The exit of Steve Case as CEO with AOL Time Warner, the settlement between Homestore and AOL, and the lack of much recent innovation suggest that the Internet is no longer the new frontier of capitalism and electrons. Instead, what we are seeing is a calmer medium, a maturing one, and also a medium where a number of ideas concerning real estate and the Internet have had their run.

I first met Steve Case in 1991 when AOL had 100,000 members and the whole company was in a small building in Vienna, VA. Over lunch at a nearby deli, Case would explain his vision: First, the Internet would be everywhere, which meant complex technologies would have to be converted into systems everyone could understand and use. Second, the Internet had to be accessible by everyone -- the reason AOL would become the first major ISP to have a monthly flat-rate plan instead of hourly fees.

And Case, despite recent set-backs, has been right a whole lot more often than he has been wrong.

What AOL really did was democratize the Internet -- a "model" which is now virtually impossible to deconstruct in the U.S. Given a free and open Internet, anyone can communicate with anyone else. Everyone can be a publisher and broadcaster. The distribution of ideas is no longer an issue -- you don't need paper, presses, or permits. The world's biggest library -- with it's collected wisdom and follies -- is now accessible from every home and business.

It's useful to compare the Internet in the U.S. with the Internet elsewhere. In countries where governments control the phone system, access is often costly and restricted. Many governments censor the Internet, especially political and religious sites. The free flow of information and ideas absolutely terrorizes an assortment of dictators, loons, louts, and despots.

The catch is that change impacts a variety of established interests. Booksellers, travel agents, and stock brokers quickly discovered that a handful of Internet newcomers with different economics could readily take-on established firms.

Could traditional real estate firms be replaced by high-tech online sites? It's certainly a thought that has crossed more than a few minds during the past decade.

The idea of a frontal assault -- let's replace huge numbers of brokers with the Internet and 800 numbers -- seems finished because real estate remains what it has always been: a localized business. What's not finished is idea of gaining so much online traffic that local brokers will be forced to pay for exposure on successful sites.

But the high-traffic model, while offering a certain logic, seems to have hit a ceiling.

First, someone wanting to create a major listing site will find that such "space" is already occupied by Realtor.com, major franchises, MLS systems, local brokers and agents, and others. In effect, there's so much competition that no individual site dominates or can dominate the marketplace -- which also means no site can charge monopoly prices for access and services or ignore the central interests of its client base.

Second, the value of volume is declining. Advertisers pay less per thousand exposures than in the past, which means to maintain ad revenues sites must deliver more and more volume. That's a problem because there are only so many "eyeballs" out there and the Internet is no longer growing at previous rates. A related issue is that to increase volume you must also increase site costs -- not a good strategy when revenue per thousand ad exposures has been declining in recent years. (See: 2003: Interactive Marketing Gets in the Mix, at Boston.Internet.com)

Third, successful brokers and salespeople are investing in their own sites and traffic -- not someone else's. Their websites are becoming branded identifiers, the name and notion associated with real estate locally. Why drive traffic, business and dollars to someone else's site? That's one underlying question which prevented passage of the VOW proposals at the NAR national convention in New Orleans, a discussion now postponed until the mid-year meeting in May.

Fourth, the Internet increasingly favors local brokers. What's the hottest concept on the Internet? You can make an argument for AOL, E-Bay and Amazon, but the rising giant is plainly Google. If you can "google" someone -- check their background, you can also "google" real estate: Press a few buttons and instantly find brokers and agents in a local community, a good deal for brokers with top sites who are not paying referral fees or other costs to gain traffic and business.

The good thing about the Internet is that is has allowed -- and continues to allow -- a variety of approaches to every given issue. That said, there are some ideas which no matter how lucid in theory simply do not create much marketplace impact. If that sounds unreasonable, just call me on your videophone.

For more articles by Peter G. Miller, please press here.