E-Commerce Newsletter A-Clue.Com, Volume 4 Number 41
A-Clue.Com
by Dana Blankenhorn
Volume IV, No. XLI
For the Week of October 9, 2000

This Week's Clue: Ending Broadband's Failure

This Week's Clue: Ending Broadband's Failure

SSP (Shameless Self Promotion)

ICANN, or Can I?

Dynamic Pricing Has Its Price

Real Estate's Place on the Web

Clued-in, Clueless

I have a DSL modem and I pay its bills, so I decide what the modem does. But if you access the Web from work or school, someone else pays and they decide. If the boss wants to monitor your e-mail or install software to seek flesh tones on Web pages you access, or if the college decides to ban the use of file-sharing technologies like Napster, then he who has the gold makes the rules. Break those rules and you can lose your job, your education, and your future - there's no recourse. 

So the broadband Web can be controlled - beyond the constraints of the law. Napster can be stopped, pornography can be stopped, and even racist or sexist e-mails can be stopped, if the current owners of the broadband net choose to do it. 

But this is going to change over the next few years. eMarketer, which compiles everyone else's market research, estimates there will be 32 million broadband users in 2003 (four times the present total) and roughly 80% will be in homes, not businesses. 

Whether DSL or cable wins the game matters very little - both will do quite well. While cable operators have tried to limit use of their consumers to technologies like Napster, their ability to do this will decline with time and scale, just as China's enforcement power will decline as more Chinese go online. 

Billions of dollars are being waged based on this assumption. The thousands of miles of fiber cable now being put on-stream, the billions being spent on optical switching and in tapping optical lines, depend on those lines being used for broadband services. To date no broadband-based Web site has been successful in the marketplace.

Unless willing buyers and sellers can make a market in broadband files (like music files) and video files, the broadband Web will not succeed and most of that money will be wasted. Negotiation and experimentation are called for, not litigation (and certainly not prosecution).

Among the artists who have begun this negotiation process none has the desire for a deal (or the motivation to cut record companies out of it) than Prince Rogers Nelson of Minneapolis . Prince sacrificed his name, and endured a decade of ridicule, in order to extract his catalog with minimal gain to his publisher.

Unknown artists using sites like MP3.Com to freely offer copies of their new songs understand the game as well, but they lack the capital and business savvy to take the next step. That next step is to build a career without resort to the big music publishers.

The man in the best position to take this step is the man known as The Artist. There's ample precedent for the artist-as-businessman - Quincy Jones, Chet Atkins, and Herb Alpert among them. What's different here is the need for an entrepreneur, not just an executive. Even if he merely provides a model that bigger rivals then exploit, Prince will liberate generations of musicians, make himself a lot of money, and (perhaps) turn Minneapolis into a music capital.

Given the refusal of music publishers to negotiate with the market, those who believe in the broadband Web badly need Prince or someone like him to succeed. Someday broadband's Prince will come, in other words, and we can only hope he comes soon.



SSP (Shameless Self-Promotion)

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I write daily for ClickZ. I write monthly for  NetMarketing and Boardwatch. I've been in Advertisi000ng Age and the Chicago Tribune . Once every other month I'm in CLEC Magazine. Twice each month I'm at OneChannel.Net  and I've recently joined the staff at ISPWorld. 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

ICANN, or Can I?

Despite Esther Dyson's best efforts, and a streamlined "dispute resolution" procedure that has drawn praise , the Internet Committee on Assigned Names and Numbers can't help but evolve into the first world government.

I use that term advisedly but deliberately, knowing the phrase "world government" carries with it a ton of baggage, as well as controversy, hoopla and pain. But ICANN has power, real power, and its procedures for handling that power include a real election that is taking place right now.

The power of people over that election is limited. Insiders will maintain a controlling block of votes even after this election. But if "insider" candidates like Lawrence Lessig are overwhelmed by member-nominated candidates such as Emerson Tiller it will send the same message as a "no confidence" motion against any other government.

The chances of such a result are very real. It's easier to stand against an existing structure than create something new - it always is. (Even the U.S. Constitution was a close thing.) ICANN has a ton of critics, who say it's undemocratic and favors corporate interests. When the impact of a vote isn't seen as real in your daily life, it can be treated as casually as the match that just lit your cigarette while you're driving down a forest lane on a Western summer's day.

My prediction is the critics will win the vote. Creating something meaningful that still works, however, will require much more than the critics may be able to provide.

Dynamic Pricing Has Its Price

Amazon.Com's efforts to turn a profit took another setback when its experiments in "dynamic pricing" were detailed . Amazon had already ended the practice but the damage had been done.

There's nothing new in dynamic pricing, nor should there be anything controversial in it. It makes sense that big customers get better prices than small ones. (Amazon made matters worse by experimenting with a system that gave regular customers higher prices than new ones.) Amazon's ability to database (as opposed to calculate) its way to a decision on who should get what price is what's different here.

But Amazon's public image doesn't need any new black eyes, and it just bought a major shiner. The company has already hosed members with its privacy policy , it's in deep doo-doo with analysts , and it's had to cut its losses in some niches . (The site was also down early last week - at least it was inaccessible Tuesday morning to my DSL modem.)

Each step Amazon has made lately sends the same message. We're big, we do business only with the big, and we're out to make big money. Each move Amazon makes takes it further from its roots as an upstart against the status quo. This also takes it further from the goodwill it must have with rank-and-file Internet consumers if it's to succeed.

Real Estate's Place on the Web

It turns out that real estate does have a big place on the Web, and the Web has a big place in real estate. It's just not the place advocates had in mind.

People used to think that big files and e-commerce would provide a substitute for all the rigamarole you have to do with real estate agents. Groups like Buyowner  are still pushing a version of that, but that's not where the big money actually lies.

The big money lies in culling prospects on the one hand and properties on the other, as a recent NPD-Media Metrix study makes clear . Traffic at major sites jumped 75% year-to-year at a time when the total Web universe grew just 22%. Consumers are using Realtor.Com, HomeAdvisor  and HomeStore, and to a lesser extent HomeFair, Homes.com  and others to pinpoint a set of prospect homes in their chosen location and price range. This speeds the home buying process by pre-qualifying people, driving them down the sales funnel at modest cost.

The challenge remains to monetize this movement down the sales funnel. Unless the Web's role is recognized financially, it will disappear.

Clued-in, Clueless

Clued-in is Prince . Rather than add my own two cents to the Napster debate, listen to what a famous musician outside the control of the music industry thinks.

Clueless is cdINK.com, a Web design firm which sent out a press release bragging on their new, most-horribly overdone Web site.


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