A Clue..to Internet Commerce

by Dana Blankenhorn

For the Week of May 5, 1997

Volume 1, No. X


This Week's Clue: They're Coming To Take Us Away (Ha, Ha)

In recent weeks the news has been filled with talk of takeovers, shakeout, and a feeling the "good old days" of the Internet are over. Microsoft buys WebTV, Disney buys into Starwave, News Corp. is reportedly embracing C|Net, IBM has closed its Web strategy unit. Newsweek's Allan Sloan is skewering Yahoo's financials and Amazon.Com's prospectus, with relish, noting you'd now have been better-off sticking your money in a mattress than buying Netscape stock.

Has it all been figured out? Is it all over?

Pl-eease. It's true that mass-market Web start-ups no longer open in a vacuum -- there's lots of competition out there. It's also true that the half-life of a new market niche is now under a year -- the push shake-out is already well underway. But are all the good ideas gone, or worthwhile only for those with billions in the bank? NO! (Ann Winblad says good ideas are the key limiting factor in the Internet's future growth -- send her this issue.) For proof, let me quickly offer 5 industries still waiting to be born:

*Commercial WebTops -- Producing "push" systems integrating corporate purchasing systems and commercial sales systems, combining them with editorial tied to target markets, is a business which hasn't happened yet. (An "Office Depot" channel, for instance.) We need studios to put this together, we need tools, we need a business model.

*Newsletters -- We're doing great, but no one has thought about aggregating online newsletters yet, giving folks a stellar guide to them. Even a newsletter "Yahoo," let alone a 'zine on online newsletters. Even a glossy magazine.

*Filters -- Here's something people really need -- a custom e-mail filter. Anyone who can program a good filter which works with all major clients, then tweak it for your individual needs (without turning users into programmers) can make a killing right now in corporate America. Converting e-mail lists between, say, Netscape's .htm format and the formats used by Eudora or Microsoft, is another promising software niche.

*Latin America -- All the great Web businesses we've developed here are untapped niches throughout Latin America. Si habla Espanol? No? How about Portugeese? We need Spanish and Portugeeese Yahoos, C|Nets, CNNs, and (perhaps most important) online communities. You can even host 'em here, where laws on behalf of enterprise as well as free speech are fairly clear. (Mirror 'em there when they get popular enough.) Start with something for the Hispanic Web audience in this country. Get Henry Cisnero's phone number at Univision!

*Industrial Networks -- It's amazing how many industries in the U.S. still lack a concentrated Web presence, someone with a clue who can pull together existing resources, produce news of interest to the community, and push it all onto users' desktops. Such as? Start with farming. Government. Organized Labor. Organized government labor. And on and on.

Now all this took me about 10 minutes to think up and write. It's far from an exclusive or exhaustive list. You can think up 10 yourself, right now. Go have a cup of coffee and write some down. Get rid of nine. Share your list with some friends, boil it down to one worthwhile idea. Write a business plan. And remember that one committed entrepreneur will beat a herd of suits every time. I'll cover you.


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...


Allen vs. Gates in The Case of the Deep Links

Ticketmaster's legal challenge to Seattle Sidewalk's links to Ticketmaster's online ticket counters seems to put Microsoft co-founders Paul Allen (who controls TicketMaster) and Bill Gates (Sidewalk is a Microsoft shop) on a collision course. So there are many ways to take this out of court. An agreement to allow deep links with Sidewalk -- on any financial terms -- sets the precedent that such links (as opposed to this) represent assets a Web-site owner can control. It's the same argument being made against TotalNews, which wraps its ads around news sites' content.

Your clue is you can't have it both ways. You can't call TotalNews a "roach motel" which is "stealing copyright," then deny TicketMaster the right to control links to its sales pages. But you can't give Gates free links to those sales pages, either, then deny TotalNews the right to deep-linking. Not if you've got an ounce of principle. (And if you don't, what are you reading me for?)

Financial Sites Pop

A booming stock market, with traders hungry for information and lower "vigorish" on their bets (read commissions on their trades) spells big bucks for all kinds of Web financial sites.

The "Wall Street Journal" brags it has 100,000 paid online subscribers, 60% of whom don't get the paper and thus pay $50/year, the rest of whom pay $30. With an 80-person staff making, on average, $40,000/year at minimum, you've got $5 million in subscriber revenue against $3.2 million in salaries and, since the reporting's paid-for, a potential profit. (The Journal admits it's not that simple, and they're not making money online yet.) E*Trade, meanwhile, reported a *real* profit of $3 million, with accounts up 29%, despite the fact Schwab still has over half the online brokerage accounts.

All of which can lead to some hyperbole. Jupiter Communications claims in its new "1997 Home Banking Report" that "banks must be on the Web by the end of 1997." Jupiter claims the number of homes doing banking online will grow from 2.5 million at the end of last year (real) to 18.1 million in 2002 (projected, i.e. imaginary) and, since some of the new Web banks are online-only, those who don't get in the market now will be left-out. This despite the fact they see online banking revenues peaking in the year 2000, at $410 million, then falling-off. (The savings justify the expense, Jupiter says.)

However. All this may have more to do with the economy than the Web. The stock market is drawing gamblers, who want to cut their costs and get "inside dope" with which to make money. A paid, online "Journal" promises such "dope." E*Trade users trade more than investors who phone their brokers. Information has value when it's rare, when the audience has both money and motivation. (Pornography and financial news have that in common.) That's your clue. Rarity, and a motivated audience with money, is needed to turn information into dollars. Mere "convenience" doesn't do it, as CyberCash continues to learn.

Clued-In-Clueless

Clued-in this week is Inverse Network Technology which has begun selling reports on how Internet Service Providers measure-up on busy signals (guess where AOL ranks?), and will soon begin doing the same on e-mail deliveries. This is crucial data for those looking to host Web sites or put mission-critical functions online. A great example of information worth paying-for.

Clueless are Steve and Cokie Roberts, who recently expressed fear in their newspaper column of Web-based reporters and, worse, voters using the Internet to demand direct democracy and bypass the gatekeeping function the Roberts' high salaries represent. Hey, kids, a clue -- the loser now will be later to win, for the times they are a changin'.


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