A-Clue.Com
by Dana Blankenhorn
Volume III, No. XLIII
For the Week of October 25, 1999

This Week's Clue: Falling Toward Zero

This Week's Clue: Falling Toward Zero

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Custom Printing

It's Beginning to Look a Lot Like eChristmas

When Patents Kill

Clued-in, Clueless

Despite a memory chip price hiccup that sent Dell and then Micron shares falling in price last week, the price of storage is falling toward zero. This has enormous implications for everyone, many of which have yet to be recognized. 

If you recognize these implications, and take advantage of them, you can profit from them.

I came to this realization when talking to Mindspring about getting a DSL modem for my kids' new school. The offer, good through November 15 for everyone, is $100 up-front and $50/month for a 1.5 Mbps G.Lite DSL connection that can be shared within a small home (or school) network. To make this irresistible they're throwing in 5 e-mail boxes, 5 aliases, 20 hours of dial-up service each month and (most interesting of all) 10 megabytes of storage. 

Everywhere you turn these days you're bombarded with offers of free e-mail boxes or megabytes of free Web storage. They're plentiful because storage prices are falling toward zero. In exchange, outfits like Tripod and GeoCities ask only for your ad revenue. But because storage is free, these companies must now work hard to increase the value of the bundle. So they're adding affiliate programs and e-commerce engines. They have to do this, because their basic free offer is now essentially worthless.

But here's your key Clue. In a world of free storage, time is the true measure of value. There are two ways to save time (and thus create value) - through insight and data access.

This column tries to offer insight. Our agreement is simple. The value of my insight must be greater than the value of your time, or you will unsubscribe. On the other hand data access also saves you time, by offering what's being stored in a way that lets you get at what you want. Yahoo's manual index is one way of saving time for users. But any good database must be designed carefully, so that what comes out will be what's sought and not 129,022 other things. (That's why Yahoo still beats Excite - they give 10 hits on a keyword from the index before searching for the 129,022 other possible links.) 

QuestLink represents a good example of data access being used as a value to drive e-commerce. The database (it's the "Power Search" feature) was designed from the inside out, with the needs of its target market (design engineers) in mind. It's what lies behind the search box that counts, and it's not enough to just have all the data. That data must be organized in such a way that it's accessible. 

This leads to "Ellison's Clue" (after Larry of Oracle, not Harlan of sci-fi fame). It's the database, stupid. It's not just the data, but the organization of the data, and the ease with which people can get what they want from it, that makes the difference between a good site and a bad site. (Note that under this metric you can't tell a good site from a bad one by just looking at it.) This means your employees must be able to use your site to quickly pull up customer data. Your customers must be able to use your site to quickly pull up product data. The interface between these two databases must inform every page of your Web site in order to add maximum value to the users' time. 

This last is the struggle every large site must go through over the coming year, and it's the key barrier to entry that will face smaller sites "going forward," as the stock mavens like to say. How can they clear this barrier without going toe to toe on price or database expenses? The answer to that question was a few paragraphs up from here - insight. 

You gain insight by targeting your market by product, by customer, or by niche. My niche is Internet Commerce. What's yours? Answering that question will provide your key to success in the coming Millenium. Know your niche, be able to explain it in 25 words or less, have more insight than anyone else on that niche, and (Yahoo!) you can beat the databases. 


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I have begun my adventure at Voxcap.Com, discussing how next year's elections might impact the future of the Internet. I write daily for ClickZ, and appear on TechEdge Radio. I write monthly columns for  NetMarketing, Boardwatch, and  Intellectual Capital. Once every other month I'm in CLEC Magazine. 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 that keeps the Clues coming. Give me a call at 404-373-7634. (Yes, I do some commercial writing.) Now back to the show...


Takes on The News

Custom Printing

When I came up, a journalist was defined as someone whose employer bought ink by the barrel. A real business was sort of defined the same way - you had to be big enough to afford your own tchotchkes.

That's no longer true. This week I got two press releases, from Logo Softwear  of Connecticut and ClickPrint of Indiana. Both outfits claim to have "reinvented the custom apparel, print and promotional products market," to quote Logo, which registered masspersonalization.com to prove it. (Logo's premier customer, you should know, is Network Solutions .)

Both of these outfits have affiliate programs, so your site can earn royalties on other sites' orders, when they're run through a link on your page. (ClickPrint has already raised the ante on that one, promising "up to 25% commission on every order." Among ClickPrint's affiliates are SirSpeedy, MailBoxes Etc., and PIP Printing.

What's true for t-shirts is also true (in spades) for books. M.J. Rose felt confident an erotic novel for women would sell, and after she wrote one she even did some market research. When publishers refused to give her book, "Lip Service," the kind of push she wanted she built a Web site, self-published and offered downloads. Now she's gotten not just a book deal, but top billing from the Doubleday Book Club and the Literary Guild.

Is it any surprise, then, that Bertelsmann has invested up to $16.5 million over three years with Xerox to join Lightning Print, Trafford and others in Web-based print-on-demand publishing? There's only one problem with this publishing model, at least for me. If you go this way you're an editor, publisher, and publicist - not just a writer. (Customers of Logosoftwear and Clickprint also take on their own editing and marketing responsibilities.) If you break out and decide to keep writing, you'll have to choose which hat to wear. But that's not a bad problem to have.

It's Beginning to Look a Lot Like eChristmas

Save these numbers for January. NFO Interactive says there will be 27 million shoppers online this Christmas season. Jupiter Communications estimates $6 billion will be spend on online gifts over the next two months, double last year's total. But David Strom, quoting Forrester Research, says two-thirds of shoppers aborted transactions last year.

If the first two numbers are to prove out, the last number can't be right this year. Strom advocates the commonsense approach. Keep the number of screens between product selection and purchase to a minimum, be honest on your terms, write simple checkout screens, confirm you've gotten the order, and make it perfectly clear when money is about to change hands. If you prefer the more numbers-oriented approach, however, Followup.Net (http://www.followup.net) has a new service called CartTrakker that will let you automatically track down those who halted before buying and find out why.

Oh, and one more thing. John Dvorak still doesn't think online grocers will make it . Here's a respectful disagreement. In the long run online grocers represent the "last mile" of e-commerce infrastructure, a service that could (in time) deliver any product from any merchant. (Watch Amazon try to take advantage of Webvan, for instance.) If you take the long view, and a broad view of what a Webvan (or Streamline, or HomeDelivery.Com) could become, you'll see how this makes sense. The real question is whether these outfits are too early into the market, not whether the market has a future. That $6 billion of sales (and next year's $12 billion) has to get home somehow.

When Patents Kill

One reason the media and industry might respect Priceline.Com's patent claims (in its suit with Microsoft) is because Priceline has made an honest effort to prove its idea's value in the real world.

Andrea Rose can't expect that kind of reception. She claims her company, Fashion Integration Technology Ltd. of New York, owns patent 5,930,769, granted July 1999 for the StyleFitter system. She says it's "a patent for computerized systems that optimize apparel fitting across manufacturers" which "helps consumers select appropriate clothing for their body type by allowing them to try on apparel via virtual modeling."

Yes, that does sound like the "Your Personal Model" feature at the LandsEnd.Com site. Penney's, Hearst, Federated, and a host of others have similar features, and Rose has sued all of them, while claiming her company is developing its own applications. The guess here is the claims will be called overly broad, unless one of Lands End's big rivals settle and put their lawyers at the patent's disposal.

Being first carries temptation even without a patent. Fortunately, Bill Densmore has finally learned that 100% of nothing is nothing, so he's brought former newspaper publisher James B. Shaffer in to run Clickshare, a micropayment system. The new version works with all types of digital objects, and runs on Red Hat Linux and Apache servers.

Clued-in, Clueless

Clued-in is M.J. Rose, who used Internet resources to make her erotic novel "Lip Service" a best- eller. (It's about phone sex, but more as Barbara Cartland might see it than Stephen King.)

Clueless is CNN's "commercial clearance department," which is refusing to run ads from dot-com companies like Salon.Com because they allegedly compete with CNN. There are good reasons to reject some dot-com ads (the advertisers don't always pay), but ignoring free money because you don't know your own business is really, really Clueless.


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