Week's Clue: Tonight We're Gonna Party Like It's...
Did you know "the artist formerly known as Prince" was a great computer engineer? It's true. He apparently discovered the Y2K bug way back in the early 80s. Listen to this lyric - "Year 2000, 0, 0, party over, out of time. So tonight we're going to party like it's 1999."
In that lyric, The Artist may have also been speaking of electronic commerce. Most large companies will be consumed this year by compliance testing for the Y2K bug. The bug itself isn't that hard to stamp out. (My wife, who writes transaction processing programs in Cobol, told me you can write a subroutine stating if a new date is 60 less than the most recent date, it's a valid date. I pointed out this creates the "Year 2060" problem. She replied. "None of these programs will be running then." My riposte: "That's what they said.") The problem is finding the little bugger, then making sure everything will keep running at the appointed time. You can't just run a test of January 1, 2000. You also have to run multiple months, and multiple years. (Don't forget that 2000 is a leap year, while 1900 was not.) This is what is earning your contract programming friends all that $150/hour overtime.
Assuming your small company has gone through all this tsuris, you have a huge opportunity. You can write, and build, new applications and new features, knowing the big boys can't match you. I know some Clueless stock analysts have predicted that "Wal-Mart is going to squash Amazon like a bug." My point is that won't happen right away.
Now that we have the Big Story down - the 1999 Lewinsky if you will - what other trends can we see in Internet commerce for next year? Here are several:
* The Internet stock bubble is going to burst. This one I can guarantee. Regulators and analysts are busy poking at it now, with dire warnings and margin requirements. They hope they can just let the air out of the balloon gently. My prediction is that won't work. When this thing pops, they'll be pus all over the market, including scandals where Internet stock trading sites go under for reneging on trades.
* The big story for early 1999 will be customer service, or the lack of it. Many, many Web merchants ramped up for this Christmas without scaling their fulfillment systems. The magic word for Groundhog's Day will be "outsourcing." Expect lots of stories about OrderTrust LLC, which built Lycos' online store, followed by some pieces on its competitors.
* The marriage between online and broadcasting, made last year, will be cemented this year. It will no longer be enough to just have broadcast commercials about your Web site. You'll need good commercials. These Web sites have had bad commercials and they'll pay for it.
* Expect a lot of Clueless stories beginning something like this. "It's no longer electronic commerce anymore - it's commerce." Well, yes and no. It's true everyone competes online. But these are not the Cola Wars - you don't just have a few "survivors," then a brutal "shake out" which leaves one or two giants carrying the field permanently. There will be a lot of winners in a lot of niches.
* There will be a lot of "sturm and drang" over issues of measuring Web ads, and tracking their results. There will be a lot of calls for standards. Many committees will meet long into the night, and there will be heavy balloting on proposals. They will be no closer to a solution at this time next year than they are now.
* Judges all over the world will issue Clueless rulings that seem to ban gambling, obscenity, spam, and even plain old commerce, rulings with teeth in them. Expect a lot of Web sites to move across borders as a result. (Above.Net has already agreed to put a server farm in the Philippines. Are the Cayman Islands next?) The real battle over Internet freedom will occur at the international level, as diplomats try to hammer out agreements on when "extra-territorial" decisions regarding the Web will be respected.
* Finally, remember what the Internet can do. Unlike any media that's gone before, the Internet can model every phase in a customer's relationship to a business, or a business' relationships with other businesses. It's not about putting up pages, or generating traffic, or integrating databases, or even big sales numbers. It's about changing relationships and responding to those changes. It sounds revolutionary, but it's not. As Milo Mindebender said in Joseph Heller's "Catch-22," "just think of it as evolution in action." And evolution doesn't have an end-point.
I've got a new daily gig. EcommerceTimes , a news site specializing in electronic commerce, has signed yours truly for a daily "viewpoint" feature, which launched last week. If you are a heavy user of Internet stock trading sites, I'd also like to profile you for an assignment I have with Salon Magazine . You can still buy "Web Commerce: Building a Digital Business," , by Kate Maddox with yours truly, and I have two other proposals available for consideration...
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And now back to our show...
How Was Christmas (Really)
Amid all the rapture over this Christmas' online sales, some key Clues are being missed.
Your first Clue comes from the book publishing business. That is, don't count your profits until the end of the year. Web sites that scaled big to sell will be hit this week by massive traffic from gift recipients wanting to return their goodies. It happens in "meat space," it will happen here. If you treat returns as an opportunity to win a loyal customer you'll do well. Treat it as a hassle and you're shooting yourself in the foot.
Your second Clue comes from journalism. That is, a deadline isn't just a suggestion. Santa doesn't wait. Any Web site that couldn't deliver its orders by the deadline of last Thursday left lots of angry customers in its wake, with angry stories they'll tell again-and-again.
Your third Clue comes from the business press. That is, don't follow the herd. The herd right now is calling the Web a simple "fourth channel" (alongside in-person sales, mail order, and telephone sales) and some analysts are predicting meat space will swallow you, once they get their ducks in a row. Don't believe it. Mail-order and telephone sales built big new businesses, adapted for those media, and your Web business can also have staying power - if you're smart.
The fourth Clue comes from the sky. Beware of shooting stars. A lot of Web stores spent heavily this year and look like players, but many are not. Other Web sites that didn't spend heavily, whose owners simply built their businesses methodically and profitably, are looking at good times ahead. But the press may never know.
We'll leave this weekend to the high-profile content sites and Clueless commentators. Raise a glass to old 1998, and have a Happy New Year.
Lawyers are attracted to money the way flies are attracted to rotting flesh. In the last year we've seen how they could turn the world's richest man into a quivering, forgetful mess. We've seen suits over links (Ticketmaster vs. Microsoft) and we're about to see patent fights over business practices that existed for hundreds of years before the Web was spun.
Here's an easy prediction for 1999. It's going to get worse - a lot worse. Big guys and bad guys have long used lawyers to intimidate rivals, and where there is money there is motive. There are also sound public policy reasons for wanting some controls over Internet commerce. Is anyone out there for child pornography? Should the Internet be used to circumvent the medical prescription process? The problem, of course, lies in defining where the line is you shouldn't cross. And the first thing lawyers learn in law school is - fuzziness equals fees.
Sure the Web crosses all boundaries, but so does the Bell System, and we've dealt with its problems for decades. Laws regarding mail order are well established, as are procedures for selling all the controversial items the Internet makes it so easy to sell. You can expect, over time, that those are the rules that will prevail. If you stick to them, your Web Shop Around the Corner should be safe.
That's a good standard for legitimate business, but there are also illegitimate businesses. Regular readers here know all about spam, and the legal attempts to quash it. The direct mail industry has responded by insisting that "opt-in" lists offer marketers protection. Some large companies, even Microsoft and AOL, have responded by trying to make "opt-in" the default for their customers.
Then there's that boundary line, when an "opt-in" list isn't what it appears to be. Mark Welch , who runs a number of small shared lists for Internet marketers alongside his consulting practice, recently shared with me the story of a BeFree consultant who he found selling that company's list of affiliates. (One of the purchasers, Mark says, was a bank!) I won't pre-judge the case, but I think Mark, a lawyer by training, believes lawyers (and perhaps law enforcement) may need to be involved here.
Unfortunately, the Case of the Questionable List isn't a major case of public policy. It is, at heart, a struggle over the rights of e-mail marketers to control their lists and perpetuate their businesses. And this is what leads me to a Clue. The joke is a conservative is a mugged liberal, while a liberal is a conservative accused of a crime. What do you call an Internet libertarian who's been spammed? The answer, most likely, is a regulator.
Clued-in is Webcertificate , a "bank" for gift certificates that can be spent anywhere online. They made a fast buck this holiday season, they'll likely sell out for fast bucks before next holiday season, but they did it the old-fashioned way - they earned it.
Clueless (again) is Cox Enterprises , which is apparently trying to run local "interactive" sites in Colorado and Texas out of Atlanta, after failing to build a profit with them using a Clueless business plan.