(formerly "A Clue...to Internet Commerce")

by Dana Blankenhorn

Volume II, No. XV

For the Week of April 13, 1998

This Week's Clue: Lessons from the Fall

SSP (Shameless Self-Promotion)

Silly Lawyers

Silly Publishers

Why Zona IS Wrong

By George He's Got it

Clued-in, Clueless

This Week's Clue: Lessons from the Fall

The loss of my hard drive a few weeks ago caused some big changes around here. One was the purchase of Intuit's Quicken. The maker of our old home accounting package had been bought by Intuit years ago and we ignored the siren call of upgrades until it was too late. So we got it retail.

We got a big surprise. According to the package directions, Quicken's online banking and brokerage functions are only available if you use Internet Explorer 3.02 or higher, supposedly (according to the package) because it provides strong 128-bit encryption. Well, Netscape provides the same level of encryption, I told my spouse. Intuit made a business decision agreeing with Microsoft not to support Netscape, I said. The words on its documents, I asserted, were a cover-up.

This steamed me no end. I prepared to slam Intuit in virtual print, and did some research on the stock. Unfortunately (for me) it's up, trading recently near $50/share. That's far below the roughly $80/share Microsoft offered three years ago (Justice nixed it), but it's double the price of a year ago.

What happened? The Open Financial Specification is what happened. Essentially, OFX turns Quicken into a file format financial Web sites can download. It's neither browser nor server dependent and fairly easy to implement. As a result, Intuit has released a steady drumbeat of press releases in recent months, as various online brokers (like Ameritrade and Discover decide to support OFX to differentiate themselves from competitors .

I also exchanged some e-mails with Michael Weiss, who helps run the OFX Web site and also works for Microsoft. Weiss insists the key to the deal was technical, not financial. "A Quicken user downloads an OFX block using IE today because Navigator couldn't be accessed via external applications (at least not without information that Netscape wasn't making public at that point). IE, on the other hand, could be accessed via external applications by making use of ActiveX.

"Downloading files in a Quicken format is nothing more than getting QIF files off of the Web," he continued. "It's certainly not robust (it just imports without any mapping to existing transactions). OFX provides much more robust capabilities. You can download a QIF with any browser (even Mosaic!), but you can only do OFX via a direct HTTP connection. IE provides a public interface to the HTTP connection. With the source code for Navigator on the Web, you probably could do the same with them (I haven't seen their code, so I can't say for sure)."

Intuit's original goal, to be the dominant financial Web site, was thwarted because bankers and brokers prefer running their own sites. Their own upgrades are instantly reflected, and they don't want to put another brand between themselves and the customer. The banking and brokerage industries forced a sea change on Intuit's business plans, away from its own Web site and toward open standards. Intuit's Web strategy change took months, not years, to implement, as it would have were it reflected fully in client software. Fans of Netscape will be angered by Intuit's client software for months to come, and may be less-likely to consider its own services as a result.

Your Clue here is speed, the difference between Web time and software time, and the real reason the Web is so powerful. If your business depends on the upgrade cycle, it will take decades in Internet time to turn your ship around. Intuit won't reach its old highs until the turn is complete.

SSP (Shameless Self-Promotion)

We're trying to run this "business" on a more businesslike basis, hence our new URL. It's more than our URL, it's our new name, pronounced "a dash clue dot com." After appearing on the CompuTalk radio program March 21 with host Tom King, I also agreed to post these letters on the show's Web site as its "Internet" column. As usual, I'm also talking to lots of new publishers, thanks to contacts made at Internet World .

Still, you know the drill. 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, at PlugIn Datamation or in Net Marketing magazine, among other locations, don't wait for the e-mail -- give me a call at 404-373-7634.

And now back to our show...

Silly Lawyers

Recently I participated in a seminar called "Business on the Net" run by Counsel Connect, the site of "American Lawyer" magazine.

Perhaps it was inevitable that the discussion turned on legal issues, rather than business or technical issues, leaving me to wonder if lawyers will ever understand that the key to the Web is technology and communication, not legal mumbo-jumbo. Worse, the most active threads were on fights over domain names (Hasbro taking back Candyland.Com from a porn operator, for instance) and the legal prevention of links (lawyers for both Ticketmaster and Microsoft were online.)

Ticketmaster's attorney maintained sites can stop incoming links under the Trademark Act. (I held the way to do it is with an admission charge.) With support from Mitchell Kamarck, who's represented actress Pamela Lee Anderson in her fight to keep Web sites from showing home videos of her lovemaking, the lawyers created a number of "theoretical" cases, trying to make their legal arguments Internet-friendly. They acknowledged there's no legal precedent on their side - "many new areas of law often take a while before there is a reported decision" wrote one, and that's true.

Perhaps the most idiotic attempt to justify a halt to links was the idea that a porn site might want to link into, say, Ticketmaster, and Ticketmaster then might want to enjoin that link. The question is, why would a porn site seek links outside itself, to someone with PG-rated content? It makes no sense. And that is the point. Lawyers will go to great lengths over the next few years, looking for situations where they can make new anti-net law. But to do that, they have to get a case. Despite the fact it hasn't been settled, the prediction here is Ticketmaster vs. Microsoft will never go to trial. And some lawyers will never get a Clue...

Silly Publishers

Speaking of silly, increasing numbers of publishers are eliminating links from their stories, hoping thereby to keep users from fleeing. I first saw this at the fine Advertising Age site, and I heard their justification clearly - why toss away your readers?

Well, let's reevaluate this. Some news links, even in context, are silly. Here's one - I like Netscape. It's silly because y'all know where Netscape is. And that's a major trend, plain English URLs don't need links to their home pages in news stories. That's why there weren't many links in the story above this one.

You can also make a good argument that, if the required information is on your site, you should favor a link to it, rather than sending users away. For example, if the subject is child pornography, C|Net is far better served by a link within the story that goes here rather than one that goes outside the site. When you're defining a term, and it's on your site, why send someone away? . ZDNet has also understood this Clue. While they've greatly reduced the number of external links within its stories, they haven't eliminated them, and today's links are much deeper, going to specific information rather than home pages.

Since most readers understand the Web today, links need a higher-value to be worthwhile. Reporters should do more research, going inside sites and search engines, before adding links - links to obvious home page URLs aren't worth much anymore. But another point should be equally obvious to today's "roach motel" publishers. Denying all outside links denies service to readers. Your risk is that clued-in readers will go elsewhere for their news or (more likely) come to stories only from aggregators. Expect a Clueless attack on these folks next.

Why Zona IS Wrong

Zona Research has recently taken to calling every piece of industry news a victory for Microsoft. Even the announcement by IBM and Sun of a JavaOS was spun that way, because Netscape and Oracle weren't in on the announcements. And National Semiconductor's announcement of a $400 "PC on a chip," (lacking only drives and memory) was played to Microsoft's advantage, by National Semi's president, on CNBC.

Before we mint the $50 billion man another 10-spot, however, let's look at some facts. The hardware's there to have a PC in every room, in your car, and in your pocket. The problem now is the cost of software. How many $400 PCs will you buy if it costs $1,000 each for the software to make it useful? (Not many.) That means pricing pressure for Microsoft Windows. (New name for Windows CE - PCjr.)

What cheap clients need to be cheap is access to applications, without the heavy costs. If the JavaOS can link to Citrix' WinFrame (or even Novell's NetWare), NC no longer stands for "not compatible." Your Clue is this. Don't base your estimates for the future on an extrapolation of the past.

By George He's Got it

Last week an interview I had with Rich LeFurgy, chairman of the Internet Advertising Bureau and a senior vice president at ESPN and ABC News Internet Ventures, ran in Net Marketing . The subject was a survey conducted by Coopers & Lybrand for the group showing that Internet advertising was a $900 million business last year, and it grew 200%. At that rate it'll easily surpass the billboard business this year, and it's growing even faster than TV did in its early days.

Everything was going nominally until Mr. LeFurgy said the following. "The Internet is transforming marketing because as a multitasking medium it's able to combine a number of elements." (Is that a Clue I hear coming on?) "You can do brand marketing, direct marketing, e-commerce or retail marketing, and you can do customer service." (By George he's got it!) "The ability to bring all these elements together lets us see we'll continue to see this robust growth scale over time, because we'll draw from lots of different budgets." (It might be, it could be, it is...a home run, Holy Cow!)

Remember, ads and clicks aren't really economic goods. Purchases are economic goods. The Web enables direct purchases, and that's its power. Don't just take it from me -- you heard it from the man himself.

Clued-in, Clueless

Clued-in are the Usenet moderators who staged a strike against all ISPs, simply refusing to filter spam. Self-righteous hypocrites in the press condemned these folks when they acted against moronic ISPs with a Usenet "death penalty." The strike achieves the same end - without the risk of media backlash.

Clueless, this week, is the Dallas Morning News , which killed several discussion forums that degenerated into flame wars. Moderation must deal with flamers, and failure to moderate properly can leave anyone with egg on their face. Any Dallas entrepreneur now has a real opportunity to take the newspaper on and defeat it in the marketplace. What was Clueless was the News' failure to anticipate, and plan for, its forum offering, giving competitors that opportunity.

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