(formerly "A Clue...to Internet Commerce")
by Dana Blankenhorn
Volume II, No. XVI
For the Week of April 20, 1998
Firefly Network was failing. I've covered the personalization space for over a year now, and NetPerceptions was beating their butt on nearly every deal. Yet Firefly was the prime mover behind the Open Profiling Standard (OPS) part of the Platform for Privacy Preferences (P3P) project (say that three times fast) on which Microsoft hung its hopes for avoiding privacy regulation. (Firefly's system has already been implemented in IE 4.0.) So Microsoft bought Firefly.
Some otherwise-clever folks who don't follow this space year-round have called this a reason to break-up Microsoft. But the fear Microsoft might use Firefly's database to destroy your privacy is groundless. The real danger is that sites' desire to hold user data as proprietary might lead Congress to regulate, or prevent, its collection.
Let's start by summing up OPS quickly. It's a file (based on Firefly's Passport) into which you put personal data of all kinds. You can then deliver that at once to a site that requests it, or withhold certain portions of it. This is supposed to give you control over your personal information and make site registration easier. The OPS rules also restrict what sites can do with that data (in theory), and it can be combined with a Digital ID for authentication. Therefore (in theory) there's no need for government regulation of Internet privacy.
Publicly, NetPerceptions welcomed the move. Vice president marketing Steve Larsen wrote "friends" (including me) to insist Microsoft's Interactive Media Group bought Firefly for the profiling business and work in the privacy area, not its collaborative filtering technology. "Microsoft's acquisition of Firefly will spur an expansion in the use of profiles that will result in an increase in the market for personalization technologies like ours," he wrote. "Our GroupLens Recommendation Engine is Microsoft's preferred Recommendation Engine solution for Site Server 3.0 and we will announce two joint customers later this month."
But Microsoft didn't just buy Firefly to help out Steve. The Federal Trade Commission is now conducting a sweep of commercial Web sites, looking for posted privacy policies. Congress is looking at about 50 privacy protection bills, and many states, including California, are moving toward passage. People are having their identities stolen by thieves who find their Social Security numbers (Georgia just made this a felony), and the continued sale of transaction records to related direct marketers doesn't help. Mistakes in credit records, driven by data collected through the Internet, and AOL's decision to give-up a sailor who was then accused of homosexuality by the Navy also drew publicity. It doesn't sound related to P3, but Microsoft has learned that in politics perception is reality.
And you think it's bad here? The European Union has already approved a privacy directive, which goes into effect in October, far stricter on the collection and use of private data than anything contemplated by the U.S. government.
Without P3, in other words, Web commerce in Europe may be stymied before it gets going, and it may be seriously compromised here, with new costs aimed at meeting regulations designed to soothe popular fears. In this case, Microsoft did the industry a favor.
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...
Speaking of Microsoft, a recent IDG study on the "mind share" given vendors by MIS managers was quite revealing, although not for the reason publicized.
Most analysts noted that IBM's "mind share" tripled, while Microsoft's fell. (The question was which vendor will direct the Web's future development.) But Microsoft's share of mind actually fell only slightly, from 25.6% to 24.2%, well within the study's margin of error. IBM's gain, driven by its JavaOS announcements and "e-business" marketing hype, took it to 9.9%. Last time I looked, that number still won't get Steve Forbes out of Iowa with hope alive.
While Netscape's share fell like Milli Vanilli (from 9.6% to 2.7%) the real key is the "don't know" category, which rose to 45.8% from 39.1%. Apache, Linux and Mozilla will not go away, and corporate buyers now grok that. So apparently, does David Gee, IBM's director of Java marketing. He warned in Australia last week that Sun must give up its control over Java development by year-end for the language to become the "lingua franca" for linking disparate systems IBM hopes it will be. To put meat on that statement, David, all you need do is put your version of the JavaOS into the public domain. (Maybe you can call it Cuppa.)
I spent some time for NetMarketing recently chasing "spamdexers." These are marketers who promise to get your site listed first when someone uses specific keywords on a search engine. Some, like PromoteOne of San Diego, sell their knowledge through newsletters for do-it-yourself spamdexing. Others, like Did-It , host pages that attract the engines, then re-direct consumer hits to clients' pages, charging a fee each time they do it.
Your Clue here involves the Cold War between the engines and the spamdexers that's making Yahoo's Jerry Yang a billionaire. When the engines got wise to the abuse of keyword "meta tags" and started indexing body text, the "spamdexers" simply manipulated the body text on their sample pages. Infoseek has been the most aggressive at combating the spamdexers, combining hits on specific sites into a single listing and halting the indexing of pages that re-direct users elsewhere. But they've gained little traction in the search engine wars as a result - user inertia is very powerful.
Because they're losing the search engine war, Excite and Lycos have been using their ridiculous stock prices to buy services like Tripod and turn their sites into "start pages" a la Planet Direct and Snap! Another result is that Yahoo, a human-generated index rather than a spider-driven search engine, manages to keep its market share. While Yahoo's spent some stock and recently made some minor changes to its page, exchanging its gray background for white, it hasn't really changed that much. The box into which you type your search is still the page's key feature.
Getting your page correctly indexed by Yahoo takes PR, not software. Fill out the forms correctly, have a URL that relates to what you do, and you'll have few problems, the consultants I spoke with said. This looks like one war between man and machine that man seems to be winning. They'll be others.
While channel-surfing last week I happened on the repeat of a January 9 C-Span discussion of online journalism, hosted by the Freedom Forum. The "experts" presented were Steven Levy of Newsweek, John Markoff of the New York Times, Jai Singh of C|Net and Rajiv Chandrasekaran of the Washington Post.
A session that could have shed light on the nature of the Internet, however, turned into just another big-media bitch-fest. Markoff attacked the San Jose Mercury News' attempts to coordinate Web and paper publishing. The word "Drudge" was used as a verb, meaning "shoddy" and "unprofessional." The most revealing aspect of their discussion on links was some double-talk from Singh, claiming "news judgements" moved him to halt links to porn, hate group, and other controversial sites in stories about them.
In fact, the reason Singh doesn't link to such sites is subtler. Lawyers fear that if people click to www.whitehouse.com in a story and find nasty pictures, they might sue the news service. In fact, as I've said before, the difference between a link and a name on the Web is minimal. You see the mention of a Nazi site in a story, you do a quick Yahoo (even if they don't index it, it'll be near the top of AltaVista) under the name in the story, and you're there. (Open a new browser window when you start from the Netscape File menu and you can even stay on the story.)
Lawyers still don't understand that a link is a convenience, not an endorsement. The bad news is their voices are now controlling newsrooms. Chandrasekaran went so far as to laud the practice of placing outside links at the bottom of stories, "warning" readers that by clicking again they'd leave the news site - as if people don't know that.
Inertia is powerful, but it isn't forever. Users do learn when they're being manipulated, and they'll take it out on your credibility account. Imposing publishing norms on this new medium sounds nice, but what will happen next is that the ad side will sign Yahoo-like deals placing specific commerce sites next to editorial copy. (In some cases it's already happened.) Publishers are businesspeople, not idealists. What you'll have at the end of the day are stories sold-out to advertisers, and users treated like sheep to be herded.
The good news, and your key Clue here, is that this opens the market to competition. It opens every market - news included. So keep up the arrogance and stupidity, boys. Keep pretending that you, and not your businessman-bosses, call the shots. You'll wind up either selling your souls or watching someone else take them.
Spam won't go away, but some spammers are changing their tactics. Sanford Wallace' new venture, Quantum Communications, will pay ISPs for forwarding its junk mail to their users. Excite's MatchLogic unit, meanwhile, has gone the opt-in route through a product called DeliverE, which lures users into becoming spam-bait via ads for sweepstakes and contests. Unlike Yoyodyne, which uses its contests to create relationships between users and specific marketers sponsoring those contests, MatchLogic re-sells your name. Watch this logic bomb explode in Excite's face.
The bigger problem, as I wrote a year ago, is that spam is becoming a do-it-yourself scam. Software that collects e-mail addresses and sends mass e-mail is now as easy to run (and practically as cheap) as any browser. That's why neither Spamford nor MatchLogic stands a chance. Millions of minnows are eating any hope that e-mail marketing will work, beyond specific responses to specific notes, or specific requests (like yours to me) for a specific line of notes. That's still a good business, but it'll never be what it could have been.
Clued-In this week is Link Exchange, which drew Mark Bozzini, formerly of Pete's Brewing, as its new CEO. With all the money being thrown at Yahoo, Excite, CMG and anyone with an Internet customer franchise these days, it seems LinkExchange, which has built its franchise to 200,000 Web sites exchanging banner ads, has a real chance to make itself a fortune, and soon.
Clueless this week is Microsoft , which is trying to use ads and considering phony grassroots appeals from users to stay the trust-busters' hands. When even Zona Research says your integration efforts (this time in Outlook '98) have gone too far, you should stop trying to kill the messenger. PR in the name of politics is wasted, unless you really are trying to protect a monopoly. PR in the name of protecting something you claim you don't have is...well you know what it is.
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