A Clue...to Internet Commerce

by Dana Blankenhorn

Volume II, No. IX

For the Week of March 2, 1998

This Week's Clue: Building A Business

SSP (Shameless Self-Promotion)

We Built This City...

The Political Problems Mount

Contract Law

Watch This Standard

Clued-in, Clueless

This Week's Clue: Building A Business


A friend recently made a fine offer to sponsor this letter, but before taking it I did some hard thinking.

It's easy to take the money and run. Traditional publishing has always separated the sale of ads from the creation of content. But the more I considered the question, the more I saw how Clueless this traditional formulation is, when taken online. I also found some Clues that might help other letter-writers build their businesses.

Let's start with some conclusions. First, the one asset I have is your attention. You give me that because I don't waste your time. Since I have just one ad "avail" in a letter like this, the ad I put there had better provide service. And instead of putting that money in my pocket, I'd best use it to build the business, delivering you more service and earning more of your attention.

What's the key word in that last sentence? The key word is earn.

What actions are implied by these conclusions? First, I have to vet any ad I place here. Is the product relevant to you, is it valuable, and does the link behind the ad deliver real service? That doesn't mean I'd want to buy the product being advertised. It just means I must agree that your learning about it is worth your time. This requires more due diligence than you'll find in other media - even on mass-market Web sites. If I do my job well, both you and my advertiser will be happy. It's essential for the long-term health of any Web-based business that both sides in every transaction remain satisfied. That's the only way you can build an online community - it's a process of mediation.

Second, a moneymaking newsletter deserves its own Web site. Such a site needs more than a morgue. The money coming in must go toward providing you additional services. I'd start with a "worthwhile resources" page describing (and linking to) sites, pages and people I find useful. I'd update that page every week. It would also include a page where my answers to your questions, and replies to those answers, can be posted. This creates new ad opportunities, sure, but more important it delivers you new services you may also find worthwhile. Most important, it turns this one-way newsletter into a community. The resources page can be enhanced with descriptions and demonstrations. The letters page can turn into a "digest" that puts all of you in touch with one another.

Here's the most important Clue. Turning a labor of love into a profit-making business takes time, discipline, and respect for the audience in all your decisions. When you reach some success you can choose either to sell-out or to grow for the long haul. And, because of the feedback loop and instant attention spans (competitors are always a click away, and the chief competitor is "unsubscribe") the answers to those questions will always be slightly different in this medium than in those that have come before.

When I was a kid my dad owned a TV repair shop. He knew his customers, he knew his stock, he knew his employees, and he mediated among them to earn his living. He took the customers' anger when a tube went bad or a repair went wrong. In exchange, he marked-up the price he paid for his merchandise and his employees' time. I'll admit I didn't like Tower TV - I chose a journalism career to get away from it. But my dad really enjoyed the process of his work, as I've come to enjoy the process of analyzing the news and helping you run a better business.

In other words, a successful online newsletter isn't a paper at all. It's a store. I'm the manager. Behind me is the whole whirl of Internet Commerce. You stand before me, with a site that might not be working quite right. My job is to help you fix it, and if I do that you'll come back, you'll tell your friends, and together we'll build a business. All of which means, I think, that I owe Fred Blankenhorn an apology.

SSP (Shameless Self-Promotion)


Here's an irony. Datamation Online wants me to write a column on electronic commerce, and I'm happy to do it. You can also expect to see me at Internet World in Los Angeles the week of March 9. And, yes, we're still waiting on automated deliveries through Audette Media - we'll let you know on that.

Just 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, as found in Atlanta Computer Currents, on Access Atlanta, in Net Marketing magazine and Internet & Electronic Commerce Strategies, or right here, don't wait for the e-mail -- give me a call at 404-373-7634.

And now back to our show...

We Built This City...


The man at the other end of the long-distance call was excited. "We're offering a free Web store to everyone in town," he said. Not a free site, mind you, a free store, complete with cash register. For processing the transactions, the developer wants just 2% of sales, and a small rent for data processing.

Isn't that neat? Well, they've got two key Clues right. You need to specialize (in this case geographically) and you've got to offer more than a "site" in order to compete these days - you have to give people the tools with which to make money. But this is just the beginning of the story; the beginning of what entrepreneurs in hundreds of other cities must do to build virtual cities.

What will bring shoppers to an Internet Mall, even one with a geographic focus? In a word, it's editorial. If you're planning a local Web mall, hearken to these Clues:

  • Start with an entertainment reporter, someone who can write well about local music clubs, local stage shows, and movies now opening. Those columns get you into a net-centric crowd. Then you must either create, or license, some reliable listings on all these areas. You then build sales calls around the excitement, and crowds, generated by this editorial. You find your best prospects through a simple content analysis, looking at your new competitor's ads. In Atlanta, you'd open Creative Loafing.
  • Next, get yourself a fashion and lifestyle reporter. Same deal, but this time your directories are those of clothing stores, jewelry stores, and all the attendant happenings around town. Eventually you can expand this into interior decorating, gardening, home renovations, cars, and even specific "happening" neighborhoods. Where I live, Atlanta Magazine does this job.
  • You can then expand into the local computing scene, into sports, and then into real news. At every stage, you're adding directories, including every business (not just those with stores you have online) and links to other local resources (tracking links to non-advertising businesses). Now you're going after the local newspaper.

Be prepared to bring in a high-level editorial hand, a managing editor if you will, who'll build the excitement, take responsibility for your credibility account, and do the local talk shows or garden clubs. Be prepared to license your technology to newspapers and directory companies that see what you're doing, and be creative in these deals - you may be able to gain some editorial control (and cash flow). Be prepared to offer even more help - design help and merchandising help - to make your partnership with local merchants work. Finally, don't just think Internet, also think Outernet. Newsprint is cheap, publishing is heavily computerized, and there's no reason why you can't (or shouldn't) be ready to publish a free weekly supporting these efforts, and including all your best stuff.

Let me summarize this. Think editorial. Build credibility. Add paper. You can create quite a stir. It amazes me that no major news organization has figured out the Web, but these new local malls are halfway there. They've got the advertising side wired. If they have courage - if they invest properly in editors - they'll eat the publishers' lunch.

The Political Problems Mount


If governors win the right to tax Internet purchases, if the FCC decides Internet users should pay per-minute fees for the Universal Service Fund, if schools and libraries using that money are forced to install censorware, the reason will be easy to see - disunity.

While one-quarter of U.S. adults have e-mail addresses, three-quarters don't, and only a united front stands a chance of winning any of these battles. But what were privacy advocates doing at the recent Computers, Freedom, and Privacy (CFP) conference in Austin, Texas? That's right, they were fighting with each other.

It is true that users' online interests differ. Businesses want to protect their rights to advertise, and protect trademarks as much as possible. Many people want to protect their own rights to be heard, while calling opponents spammers, pornographers, haters, or worse. Those who play the political game are attacked for defending the compromises that result. Any assumption held in any country, whether the right to jihad or the First Amendment, is derided as a local ordinance.

So the time has come, it seems to me, for an online "Constitutional Convention." Ordinary users around the globe need to get together on some basic principles, then defend those principles before their own governments. Principles like, we have a right to know, and to learn, but a responsibility to protect ourselves and obey the local law. Simple statements - the whole thing should fit on a postcard.

While we're here, let me get in my two cents on one issue, taxing purchases made online. It it's matched to identical taxes for direct mail purchases, I don't have a problem with it. The software can be run by transaction processors like First Data and National Data, and sales taxes are key to paying the costs of local government - cops and schools and roads. The key, to me, is separating issues like our right to speak and access others' speech to commercial "rights" that amount to mere selfishness.

Contract Law


Speaking of rights, what we expect in law can easily be taken away by contract. My kids can't borrow the CD-ROMs they use at school because of software "license agreements" prohibiting acts that are common in other media.

So kudos to Richard Wiggins of Web Reference for breaking a great story on Microsoft's latest outrage in this area. Its Microsoft "Agents," soon to appear on an ad site near you, are being censored by license agreement. If you use these online agents to say something Bill Gates doesn't like, in other words, Microsoft's lawyers will shut you down. Your Clue here should be basic. Not all dangers lie in what governments seek to do. They can also lie in what competitors or suppliers seek to do. Read your contracts carefully, and be warned.

Watch This Standard


If you're in business-to-business (b2b) sales, watch something called the Collaborative Planning Forecasting and Replenishment (CPFR) standard, coming to a software program near you.

Briefly, CPFR coordinates how data is organized in the kinds of database, messaging, and logic programs used by big businesses. It will work with other business standards like EDI, object standards (Microsoft's COM and Netscape's CORBA) and, if it makes its way into the recently approved Extensible Markup Language (XML), it could get really dangerous. (Dangerous in this case is good.)

CPFR would let businesses into each others' systems to manage supply chains, rather than relying on reports and forecasts. In the hands of a Wal-Mart, which has built its reputation in supply chain management, it means cash registers and hand-held computers taking inventory can create orders (or stop orders) at suppliers' factories inside a day. It will take years to bring this power to smaller businesses, but the faster the better for their survival, and a Web standard is the best route.

Clued-in, Clueless


Clued-in is N2H2 of Seattle, which is building a filtered search engine for kids with Inktomi that will use "out of band tagging" to exclude specific pages parents would find objectionable, while allowing searches of the full Internet. For schools and parents concerned with what kids find online, this is a solution that will work and it will be completely ad-supported.

Clueless this week is Newsbytes News Network managing editor Ian Stokell, who seriously suggested in a recent editorial kids who are under 14 shouldn't be allowed to go online alone. There is a problem online with "search engines for kids" that can't find anything, but I'm father to two Internet-savvy young people, both under 14, and I refuse to deny them the right to learn because Ian's afraid of what someone else's kids might find. We need a lot more cyber-help for kids, true, but to deny them the future because that help is currently in short supply is, is...well you know what it is.

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