E-Commerce Newsletter A-Clue.Com, Volume 4 Number 23
A-Clue.Com
by Dana Blankenhorn
Volume IV, No. XXII
For the Week of June 5, 2000

This Week's Clue: The Problem of Being Paid

This Week's Clue: The Problem of Being Paid

SSP (Shameless Self Promotion)

AOL Takes Over Gateway

More on Living With Broadband

Spank Bronfman

Clued-in, Clueless

I have been very lucky in my freelance career. Only two clients in 17 years have stiffed me. One was a magazine that went under, so I was entertained by years of court filings for my lost $35 fee. The other was a Web site whose owner kept "forgetting" to send the $300 check for a press release I wrote. (I think he's out of business, too.)

One reason I've been lucky is people realize I'm trying to make a living here. Corporate vendors may be put-off - failing to pay employees is harder to justify. A second reason is that I'm a reporter. If you're angering a reporter over money you're playing with fire. A final reason (the best, I think) is my charges are so small - I've gotten only one five-figure check in my entire career. 

But I have been dealing with a lot more slow pay lately. One client has made a habit of staying at least a month behind on my invoices. Others who didn't insist on invoices before now insist on them, often without telling me first, which slows payments. 

I figure that if I'm catching cold you're getting pneumonia. If your services aren't mission-critical, you may have trouble getting paid. Making things worse for creditors is that some Web sites, instead of filing for bankruptcy, simply disappear from the Web , leaving no one to collect from or sue. This makes it harder on every company that's left.

What can you do if you're not being paid promptly? First, diversify your client base so no one client represents so much of your income that you're dependent on them. Next, demand honest answers but show a little humanity. Gently remind the top guy (or gal) at your debtor that slow payments can burn goodwill they'll need for their next start-up. Finally, once you catch a debtor in a lie, burn 'em. Set firm deadlines for payment and stick by them - don't get fooled a second time by the same client. Once the deadline passes, call the collection agency and take your lumps - they get paid out of your proceeds. 

What if you're the one who owes? Be honest with your creditors and be ready to fold before you're robbing Peter to pay Paul. My dad robbed Peter to pay Paul for years, and when it finally crashed around his ears the shame killed him dead, slowly and painfully (for those around him). No business, no matter how much you love it, is worth your life. 

There's also an opportunity here. A collection agency has already taken slowpay.com, but slowpay.org is still available. A database of slow payers, backed by discussion and access to resources, could be a valuable service. Such a service should be run by lawyers, however, and not by marketers. (Personally, I wouldn't want the liability risk of this business model, but just because something is difficult doesn't mean it's not worthwhile.) 

What's most needed is a corporate memory. If an entrepreneur develops a history of walking away from debts, it's something you deserve to know before you consider doing business with him (or her). A database tracking individuals who shirk their fiduciary responsibility from within corporations would be a service worth paying for. 

Remember that you're in a corporate ecology. When there's not enough food for all, some creatures die leaving the survivors stronger. That's the way it is. If you go with honor, you can come back. If you go sniveling, you can't. 



SSP (Shameless Self-Promotion)

At the end of this month I'll be appearing in New York, covering the ClickZ Marketing Strategies 2000 conference . If you need to become Clued-in, the speakers at this show can help.

I'm still making myself available for consulting to a limited number of clients, with an eye toward assuring their long-term success. If you're interested give me a shout at 404-373-7634.

Also, please pass this along to friends and urge them to join our list. And don't forget our new e-mail address .

I write daily for ClickZ, and weekly at Andover.News. I write monthly for  NetMarketing, Boardwatch, and  Intellectual Capital. I've been in Advertising Age and the Chicago Tribune .Once every other month I'm in CLEC Magazine. You can always buy my book . Subscription instructions are at the bottom of each issue.

Remember that it's journalism that keeps the Clues coming...


Takes on the News

AOL Takes Over Gateway

America Online has been slowly absorbing Gateway into its keiretsu for months. Gateway quietly added AOL to its bundle and dropped Earthlink. Now it has committed to building an Internet terminal using a Transmeta chip and Linux tied to AOL and its Netscape browser .

Most attention is focused on the technology or the intrigue of this device but that's not where to look for insight. Look instead at the support behind the play. You'll find there isn't much. Gateway's stores don't offer service. All they can do is replace machines that break by mail. Neither AOL nor Time Warner really has a presence on the ground.

Attention is being paid to the "price" of these boxes (under $500 for a flat-panel display and cheap keyboard) but look instead at the terms. The devices will likely be rented at $25/month on a three-year contract. As production costs drop the contract length will shorten (as in a cell phone model) but the base rate will remain the same.

What's missing? This is a broadband play so cable modems alone won't do the job. The next shoe to drop must be a collection of DSL players - Bells or CLECs - who will provide the connections and stand ready to pull wires. Expect that announcement before the end of the year, certainly before any product is delivered.

More on Living With Broadband

Speaking of broadband, I've had it for more than a year now and it's not all it's cracked up to be.

I still don't have a home network, but as time goes by (as the novelty wears off for my kids) that becomes less and less essential. It's still great to be able to respond to e-mail immediately, but the "fast downloads" promised by DSL aren't yet real, mainly because of problems finding target sites or connecting between my local switch and the POP of my broadband provider, Mindspring.

Unlike BellSouth's service, which turns on with the machine, Mindspring's must be turned-on separately, and the connection is often dropped. I'm still happy with Mindspring because its customer service is superior and they'll let me build my home network when I get around to it.

I still don't watch movies or video on my computer and I don't download a lot of MP3 files. What I want before doing that is a "home server" linked to the TV and all my PCs (maybe something like an AOL appliance in the kitchen) along with much faster service. The G.lite standard of 1.5 Mbps downloads may sound good if you're on a modem, but it's a '386 experience. The Pentium version of this technology will be a dedicated phone line with a top speed of 7 Mbps, with service delivered transparently throughout the home through a LAN. (That 7 Mbps speed is still less than typical LANs promised in the 1980s.) Getting there for the bulk of the market may be the work of a decade.

Spank Bronfman

Someone has to say it. The biggest mistake the Bronfmans ever made was letting their idiot child Edgar run the company.

Instead of owning 20% of DuPont they're stuck with a poor movie studio and a music library they can't capitalize on. The reason is Bronfman's own complete Cluelessness, which he exhibited to Variety last week .

Rather than look for an economic model that will broaden the reach of his product and earn more money (even if he takes less for each recording), Bronfman is demanding that government protect his monopoly and that listeners pay only the prices he dictates for the formats he chooses.

Bronfman doesn't write music and he doesn't perform it. His right to own music is based on his ability to make money for those who write and perform it. If others can deliver more value, they will take his market. He refuses to listen. He deserves to fail.

Clued-in, Clueless

Clued-in is Hank Barry , the new CEO of Napster. He may fail, but he's asking the right questions (like what's our business model) and has the right background (he's a lawyer) to give the company a sporting chance of success.

Clueless are dozens of b2b exchanges from big companies, including IBM , which think they'll be able to dominate this market without anti-trust scrutiny. Even GW Bush is smart enough to figure out that when one player owns the marketplace, they control the market, and that most businesspeople control neither marketplaces nor markets.


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