by Dana Blankenhorn
Volume III, No. LII
For the Week of December 27, 1999

This Week's Clue: The Year of E-Commerce

This Week's Clue: The Year of E-Commerce

SSP (Shameless Self-Promotion)

End Business Practice Patents

Sword of Damocles

Buried News

Clued-in, Clueless

(For Christmas we're reviewing 1999. For New Year's we'll offer predictions of 2000.)

It was the best of times. It was the worst of times...no check that, it was the best of times.

The year 1999 began with an Internet stock mania and ended with e-tailer Jeff Bezos as "Time" Person of the Year. The Internet didn't enter the mainstream - it became the mainstream. Dot Com jokes filled every comic strip - in fact the phrase entered the language as a synonym for e-tailing and all its excesses.

What excesses? Start with these. Excessive marketing, excessive losses, excessive attention to the short run, excessive obsession with the stock market and (most of all) excessive attention from Clueless reporters facing impossible deadlines and excessively Clueless editors.

The Internet "99'ers" will probably go down in history alongside the California "49'ers." This was the gold rush. (Cisco and Dell played the part of Levi Strauss, selling them the picks and shovels.) It was gaudy, it was excessive, and most of all it was great fun. Anyone who criticized the excesses or the short-term, Clueless thinking (like me) was just a crank, a spoilsport, and a party-pooper. OK, so I'm a party-pooper - what else is new?

The year was filled with lots of great news stories. The U.S. vs. Microsoft trial was great entertainment, as was the Clueless assumption that the outcome meant anything - the trial itself was the thing. AT&T's long-running "open access gambit" was often infuriating, but both it and the Microsoft trial taught the industry an important lesson (which the richest among us promptly misread). That is, for the right amount of money a lawyer will say anything, and most policymakers are lawyers. The rich misread this as meaning the truth is fungible, and that credibility is just another commodity.

This last is just one of the assumptions that will be sorely tested in the year 2000. There are many such Clueless assumptions out there, and it will be interesting to see how many of them survive until the actual Millenium of January 1, 2001.

Here are some of the current assumptions, which I suggest are merely short-term market aberrations:

SSP (Shameless Self-Promotion)

I have begun my adventure at Voxcap.Com, discussing how next year's elections might impact the future of the Internet. I had two features in a recent special section of the Chicago Tribune  as well.

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...

End Business Practice Patents

Abusive patents may turn out, in retrospect, to have been one of 1999's biggest trends.

Amazon and Barnes & Noble are in court over "one-click ordering." Priceline and Microsoft's Expedia unit are battling over reverse auctions . AskJeeves is fighting for its right to life against two MIT professors who say they invented its basic search function .

Business Week ran a good summary of the situation but, as usual, never asked the key question - is this right? The problem isn't with the patent system, or patent protection, it's with the whole idea of patenting business processes that are, frankly, fairly obvious.

Business process protections go too far for a simple reason. A patent on a mousetrap doesn't stop another inventor from building a better mousetrap, and a patent on a blood pressure medication doesn't stop a rival drug company from creating a better one. But business process protections don't just protect a method - they protect the whole mechanism. Rather than supporting innovation, business process patents stop it in its tracks.

The irony is this wasn't something the nasty Democratic Congress did. It's new law created by Republican jurists. It was the U.S. Court of Appeals that ruled in 1997 (the case was State Street Bank vs. Signature Financial) that U.S. law didn't prohibit business methods patents. It also added that they had to be new, useful, and non-obvious. . So far the patent office hasn't noticed this last part. Some juries have. If the Supreme Court won't unmake this judicial-made law, it's up to Congress to do the job. And I don't want any carping from you right-wingers if a liberal, Democratic Congress gets the j-o-b done. Labels mean nothing.

Sword of Damocles

One reason we all partied like it was 1999 was the assumption that year 2000 zero-zero (party over, out of time) Wal-Mart would squash us like bugs. The assumption comes from the continuing growth of AOL, and our willful ignorance of the fact its market share continues to fall.

Now the two are finally getting together and the assumptions will finally be challenged. AOL and Wal-Mart have grown to "dominance" for the same reason - they're easier than the alternatives. As the AOL ease advantage declines, ad campaigns taking advantage of the fact have bite, as Earthlink found. Wal-Mart's power is based on the stores' convenience and big selection, but every store is equally distant online, while big selection is just another word for complexity.

So here's a prediction for next year. AOL and Wal-Mart will continue to stumble, and someone with the power to move the press gallery will finally point out what I've just pointed out to you.

Buried News

Before the year ends, I have a few stories here that went grossly under-reported and which deserve to be noted.

WILL THE LAST PERSON OUT OF THE MOUSE HOLE PLEASE TURN OUT THE LIGHTS? - One reason Disney lost $1.06 billion on its Go Network in 1999 is they never realized what they bought. They thought they got computers, connections, and software. What they actually got was talent that, when it wasn't appreciated, walked out the door.

RESTRAINT OF TRADE - What Lawrence Lessig calls the battle of "East Coast Code" (law) vs. "West Coast Code" (software) is heating up in the legal profession. Lawyers are so accustomed to restraining trade, even in their own business, that now they're trying to keep one another from even speaking in its name . The big trend for the next few years will be an all-out war between the Web and the legal profession.

NOT EVERYTHING TURNS TO GOLD - All the excitement of Web IPOmania has blinded us to what happens next and stories of those IPOs that don't turn out well. . The game is anticipation - when anticipation becomes reality it's measured, and nearly always found wanting, even when the news is good . That's how you now it's a mania - the rumor is always better than the news.

THE LINKS BUSINESS - Controversies like the Utah judge enjoining Mormon critics from linking to forbidden pages mask the real story, namely a growing business in selling links, which the Web makes a free good. It started with AOL's "exclusives," spread quickly to the search engines, so TicketMaster and Universal Studios assumed they could do it, too - keep people from even finding inside pages without paying you. Now eBay has gone and done it . Imagine if sites could have forced Yahoo to "license" their content before linking? We'd never find anything. But that's where we're heading, until someone with authority gets a Clue.

DON'T JUST LINK - One reason "link licenses" aren't challenged is the smart boys are too busy finding other bright ideas, as Auctionrover rival AuctionWatch has done. Take a look at their new appraisal service - is this clever or what?

BIG OPPORTUNITIES, SMALL APPLICATIONS - The break out technology of 1999 was the Wireless Application Protocol . Everyone I saw with a WAP-ready cellphone was as excited as the 1994 geeks who first discovered Yahoo. Coincidentally, the WAP Yahoo was announced in December .

Clued-in, Clueless

Clued-in is Furniturefind.com. They understood that fulfillment was the whole issue, and by solving that problem before launch they maintained their good name. They sacrificed today for tomorrow, the essence of Clued-in thinking.

Clueless was Internet Capital Group for letting TradeEx go to Ariba without a fight . Letting your own independent solution go proprietary kicked holes in its other businesses, holes it will pay a fortune to plug. It's sacrificing tomorrow for today that is the essence of Clueless thinking.

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