A Clue...to Internet Commerce

by Dana Blankenhorn

For the Week of June 9, 1997

Volume 1, No. XV

This Week's Clue: Business Models

The Internet's claimed another victim, Comdex. Who needs to travel to a computer show when you can let your fingers do the walking? Visitors to Gateway's booth who asked about configuration and pricing were shown quickly to units tuned to the company's Web site . New York reporters insisted things will be better in two weeks, at PC Expo, with lots of Internet Commerce announcements. They may be better, but they won't be as they were.

All this points to the need for new business models -- online and offline -- which work in the age of the Web. Some brave reporters have even gone to the Web's red light district in search of them. (Anything for the team, right?) There they've interviewed models-cum-programmers whose sites lure the lonely to a shared peep-show. For $19.95/hour each you and some total strangers can share the attention of a woman pointing a camera at herself in response to your messages and pretending to enjoy it. We've all done something similar, spending big bucks for a shared experience, and once we get that experience we gain rights, privileges and respect in our communities. It's called University, and (ta-da!) it's now got a Web business model. (So does any other form of training.)

The key to making a Web site work on the bottom line is a fairly-simple two-part equation. First, calculate how many hours you spend each week working on the site, and how many hours users spend clicking around it. This can be done easily with time sheets and Web logs. In the case of A Clue...the dirty secret is I spend just five hours/week writing, editing, and delivering my knowledge to you. (It's based on my lifetime of experience as a reporter, but we don't have to count that.) We currently have 400 e-mail subscribers, and another 400 who read us on the Web. Figure y'all spend an average of six minutes with us each week, and you have 80 hours coming in to 5 going out, a ratio of 16-1. All we need do now is extract value from that ratio. In my case, getting reporting or writing assignments to fill my other 35 hours each week does the trick nicely. Your task is to find it on your own site.

This calculation, carefully done, can quickly point you to the most clueless sites online. The fact is, posting a newspaper, or magazine's, editorial content online doesn't demand much time from readers, even those inclined to go online to get it. The only way to get those ratios up is to engage readers in some form of interaction, with each other, around the topics and content you've posted. (Or to sell something, not just get the ball rolling.) Yes, hosting forums and chat can be risky -- you're investing time and early returns can be poor -- but that's just one way around the problem. Others include marketplaces, based on links and built around your content, education courses (see above) built around your knowledge base, FAQs built around your knowledge base, value-added services using your expertise...use your imagination.

If you can't get your ratio up, or provide deeper value, you'd better be a darned-good billboard for a business that works well in the real world. Because otherwise, you're wasting your money, and users' time.

SSP (Shameless Self-Promotion)

Investors' Business Daily quoted us on their front page last Tuesday, June 3. If you're a reporter on deadline, we can help you, too. We not only "give good quote," but may be able to offer some additional sources that can keep your stories "clued-in."

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.

A Modest Proposal Against Spam

We don't need new law, we don't need a technology war. What we need is one ambitious U.S. attorney willing to apply existing law to a new problem.

Like ol' Ross once said, it's simple. Most spammers send their junk through third-parties, hiding the real address behind another ISP or Web site. This, they figure, protects them from flames. It also constitutes fraud in interstate commerce (these *are* commercial messages). Yes, it's a low-level felony, one-to-five on each count, but each e-mail can be a separate count. Go after a "businessman" paying someone to send spam. Offer a deal -- immunity for turning-in the spammer. Then, arrest the spammer. Parade this bum before the cameras. Get the trial on Court TV. Promise to go after his (or her) buddies in the business.

Once it's established that pretending to send mail from another address is fraud -- and the argument can be limited to that point -- current anti-spam filters will work. End of problem.

Bandwidth Hogs

This section was supposed to be titled "Dumb and Dumber. " Ted Turner is as funny in person as Jim Carrey, while Larry Ellison is a ready foil. But their CustomNews may be the straw which breaks the old Internet and forces changes. Let's talk about that.

CustomNews is an Oracle server-based version of PointCast. Content is controlled by CNN, which claims its main site is "not a money-loser" with 100 million page views each week, doubling every nine months. They lined up 100 of the "usual suspects," (AP, Reuters, some magazines) adding their content to an Oracle database. CNN also created the main index, using its current nine categories of news (like Sci-Tech -- yecch!), and about 300 sub-categories within each main category (each NCAA Division I sports department is a sub-category in sports.). New users spend some minutes clicking through menus of choices to create their "custom news page." The software identifies the machine they signed-in from, but they can then sign-in from any machine to get a view of the latest from their choices. The pitch is Oracle will customize ad views based on categories users select -- so far the only advertiser is CitiBank. (Overall it's OK, but I want an easier-to-use ticker creator, more sources, more choices for weather and stocks, plus stop throwing the main stories before me as defaults.) The only software they're downloading is the Applet used to run the ticker.

Now the bad news. Remember how Oracle turned-off corporate access to PointCast because everyone would update their screensavers on coming to the office? PointCast solved that problem with the "I-Server," which consolidates an Intranet's incoming feeds and lets companies add their own channels. No way you can do that here. CNN officials claim they can mirror the database in numerous cities, but that doesn't solve the bandwidth problems of the rest of us. (Watch what happens when Ellison's employees all "rush to the rail" for CustomNews.)

What's at work here is corporate ambition, not clued-in business thinking. Ellison wants a flagship customer for his Universal Server, which supports multimedia and comes out at PC Expo in two weeks. CNN's video files are a great fit. CNN wants something to use in the ongoing fight for power within parent Time-Warner (http://pathfinder.com) (notice the "not a money loser" quote above) and the added costs here are low -- it's all upside. But what about the rest of us? Asked by A Clue...about the bandwidth problem, Ellison claimed server-based solutions actually use less of it. (If Ted Turner were a technologist, he'd reply, "Ahh, Ahh, Bullshit." Then everyone would laugh.)

Two factors are creating the high-tech crunch. There's no compelling reason to dump old machines and upgrade to Pentium II (the "Memphis" release of Windows is due by year-end, but big deal) and bandwidth hogs are slowing everyone's access to a crawl. The solutions to the latter problem -- the Internet problem we deal with here -- will come when the Bells decide to let them. Add bandwidth-hogging moves like this one to that mix, and the Internet recession, or "shake-out" (choose your own term) may not end until 1999, with cable modems, ADSL, digital cameras for everyone and consumer Internet access billed by-the-hour.

Clued-in, Clueless

For clued-in this week, we're taking Netscape . They've been kicked-around enough. Navigator still has most of the browser market (and even Microsoft's boosters believe it'll still have the lead *after* Explorer is integrated into Windows). The company's brought together everyone outside Redmond on important Internet technologies, and it's kept its troops together. Next month it will link closer to Intranet technologies with Information Builders , and if they can do a deal with SAP even Microsoft may run Navigator. I don't know if $30/share is a proper price --- I'm not a stock picker by trade. But survival against an onslaught like the one Microsoft's putting on deserves applause, not approbrium. (Microsoft now has a market capitalization of $151 billion -- behind just General Electric and Coca-Cola. Bill Gates personally holds $35.5 billion of that, by last count.)

Clueless is Viacom which has been on a crusade against its own audience for months now, and has little to show for it but the virtual destruction of the "Star Trek" franchise. Since letters were sent to "fan" sites last year like CDS, demanding that they stop using audio and video clips from the shows, the result has been a big yawn from the same people who saved the franchise in the 1970s and 1980s. The studio still has two TV shows in production, and a movie series to protect. These actions are killing all of it. Let that be a lesson to you.

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