A Clue..to Internet Commerce

by Dana Blankenhorn

For the Week of April 28, 1997

Volume 1, No. IX

This Week's Clue: B2B (Business-To-Business)

The light bulb is going off in many heads. While the Web has (so far) failed as a consumer entertainment medium -- no subscription revenue, no real ad base -- it is succeeding as a medium for business-to-business transactions.

Proof lies in the quiet rise of new business-to-business marketplaces. GEIS, the largest player in Electronic Data Interchange (EDI), is building one with the Thomas Register, whose directories are the "Bible" of commercial-supply buyers. The result will enable direct RFQs (requests for quotes) from Thomas directory searches and, eventually, purchases.

They're following Fisher Technology of Pittsburgh, whose Procure.Net has been taking transactions for six months and has signed up other distributors -- Fisher runs one of the biggest. Cahners' Publishing is adding Open Market's cataloging-and-purchasing (from WayPoint) technology to its Manufacturing Net, which remains centered on news from its trade magazines. Jim Manzi's Industry.Net is moving toward transactions -- it originally called itself a "dating service" for businesses. All promise to put your industrial goods in front of buyers, which need a lot of data before putting your stuff in their stuff. They offer buyers the savings of Web-based transactions.

The logic here is impeccable. Most businesses can afford Web sites...many get them just from extending their Intranets. Cost savings are huge -- the sales are being made anyway, so this money goes straight to the bottom-line. There are huge opportunities here for distributors, and others, with knowledge needed to put buyers-and-sellers together in specific industries. Unlike the consumer market, there are valid business models here.

What are your clues for succeeding in this new realm? Learn EDI -- securing and identifying invoices can be fun. Check yourself out on all the business-to-business directories, or at least make sure your distributors are there. Build your own Web of suppliers, customers and business partners. Remember firewalls must be porous to be useful. The person running your Web efforts can't be some kid who loves "cool" pages, but it can't be the super-salesman who's scared of pornography, either. Most important, the key to Web success is trust -- violate trust (a salesman changes a female colleague's home page defaults to a dirty picture) and the hammer should come down on the idiot. But not on the rest of us.

SSP (Shameless Self-Promotion)

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 Atlanta Computer Currents , which will start soon. I also have drawn new assignments from AdAge's NetMarketing supplement and Business Marketing magazines. Now back to the show...

The Value of Information

The creation of the World Wide Web brings home a key question journalists spend their lives asking, namely what's the value of information?

It should be obvious by now that news, and even commentaries like this one, have no intrinsic value. Even when micro-transaction systems like CyberCoin and First Virtual work technically, few people are willing to pay even a few pennies for a news story. This leaves publishers looking for other revenue streams, primarily advertising. There, too, most fall short. The only publishers making a profit online are those which, like Feed , are basically small businesses.

The fact is any publication, even something free like A Clue...still demands something important from you. Time. The moments you spend here are valuable. You give them grudgingly. You combine my insights with those of other people and staffs you trust -- magazines, books, newsletters, increasingly, Web sites and newsgroups to build your own world-view. You choose based on credibility, the fine mix of contacts, insights, and truthfulness which writers can only build brick by brick and story by story. We can throw away credibility in a heartbeat (Pierre Salinger) and even large journalism organizations can piss-it-away slowly (Hearst Corp.).

Once credibility is gained, a journalist's task is to cash in on it. Subscriptions and ads are just the tip of that iceberg. Books, consulting, freelance writing, and a host of other methods are available. (Publishing houses have conferences and trade shows -- same thing.) Credibility is my equity, and I earn my living getting a return on that equity. These investments, of money or time, risk credibility even if they bring a financial return. I might make a quick buck saying nice things I don't believe about Bill Gates -- what stops me is the risk you'll stop believing anything else I say as a result. All journalists make choices like this, large and small, every day. A key clue -- with the Web we're all journalists. We all have a credibility account, which we protect by playing-straight and piss-away through dishonesty.

What's the Web mean, and do, for this equation? It gives hope to new entrants -- the cost of entry is no longer ink by the barrel, just readers by the score. But it doesn't change the basic equation. Nor will it. Credibility remains the coin of the realm.

Terrorism Rears Its Ugly Head

Reports that Apex Global Information Services Inc. , a major backbone provider, was shut-down briefly recently by anti-spammer hacker attacks, eliminates any hope government will act against commercial junk e-mail.

AGIS president Phil Lawlor is a cyber-libertarian. He doesn't like spam, but prefers market and technology fixes, like anti-spam filters, to deal with it. The hacker here was apparently a cyber-vigilante, angered that spam deliveries are, in effect, subsidized by other Internet users, and do no one any good. The problem is, if you can use violence for your cause, even virtual violence, so can anyone else. Most of us understand this, and reject even causes we like when they turn to violence. As went the anti-war movement of the 1960s and the anti-government movements of the early-1990s, so now goes the anti-spam movement. It's a pity.

Clued-in Deal of the Week

Word that Hewlett-Packard will buy Verifone for $1.2 billion in stock warmed my heart, and I don't own shares in either. It's a 60% premium for Verifone shareholders, but the 25 million new shares mean no real dilution for H-P holders -- they have 1 billion shares outstanding. Most important, it speeds the integration of current payment technology with the Internet -- HP can plow untold millions into it, and Verifone sells most of the terminals that provide payments to stores. Sweet.


Clued-in this week are Jim and Audri Lanford . Their Scambusters newsletter is a great public service, and a great example of our first principle -- to get, first give. Their latest effort is Siteings, a free e-zine with useful business links . I also like their new NETrageous Publicity Resource Center -- get your 15 minutes of fame here. Most important, the Lanfords have stood the test of time, building their credibility brick-by-brick. That's a key clue.

Clueless is Jai Singh, head editorial guy at C|Net . Halsey Minor, who's normally clued-in, thinks this guy hangs the moon. But Jai's limited, as we all are -- he's an editorial guy, not a business head. The solid strategy for C|Net is B2B -- selling hardware and software, then networking gear, based on solid editorials and reviews. Instead, Singh's "Project Gunsmoke" is apparently going to copy the failure of NetGuide Live and Magellen, using push technology and custom default pages for ISPs. WRONG! He also thinks C|Net's play in financial reporting is to go head-to-head with Dow Jones and Reuters. WRONG! Halsey, want a clue? Buy Fred Davis lunch, and follow his advice.

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