A Clue..to Internet Commerce

by Dana Blankenhorn

For the Week of April 14, 1997

Volume 1, No. VII

This Week's Clue: TV or Not TV?

Last week's National Association of Broadcasters' show opened with a shocker -- Microsoft buying WebTV for $425 million in cash-and-stock. Analysts applauded. I say the Emperor has no clothes.

Bill (Clueless in Seattle) Gates has been fascinated for a long time with the merger of TV and the PC. Why? Viewers have high expectations for TV programmers, but I can produce this letter in my dining room. That cuts the number of potential competitors, allowing Gigadollar Bill to focus all his energy on one or two rivals (which he's good at) -- the Web is a death-of-a-million-cuts.

WebTV puts Internet technologies onto silicon, then licenses the resulting set-top box to TV makers like Sony and Philips . WebTV was the high-tech "Tickle Me Elmo" of last Christmas (thanks to heavy advertising), but how many units sold? Maybe 100,000, maybe less. And are those owners happy? Those I talk to say no. When your Internet access is set in hardware, it can't upgrade in Web-time. No Shockwave, no VRML, no whatever-comes-next. The solution WebTV's been mulling is a "second Internet," based on standards WebTV would set. Couch potatoes would substitute this for the "real" Internet, and this "consumer" Internet would have one ISP, and one software standard -- see why this appeals to Microsoft?

Microsoft figures most would rather pay a few hundred for its Web than a few thousand for a PC. A clue -- I paid $60 for my little girl's bike with training-wheels, but when it was time for something street-legal, I ponied-up the big bucks. So will most people. (And if people want to pay a few hundred for an Internet-access device, they can go for a Pippin or other game machine.)

The real hope is for TV networks to buy-into proposals Microsoft, Intel and Compaq did a dog-and-pony for during the NAB show. Make HDTV compatible with computing, then broadcast digital "channels" at cable-modem speeds. Broadcasters could also use this to offer up to four shows in their new HDTV bandwidth where they now offer one, switching to HDTV only in prime-time for movies which benefit from the higher quality. To computer people it's a quick, easy business decision.

But it won't happen, and if you make a political calculation you'll see why. The FCC isn't giving TV stations extra-bandwidth so they can compete with computer networks. HDTV replaces TV with TV. Every move toward a computing standard by TV station owners is met by demands they pay big bucks for their extra bandwidth. Broadcasters won't risk their licenses on anything less than a sure thing. Until the political equation changes, Microsoft's right to write-off its WebTV investment.

But assume I'm wrong. Assume, as IDC Research does , that 3.2 million "Net TVs" can be sold in the year 2000, There's always NetChannel , which bought ViewCall America last week. They sell something just like WebTV. And there are others. It's easy to put a browser on silicon, easy to put that into a box, cheap to make a manufacturing deal for a proven product. Netscape can get into this race in a heartbeat, and for a pittance.

Here's the big clue. Bill Gates is wrong more often than he's right. For proof I'll give you one word, just one word --- Bob.

Shameless Self-Promotion (SSP)

Journalism -- checking the news, calling people, listening carefully, writing on deadline -- is how I keep these clues coming, although I also handle consulting and commercial writing (ask about those rates via e-mail). My latest project is a column for the Atlanta Journal-Constitution's Web site , which will start soon. I also have drawn new assignments from AdAge's NetMarketing supplement and Business Marketing magazines. Now back to our program...

Oh, yes, that was yours truly on CBS Radio last week, giving the Social Security Administration a clue about digital signatures, so they can give your data to you and protect it against me. Newspapers, radio, TV, you name it....we give good quote.

Sales Cycles

Your first clue, before selling anything, is this -- would you take this offer yourself, at this price? If you're honest in pursuing this clue, you can save a ton of money. Maybe as much as Disney would have. After buying heavily into Starwave, they announced a $5/month kids-only Web site (free with MSN). They're going to lose a ton on it, because there are so many free alternatives, most kids prefer CD-ROMs, and those who'd enjoy the Web will quickly "graduate" to other, more mature resources.

We'll assume you're neither spammer, scammer, nor clueless rodent. How, then, do you turn the great mass into happy buyers, using the Internet? Your clue here is, again, to think like a customer. How would you decide on, say, a new printer, using the Web? How might your neighbor -- someone with an Internet account, but not your savvy? Don't know? Ask.

Chances are, they'd check out magazine stories, look for reviews, scan newsgroups covering the subject, and only then get product literature. Then they'd look for the best deal on their target printer -- the nightmare is seeing the same thing for less a week after purchase. Finally, they'd probably check the vendors' Web site for technical notes, saving time-and-money if they have access to FAQs and e-mail access to customer service, as well as a phone number. Now, work backward from there. If you don't have the resources -- reviews, newsgroups, overviews -- link to 'em.

Is there a short-cut? To some, there is. It's called the "brand." Here's how AOL president Robert Pittman put it at last month's Jupiter Consumer Online Service Conference. "Superior technologies don't win. Superior products don't win. Brands win."

Half-right. And half-assed. How was the ultimate brand, Coca-Cola, created? (Atlantans memorize this in elementary school.) Robert Woodruff was named president of a failing company in 1923. Bottlers were fighting with the company over the price of syrup. Instead of addressing that argument, he asked "What can we do to make every Coca-Cola the same, wherever it's purchased?" From that came water purification, quality control, a host of measures which created a replicable, predictable experience for marketing to exploit. That's where AOL finds itself today. Unless it can cut its subscriber-modem ratio to at least 10-1, from its current 20-1, it will die. Every day it fails to do this, it dies a little. The solution is to give Block the price it wants for the CompuServe network, maybe sell a hunk (20%) of the company to MCI or AT&T for prime network access.

The clue -- you build a brand by fufilling expectations, one customer and one purchase at a time. Marketing alone won't maintain an online brand. Only performance will maintain a brand. The Internet is a one-to-one world, not a many-to-many world. Your power as a consumer is enormous. Your power as a marketer is only as great as your organization's ability to deliver on your promises.

Adventures in Webmail, or Color Me Clueless

I'm no HTML-hound, OK? Here's why your internal HTML links haven't worked, according to Sean Cafferky, who hosts us at PPN. When files with internal links are sent via e-mail, as attachments, they need to refer to the file they're in. So the command a href="clue4-14.htm#story3" works. A NAME="story3">Color Me Clueless< > works on the Web, but not in e-mail.

Tommy Bass, who hosts us at http://www.tbass.com/clue, adds that if you strip-out the top MIME or UUENCODE statements of your e-mail, which refer to its original location on my hard-drive, to wit:

Content-Type: text/html; charset=iso-8859-1; name="Clue4-7.htm"

Content-Disposition: inline; filename="Clue4-7.htm"

Content-Base: "file:///D|/CLUE/Clue4-7.htm"

...your links will work as well. Another option: we could send the content as the message, not an attachment. (Your views welcome.)

There's yet another option for Webmailers, from Steve Shelton of Wondershelf . Post a mirror of your e-mail on a Web site, with all the graphics and sounds you want, then reference it in the e-mail, complete with its Web address. "In doing this every file is directly tied to your web site," he writes. "OR, You could send the new-zine to them as one html file," referencing the graphics and other codes on your Web site.

All well and good, but here's a clue for Steve. Don't overplay your hand. Make sure that e-mail you send has "off-line" value, in case it's being seen off-line.


Clued-in this week is Knight-Ridder (no, they still don't have a corporate Web site), the newspaper chain which bought more newspapers from Disney and will sell its Knight-Ridder Information unit, formerly called Dialog. Michael Dortch, who invented the phrase "Few with a Clue" and now writes "Information Superhighway Vista Points (ISVPs)" (write him at medortch@aol.com to get on that list) calls this "potentially clueless" so here's why it's not. Dialog's obsolete in the age of the Internet -- all the databases it previously aggregated can go to market by themselves, with better search software. Newspapers, meanwhile, provide journalists, lots of 'em, and K-R has proven its ability to move these operations to cyberspace with such papers as the "San Jose Mercury-News". So they've got a working 21st century business model. They're expanding it, and dumping their garbage to do so. Sounds clued-in to me.

Clueless is (unfortunately) FBI Director Louie Freeh . What we have here is a failure to communicate. There is no difference between online and off-line crime -- you can say what you want but you might be held responsible for it, or its consequence. Freeh's inability to explain this, and it's gone on for years now, has left him hostage to Washington's Luddites. And it's left us all hostage to the threat of stupid reporting based on his flawed understanding. Fortunately, Congress is starting to get clued-in -- Freeh's call this week for more money to fight "online child pornography" (launch stings in chat-rooms, with agents posing as teenagers, for instance) drew just two Senators. There *are* law enforcement people who understand what the online dangers are, and aren't. If Director Freeh were one we'd all be safer.

A Clue...to Internet Commerce is a weekly publication of @Have Modem, Will Travel. It's sent free to a qualified e-mail list. Like Netscape Navigator, it carries a list price -- $49 per year. Subscribers can receive either a .txt file or an .htm file. The .htm version features links which become active when online with 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, of a message replying to this post. To request your free copy, write us at Dana Blankenhorn@worldnet.att.net. We're on the Web at www.tbass.com/clue and www.ppn.org/clue .

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