What's clear is that, whatever you do on the Internet, you have to be prepared to compete, today, against the best (and best capitalized) people in your field. To say "we're doing this on the Internet" is no longer any protection. There's too much money to be gained, for any company, by doing it on the Internet, and doing it right, for you to gain protection on it. The first stage of the "shake-out," in other words, has already occurred.

So how can you compete? You can, as the ABA is doing, invest heavily and go directly at your rivals. There's still plenty of capital available for that. You can, if you prefer, serve a sub-market (say, science fiction), or go after the market in a different way (publishing as well as selling). You can also admit the obvious, namely that you don't need all of the market, or even most of the market, to make a living in the market. All you need do is serve that market you get better than anyone else.

In the business of clothing, this means selling style, not just selling generic duds against The Gap or Lands End . And speaking of Lands End, does anyone think their new site design, with its heavy TV hype, means L.L. Bean (for example) or Tommy Hilfinger (a more far-fetched example) should close its doors? Of course not - sites like Lands' latest, with its "online fitting rooms," will simply become basic for big merchants, and those capabilities will filter down, over time, to smaller merchants. In a few years everyone will have them. The Clue here is that technology advantages are usually tactical - they are seldom strategic. When the markets figure out that one, watch out!

In the business of music, strategic advantages lie in breaking new artists, using the Internet to create a label, knowing when to use MP3 and when not to. In any b2b business, you can still make a killing if you find (and sell) a way for industries to cut their procurement (or distribution) costs. Can you speed a dental bridge from exam to installation? Can you cut a dentist's bookkeeping and insurance reimbursement costs? Can you help dentists in a solo practice market themselves better? These are just three of the thousands of unfilled cavities in one market, but I'm afraid I'll still have to sit in Dr. Shapiro's chair before I find true relief.

Let's summarize these points, because they're important. On the Web, you compete today with everyone, so figure out where exactly you can win. On the Web, technology is a tactical advantage - the nose ring and hip-hop crowds won't be crawling into Lands Ends' Oxfords no matter how pretty their Web pages. Finally, as the market broadens new niches develop you can find profit in.

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Put on your Thinking Ears, Boys and Girls

Having successfully implemented its new Internet strategy while its stock has gone nowhere, The Walt Disney Co. is now considering spinning it all out to shareholders.

The debate swirls around questions like whether Infoseek can be added to the mix when Disney owns less than half of it, and exactly how you separate a site like ABCNews.com from ABC News. (When you figure that one out, Mickey, call these folks.)

Those are not the important questions. Actually, there's only one important question. That is, who is going to run the thing? If Disney really wants to spin-off an Internet IPO, it must have an Internet company, not a bunch of suits in Goofy hats masquerading as an Internet company. I've long campaigned here for Infoseek head Harry Motro, and if he is put in charge of this new unit, with enough autonomy to satisfy the stock market, the spin-off can work well. That must, however, include the freedom to work with other companies on building their Web businesses, not just automate delivery of Disney's own stuff. Disney has already missed opportunities here, and if it can keep itself from losing anymore I'd be a buyer - of Disney.

Reign on Real

Real Networks is on a roll. They've signed a major agreement with IBM, they've bought Xing, a creator of MP3 software, and the stock seems to hit new highs every day.

What can rain on this parade? Microsoft can reign all over it. When the Windows Media Player is put inside every copy of Windows 2000, and fully integrated with the Explorer browser and Office, Real becomes Netscaped Real fast. Does anyone think the U.S. Department of Justice will move against Big Green before this happens? Why do you think Microsoft's most basic demand is that it be allowed to "innovate" and "integrate" its products without interference?

That's why Real must reach an agreement with record producers, and keep Microsoft out of such an agreement. It's not just important, it's a survival strategy. Real Networks' long term survival is far from assured.

Policing Finance Boards (Every Click You Make)

Ever since the great (unlamented) Stratton Oakmont precedent , companies have sought to treat unsubstantiated criticism as libel. Rather than taking on the services directly, the strategy has been to sue for the critics' e-mail addresses, file court papers with their ISPs to reveal the names, then send the lawyers out to destroy the critics financially. The threat is basic. If these moves succeed, any legitimate critic can be intimidated using the same tools. The best weapon against a lie is the truth. If investors are taken in by lies that's their problem.

When you steal a corporate identity, however, you've crossed the line. PairGain Technologies Inc.  says it won't go after whoever used Bloomberg's page design to create a fake link that stole millions of dollars from Clueless investors before it was uncovered. The SEC, however, must. Identity theft is wrong, corporate identity theft is worse, and stock manipulation through corporate identity theft must be stopped. I think this case is just as important as that of the Melissa virus. Unless the author of this scam is sent to prison for a long, long time heaven help us.

The End of Internet World As We Know It (I Feel Fine)

The Internet revolution really isn't about products. It's about process, about services, about commerce. With investors throwing billions of dollars at even mediocre ideas, the action has moved from trade show aisles to hotel suites, where schmoozing turns into deals.

All the people who are putting together Web sites, or building the Net, have been pushed into the background as the Tulip harvest continues. In other words, we don't need no steenking Comdex, and that's what the Internet World shows are - Comdexes for Netheads. Instead, the smaller confabs put on by Jupiter Communications or (better yet) investment houses like Hambrecht & Quist or Morgan Stanley, are where the action is. So smart reporters stay home, preferring the comfort of their phones, browsers, and e-mail clients. When talking and thinking mean more than buying and selling, the schmooze better be very high quality to get my bags out of the closet.

That is where the market stands now, but it's not an end state. The wheel will keep spinning, and when the news appears elsewhere I'll be glad to travel to it.

Clued-in, Clueless

Clued-in is CBS CEO Mel Karmazin , who grabbed big hunks of two Internet companies for $200 million in "promotional considerations." It's all window-dressing for the ongoing auction of CBS proper, a little "sizzle" for Clueless investment bankers. Even if the two Internet deals turn into nothing there's no cash lost. This is the right way to harvest Tulips.

Clueless is Skymall , or more precisely anyone who buys the idea that this catalog aggregator has an "Internet strategy" based on "aggregating eyeballs." Having a Web site (even one that can take orders online) doesn't make you a Web company. Except during Tulip season.

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