A Clue...to Internet Commerce

by Dana Blankenhorn

For the Week of December 1, 1997

Volume I, No. XXXIX

This Week's Clue: Business Plans

A Web site manager reminded me at Comdex recently that now is the time to write those 1998 business plans. So here's some help, along with a peek at our own plan.

All business plans start with reasonable objectives. If you've been online for a time, you should now have some market share data to evaluate. If you haven't, you can still use such data to get the lay of the land.

We're talking here of Web market share, not real market share. But we're not talking about looking at it in a vacuum. If your newspaper is a local monopoly, in other words, the fact you've got 60 percent of local news clicks won't look so good. If you are a national magazine, compare estimated revenue streams (their rate card, your rate card) against the competition, not just to see how you stack up now but how you may stack up with the right plan. If you're selling something, do a solid content analysis, not just of your site, but of your competitions', and estimate what it will cost to match their improvements.

What technologies should go into the plan? We know now that 1998 will be a big year for personalization and interaction. Translated, this means adding a salesman and a feedback loop to your Web site. There are lots of expensive tools aimed at doing the former, but before you buy, ask first what you want this online sales force to do and be realistic. Your consideration of the feedback loop may enter into this. How are you handling e-mail, for instance? How are you routing it, responding to it, and turning it into a true two-way pathway to build your business...that is the question. (The problems of 1998, it turns out, are a lot like those of 1985.)

If you don't have one already, database technology should be another ingredient in your 1998 menu. Not just a content database, but a solid registration database from which you can extract useful information, and (if you're selling goods) a complete products database. I'm guessing they'll be a big premium among users next year on saving online time - if you can get them exactly what they want with a few simple WAIS-like database calls, you'll increase market share without increasing the load on your system.

What's in my business plan? For 1998 we're looking at automation, advertising, and more interaction. This means using a mailing list management service so your subscribe and unsubscribe messages are handled correctly, as are bounced messages. We'll pay for this with a brief ad, where the SSP section sits now (which means that will expand slightly). We'll use ticklers (another feature of mailing list programs) to encourage your responses to our copy, and we'll work in time to build a digest that will include your debate as well as links to outside news stories. We're also going to drop the canard about charging for this service - I haven't got the infrastructure to handle paid subscribers.

I have one more piece of advice. A business plan is always written on a word processor. That means it's subject to change as circumstances warrant. In my case, we might get our own URL, we might add graphics - that depends on finding some money (not much) and time (much more) to devote to such projects. We get our Clues, after all, from following you, and we want to leave plenty of time for that.

SSP (Shameless Self-Promotion)

It's our fall tour. Next Tuesday we're speaking at Comdex Miami and then jetting to Internet World in New York. We'll see you there. I'll be wearing the beard and the gray fedora, as normal, and spending considerable time in the press room writing the next week's issue.

How do I afford such extravagance? 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). Look for coming features in 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...

Some Welcome Realism

Reports that both Wired Digital and C|Net have cut some jobs and may cut others upset a lot of people on the Left Coast last week. But it has this old journalist singing a different tune.

The false assumption that the Web is a fad was based on the totally Clueless business plans of publishers and some online services , of whom C|Net and Wired were just the most visible. Both now say they're aiming at a profit, and as growth inevitably slows (due to the law of numbers) that's not unreasonable. Personally, I think it will prove easier for C|Net, which has multiple revenue streams and a younger staff, to find the bottom line than Wired, at least in the short term. But the process will teach both companies what they have, and give them an opportunity to decide once again what they want.

I expect this same process will be repeated at many other popular sites over the next few months, including ZDNet and MSNBC . This is not a recession. It's a consolidation. At the end of the process, you have solid businesses, rather than pipe dreams, businesses that can go forward with experience to take on new challengers.

Certainly some good people will lose jobs, or change jobs along the way. That's inevitable. But as I think my own case makes clear, the Internet gives everyone the opportunity to be their own boss, and make for themselves whatever their time and talent will allow them. This race is not always to the rich - it goes to those with a Clue who execute realistically, who turn the first blush of success into a profit.

Where the Netscape-Microsoft Battle Is Joined

Before leaving Comdex one thing became very clear to me. Microsoft's Achilles-heel is that Windows NT doesn't scale. It won't work for enterprises the size of, say, Microsoft. Instead, Microsoft runs its business on SAP. All of Microsoft's rivals have just a few years in which to offer solutions better than what they expect NT will be. If they fail, in ease of use, performance, price, or the transition path, Microsoft really becomes IBM - and on a much bigger scale than anything the Watsons could have dreamt of.

This is true for Sun, true for IBM, true for Oracle and (most important) true for Netscape. Thus, its $180 million purchase last week of Kiva Software, which makes tools for building extranets linking everyone in your shop to all the other shops they do business with, as clients, customers, and collaborators.

What's happening in what Zona Research calls the ABM (Anyone But Microsoft) space is that all the players are angling for pieces of one alternative solution, and elbows are sharp. IBM has its "San Francisco" object technology, Sun has Java and Solaris, Oracle has its Universal Server. Kiva is Netscape's play. It's not browsers, or servers, or applications, but networks and the applications that run on them, which are at stake. Expect Netscape to display this solution in Java-based commerce systems built by Actra, formerly a joint venture with GEIS, whose interest it bought-out a few weeks ago.

Microsoft can build browser and server market share by giving its products away, but its enterprise solutions aren't there yet. Such solutions have yet to be built. With a little help from its friends, Netscape's plan is to build them. And if you add the development dollars of Netscape, Oracle, IBM and Sun together, Microsoft remains outgunned.

New Horizons In E-Mail

Two stories came across my desk last week reflecting where e-mail is headed as a marketing tool. It's the control (if not the consent) of the client that counts.

Juno is trying to assert this control through a lawsuit against 5 named and 10 unnamed groups it says have been using faked Juno return addresses to send out spam. As has been suggested here, Juno asserts the use of fake return addresses constitutes mail fraud, but given the lack of criminal action in this regard, it's turning to a civil suit. Juno's hands aren't clean here, of course. Its right to send e-mail to subscribers, and place banner ads on their messages, are keys to its business plan. Those accounts are its assets, and it's asserting it doesn't have to share those assets.

PC World wrote to brag it's now sending 2 million e-mails per day, between its Dummies Daily and TipWorld letters. The company now has 42 different e-mail titles, all one-way tipsheets, which go to a total of over 550,000 e-mail boxes. (The subscription rolls put it somewhere between C|Net and Wired.) Advertisers include Microsoft, Dell, Micro Warehouse, Symantec, and Kodak.

Three things are clear from all this. First, people will ask for e-mail. Second, they demand control of the flow, and services are increasingly becoming their advocates in this regard. Third, the challenge of turning this into a two-way information flow remains to be met. That's where your editorial dollars should go in 1998.

Clued-in, Clueless

Clued-in is the Information Handling Services Group , Englewood, Colorado, best known for its engineering specifications databases. They bought what was left of Jim Manzi's Industry Net from Perot Systems last week. By linking its databases to suppliers' e-commerce engines, the company hopes to turn Manzi's sows' ear into a silk purse. With minimal additional investment, the site is already a credible alternative to Cahner's Manufacturing.Net , with its specifications providing more depth.

Clueless, as always, are the nation's newspapers. Whether they're working through the New Century Network , America Online or their own sites their eyes are on ad dollars. The Web isn't about ad dollars, or even transactions, but modeling the business process or buyers (readers) and sellers (advertisers), and earning commissions, rather than mere tips. The problem is such city-wide Webs are huge, and even newspapers lack the scale to do them. The Clue is to do them in a niche, something small and profitable that can be copied in other industries. When will they ever learn?

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.