A Clue..about Internet business

by Dana Blankenhorn

For the Week of March 3, 1997

Volume 1, No. 1

WELCOME

Welcome to A Clue, the weekly e-zine which will give you A Clue of what works and doesn't on the Internet.

The beat here is money and new technology -- how to make it, and how to avoid losing it. This letter will cover the news, drawing from 20 years in business journalism, 15 of them in high-tech, and 12 of them online. In that time I've seen many businesses come and go (remember The Source?) and found the patterns, the clues which separate the quick and smart from the dumb and dead. Now I want to share those clues with you.

What's in it for me? (We're free, after all.) I like the work, I'm available for freelance writing and consulting projects, but mostly I've always had a deep, abiding need to communicate in ways which promote understanding. In this way, I hope to push history forward just a little bit, and be a part of my time.

Now that you know the agenda and the background, let's get to work.

Follow the Numbers

Microsoft brags its Expedia travel service booked $1 million in travel last week. But wait. Compare that to the billions spent on travel, most booked through computerized systems like Sabre. Note that Sabre just bought Expedia rival Travelocity Travelocity. So $1 million/week only looks good next to Sabre's own estimate of $95 million in Web-based bookings last year, (they're not the only such network) and when you consider Expedia just opened in October. Jupiter Communications claims over $3 billion will be spent in travel online in the year 2000, and claims the market's already worth about $1.2 billion.

Trend of the Week: Local Competition

Local Web competition is coming fast, as newspapers , TV stations , phone companies , directories , Web veterans and entrepreneurs vie to build local user networks. They all want to make their plays before Microsoft launches its Sidewalk sites later this year, in big markets like San Francisco, Boston, and New York. (No, we didn't forget AOL's Digital City or Yahoo .)

All this is based on a false assumption -- there can only be one winner per market. The assumption is based on the fact most cities have just one newspaper. Newspapers do have big advantages here -- money, credibility, contacts with advertisers. But they also have disadvantages -- fear of cannabalizing their print product, fear of competing with advertisers, lack of Web expertise.

Who'll win? At least some entrepreneurs. At least some big media companies. More people than you think. And here's a clue -- there will always be room in this market, as there will be on the Web generally, for new entrants. The cost of putting together a Web site continues to drop towards zero. As the launch of A Clue proves.

Show Me The Competition

You know it's time to stop funding an Internet technology when you start finding a new entrant every time you turn around. That's already happened with push technologies, where Pointcast , Marimba and BackWeb face plenty of rivals, and a shake-out is overdue.

Where will it happen next? Here's a clue -- advertising networks. DoubleClick , a clued-in network part-owned by Poppe Tyson, is already moving to international markets. That's what you do when the niche at home gets crowded, although laggards usually do this first. Here's a start-up who's late -- FlyCast Communications. Their AdAgent may deliver its promise of creating unique values for every ad impression, based on a client-server network. Deployments, starting in March, will be to a who's-who list of agencies -- JWT/West, Western International New Media, Dahlin Smith White, Fallon McElligott, BBDO, and SiteSpecific, among others. But even if FlyCast does hook a big one, the market's bagged its limit.

Tool Time

Content and management tools must be evaluated based on two criteria only -- do they save time on what you're doing, and can you create real new value for users?>p> Ncompass , which provides the ActiveX plug-in for Netscape, knows you don't just sell to Microsoft and sit-back expecting wealth (remember Spyglass ?) -- you build quickly on the Microsoft connection and offer new, valuable products based on it. Version 2.0 of their CaptiveX is a set of six ActiveX controls, priced at $195, which let you morph messages, create spinning Message Cubes, build sequences with "flip," "swipe" and "wipe" like those on TV control boards, and develop billboards, among other things, without programming. (For a demonstration visit www.ncompasslabs.com/captivex/ ndex.htm .)

MapQuest remains the best mapping solution for Web sites, and they signed two important allies this week. Switchboard is the latest directory to link the maps to its addressees -- it has links to AOL's Digital City. MapQuest also lets you link local maps to local ads, and the second deal, to create a "mapping channel" with Marimba and its Castanet Tuner technology, makes this even more powerful. A clue -- even the best tool can get better through alliances.

The fastest ways to add value to a site are through conferencing and chat. eShare Technologies is the latest to enter the Web chat market, with a Java-based program called Expressions. Its public launch was at IBM's Lotusphere , and Sony's using it for its Live By Request telecasts. Here's a key -- no plug-ins necessary, and it streams through firewalls, meaning corporate users can access it. In conferencing, Web Crossing is now in Version 2.0, with links to folders, built-in back-ups and more -- see it at Salon , Excite and National Public Radio .

Here's a clue. The way you get mindshare in the tool business is by winning deals with a few popular sites. If you give it away, people will come. They may stay to buy.

Slow Down

Forget the hype, and forget 56 Kbps for at least this year. US Robotics' insistance on pushing its software-based X2 offering against Rockwell's hardware-based competition dooms this technology, until the gap is breached. USR shipped its first x2 products last week, and says AOL will use 'em. But wait. They're assymetrical, delivering top speed in only one direction, and they're not really that fast, because they require too much power. The FCC has limited the amount of power you can load on a phone line, meaning the best these puppies can do is 53.3 Kbps, USR admits. So wait -- Hayes and others using the new Rockwell chip-set may make this USR's modem too far.

Note: Between the time when these words were written and sent to you, USR said it would sell-out to 3Com , a supporter of Rockwell's hardware-based system. Call it a case of ESC -- Casey Cowell gets an Extra-Sensory Clue.

Clued In -- Clueless

This is our weekly feature where we identify a company or person who understands the Web, and someone who, in our opinion, doesn't have a clue.

Clued-in is Chris Barr of C/Net , but not for the reason you think. It's not the speed with which he moves, or the number of hits he puts up, or the balance sheet, which still shows a loss but narrowing-enough. It's the methodical way he operates, building niche-by-niche. The key to this market will be combining editorial with transactions, and building communities which turn surfers to buyers, and buyers into satisfied customers. Yet he doesn't reach for everything at once. He gives it away , then starts selling it . A clue -- build carefully, and you won't have to rebuild.

Clueless is Steve Case . Again, not for the obvious reasons. Not because he failed to provide enough modems, not because of the lawsuits from subscribers and shareholders. We're citing him for what others consider a strength -- the host of "old media" executives he's putting together with Bob Pittman, late of MTV, at their head. This is not publishing, this is not broadcasting, this is the Web! What matters is you, not y'all. It's not a mass medium -- it's 260 million individual media choices. Anyone who tries to treat Web users as a mass audience will fail! (Hear that, Mr. Gates?)

A Clue is a weekly publication of @Have Modem, Will Travel. It's sent free to a qualified e-mail list, and carries a list price of $52 per year. To take your name off the list, simply write REMOVE as the subject, or content, or a message replying to this post. To get on the list, write us at clue@tbass.com ,DFBLANKNHN@aol.com, or Dana.Blankenhorn@worldnet.att.net.