A Clue...to Internet Commerce

by Dana Blankenhorn

For the Week of July 21, 1997

Volume I, No. XXI

This Week's Clue: Ignore Big Media

A few weeks ago the American Society of Magazine Editors (ASME) issued a set of "guidelines" for new media which were identical to rules used already in print. No ads masquerading as copy. Clear separation of church and state. Nothing I wasn't taught as a Medill magazine major 20 years ago. (It was the one course I aced all year . Medill is the Journalism School at Northwestern.)

Still I seethed, and wondered why. Then it occurred to me. ASME should have no standing in this debate. They don't know it, it's not their business.

The standards of the magazine industry didn't come down on tablets with Moses. They're not in Holy Quran. They're not found in Confucius, and Buddha didn't imagine them. They developed, over time, in the interactions between the medium and those it served. Ads which masqueraded as editorial were ignored, or shown by other reporters to be shams, while the magazines which ran them lost credibility, or folded. The rules were created, in other words, by the market.

That's how it's going to have to be on the Internet. The rules are going to have to evolve from experience. Does this mean readers must now make their own distinctions between whom to believe and whom to disbelieve? Yes. Does it mean they must make these destinctions without the guidance of anyone? Yes. Isn't this dangerous? Yes. So shouldn't the ASME at least weigh-in and try to establish some order here? NO!

Frankly, the publishing industry has done almost nothing worth seeing online to date. Most "old media" sites are essentially shovelware, with print content served up, new ads put next to it, and "house ads" used to lure people into reading the same-old same-old. An early exception was "Interactive Age," where I was asked by David Klein (one of the few with a clue) to launch a daily online news page on our launch date, September 16, 1994. It became the most-read work the magazine did online not because it was great, but because it was fresh. This horrified some on our staff who insisted on highlighting the publication's content instead. So readers simply bookmarked the daily's page and ignored the home page. By the time I got to "NetGuide," in 1996, old media had a new game. Multiple levels of editing, multiple steps in the chain-of-command between writing and posting. The result was to make the news stale, boring, less worth reading. What killed "NetGuide," I submit, was its old-media prejudices.

In Internet media, there are going to be places where the clear line between what I say and what advertisers say will seem to blur, in the name of creating value for the only people who really count, the readers. If I only offer banner ads with links at the top of some pages, the only value I'm capturing is rent on the eyeballs reading my copy. The advertiser still has to do all the heavy-lifting, on their site, turning this eyeball into a prospect, then a buyer. They may well fail, because the process is complicated.

Think about how you decide what to buy and where. You want unbiased information, you want a sales pitch, and then you want some re-assurance (maybe from friends) that you're getting the best value. In the old media, this means going between magazine news stories, reviews, letters pages, catalogs, and visits to stores. The Web can do all of that, but if its "publishers" restrict themselves only to selling top-of-the-page banners, they create and capture none of that added value, and it will take hundreds of thousands of unique visitors each week to make a site profitable!

The way to capture that value is to be interactive. You place ads at the bottom of reviews, to Web stores and the people who make what you're talking about. You push readers and buyers into giving opinions with forms and newsgroups. You respond, keep the discussion going, and organize the results. You provide links to buying wherever your reader might consider buying. In other words, you model the buying process, which the reader controls, and the content is your "payment" to the reader for coming in the door. Then you find ways to capture the value, like coupons, which are not based on click-throughs but on the sales your content -- not just your writing but that of your readers' as well -- stimulates.

I went through all this myself recently while buying a new laptop for Internet World. I took careful note of what I saw at press conferences, listened to friends about the reputations of manufacturers and machines. I visited some editorial Web sites along the way, and finally bought from Insight, whose site takes orders. But I ordered via the phone, taking a deal highlighted in their catalog which I found hard to pull-up online. There should be ways for the Web to take more advantage of the value I was offering to create in the process of buying my new Toshiba Tecra. When someone does that, say for a small number of high-end buyers, they can reap big profits, as have companies like Aspect Development, which helps manufacturers buy the chips they need to produce the products they make at the lowest cost.

The industry that's furthest along this road is online stock brokerage. Take a look at Silicon Investor. Not Barrons, which is shovelware, and not TheStreet , which is the product of a traditional editorial mind-set. Then listen to the online stock brokers, like Ameritrade, talk about paying for banners based on accounts opened, not click-throughs. Notice that sites like E*Trade are reporting $3 million in quarterly profits on 182,000 users. These people have a clue, and now so should you. Here it is: The most wondrous message a sysop can see goes from User A to User B. Turning community into value, and value into money, is your challenge. Old media doesn't have a clue about it. Don't listen to them.

SSP (Shameless Self-Promotion)

Business is picking up. Check out the next issue of DOSV, Softbank's Japanese computer magazine, or the next issue of Internet & Electronic Commerce Strategies, to cite two examples. And AccessAtlanta is finally running my "Internet Insider" column.

That's good for you.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.

One more thing. If you're going to Internet World in Chicago this week, look for me. If you're with a magazine or Web site with an editorial budget, bring assignments.

Tsuris for CNN

CNN's got big trouble. Ratings are down, costs and competition are rising. While their Web effort is impressive, with some neat technology, the Web is itself the problem here.

Two things CNN lacks that the rest of the Web has in spades are depth and interactivity. For some reason, the network still uses CompuServe for its "TalkBack Live" show. When big news breaks , it's easier for people to get what they want, how they want it, by going to the source. Following links can get you to newsgroups and more depth, on any topic, than CNN could possibly deliver. And without the filtering of all those editors back in Atlanta, who are compressing the whole story down to 300 words before shoveling it onto your screen.

In the age of the Web, people resist being spoon-fed. They won't be spoon-fed short news stories, they won't be spoon-fed a "selection" of links, and unless you ask them to interact, making it easy and fun, they'll take that business elsewhere too. Here's a clue for managing editor Scott Woelfel. Instead of having your staff spend all that time editing, get them to spend it interacting with readers. See our top clue this week for more...

Beyond the Banner

The failure of click-throughs to generate direct sales is leading to lots of experimenting.

DoubleClick, which runs a Web ad network, announced DoubleClick Direct, which includes a pay per-order model -- you don't get orders, you don't pay. A British outfit called Safe-Audit is going one step further, with banners which are "100% based on performance, no up-front costs, and no minimum particpation level."

Beyond the banner, is developing a Java-based transaction system for Web banners, and Kate Maddox of Advertising Age reported recently that K2 Design of New York will offer a technology called Vampire this fall, another Java-based system for putting subscription forms and other direct-response offers inside banners. (K2's solution includes creative, tracking and reporting, not just software.)

Even AT&T is looking for solutions, signing a deal with Interactive Coupon Network, whose banner-based couponing system is called CoolSavings. The trouble with these coupons, for stores like Toys R Us, is illustrated by my nine-year old daughter Robin whenever we go shopping. She takes them, loves them, but doesn't use them. To work, any coupon needs to go to a motivated buyer. It's a great technology -- what's needed is a clue how to use it.

Clued-in, Clueless

Clued-in this week is CUC International, which put all its membership-based buying services into a single site called NetMarket. CUC has been building its online version of Costco for decades -- it now has over 350,000 members at $69/each per year. (There's a teaser rate on the new site at $1 for three months.) This is the outfit that's merging with HFS International, whose brand-names include Days Inn and Avis. The new site offers over 1 million items at deep discount, with catalog-like services. We wondered about 'em when they paid $50 million recently just for position on AOL, but on their balance sheet that's chump-change, a defensive play. This is the real deal.

Clueless this week, officially, is Bruce Haring of "USA Today." He followed his idiocy about the "death of links" (see "True Lies (A Major Rant)" on July 7) with a story claiming HotWired , which is now being redesigned, will be left-out as cyberculture matures. Replaced by what, Bruce, you? Not likely.

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