A Clue...to Internet Commerce

by Dana Blankenhorn

For the Week of June 2, 1997

Volume 1, No. XIV


This Week's Clue: Show Me The Money!

The dirty little secret of the Web is no one's making money on it. Another good reason not to worry about "big corporate" control of popular resources. Think of it the way PBS does, as underwriting.

AOL claims to make money, but those who've looked at the books know it's mostly accounting, and hope for the future. Does MSN make money? No way, with what they're spending. CompuServe is nearly sunk, and Prodigy is that rarest of birds, a slow-growth ISP. (Even fast-growing ISPs are sinking in red ink.)

Look at the Web-only public companies. Yahoo is making money investing cash from its IPO, not from ad revenues. Excite, Cybercash, Infoseek and other Web pioneers are feeling so much "cash burn" their next chapter may be 11, and Amazon.com went public because the alternative may have been going under.

Some tool outfits, like Netscape are making a go of it, despite the media's current obsession Microsoft will take the game, but most aren't. Web ads make money mainly for the networks which arrange them, not the sites which take them. (Although that business is still bringing investment .

So, is it all hopeless, are we wasting our time? Of course not. You can make money, right now, if you follow these basic clues. Keep your costs under control . Have a business model which works in the real world, not just the virtual one. Offer a valuable service at a reasonable price.

Most important, be honest, with yourself and everyone you do business with. The game has just begun, reputations can be lost fast and won't be regained. There's No Such Thing As A Free Lunch (TANSTAAFL), no such thing as an easy dollar.


SSP (Shameless Self-Promotion)

Oh, yeah. We're hot. At least according to USA Today , which cited us for the weekend of May 16-18. (That notice ran in the paper May 20, Page D6, under the headline "On Board Atlantis And Get A Clue.")

But it's journalism -- checking the news, calling people, listening carefully, writing on deadline -- which keeps us hot, although I also handle consulting and commercial writing (ask about those rates via e-mail). If you're looking for excellent work -- like that found in my column at Atlanta Computer Currents or my regular work for Net Marketing magazine, don't wait for the e-mail -- give me a call at 404-373-7634.


WebRings

The hottest little marketing idea online came from a teenager.

Sage Weil, now 19 and a student at Harvey Mudd College in California, came up with the idea of a Webring in 1995. It's a circular list housed in a CGI script...click on an icon and go from location to location on the ring. You could do this without outside help, but Webring -- which is entirely free -- links its script to the icon on your page so the HTML code underlying the ring never changes. Instead, clicking on the icon links the user to the relevant script at Webring's site.

Weil, who's also a freelance Web designer with the New Dream Network , maintains a directory of rings, which you can seek to join . The trick is you have to be let in by whoever's running the ring most relevant to your business -- Weil says there are now over 8,000 rings linking over 50,000 Web sites.

Yes, this is an idea which can be ruined and abused. It's the credibility of each ring's manager which is key here, and over time someone will have to police that credibility or that of the whole group can suffer. And there's no reason commercial imitators can't pop-up, some far-less scrupulous and, perhaps, far-more litigious than Weil.. But for now, we have evidence of intelligent life on this virtual planet, and that's a good thing.

Privacy? What Privacy?

All the recent stories about "Web privacy" and the Netscape-Firefly-Verisign "Open Profiling Standard" miss the point. It's not "Web privacy" which is at issue, but real privacy. And the "Open Profiling Standard" is meaningless in terms of the overall privacy effort.

The proposal is really just aimed at dealing with"cookies," used by ad networks like DoubleClick to track user behavior anonymously and deliver ads you might find relevant to your needs. You'd create an automatic registration file and be able to tell sites whether data you give them can be shared. The Electronic Frontier Foundation , which was created as a privacy advocate, has supposedly signed-on. The technology's based on the vCard electronic business card specification, and could support digital certificates to prove your identity.

This is great for Web sites which want a standard format in which to share personal data. But does it enhance privacy? No. In fact, it does the opposite. Now sites which demand personal data on you as the price of admission (and most corporate sites now do) have a standard format for sharing and storing this data. This doesn't stop them from building profiles of your behavior -- it gives them the tools for doing so.

Besides, as we said at the top, real privacy no longer exists, and it's about time someone realized it. If you've ever been involved in any legal action, anywhere in the country, it's now fairly simple for people to pull-that up. Many legal documents, readily available online, carry identifiers like Social Security Numbers. With such identifiers, crooks can easily obtain credit card numbers. Even without the SSN number, it's easy for stalkers to get the addresses and phone numbers of potential victims online, because most directory sites get their data from firms which handle magazine registration cards, not from phone companies. (Even people with unlisted phone numbers subscribe to magazines.)

Media stories bemoaning the lack of "online privacy" miss the point. By using online systems, bad guys can seize anyone's privacy. Question -- how many people will die and suffer grievous harm before the real story's told? More to the point, how many will be hurt until something's done about it?

Obviously, Digital Certificates -- personal encryption and decryption codes like those Verisign sells -- can offer a partial solution. But only a partial solution. We have to ask ourselves how public we're to make public records -- liens, bankruptcies, etc. -- and police improper disclosures. We also have to limit what can be done with our personal data, and crack-down on anyone who abuses the privilege. (Giving consumers the ability to sell their data's been suggested -- but should someone be able to sell themselves out?) We either restore a zone of privacy, one immune to at-least the casual users of online systems, and create law enforcement mechanisms against the rest (especially the corporate ones) or we admit that privacy is gone, for real and for good. Calling the issue "online privacy" obscures this truth.

Clued-in, Clueless

Clued-in this week is Evan Schwartz of "Wired" Magazine. His new book, "Webonomics," is well-written and fairly accurate. It covers the economics of the Web simply and readably. That's hard to do in this fast-changing field. So we'll excuse the lack of sidebars, tips, notes, charts, and the fact that URLs are all stuck in the back. He knows the difference between "USA Today" and "Bianca's Smut Shack" -- good enough for us.

Clueless is Home Shopping Network Inc. , which bought Ticketmaster from Microsoft co-founder Paul Allen. Question -- where's the upside? The company's already got a monopoly on most ticketing, the number of events isn't going to increase fast-enough to justify the price, and they've done a masterful job of angering the Web by suing to prevent database-driven deep linking. As a result, they'll either face competition or an anti-trust investigation. Either way, the price isn't worth it. Besides, HSN has already proven its ability to under-perform with a Web-based asset at the Internet Shopping Network, which it bought two years ago. Some people never learn.


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