I find it helpful to visualize the Internet business environment in terms of concentric circles. At the center we find people-to-people, everyone-to-everyone -- direct interaction, through email and newsgroups and Web-based discussion areas. That's the main reason people come to the Internet -- to relate to other people.
The next circle out is the Free Zone -- all the libraries of free information -- all the good stuff that libraries and educational institutions, and governments and well-meaning individuals and companies make available for free.
The center and the Free Zone are still the heart of the Internet. That's where the concentration of gravity is. Yes, it's possible for businesses to ignore the unique characteristics of the Internet and to try to bulldoze their way to profit by making enormous investments. But that's like pushing rocks uphill. And their competitors -- companies that are sensitive to the environment and take advantage of the gravity rather than fighting it -- can do much better for much less, making money rolling rocks downhill.
The next circle -- the realm where companies start to see revenue -- needs an update, because so many new opportunities have opened up. I used to refer to this as the "subscription zone" because information by subscription was the main activity here. This includes all the tools and services that let you find just what you want when you want it. People are willing to pay more to get less -- if it's just what they want. Even if the raw information is free, it can be worth a lot to be able to find the right needle in that monstrous haystack.
Now I call it the Value-Added Zone, and include a wide variety of Internet-based services which go beyond the plain vanilla personal interaction and information which is available for free.
1) information available by subscription, which is timely or tailored/personalized/selected (as noted above),
2) use of intelligent search engines and agents (tools that can go significantly beyond what's available for free -- drilling down to give you not a list of hundreds or thousands of matches, but rather the few that are of real value to you),
3) access to specialized databases,
4) participation in specially staged on-line events -- including opportunities to interact with celebrities and experts, and participation in on-line training/distance education courses,
5) access to environments that facilitate multi-media personal interaction,
6) interactive advertising -- personalized based on choice/profiles and usage stats, and broadly solicited by the recipient, while the messages/content received are not the direct result of user choice,
7) translation services (automated and manual), and
8) mixed media services (combining Internet use with CD ROM, telephone, radio, or television).
And the list will keep getting longer.
The outer circle, the "Transaction or On-Line Shopping Zone" is where people buy and sell ordinary goods by credit card over the Internet. While this activity gets lots of media hype, it is still in its infancy, and probably won't really take off until the advent of "micro-commerce," the ability to do on-line transactions of less than a cent, which can enable new kinds of products and services and business models. (For information on what's coming on that front, check the "Millicent" white paper at http://HTTP.CS.Berkeley.EDU/~gauthier/millicent/millicent.html ).