a dime in advertising.
"A question on many minds is how often the same company that serves an interest group in print will succeed in serving it online. Even the very future of certain printed magazines is called into question by the internet."
Just about every major news organization made its way online at some point, but many of the legacy outlets simply moved their print version to digital and did not work to innovate, an action Gates said would prove unsuccessful.
News usually meant for a local audience would go global.
“Although the gold rush atmosphere today is primarily confined to the United States, I expect it to sweep the world as communications costs come down and a critical mass of localized content becomes available in different countries.”
The decline in print didn't mean less information. Quite the contrary.
As Gates predicted, the cost to access the internet would go down considerably, and now 40% of the world is connected. That number was barely north of 1% in 1996.
With many more people online with incredible access to information around the globe, local news stories in recent years often have had global reach. "Every journalist on earth can now reach nearly every human on earth — directly and instantly," Business Insider's Henry Blodget wrote in 2013.
He also predicted technology for "pay walls" to help sites monetize would begin to appear within a year.
"But within a year the mechanisms will be in place that allow content providers to charge just a cent or a few cents for information. If you decide to visit a page that costs a nickel, you won't be writing a check or getting a bill in the mail for a nickel. You'll just click on what you want, knowing you'll be charged a nickel on an aggregated basis."
Gates fudged it a little on this one: It was Microsoft itself which led the way, launching Slate.com in June 1996 with a $19.95 annual subscription fee. Though Slate dropped its fee a year later, The Wall Street Journal added an annual $50 pay wall in Jan. 1997 that continues to this day.
"It's tricky, though, because as soon as an electronic community charges a subscription, the number of people who visit the site drops dramatically, reducing the value proposition to advertisers," Gates wrote.
Gates was certainly right about this publishing balancing act, but plenty have figured out how to implement pay walls that work.