by Dana Blankenhorn
Volume V, No. XXXVIII
For the Week of September 24, 2001

This Week's Clue: Lessons From The Internet's Finest Hour

This Week's Clue: Lessons From The Internet's Finest Hour

SSP (Shameless Self Promotion)

SP (Shameless Promotion)

Direct Marketing vs. Branding

Enlisting the Internet

The Online Marketplace

Clued-in, Clueless

November 23, 1963 was TV's finest hour. It brought us through the grieving process together. But the story was simple. As the 1960s went on, and the story became more complex, TV could not keep up. 

September 11, 2001 was the Internet's finest hour. TV still told the simple story, but as the mind-numbing images of the buildings falling ran over-and-over millions of us ran instead to our PC screens. 

There we found a more complex reality. We received sympathy from around the world. We saw the distinct phases of grief - shock, disbelief, anger - play out in millions of other hearts, in hundreds of other nations. 

News sites saw a spike , but the reality was, again, more complex. Many people sent grieving notes to their entire address books. Normally I'd call that spam, but not now. Forums normally devoted to completely different subjects, like book publishing, became battlegrounds between those demanding vengeance and those counseling patience. Those urging peace found (to their surprise) that they weren't alone. 

As shock turned to anger, we saw the inevitable backlash. Former Clinton-era Internet advisor Dave Farber's list began seeing links to stories blaming the Internet for the bombing. A "Daily Telegraph" editorial blasted encryption , saying "If Washington is serious in its determination to eliminate terrorism, it will have to forbid internet providers to allow the transmission of encrypted messages...and close down any provider that refuses to comply." This was echoed by Howard Fineman of "Newsweek," who wrote "A generation that grew up in unimagined freedom...will have to abide new limits on travel, on communications, on free speech, due process and other constitutional protections."

A poll by Princeton Survey Research Associates showed most Americans supporting restrictions on cryptography "to Aid CIA/FBI Surveillance" even though Bin Laden himself may be using an unencrypted satellite phone and even though it's more likely terrorists are actually hiding their messages in plain sight, in chat rooms and ordinary photos, a process called staganography

Just as a Mafioso aware of a wiretap will say "badda-boom, badda-bing," so it is with terrorists. You not only have to find the communication, and decode it, but interpret it properly. The problem isn't encryption, but the sheer volume of communication taking place around the world, which defies such isolation and analysis.

The most chilling note may be this, from former ICANN President Mike Roberts . In a note on ICANN's Domain Name Supporting Organization list, he wrote, "Given the military mindset and anti-terrorist measures in Washington and other capitals, there is going to be a much greater stress on operational oversight of the DNS, on stability and on synchronization with related Internet security steps. There is going to be much less interest in who is represented by whom on the Board." A security services' takeover of the Internet could be just around the corner. 

Despite these chilling events I remain hopeful, because of the Internet. What we've learned these last two weeks is the Internet isn't about free music, it isn't even about technology. It's about people. It's the natural evolution of telephony and computing. Good and evil are in our hearts, not our tools. 

At times like this I turn to Abraham Lincoln. I find myself paraphrasing his "House Divided" speech of 1858 . I do not expect the world to dissolve. But I do expect it will cease to be divided. It will become all one thing or all the other.

We cannot run from the problems of the world. We cannot put the misery of Afghanistan, or the Congo, or of Israel, aside and pretend it does not impact us. The 21st century we wished for, dreamt for and worked for won't allow it. We will either deal with the causes of terrorism or be consumed by them, in the fire of war or the icy grip of our own fear. 

SSP (Shameless Self-Promotion)

"Living on the Internet: How to Make Money, Live Right, and Fight For the 21st Century" is now in the hands of the folks at eBookAgent , which is arranging for electronic distribution. I will add monthly updates, available free to all buyers of the book. Your testimonials on my work (or my book) are eagerly sought. Drop me a note if you need a sample chapter first .

You can join the A-Clue.Com discussion at I-Strategy , our shared e-mail digest produced with Adventive.Com. You can also read me at ClickZ , B2B, at Boardwatch, ISP Executive, Sitepoint  and the new (paid) version of WorkZ. More deals are being sought. Remember that it's journalism that keeps the Clues coming...

Shameless Promotion

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Takes on the News

Direct Marketing vs. Branding

Some of my best friends are direct marketers. Direct marketing is a great and important discipline. But it is Clueless for publishers to depend on direct marketers for their long-term survival.

Direct marketers are a diverse lot. Many have very high ethics. Those who teach this art and science encourage high ethics. But not all direct marketers have such ethics. Many, frankly, are thieves. I get 10 spams per day here, on average, and all of them come from self-styled direct marketers.

During the Internet Boom sites pulled-in brand builders as advertisers but measured their work using direct marketing metrics like clickthroughs. This worked well, with brands focused on the Internet. It didn't work well with traditional brands. This is why the bursting bubble killed so many sites. Even the best sites, like MSNBC, found themselves selling home page space to direct marketers like Classmates.com and even online casinos like 888.com.

To succeed Internet publishers must lure traditional brands. This is a long-term survival strategy. Unfortunately, it comes up against a short-term reality.

Direct marketers are the only people spending, and their demands of sites for obnoxious ads are increasing. Thus, users are faced with a host of pop-ups, pop-overs, and pop-unders. They're rebelling with programs like Pop-Up Killer, and major media is encouraging them to go further, by turning off Javascript support on their browsers.

Site managers have responded with threats. One ad guy told me users "have to accept mildly intrusive" marketing (things like 30-second spots before home pages load) or lose all content. Another respected manager said subscribers to e-mail newsletters should be forced to accept marketing e-mails as a condition of free membership. Both said that unless users conform their sites might close.

It is Clueless to threaten the market. As a consumer of goods I don't have to buy from you. As a consumer of information I don't have to give you my time. It is up to you to earn my time and my money, and if your business goes under don't blame me - I've already gone somewhere else.

I've talked before about how sites can lure traditional brands. They need to encourage users to register. They need to get permission from them to engage in a dialog that will bring brand managers valuable market data.

But they also have to ignore the siren call of direct marketers for quick bucks. Some direct marketers are subsidizing some real crap, like the purchase of misspelled domain names linked to Javascript pages that force-open dozens of direct marketing sites. Closing these windows only forces open new windows. CERT has issued an alert on this with instructions for disabling Javascript. But many sites (including the a-clue.com home page) depend on Javascript, and some entire sites won't load unless users accept Javascript.

The result is an impasse, and many users are reacting by going to other, more controllable media, such as TV. That's not good for anyone.

Two actions are urgently needed. First, direct marketers need to not just claim they're ethical, but have their ethics written into law, so those who aren't ethical can be put in jail. That means we need anti-spam legislation as well as specific laws dealing with the mis-use of things like Javascript for marketing purposes. (That means granting regulatory power to the FTC.) If the DMA  doesn't cave on this issue soon it will lose the medium.

Second, site managers need to resist calls by direct marketers for increasingly-intrusive ad formats. They must avoid turning all sites into porn sites, with users forced to look at things they didn't ask for as a condition of seeing what they want. A little creativity wouldn't hurt, either. The "Band of Brothers" banner recently found on Weather.Com (featuring the sound of bombs bursting and tiny figures sky-diving onto the page) is cool -- the first few times you see it. CBS Marketplace's "subliminal" branded backgrounds (Budweiser is in their rotation) behind news stories isn't obnoxious, either. (Putting a 30-second ad in front of their site, however, is obnoxious -- we're walking a fine line.)

Third, site managers need to give brand managers the metrics they want, the credibility they need, and the data they crave. If you can make just one brand manager happy with such a strategy, you can save your small site. If you can make a half-dozen brand managers happy with such a strategy, you can save a big site. If your staff can do this for even a dozen brand managers, you can save a whole portal.

Enlisting the Internet

In the wake of "911 Day" many ISPs were "raided" in the search for evidence (I suspect they all complied gratefully) and others were asked for "online wiretaps" aimed at surveillance of other potential suspects .

That, of course, was just half the story. Many "hackers" all over the world decided to enlist in the effort against terrorism . Most wound up engaging in vigilante actions that did more harm than good. Many others will find themselves targeted, because of their past political opinions, in the next several weeks, months and years.

The Bush Administration, and many other national governments, face a fundamental choice over the next weeks and months. How much freedom will be destroyed in the name of protecting what is left? How many will be antagonized - turned into enemies of authority - through that effort? What will those people then do, in the name of fighting for lost freedoms?

There is a balance that must be struck here, a delicate balance. Cops and spies are now our beloved protectors. If they overplay their hand, however, every enemy they make becomes an unwitting friend of terror.

The Online Marketplace

New York's two stock markets opened together last Monday mainly because the NASDAQ refused to take advantage of its computer-based market against the NYSE's "open outcry" system. Had New York's markets really been entirely based in Lower Manhattan they would have disappeared.

Beyond that there are important lessons here and warnings. Transparent markets demand transparency of information. Bin Laden tried to short insurance stocks in Europe before his attack, and that's evil. But people try to do the same thing every day - it's the transparency of information marketplaces, as well as of financial marketplaces, that keeps such things from happening. Concepts like standardized financial reporting and "Regulation FD", a new rule that requires boards to communicate with everyone at the same time (not selectively disclosing dangers to analysts) are aimed at increasing this transparency. This is what makes the U.S. market the best, and fairest, in the world.

Anything that restricts the free flow of information reduces the transparency of markets. Any U.S. move that has the side-effect of reducing our market's transparency risks moving money flows to other countries. A move against the Internet, in other words, is a move against the market.

Clued-in, Clueless

Clued-in is the technology of fuel cells . Replacing hydrocarbons with hydrogen will do more to reduce our vulnerability than any other single act.

Clueless is Osama Bin Laden . Anyone who ever played "Risk" as a child knows you don't tap a horde, lest it sweep the board and destroy you.

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