A Clue..to Internet Commerce

by Dana Blankenhorn

For the Week of March 17, 1997

Volume 1, No. 3

This Week's Clue: Levels of Intimacy

The deeper into the Internet you go, the greater the level of intimacy between users, and the more sensitivity you must have if you're to have a hope of making the sale.

The Web is the great wide world. Be as loud and brassy as you want on the Web. Offer whatever you want. People will come in, or avoid you, as they choose. There's stupidity, but netiquette issues are few -- save cookies and caches, which many treat like flyers stuck on their windshields while they were in a shop.

E-mail is far more intimate. It's your living room. If I have the TV or radio on I'll get your ads. But call me during dinner and I'll raise hell. Unsolicited e-mail is like that call during dinner. It's a great way to make enemies, even if you're a charity.

Chat is the bedroom of the Internet. Internet World this week focused heavily on adding marketing messages to chat. AOL has put banners inside chat rooms. Marketers are looking for other ways to slip marketing messages into chat rooms, both overtly and covertly. A clue -- be very careful. There are ads in those magazines you read before you go to sleep, but if you get into the middle of an intimate conversation and some salesman suddenly pops up between the sheets, he or she may get kicked, hard, where the sun don't shine. Them and the horse (or Web site) they rode in on.

Speaking of Chat...

Chat builds billable hours. It's the basis of AOL's success. Now specialized and 3-D chat worlds want to eat AOL's cheese.

Leading the charge is (of all people) John Sculley. The former Apple chairman is behind LiveWorld Productions, whose TalkCity announced a deal with Microsoft at Internet World. Sculley has an interlocking set of investments and board seats aimed at turning chat into a deep marketing vehicle. On the other side is The Palace, which announced bundling deals with hardware-makers U.S. Robotics, Compaq and NEC. There's also a Microsoft connection here -- The Palace's "auditorium" feature integrates with Microsoft's NetShow 2.0. Investors in The Palace include Intel and Time Warner.

Remember what we said above -- marketing must follow rules of intimacy. Banners in chat-rooms will be ignored, and could be resented. Suggestions on products or Web sites must be on-target, delivered within the flow of conversation. The key should be building communities through which conversations can be continued, including talk on products those in the community will find truly worthwhile. Violating these rules is very risky -- it's easy to lose goodwill if you're too blatant with those you're trying to be intimate with.

The Nature of the Medium

At Internet World, the big debate concerned the nature of the medium. Is it a mass market, or direct mail? Here's a clue. It can be either, it is in fact neither.

You can't deliver deep value to customers on the Internet by modeling other media on it. Yes, you can draw a lot of customers, and viewers, through an online service. America Online has 8 million customers. But its network upgrade will give it just 400,000 modems. That is a magazine, not a TV network. Only hype, money, and boredom could interest a Brandon Tartikoff in it.

Still, they'll be stories. MSN has begun heavy cable buys for its $19.95/month Web-online bundle, showing-off Expedia, MS-NBC, e-mail and chat rooms. Like AOL, MSN combines access and content at one low price, hoping to pay content costs with advertising revenues. Meanwhile, AT&T and the Bells are raising their ad profiles. WorldNet's made a major new ad buy, and BellSouth signed a deal for worldwide access with IBM last week. The stories, of course, will be clueless because writers won't examine the economic models. You can't pay for deep Web content only by renting eyeballs. And you can't lose money on every deal, then make it up on volume.

Still, the need for access providers to equalize with content providers spells opportunity to outfits like CMG's Planet Direct, which rolled-out customized services for Internet Service Providers last week. Tell 'em where you live and what you care about, then Planet Direct will customize sites like The Weather Channel and CMG affiliates like GeoCities for you based on those interests. Content providers get customers, ISPs get a way to compete with MSN and AOL, and new users don't have to surf.

Planet Direct isn't alone. IDG's nVolve promises to create "affinity destinations" for Web surfers, with users' preferences turned into personal "entry pages" to Web sites. The technology could also be sold to Internet Service Providers.

Is the Internet direct mail? You can do targeted marketing to Web visitors if you're careful. Drawing customers through a Web site and then sending those who favor you e-mails is safe. But that's niche marketing, not direct marketing.

A continuum of list brokers has developed, ranging from outright spammers like Sanford Wallace's CyberPromotions and targeted list-builders like Electronic Direct Marketing, through list builders like Internet Media Group and The Internet Marketing Group , to "opt-in" outfits like Rosalind Resnick's NetCreations. But here's what "Spamford" Wallace himself told A Clue last week. "In terms of sending unsolicited advertisements, I don't know if large companies will ever use" e-mail.

Here's a clue on using direct e-mail. Build your own list, and treat that list as you would a list of friends.

Speaking of Email

The rise of HTML-capable e-mail programs like Netscape Mail 3.0 is leading to programs like Email Magic from ArcaMax, now beginning beta test. This program lets you add animations to messages, without using a separate player. Animations are sent as an animated .gif which can be seen by Netscape 3.0, and the player is small enough to be embedded with the animation for users without the new mail readers. The creation program costs just $49.95. Expect lots more of this kind of stuff soon.

Another Micro-Payment Technology

Digital Equipment has become the latest to enter the still-nascent micro-payment market with an offering called Millicent which, it says, can profitably handle transactions worth as little as .1 cent.

Like CyberCoin, Millicent uses a wallet, server software and caching to keep transactions together until they'll pay to process. Millicent also features an electronic ticket, or scrip, which can be used as electronic currency. That, and Digital's sponsorship, could be the way to make a market here. Think of this scrip as the "S&H Green Stamps" of the Web. If enough merchants give 'em to people, for buying or just visiting, and valuable merchandise can be purchased for "scrip," there's a financial model which works.

But selling columns like this for a nickel? Gedoutahere.....

A Contrarian Clue -- Don't Give Up On Netscape.

Not just because some college kids found holes in Internet Explorer 3.1. Not just because Microsoft throws four cache directories on your main drive, and makes it impossible for ordinary users to kill caches and cookies. It's because Netscape is taking advantage of these opportunities -- adding cookie-cutters, delivering continuing value through In-Box Direct, giving away e-mail accounts, keeping the number of cache files down. It's also successfully managing alliances with a host of warring partners -- IBM, Oracle, and Sun -- to give CORBA objects a fighting-chance against ActiveX.

Netscape is hoping that, by supporting others' standards, listening to users' desires and responding affirmatively, it can become the "browser you grow up to." That's clued-in thinking. When you're out-gunned financially, you'd better have a clue.

Clued-In, Clueless

Clued-in this week is someone you've likely never heard of. Neil Edwards runs the Internet Division of American Business Information Inc. in Omaha His 16 million listings -- checked as often as once a week -- are behind most Web business directory sites and many printed directories. Last week he announced a deal with BigBook (www.bigbook.com) to sell his database of business listings, at $3 for a full account of a business' officers and office locations, as little as 50 cents for a basic listing. He says his 83 year-old grandmother was able to use his software, and, while ABI's investing in BigBook as part of this deal, it's non-exclusive. Keep your eye on this outfit.

Clueless is Jim Kinsella, who previously launched Time's Pathfinder site. Kinsella's made a career of mis-reading the Web, first calling it publishing, now calling it broadcasting. He's also behind the legal attack on TotalNews, which is certainly a "roach motel" that links copyrighted content within frames, but doesn't deserve the suit because users are smart enough to figure that out. People who think other people are clueless are, themselves, clueless.

A Clue...to Internet Commerce 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 $49 per year. Subscribers can receive either a .txt file or an .htm file, the latter enables links on the page to be active when seen inside a browser, or an e-mail package like Netscape 3.0. (Let us know which you prefer.) To take your name off the list, simply write REMOVE as the subject, or content, or a message replying to this post. To request your free copy, write us at clue@tbass.com, or Dana.Blankenhorn@worldnet.att.net. We're, also, on the Web at www.ppn.org/clue.

A Clue...to Internet Commerce -- Copyright @Have Modem, Will Travel and Dana Blankenhorn, 1997.