In my continuing effort to follow "William Safire's Clue" and kick people when they're up (rather than when they're down), I decided this might be a good time to re-examine the bluest of the Internet "blue chips," America Online.
I'll submit (for purposes of argument) that AOL's best days may be behind it. Now let's look at the evidence.
On August 24 I received one of Zona Research's regular "Qstats," a sampling of its research findings. (Zona, by the way, is now part of WPP, which also owns Ogilvy & Mather, Hill & Knowlton, and dozens of other ad-related outfits that you didn't think had been conglomeratized.) AOL remains the most popular method for reaching the Internet, Zona wrote, but its lead is shrinking. AOL had 56% of the market in the last quarter of 1996, only 42% in the second quarter of this year. Winning the bulk of this lost market share were small, local Internet Service Providers (ISPs), whose share grew from 3% to 10% in that time. Perhaps most significant, the market more than doubled in size during the period, from 30-35 million to 80 million, Zona said. Thus, AOL kept growing smartly even though its share of market fell. (AOL's growth claims might be another example of lies, darned lies, and statistics.)
Here's another statistic just-in. Netscape's share in the "browser wars" has collapsed since AOL acquired the company. Microsoft's lead, which first opened a year ago, is now as large as Netscape's was two years ago, 3-1 or 4-1 depending on how you figure it.
Want more evidence? Despite its best efforts, AOL is losing the "Instant Messenger" war with Microsoft. Larry Magid, who counts AOL as a sponsor of his SafeKids Web site, nevertheless felt compelled to write in the LA Times that, in this case at least, it's Microsoft that represents the interests of users. AOL represents monopolistic greed . He's got a point. Wanting exclusivity or per-user payment on something that is becoming a standard Web service looks greedy - whether AOL has legal right on its side is beside the point.
In Europe, some folks are excited over AOL's move to a "free ISP" model in Germany and its expansion into the U.K. based on the same premise. But AOL is late in England (very late), and it faces stiff competition in Germany from others for whom the market is not exactly a state secret. Neither has anyone in Reston considered that going into a worldwide market as "America" Online may not be the best thing for long-term financial health.
The best evidence for my thesis, however, may be last week's announcement that AOL is going into promotion with (of all people) CompUSA. The aim is to get people onto AOL when they buy their first computer, but that's never been CompUSA's market. (Wall Street has been wondering exactly what their market is.) When people are wondering whether you might have trouble, getting in bed with a loser is no way to reassure them.
AOL is not going under. In fact, it's continuing to grow, now at 19 million members and counting. But it's not growing as fast as the market as a whole and churn remains a problem. Grabbing millions of dollars at a time from vendors in exchange for "controlling" or "steering" users to them may be great in the short term, but in the long term people learn better. AOL's international ambitions are hampered by its corporate name, and a weak understanding of how phone service works in its target markets. (You need to either cooperate with local monopolies or challenge them loudly - you can't do both.)
Until Linux gets a major share of the corporate system market, Microsoft is a monopoly. America Online is not. The Internet is not going to be, in Gilbert Gottfried's immortal words, "the C.B. radio of the 90s." But maybe AOL will be.
Type "A-Clue.com" in the Offer Code field on the INB order form and receive a 15% discount on any order.
I write daily for ClickZ, and appear every Saturday at 6 Eastern on TechEdge Radio in Phoenix, Arizona. I write monthly columns for NetMarketing, Boardwatch, and Intellectual Capital. Watch for my series soon on VoxCap. The lead item here is also the Monday e-commerce column of Andover.News. You can still buy my book . 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...
The recent ICANN meetings in Santiago were nothing short of a fiasco.
The goals were simple and modest - to create a means for settling "cybersquatting" disputes and create an inclusive process for handling the rest of ICANN's agenda. The pressure was enormous - ICANN is now being told to become a "world government" through its power to name and un-name domains.
A Saint might have been hard-pressed to succeed in this super-heated atmosphere, and this situation didn't need one. Instead, it needed a Pope who could lay down the law and dare anyone to challenge them. By trying to act instead like a weather vane, Esther Dyson blew toward the strongest gale - the one coming from governments and businesses who see their goal as control of others rather than liberty.
Were I in Esther's position, acting as a Wizard , I'd be a wiz of a wizard and understand that "they have one thing you haven't got," in this case a manifesto. You know, "when in the course of human events" and all that. (Yes, it's been done , but without authority.)
We're talking here of a simple statement, written (mainly) by one person (maybe sporting Tim Berners-Lee's autograph at the top, in large script), setting down basic principles, backed by the authority (and signatures) of those with the power to be heard. The situation doesn't call for a Clinton or a Bush, but a Jefferson. (At minimum, a Peggy Noonan.)
Take a stand, state it plainly, and go forward based on it. Move ahead from your declaration to something like the U.N. Charter. You're going to be a world government anyway - be a good one.
Yes, I'm Wrong Sometimes
There's a reason this letter is called "a clue" and not "the answer." The reason is, sometimes I'm wrong.
It appears my first instinct regarding Amazon's "Purchasing Circles" may be an example of that. It's nice to know what the denizens of my old school are reading, but Rice is a small school. If the affinity groups you've identified with Amazon are tiny, their use of that data may identify you personally. This is why ratings agencies like Media Metrix and Nielsen NetRatings don't calculate ratings when 1-2 people in their sample have seen a site - it's not statistically relevant. That's also why you can't drill down through Census data to find out, say, how many white families on Winter Avenue in Atlanta have kids - you're going to find mine and the Census Bureau doesn't want that.
In a nutshell, that's the problem with Amazon's system . They're profiling groups that are too small. A simple subroutine will fix that - if the number of purchases is under, say, 100 don't report the group or the numbers. The problem, in other words, can be fixed if Amazon has A Clue. They made a half-step forward, saying they wouldn't profile groups of under 200, and would let people opt-out of the identification. But opting-out is a spammer's game and it may be they've already lost the struggle. Publicize the fact that buyers aren't identified heavily, and maybe people will again trust you with their data. Fail to do that and you'll lose Permission - the only real asset you have.
Today or Tomorrow?
Covering technology is a lot like covering the stock market. What people are using in their daily lives is no more important than what profits big corporations reported yesterday. Plans and expectations matter more. In technology, it's whatever is over the next hill that counts. In business it's expectations on growth and profit which count.
The Internet stock craze was driven by expectations, and today that excitement has moved to Linux. Red Hat's sales and profits don't matter - all that matters is their position in relation to other Linux re-sellers, and (to a lesser extent) the big names on their customer list. If Linux adoption continues to pick up, then products that are ported to Linux will matter too - even if most of the reporters covering the story don't use them.
The trends came together in news that programmers are no longer interested in Windows, but in Java and Linux . That story covered a hidden message. It's not what Linux is doing as a client platform that excites people, but what Linux has already done as a server platform. As Linux and Apache maintain their high market shares in that space, Java maintains its importance. Microsoft's extensions to Java remain useless because they're not used everywhere, and there's still a "there" somewhere in there that Internet programmers everywhere must respect. (No, it doesn't matter what "there" means.)
In a mass-market Internet, however, it's important to know the difference between what excites folks about tomorrow and what they're doing today. What they're doing today remains Windows clients and slow-speed connections. Yes, the lucky few among us have the "386" version of Internet access - G.lite DSL or cable modems. An increasing number of us are on Macs, or using Linux as a client. But we'll still be the few and the proud for another couple of years at least.
Clued-in is (and always has been) Ted Nelson . Nelson came up with the ideas behind today's Web 30 years ago! And he's still innovating If Time Magazine had a Clue about science, they would have placed Ted alongside Einstein, not Tim Berners Lee, in their list of the century's greatest minds. Berners-Lee was the Oppenheimer of the current market explosion - Ted Nelson's theories made it all possible.
Clueless is "The Industry Standard" and Jackie Cohen for the story "Who's Spamming Who." It promised to deliver spammers' secrets, but just offered their self-righteous apologia. Pictures of Spamford Wallace cuddling a cat should come with a Surgeon General's warning. The next issue of this magazine goes in the trash where it belongs.
A-Clue.Com is a free weekly email publication registered with the U.S. Copyright Office as number TXu 888-819. Subscribers can receive either a .txt file or .htm file. The .htm version features links that become active from inside a browser. To take your name off the list, simply write REMOVE as the subject, or content, of a message replying to any issue. To request your free copy, write us at Dana.Blankenhorn@ att.net or +A_Clue . To subscribe you can also write to firstname.lastname@example.org with the word "subscribe" in the subject. (Address your request for the .txt version to email@example.com . You can unsubscribe with a note to the same addresses and the word "unsubscribe" in the subject.. We're on the Web at http://www.a-clue.com and http://www.ppn.org/clue.