A Clue...to Internet Commerce

by Dana Blankenhorn

For the Week of September 22, 1997

Volume I, No. XXX

This Week's Clue: Personalizing For Less

Last week we talked about collaborative filtering, which compares your behavior to a database of others' behavior and makes predictions on what you'll like.

The software needed to perform this function costs $10,000-$50,000 from companies like Likeminds, Firefly and NetPerceptions. That's just the tip of the iceberg, however - creating a working application may cost 10 times that. And since the software requires lots of data on lots of people to work well, only big sites can afford to use it. The Open Profiling Standard, supported by Firefly and NetPerceptions, would let sites share data, but the cost of entry is still far too high for that to matter.

The good news is collaborative filtering doesn't work that well. Check it out at Moviefinder, which uses NetPerceptions, or at Cinemax, which uses LikeMinds software. (Barnes and Noble uses Firefly.) You'll still have to put a lot of data in to get any reasonable recommendations out. The problem isn't the trust factor, but the hassle factor. (Firefly insists OPS deals with this through support of Firefly's "Passport" technology, but until OPS is implemented by rivals it's de-facto proprietary.)

Fortunately, there are other techniques you can use to give users a more personal view of your site. Rules-based reasoning collects your demographic data and matches your tastes to people with similar demographics. Case-based reasoning translates user input into queries the site itself can answer. The minimum cost for all this is $10,000, for Multilogic's Selector , a case-based tool, but that doesn't include development costs, either. (The company says its new spreadsheet-like interface cuts these costs, but the proof is in the using, not the buying.) You can see the results of MultiLogic's work at Restricted Stock, an investment site.

Don't have that kind of scratch? Wisewire is offering its software on a "service bureau" basis, through their server, at $900 for five "wires" or subjects. Brightware president Chuck Williams says he's also getting some customers who'll act as service bureaus, selling the services of the "virtual salespeople" his software can develop, alongside staffing to back-up those salespeople with real people. If you play your cards right, you might get a deal with service bureau PersonaLogic which won't sting you up-front. That's a start, but these deals do tie you to one particular technology.

Your Clue is this. By the time these tools work well, they'll be available at reasonable cost. Another Clue, from a trusted analyst - wait to see which outfits Netscape and Microsoft anoint with deals. Don't listen to the hype that personalization is the end of your world. But learn about it - it can help.

SSP (Shameless Self-Promotion)

We got game. In May it was USA Today , calling us a "hot site." Next came Jayde , which gave our PPN site, run by Sean Cafferky of Houston, its coveted "Jayde Gold Diamond" award. Then the "San Jose Mercury News" Online Today columnist, Patricia Sullivan , wrote in her "Good Morning Silicon Valley" column we've got things to say which are worth hearing. Now it's Investors' Business Daily, for the second time, mentioning us in their computing column. Thanks so much.

Want to know what you can do to help? Remember that it's Journalism -- checking the news, calling people, listening carefully, writing on deadline -- which keeps the clues coming, 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.

And now back to our show...

But What If You're Innocent?

Last week, we repeated a basic Clue. Don't spam. The problem is, this is not as easy to do as it sounds, and when you're accused of spamming (by someone willing to do the work of building a following) or any other anti-Internet activity, you can quickly find yourself in hot, hot water. (Heck, A Clue has been accused of spamming by folks who forget they subscribed.) How do you get out of it?

There are no easy answers to this, but your first Clue is simple. Bend over. You might be right, you might be wrong, but it won't matter. It's like arguing with a spouse - let them get over themselves, and if that's too much for you get a divorce. So apologize first, follow requests relating to the complainant's service, then deal with third parties by explaining there was a misunderstanding and apologizing for it.

Sometimes, I've found, this doesn't work. Sometimes the complainant won't be mollified by an apology. If there was money on the line -- if the dispute involves a stock trade you were late completing or you're a merchant whose customer won't just take their money back -- you may have to go further. My Clue -- even if you're right, give in. Assume you've lost the goodwill of the person you're surrendering to...your aim is to simply save what you can of the goodwill of others. Does this make you subject to being bullied? Yes. But I've seen too-many attempts by too-many vendors to recover an argument against someone who's really angry, and they never win.

Remember this. Complaining is hard work. Even the most dedicated amateurs eventually give up. What will emerge is a business opportunity - an "Internet User Group" which can hire professionals, separate the valid complaints from those which are invalid, and make valid complaints stick. A professional complainer, in other words. There are some good attorneys ready for this role, but you'll have to pay them what they're worth. Or rather, we all will.

Your final Clue is this. When faced with this kind of situation, consider what would happen in the real world. If you are a department store and you get an abusive customer, you step up to the plate and take your lumps.

Smart Move of the Week

The smart move of the week award, given here whenever someone does something clever, goes to the Microsoft Network . They jumped on AOL's acquisition of CompuServe - and the ill-will AOL has generated among small information providers - to hire Don Watkins and Ron Luks, two of CompuServe's top forum organizers.

CompuServe has over 1,000 forums, which have over the last few years been the best reasons for people to hang onto their accounts. The managers of these services have been routinely ignored or dissed by the company contracting their services, which was enamored of the "mass market." Now AOL, which long-ago killed-off or pissed-off its small information providers, owns CompuServe. This is how you turn that acquisition into money wasted. Time will tell whether Microsoft is clued-in enough to listen to people like Don and Ron - here's hoping they are.

Getting Past The First Round

Lots of teams make the NCAA basketball tournaments each spring. Few, however, make money on the game. The first-round pay-outs are split among too-many people. The routes to profit are to either cheat or spend the big-money up-front (which can amount to the same thing).

So it is on the Internet, where many companies today are having trouble getting that second or third round of financing, and as a result won't stay in the game. Start-ups which went after the public markets fast (maybe too fast) like C-Net , CyberCash and Yahoo bought the risk of disappointing public shareholders and analysts, but their continuing profit troubles also closed the door on companies that might have followed them. Doing it right - waiting until you have steady profits from ongoing operations before hitting the public markets - may turn out to have been the wrong move.

Your Clue here is this happens in every market. It happened in computer chips, in application software, and in artificial intelligence. Sometimes whole niches disappear under the waves. Now is the time when the big boys cut their best deals. If you're still underwater financially, take what you can get for now, and live to surf another wave. Life is unfair.

Meta Tags, Real Trouble

The fastest way to build traffic to a site is by using "Meta Tags." These are identifiers used by search engines like Excite to index your content. In a recent story on Clickz , Michael Sexton writes that the first way to build traffic is to "spend a few hours with a thesaurus and use every possible word you can find to describe your business."

But, wait! There is a limit. In a precedent-setting case in San Francisco (of course), a U.S. District Court Judge upheld the trademarks of Playboy , which found a rival dirty-picture site using its title (and its Playmate trademark) in Meta tags. The danger is that Microsoft could use this precedent to keep sites critical of its business practices out of search engines. So could Coca-Cola, or the Church of Scientology. But the facts of this case indicate Meta Tags were being abused. More lawyers are going to get rich before this one's done - let's hope the result is something we can live with.

Clued-in, Clueless

Clued-in this week is NowTools of Phoenix, Arizona. Their main products are CheckOut!, a line of automated check-out tools for Web sites. But they also created, free, a product called SpammerSlammer , which filters-out commercial e-mail. One point few recognize is that Internet merchants are among the biggest victims of unwanted solicitations - they can't just get a new e-mail address. By offering a free tool, NowTools gains goodwill for use in selling other software, and consulting services.

Clueless are the current round of exclusivity deals - some extending three-to-five years, being signed by Barnes and Noble, Preview Travel and others. This is easy money for cash-strapped services like AOL and Excite. But these deals are based on a false assumption, namely that things will stay the same long enough for such deals to pay. They won't. Don't overpay.

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. (Unlike Netscape, we don't expect you to pay it.)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.