A Clue...to Internet Commerce

by Dana Blankenhorn

For the Week of June 23, 1997

Volume 1, No. XVII

This Week's Clue: Rule of Law

The rule of law has become an obsession on the Web in recent months, and for good reason. But not the reason you think.

While the mainstream press worries about pedophiles and free speech, it's commercial law which should be at issue. Singapore and Hong Kong succeed commercially while heavily restricting human rights. Hong Kong's depredations are pending China's July 1 takeover, while Singapore is becoming a center the Internet development in Southeast Asia despite outrageous restrictions on speech. Why? Because both recognize a Uniform Commercial Code, or UCC. It's a set of uniform business rules policed by local courts, but agreed-to in general by all. It lets the global economy work.

Nations which don't enforce UCCs don't grow, but business cares little (in fact) about the human rights our Constitution gives us. (That's a local ordinance.) So long as there is some hope of redress, whether through a local court or international negotiation, businessmen can weigh risks and do business. The difference between China and Russia is that in China officials stay bought, and the pirates are manageable.

So given a choice between China and Russia, most businesspeople choose China. (Good fascists make the trains run on time.) Russia's a nominal democracy, with free speech, and a government that claims to respect human rights. China has no democracy, no free public speech, and makes no apologies for it. The question is, which way will the Internet go? So far, the answer is China. (I'm not happy about it, but facts is facts.) When U.S. state prosecutors can ignore double-jeopardy to go after "pornographers", when German prosecutors can put executives from online services in jail for actions of users, and when hackers act as vigilantes against sexual content and commercial e-mail (while other hackers work *for* commercial e-mailers), that doesn't mean business is operating in a vacuum. It means he who has the gold makes the rules. Piracy (the real kind) is, in fact, the biggest threat precisely in places which, like Indonesia and the South China Sea, offer the world's best business opportunity.

In such a world, the best thing a lawyer can offer is common-sense advice which might help avoid trouble. That's what Lance Rose is doing. His most important bit of advice is to rely on contracts, not statutes or case law, for guidance. Fortunately, help is coming from your friends in Washington (don't laugh). From Ira Magaziner, no less. His "Framework for Global Electronic Commerce", still subject to online revision, is the necessary first step. It specifically cites the need for a UCC, as well as privacy and security protections, in enabling the growth of Internet commerce. While the official comment period has long expired, you can still give Ira your two-cents worth. Just don't ask him about health care.

SSP (Shameless Self-Promotion)

Business is picking up. I recently drew my first assignments from Ziff-Davis, and I've got some newsletter article-work coming up. More on both later.

Because 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.

Truste? Trust Who?

Truste , formerly eTrust, will put an icon on your pages if you follow their rules for using personal data and pay them $500-5,000 for the costs of policing the policy.

Clued-in or clueless? Note, please, that names like Time-Warner and Microsoft are missing. Bring such names in, and you have control of trust by brand names, for brand names. Fail to do so, and you have no hope of success. (Note, too, that Wired recently accused Microsoft of playing fast-and-loose with users' data on its Sidewalk sites.)

The argument against laws to control Internet data is based on the fact that Internet time is three times faster than real time, while legal time is three times slower than real time. Truste is an Internet answer to a real problem, but will anyone trust it? Not unless it proves itself in Internet time. In Internet time, no enterprise succeeds without a dedicated entrepreneur at its head. So here's a clue. Howard Rheingold's not doing anything. (Unfortunately.) Give him a platform, back him with an ad budget and PR help...you might have a chance. Or get Mitch Kapor out of retirement. Without a human at the top whom the people trust, they'll wait on legal time. And the Internet "shake-out" will quickly become the Internet recession.

The Most Clueless Business There Is

It's this business of selling domain names. Computerworld reported recently that the domain name Business.com was sold by an English firm to a Texas one, in a deal brokered by Internet Domain Names Inc. of Houston. The reported price? $150,000. Mecklermedia also reportedly paid six figures for Internet.com after its owner went into bankruptcy last month.

Network Solutions halted this piracy of common trademarks (like http://www.cocacola.com) by allowing trademark holders to put the burden of proof on the pirate. Pirates -- and that's what these people are -- have moved to holding names of public figures, and common terms. The solution is simple, and it's not new domain extensions. Raise the price of reserving a name, and require that reserved names be active.

The more important point, however, is these names aren't worth it. They're worth one click, one entry in your browser's address box, and that is *all*. If you've got game, users will bookmark you. If you haven't, no name will save you. And if your name is taken, just use a variant, like iworld.com, or netb2b.com. Throwing away brand equity in a URL because you think another name is cooler wastes time and money.

Individual Seeks to Save Itself

Brad Templeton has always been a better story than he knew. He developed ClariNet as a value-added news service on the Internet years before the Web existed. Combining newsgroups with low-cost news services like Newsbytes , Templeton built himself a nice business which could make money from BBS operators before they morphed into ISPs.

The announced price is $7.7 million, and Templeton becomes an Individual Inc. officer. The question is whether he'll be heard. He'll own just 7 percent of the new company, and while ClariNet is profitable, Individual is a huge failure. His hope must be that the acquirer's technology, combined with his positive cash flow and content, can turn a sow's ear into a silk purse. If he's wrong, he'll have 7 percent of nothing. If he's right, he deserves control of what emerges, for he'll have proven just how clued-in he is.

NetGuide RIP

Since I came back to freelancing from NetGuide Magazine, which CMP Media just closed as part of its move to going public, I've been asked by many whether this magazine could have been saved.

Of course it could have. The problem is CMP CEO Michael Leeds, a good and decent man, has been listening to the wrong Fred. Fred Langa is a fine editor, but he's no industry visionary. Fred Davis , on the other hand, not only founded one of the first computer magazines (A+) in the 1970s, but spent the next 15 years sitting at the right hand of his industry's one true genius, Bill Ziff. He's been on the CMP payroll for a few years now, but since his vision for what became "NetGuide Live" was hijacked by Langa's people a year ago, he's been ignored and blamed for others' stupidities.

Leeds must now learn the difference between a sage and an operations guy. The latter translates the visions of the former into reality, not the other way-around. Failure to heed this lesson has already cost Leeds his entire Internet play -- "Interactive Age" and "NetGuide." The prayer here is it won't cost him his company.

Clued-in, Clueless

Clued-in is Michael Dell, who said last week his sales "run-rate" on the Web would bring in $500 million over the next year. How? By giving corporate clients their own Dell home pages, where they can track inventories and needs, centralizing purchasing and gaining the best possible discount. This saves customers big money, and, as Dell himself says, the only cheaper distribution method would be "mental telepathy." Dell's rule -- if they need what you have, the discounts they earn is money in your pocket.

Clueless this week is James Cannavino , now with Perot Systems. You may remember the name from his days running IBM's PC business into the ground, being outmanuevered by a young entrepreneur named Gates. We're "honoring" him because he paid $9 million for bankrupt Nets Inc., bailing-out former Lotus chairman Jim Manzi. What's the money buying? Technology? (Nope.) Goodwill? (Please.) And while Perot -- H. Ross left the building when he started running for President -- has aspirations of building and managing Intranets, it's gotten nowhere with that strategy. Why? Because it's...clueless.

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