A Clue...to Internet Commerce

by Dana Blankenhorn

For the Week of October 20, 1997

Volume I, No. XXXIV


This Week's Clue: Internet Uber Alles

On the Internet, good ideas are easy to transfer between industries. Take Amazon.Com's "associates" program, and the field of computer software.

When Compuserve went trolling recently for an "official" software sales affiliate, they didn't call on the usual suspects like C|Net's Download.com , Home Shopping Network's Internet Shopping Network or Software.Net . Instead they signed with a relatively obscure outfit near Kansas City called Netsales .

Bob Fraser, president of Netsales, credits a version of Amazon's Associates program with his success. "We're not trying to generate traffic," he said. "We build for stores that have traffic, that want to be in the software and hardware business, but don't want to manage the stores. We also can set up stores for software publishers or partners that want to sell direct."

Fraser's twist on the Amazon formula is that the "associates" program isn't his, but his partners'. In other words, he'll just be a conduit and back-office for sales CompuServe generates. CompuServe, in turn, can set-up its own associates program, paying commissions to other sites that run sales through it.

That's what Fraser's already doing for NetNanny , a filtering program. He estimates that company has over 100 associates, including a lot of small religious magazines. "All we do is the facilitating," he noted. "We track the URLs of the links coming in. The stores," or publishers, "get the report," on a schedule or in real-time.

This is how you build Web distribution channels. Netsales doesn't do the marketing - they're the back-end, handling the commerce and delivering the product. Stores and publishers, which know marketing, handle that chore for mark-ups, then sign-up smaller sites on commission. Sounds a lot more like the old world of retailing than the brave new world we were promised, but I think you can find the Clue in there for yourself.

SSP (Shameless Self-Promotion)

Some things are more important than money. When I was married 20 years ago (having met the girl of my dreams at old alma mater , we were too poor for a honeymoon. (No crying - wait for it.) Then we were too busy getting the degrees we needed. Then the kids showed up - we were both too poor and too busy. To make a long story short, however, we're finally getting around to it. So no Clue on October 27! We'll be back with you November 3.

How do I stay in the know? 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). (I've finally finished those features for NewMedia and Internet & Electronic Commerce Strategies ). 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...


CORRECTION

Sometimes we get it wrong. We depend on your help in making it right. So thanks today to Chris Anne Wheeler of ActivMedia, who pointed out that their numbers on Web commerce were over-stated by us last week. It's not "$13 billion of sales in 1997," but "$13 billion total through the end of 1997." That's still a lot of money being spent online, and makes one wonder about the idiots writing this field's not going anywhere.

Version 4.0

Along with Microsoft's Internet Explorer, AOL, CompuServe and the Microsoft Network all rolled-out the latest versions of their online services in the last few weeks. Rather than natter-on about how Clueless they are, let's talk about how they could get it right.

Just because you have a lot of users doesn't mean you have a big audience. Interaction and depth remain the name of the game. "Events" are fine, and onliners are best able to aggregate the user base and deliver scalable systems to pull such things off. But they obviously have the wrong analogy in TV. Instead, let me suggest they visit Las Vegas.

Mega-casinos have showrooms of various sizes, and such gathering points as restaurants and bars. They have rides, they have flashing lights, and they have action. Even during a heavyweight fight the slots are open, and a crowd could quickly gather around any roulette wheel if someone has a hot hand.

That's what the onliners lack - the visual cues to improve an online experience for the people who go by without a specific aim in mind, except to have fun. What we're talking about is giving the online user some of the tools of the online manager, the ability to see where lots of other people are, and the ability to go there. Schedules of events, whether placed on specific pages or on "channels," are simply not good enough. AOL began its rise with chat rooms, people talking to people, and helping those people find a good chat - right now - that other people find interesting would greatly improve the service.

It comes down to one word - control. Instead of treating online users as an audience, give these millions of people more tools to control their own experiences. That's an upgrade, or at least a Clue toward finding one.

Blumenthal vs. Drudge

Since I'm an online publisher, and Matt Drudge is an online publisher, maybe you want to know what I think of his legal troubles. So, to Sidney Blumenthal I say, go get him.

Blumenthal is trying to make Drudge feel his pain for passing-along allegations without fact checking. The problem his suit faces is that he's trying to get into the deep pockets of America Online, and faces the legal precedent of Cubby vs. CompuServe. In that case an onliner was absolved of fault for an item posted by a contractor. Drudge is a contractor to America Online, and AOL figures the precedent shields it. Maybe, but precedents can be overturned (they also have loopholes), so if Blumenthal wants to pay lawyers who'll fight, that's his right.

Your Clue here should be clear. Once you start making a living from your online efforts you're a journalist. You're subject to all the risks journalists like myself have always run including the risk of a libel suit. Your Clue - get it right or forget it.

Checkfree

The value of Checkfree has risen in part because Chase Manhattan has agreed to use its online bill presentment services. It is expected Checkfree revenues will grow as a result, and maybe they will.

But Checkfree - which made its mark translating between online forms and transaction processing systems for CompuServe in the 1980s - can also lose business. And it's not always noticed. So be on notice. IBM said last week it'll offer online transaction processing to CompuServe Network (the profitable network now on its way to Worldcom) processors, using the SET (Secure Electronic Transaction) protocol to verify buyers' identities. Just thought you ought to know.

This Is Not About Me, But...

I'm not master of my own domain. I offer these observations on two Web sites operated by third parties. But a case involving, ironically enough, an outfit called Clue.Com does bring up some interesting questions worth studying.

C|Net's Dan Goodin writes that Clue Computing , a small Web host in Colorado, will now have to defend its domain in a Massachusetts court because Hasbro , maker of the Clue board game, won jurisdiction of the case from a court there. Whether you get dragged into a foreign court over your domain, Goodin writes, depends on whether your site is active - Clue is trying to win business - or just offering information.

But if you win customers somewhere else - even a foreign somewhere else - you could be dragged into a foreign court, charged under their laws and their rules of evidence. Disputes over jurisdiction are constantly increasing, making lawyers quite wealthy. International commercial law is going to address the problems caused by the Internet, and those who love the Internet better get a Clue and be prepared to argue on its behalf before those rules are set.

Has Your IP Tasted Funny Lately?

The latest study by Inverse Inc. on ISP performance only confirms what I've suspected for weeks. The performance of the whole Net is degrading due to a flood of spam. Symptoms include calls that drop-off, and achingly slow performance on Web page downloads.

So I'm willing to do my part, and hope you are too. It's time for the ISP community to launch a surcharge for e-mails. This will hit me in the wallet - even a 1 cent charge will mean $20/month to send this to you. But under this pricing scheme even a single 20,000-name mailing will cost $200, and spammers who flood the net will spend thousands of dollars each month. This will force them to pare their lists, as direct marketing companies do, dropping names which don't respond with orders, aiming for 2 orders per 100 e-mails instead of having to send 10,000 e-mails to get one order.

Forget the law for a moment (although charging those who e-mail through phony addresses with mail fraud is still a great idea). It's time for those who claim to believe in the market to use the market, before everything Web companies have sought to build these last 5 years comes crashing down. Yes, they'll be a hardship on hobbyists - collect contributions. But we won't be able to push bandwidth-intensive applications until ordinary surfing speeds-up. And you can't solve this problem by getting a fatter pipe to the Net - that's not where the problem lies. Put it this way -- if conservatives don't do something quick, someone will get the bright idea of imposing this fee as a "tax" to support Internet access for schools and the poor. They'll then claim government credit for solving the Internet's problems. Scott McNealy wouldn't like that.

Clued-in, Clueless

Clued-in this week is Glenn Fleishmann . Not just for helping design Amazon, then getting out so he'd maintain a life. This is for his writing and ability to speak clearly. Just listen to him for a few minutes, next time he's on a trade show panel near you - you'll see what I'm talking about. The man knows, from experience. And he's willing to spill the beans.

Clueless is MediaCentral , owned by newspaper publisher Cowles of Minneapolis. I've been following them for some time, and they're either a day late or a dollar short with everything they write. Whether they're getting UUNet's possible 60% share of the ISP market two weeks late, or noting that Excite's content "exclusives" are matched by "exclusives" with those "exclusive" partners' rivals on WebCrawler , without noting the huge difference in traffic between the two, there's always something missing. What's needed? For starters, they could use an editor who follows the news every day and imposes discipline, and reporters who make the extra call and have a Clue. Guys, we already have Newsbytes . We don't need a pale imitation.


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.