A-Clue.Com
by Dana Blankenhorn
Volume III, No. XVII
For the Week of April 26, 1999

This Week's Clue: "Volunteers" of America

This Week's Clue: "Volunteers" of America 

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Defending Your Voice

Fighting the Ground War

Buy This Book

Clued-in, Clueless

Before the Web was spun, the best way to indulge your passion for a subject was to moderate an online forum. The job involved stimulating traffic by bringing in news, by moving messages around, by organizing file libraries, by arranging chats and by dousing flame wars. Job pressures grew with the forums, but they had a clear economic model. CompuServe and GEnie paid moderators a portion of the online time their forums generated. As the forums grew moderators sub-contracted to volunteers, who were given a free account. I did this myself for a time, and felt well compensated, because I was getting $8 hours free. 

With the rise of all-you-can-eat (AYCE) pricing, however, the model fell apart. Instead of using entrepreneurs as moderators, America Online turned to media companies. The media companies' employees did the heavy lifting. (I performed that role on AOL in 1996 for CMP's NetGuide Magazine.) Volunteers were still used, but monthly AYCE pricing cut their "earnings" to virtually nothing. Since Web sites had no subscriber revenue at all, the very idea of paying moderators became passe. 

America Online exploited the new model to become one of the most valuable companies in the world. But there is now restiveness in the ranks. Some former volunteers launched  a Web site to complain, and the U.S. Department of Labor is looking into the AOL volunteer agreements

The question here isn't whether AOL volunteers should be deemed employees and paid. If people don't like the arrangement, they have plenty of alternatives. GeoCities or AngelFire will give them free sites with all the trimmings. They can also go into business for themselves. AOL's problem is finding an economic model that will allow it to place a reasonable value on the work of its "volunteers." The alternative is to tough-it-out and hope most volunteers stay - there's enormous power to moderators in that 17 million strong subscriber base.

VerticalNet  has done an excellent job using moderators. That's what its editors really are. They man narrow industry niches, and build small communities. When businesspeople find themselves in VerticalNet communities, they also find suppliers, clients, and business partners. They gain enormous value, and the Value Per Customer (VPC) thus unlocked is also enormous.

There's a Clue here, and it's in that last sentence. Value communities based on VPC. You calculate VPC by adding each user's value to advertisers, to commerce partners, and to other community members. How much is a regular user of your site worth to you, in other words? (My apologies go here to the ghost of Dr. King, but the fact is the VPC of Fortune 500 hotshots is higher than the VPC of Memphis sanitation men.) Once you know your VPC, you then must calculate how many users you actually have, not just those who are registered (don't forget to offer real value for that registration) but those who are not registered.

Once you know your site's VPC, and your user base, you know how much you can pay moderators. More important, you also have an economic model that can be used to continually measure moderators, to plot raises in their compensation, and to value sites based on moderation. The result will be a new way to value, and compensate, the most important people on the Net, as well as the community sites they work for.

Who can use VPC first? I'd recommend the exercise highly to Salon.Com  which is now in the process of going public. If it can find a sound economic model for compensating the people who drive The Well , which it acquired before announcing its IPO, it can grow that business. But maximizing VPC within The Well will require that Salon add commerce to the mix. There are now some great bargains among small Internet shopping sites. If Salon buys the right one (yes, they'll need auction software as well) and integrates the whole effectively, we may have a winner.


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There are big changes coming. Starting May 3 I'll be working daily for ClickZ, putting a "clued-in" spin on the day's news. I'm also continuing to do monthly columns for  NetMarketing, Boardwatch, and  Intellectual Capital. I'll also begin work soon with the IC folk on a book project concerning politics and the Internet, which will appear first on the Web. A-Clue.Com is also the Monday e-commerce column of Andover.News. Buy my book now. Subscription instructions are at the bottom of each issue.

Remember that it's still journalism -- checking the news, calling people, listening carefully and writing on deadline -- which keeps the Clues coming. If you're looking for excellent work, give me a call at 404-373-7634. Now back to the show...


Defending Your Voice

Give it up here for Burt Lancaster . He came to Hollywood after a career as a circus acrobat and made his mark in film noir. But before he could be typecast, he took control of his life. He used his circus talents in swashbucklers, then won immortality as a dramatic actor, and an Oscar as a producer for "Marty." By following his own voice, and succeeding, he built the template for modern Hollywood.

I thought about Burt recently when faced with my own hard choices. I quit a lucrative writing contract I decided didn't fit my style, and switched another affiliation, again to gain more control over the results of my output. For the first time (it seemed) I was making choices based on confidence in my own voice, a voice I established right here. It felt good, and I think my work will improve as a result. (That means more to me than money, anyway.)

What happens when your voice ceases to work? Eckhard Pfeiffer did the manly thing and walked out of Compaq, leaving Chairman (and original sugar daddy) Ben Rosen to find a new song. Rosen wants to hear the Internet in Compaq's numbers, and there Compaq's been stumbling as badly as the Chicago (Bears, Bulls, Cubs, White Sox, Black Hawks, take your pick - even Northwestern let Barnett walk). Compaq has created no synergy between Shopping.com  and AltaVista. The latter is being run by Doubleclick  which, while it knows advertising, doesn't know editorial integrity .

Rosen needs to figure out what color Compaq's parachute is, and some are wondering if he's up to the job. My Clue to him is to listen for a single phrase that describes a winning strategy. Maybe he'll find the answer on Dell's deep bench, or through a complete corporate break-up. But just as writers and artists must follow their muse, so must companies. Right now Compaq's song is "Meet the new boss, same as the old boss." A better song to listen to came later in the repertory - "Who Are You." Figuring that out is the key to a turnaround.

Fighting the Ground War

The Internet is not separate from the real world, as investors are learning to their chagrin. It can model that world, and improve that world, but it can't replace it, it lives within it.

For any ecommerce effort to be real, it must be tied to the real world. The Web has grown so far through air links to FedEx, UPS and the U.S. Postal Service, as well as a host of direct mail fulfillment houses. But to truly serve the mass market you need to fight the war on the ground.

Most analysts  saw eBay's recent tie-up with MailBoxes Etc. and iShip  as huge for eBay, but it's bigger for MBE, and those who take up the Clue this deal offers. A physical drop-off, pick-up and delivery infrastructure is necessary for any site that truly scales - especially if it's scaling based on mass participation . Even if this deal is exclusive (which I doubt) MBE isn't the only player in the game. Physical networks must stand alongside the wired world to fulfill orders. If you can't make a deal with such a network, buy one or build one.

Buy This Book

I was prepared to hate Seth Godin's "Permission Marketing" . I figured it would be a sales pitch for Yahoo, or (worse) one of those tired executive tomes done by a ghost.

This is neither. It is, instead, the most important book on marketing I've seen in ages. (Godin was given our "Clued-in" designation March 10, 1997 in V1I2 of A-Clue.Com . Godin's writing is simple and clear, his points are well organized, and what he's saying is important.

Instead of seeing marketing as an assault on our attention, he says, why not see it as a seduction? Godin details the five different levels of permission ("situation" to "intravenous"), provides a marketing model that the most zealous privacy advocate will accept, and he fills the book with snappy, memorable lines ("God is a Permission Marketer") he then backs up with clear, sharp copy. I'm not jealous of Seth's money, but I am jealous of his writing ability, and you will be, too.

If you buy just one book this year, make it this one. You'll thank me for it.

Clued-in, Clueless

Clued-in is Jim Griffin of OneHouse , who understands the future of MP3 and its implications for the music industry, even if he doesn't explain it very well. As a file format, MP3 is simple to replace. As an economic idea, it's invaluable.

Clueless is Tish Williams' defense of the Internet stock bubble , especially her attack on Warren Buffett. I'll make a bet with you, Tish. You take Masayoshi Son , one of the biggest owners of Internet shares, and I'll take Buffett. The side who is ahead in 10 years wins. Remember, class - it's not a profit until you sell the stock and put the money in the bank.


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