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INTERNET STRATEGY AND MARKETING articles and presentations by Richard Seltzer

The Future of the Internet and the Future of Business

Script of a speech delivered May 11, 1999, in Lewiston, Maine, at "Cities of the Androscoggin Annual Dinner and Business Forum on Technology and the Future" 

My challenge is to talk about the future of the Internet and the future of business, looking out as far as 10 years. And to top it off, I'm supposed to end with some practical advice that you use right away.

I understand that the Farmer's Almanac is published here in Lewiston. Imagine trying to predict today what the weather is going to be in the year 2009.

And remember that the World Wide Web is just five and a half years old. Many of the businesses and business models that are making headlines today didn't exist in any form 10 years ago.

On the other hand, technology is far more predictable than the weather.

We can presume, for instance, that everything that can be invented will be invented.

We just don't know when it will happen, and the delay between invention and widespread adoption is unpredictable. And there's no guarantee that any particular invention -- no matter how amazing -- will ever become widespread.

But we can make some educated guesses about adoption of technology, because that depends on human nature. Only what people will actually use will survive.

Business is about people, about relationships with people.

And the Internet is about connecting people to people -- it make it easier to build relationships with people at a distance.

So maybe there are some interesting things we could say about the future of the Internet and its impact on the future of business.

There are four ways to look at the future of technology:

The media typically covers technology as infotainment, with technobytes, and scifi-style speculation. This kind of reporting is both tempting and confusing. What's real? What should you invest in? You're dealing here with possibilities that never existed before. To better understand the implications of what's going on, should you read the Wall St. Journal? Or would you be better off reading sci-fi novels?

On the other hand, the epitome of scifi -- Star Wars -- isn't about the "future" at all. It takes place "long ago, in a glaxy far away." And the Force isn't technology -- it's in you.

How many of you have ever been to a major computer show? A Comdex or an Internet World?

There you see thousands of vendors -- every one of which has THE answer; but all these answers just don't add up. I call it "giblet soup" -- thousands of pieces, each of which might look very good separately, but that give you no sense of where it's all headed. Typically, you come away from events like that more confused than you were to begin with.

Next comes trends. We all have our favorite trends, which we go out of our way to read about and hear about that, that we love to talk about. Here are a few of my favorites:

Magazines and magazine-style TV programs love trends. PBS will focus on a trend like virtual reality, and convince you in a hour that that's at the heart of where the world is headed. Then they'll do another show about another trend, then another and another. And these trends overlap and compete. If one "wins," that makes a major difference in the fate of the others. So what should you make of it all?

I prefer to deal with the future in terms of "end points." I look ahead 3-5 years and consider what -- given everything that's happening now -- is extremely like to be real and widespread by then. I'm not betting on any particular technology or product -- the direction is clear and there may be many competitors, and one way or another, whether one wins or all win, this should be the case by then.

Right now I see three major Internet-related end points 3-5 years from now:

First let's take a look at bandwidth.

A few years back, major media companies made huge investments in "interactive TV," presuming that they could make back what they spent many times over because they would "own" the houses that they wired, that for years head they would be the exclusive purveyors of movies, entertainment, and online shopping to those homes. That was an enormous mistake. They missed the fact that interaction with other people is far more compelling and addictive than passive entertainment and shopping. They also missed the fact that there would be alternative means of providing those same experiences. Along came the Internet, and those expensive pilots died.

Today we see Internet over TV cable lines, over fiber optic cable; we see DSL over ordinary phone lines; we see wireless delivery of Internet; we even see Internet over electric power lines. I'm not a prophet. I can't say which of these means of delivering Internet to the home and to businesses will get what percent of the business. But I do see clearly that there will be choice, not monopoly. 3-5 years from now, many of you may in fact have more than one Internet provider and more than one way of receiving and sending Internet traffic.

Choice means competition, which means low prices and high speed. I expect that the kind of Internet speed that today we consider "premium" -- fast enough for a good video and audio experience -- will by then be quite inexpensive, so inexpensive that most of us take it for granted, like we take water for granted. (Even though in some parts of the world such bandwidth may still be rare and expensive, just as today there are some parts of the world where water is expensive.)

What's the meaning for business of high bandwidth at low cost?

That will mean that audio and video over the Internet become useful for business.

These capabilities have been technically possible for years already. I remember being wowed by RealAudio and by Vocal Tech's videophone at Internet World early in 1995. But even today very few people have a fast enough connection to use those capabilities to their fullest.

In 3-5 years, enough people will have extremely fast connections, so it will become relatively common for you to have videophone interactions with your employees (who may be working at home or on the road) and with partners and with customers.

These capabilities will also take distance education to a new level -- making the delivery of courses and training over the Internet far more compelling and effective.

What do I mean by "mixed media"?

I mean that instead of network computers knocking out PCs or vice versa, instead of there being clear winners in the battle of the devices that help you connect to the Internet -- many gadgets will co-exist.

Already, you can get your email over your pagers. Soon there will be handheld wireless video games and gadgets of all kinds that connect to the Internet for specialized purposes. Imagine a pocket gadget that connects you to your online broker and beeps when a stock you are watching reaches a critical point. You may be in the middle of a meeting, but you can discretely take a glance, and with a few keystrokes buy or sell immediately; while the meeting continues uninterrupted.

Expect to see services that combine telephone, radio, television, and computer networks.

Expect a multiplicity of really interesting and valuable new services, each with their own special gadget.

Will this be wonderful? No. Each separately might be wonderful, but all together -- that's another matter.

Convenience breeds complexity

Today, you may have 2 or 3 or even 4 remote controls in your living room -- the TV, the VCR, cable, maybe a CD player or DVD.

3-5 years from now you may have the equivalent of a dozen or two dozen or even more -- little gadgets, each of which are very important to you for what they can do, the unique Internet-based service that they can connect you to. But it could be hell keeping track of it all.

In the computer industry, that's what's known as an "opportunity". Just like to Microsoft a bug is a "feature".

There will be lots of money to be made integrating all these disparate pieces, all these separate services, making it so you have smooth access to all aspects of your online identity from wherever you may be and from whatever device you may happen to use to connect to the Internet.

Today there are microprocessors in your car and your microwave and your VCR and your refrigerator, and you simply take them for granted. In the future, chips like those will be networked together, will "talk" to one another, and will be connected to the Internet. In the near future, the Internet will be embedded in everything and easy to use and taken for granted. It will become an extension of us -- like the telephone and the car.

Since my assignment calls for looking ten years out -- to 2009 -- I'll do so. But with the understanding that while whatever can be invented will be invented, there is no telling if or when it will be widely adapted.

At MIT's Media Lab, they have already developed computers that you wear and things that think and that talk to one another.

On the cover of a recent issue of Technology Review, you see a head-mounted computer, where the image is projected directly to the retina of your eye rather than to a screen. In more far-fetched designs, the central processor might be in the heel of your shoe and your skin or your clothing provide connections to other parts of the computer you wear.

Computer chips could be embedded in anything -- not just appliances, but also your shirt, your bedspread, your furniture -- and they could all "talk" to one another.

Why would anyone want a shirt or a table that thinks?

Today, you can buy a full-fledged, well-equipped computer for less than a wooden dining room table. In 10 years, a computer chip will probably cost less than the nails in a table. So the added cost should be insignificant.

Our vision of the future ages fast.

Nothing sounds more outlandishly out of date than yesterday's vision of the future.

I'm reminded of the nostalgia of Tomorrowland.

I went to Disneyland as a kid in the 1950s, then returned with my own first child in the 1970s. And in the 1970s, they were still using the same Tomorrowland exhibits. I was struck by how out of date the Disney image of the future was. "Progress is our most important product." "Live better electrically." It was a future to be powered by cheap and abundant nuclear-generated electrical power. And in the 1970s, with the oil embargo and concerns over the long-term effects of radiation, the popular vision of the future was quite different -- far more bleak -- a matter of making due with every declining supplies of natural resources.

Now in the 1990s, that bleak vision of the 70s seems very dated. For reasons I haven't been able to figure out, gas costs less now than it did in the 70s. And we approach the future much more confidently and optimistically, as evidenced by the Dow rocketing past 10,000.

What matters for business isn't technology in itself (unless you are in the technology business).

What matters is how people interact with one another and how technology affects that.

If you want your business to survive, then you should

What should you do today?

Keep in mind that the Internet is not just a library and not just a shopping mall.

It is a way to connect people to people.

Beware of the temptations of technology.

When Digital Equipment realized that 80% of their business came from 20% of their customers, they threw away the 80% to focus on the 20%. Then six months or a year later they discovered that once again 80% came from 20%, so they cut back on the number of customers they would focus on again, and then again. The idea was that if you focused on the 20%, you would get more of their business. But it didn't work that way. Having seen what the company had done with the other customers, many of these customers felt they couldn't count on Digital to be there for them long-term. So Digital not only lost the customers they deliberately dropped, they also soured relations with the remaining ones.

At a recent conference, I heard a pitch for one-to-one marketing, which was another variant of this same theme. The speaker advocated using sophisticated data-mining techniques to learn more about your customers. That sounded good. But the purpose wasn't to serve those customers better, but rather to identify which customers were the most profitable to you, so you could deliberately dump the rest. For instance, a bank might get rid of a class of high-cost customers by raises fees.

Tactics like that can bring immediate short-term improvement in profits, but long-term they can be the death of a company, because there's no way for you to know today which of your customers from today are likely to be the best and most profitable ones 3-5 years or even 10 years from now.

Regarding losing contact with customers, some people misinterpret the power of the Internet. They seek to automate transactions, to keep the cost of transactions very low. But, in fact, the main power of the Internet is in building relationships. The relationship is the asset, and automated processes risk throwing away the relationship.

Dependence on distributors poses the same kind of risk. Yes, it often makes good sense to sell through distributors; but then use the Internet to provide information, and highly responsive service to the end users -- build that relationship, earn their loyalty, or they'll simply chase after the lowest price and forget you.

It doesn't take the latest and greatest technology to build an effective Web site.

Don't start not with the latest whiz-bang effects that your Webmaster or some Web-design company come up with.

Rather, ask the basic questions:

Keep in mind that: If you want targeted traffic at low cost, design your pages for search engines. That means design your pages for the blind, because the webcrawlers that fetch pages for search engine indexes operate just like the blind. Some of the best Internet gurus today are blind -- using text to voice converters and non-graphical Web browsers. Just like the blind, webcrawlers can't "see" graphics and get stopped by fancy effects.

Keep your pages simple.

Don't be intimidated by the technology. Don't do things just because technology makes it possible to do them. Do what makes sense for your business, for serving your customers well.

So what do you need to do to succeed in the future?

Let me give you some quick practical advice, to help you get experience in doing business online immediately, painlessly, and profitably.

Go home and do your spring house cleaning.

Set aside everything that has no intrinsic value that's more than 30 years old.

Go to EBay and search for items of that kind and see what they sell for and how they are described.

Join EBay and start selling.

Have all your managers do the same -- clear out their attics and basements and sell at EBay.

If you do this -- and not just for a day -- keep it up for a month or more -- you can learn some important lessons about ecommerce.

First, you should learn the value of feedback and reputation and relationships. EBay operates without transaction software. It just links buyers and sellers, who then contact one another by email and snail mail to take care of details and make payment and deliver the goods. EBay also has a very effective feedback mechanism. Any member can leave feedback -- positive, neutral or negative -- about any other member. That feedback becomes the basis of your community reputation and has an enormous effect on the number of bids you get for the items you sell and how high the prices go.

When I started experiment at EBay with old comic books, I was getting an average of $2-3 each. After a month, after I'd built up a few dozen positive feed backs, I was getting $10, $20, even $30 for comparable comics.

Successful ecommerce is not about automated transactions. It is about relationships.

If I had used automated transaction software to sell those same comics, it would have saved me time and hassle, but I would never have built relationships and reputation and I'd have just kept getting $2-3 each.

"Relationship" isn't just an intangible concept -- it can directly effect the demand and price for your products and services.

Set up your online business accordingly.

Make it people intensive rather than automated.

Also, consider using EBay to test marketing your products and your messages and for testing your pricing. It's an enormous resource -- a global marketplace with millions of people that you can tap into for an insertion fee of about 25 cents.

So how should you use the Internet to improve your business today?

The Internet can help you do all of those.

Basically, the impact of technology on business is a matter of spin control.

Not in the sense of Spin City or Wag the Dog.

Rather, Internet technology can help you spin gold out of straw -- like selling old comic books or bottle caps.

But that same technology can also help you take something of value and wind up with just straw -- by throwing away customers and throwing away your relationships with customers.

Your success all depends on how you use the technology.

Keep your eyes on the customer.

Use technology to reach new global customers.

Use it to build closer relationships with customers, to understand them better, and to serve them better.

Divergence and Fragmentation of Internet Activities and Markets

This article is a transcript of the radio program "The Computer Report," which was broadcast live on WOTW 900 AM, Nashua, NH 12-2 PM Sundays.

It was fun being a generalist when the world was converging on the Web. You could make sweeping generalizations about the future of one industry after another, because the business implications of the Web were so clear. The Web would change everything for everybody.  And it was getting easier and easier for everybody to use the Web.

Back in the dark ages before 1993, before the Web, the Internet consisted of a variety of separate applications: ftp and gopher and IRC chat and email. You might know how to use the one but not the others. You might have the software you needed for the one but not the others. And the Web was just one more such application.

Then in rapid succession the Web browser added capabilities, so you could  email with your browser, and do just about everything else with your browser, including things that you had never been able to do before. Some capabilities were added with new releases of browser software. Others were enabled by "plug-ins". Within a few years, the Web browser became your universal tool for accessing resources on the Internet; and for those in the business of providing information and experiences, the Web page became the gateway to everything.

Some companies tried to set up separate, Web-independent services that required you to use special software as an alternative to your Web browser, and tried to keep you isolated from the rest of the Internet while you were engaged in their activities. With the Web, visitors could go elsewhere with a single click or by choosing a bookmark/favorite or by typing in a simple address. And it's only natural for business people to want to "own" their users and customers -- to not make it so easy for them to go elsewhere. But all such efforts were doomed.

Now the pendulum is swinging in the opposite direction.

Instant messaging, with its millions of users, runs as a separate application; and which software you choose to use determines which set of people you can connect with.

P2P services, like Kazaa, have proliferated, taking advantage of the millions of users who grew dependent on Napster and got used to its procedures. Each such service operates as a separate entity. They all use the Internet, but they operate independently of one another and of Web-based activities. You can't participate by  simply going to a Web address. Rather you need to download separate software. And while you are engaged in their activities, you can't suddenly with a click switch over to a competitor.

Wireless and cell phone devices can give you access to the Web, but only to a subset of what's there, because of limitations of the tiny screens and because of your limited input ability (not having a mouse or keyboard). So large Web publishers provide special presentations of their content intended for such devices and make special deals with wireless and cell phone providers so their content will be on the menu and easy for such users to access. And, at the same time, new kinds of people-to-people experiences, like text messaging, are opening up through handheld gadgets that aren't possible through ordinary PCs.

Meanwhile, an increasing number of people now have high speed -- cable and DSL -- Internet access. And in response, an increasing number of sites are catering to those users, presenting content and experiences that require high speed. In other words, while a few years ago, successful Web sites typically went out of their way to make their content accessible by everybody, regardless of their access speed; today the formula for success often includes focusing on a particular market segment, and ignoring everyone else.

Now, too, we see Microsoft expanding the reach of the Internet beyond the PC with its X-Box Live service. Everybody who uses their game system to play games with remote players is in fact using the Internet for voice over IP as well as for the game commands, but probably without knowing that the Internet is involved. You need the X-Box, and an Ethernet cable connecting you to a high-speed Internet service. But once you are set up, you don't need a computer and don't need to know anything about the Internet. You just play. And if you want to buy related products and services while you are connected, you can buy them from Microsoft and only Microsoft. They appear to have created a separate, proprietary service that runs over the Internet but that gives them complete ownership of the user/customer. And others are sure to try to imiate their success with new separate Internet-based services.

A few years ago, it was relatively easy to keep up with what was possible on the Internet -- you could quickly sample it all with your browser. Now new realms of experience can open up and involve millions of people without your having a clue that it's going on; or requiring you to spend money on new hardware and software to sample it.

Just as we were getting used to a global ocean, where all had equal fishing rights, now we see the creation of massive lakes where the fishing might be far better than in the ocean, but where you might have to pay to participate, if you can participate at all.

So now, as a user, it's tempting to fall back, to contract instead of expand. The multiplicity of possibilities forces you to pick and choose, to decide what you want and need and simply ignore all these other activities. Maybe one or two lakes have all that you want.

And as a business person, you should go out of your way to sample the new possibilities, the new experiences, the new communities of users. Because now instead of one Internet business environment, you are now faced with a dozen or more separate opportunities. And you need to consider which of these opportunities you should pursue and how you might be able to adapt your product or service to meet the unique needs of these alternate markets. In order to successfully tap into these markets, business cable internet is a worthwhile investment to keep up with today's trends and speed requirements.

Divergence, the Next Challenge

The world is rapidly headed toward an everywhere, every way, everyone style of communication based largely on today's Internet.

The Internet itself will become less visible as it becomes more pervasive.

Information technology, too, will become less visible -- become more a backroom activity that often takes place remote from the user, that the user takes for granted and need not understand.

Users will be more aware of the access devices they interact with than the computing capabilities they connect to or the transport media used. And the quantity and variety of these devices will multiply rapidly, as entrepreneurs take advantage of the underlying standards.

While engineers will be thinking in terms of the convergence of information and communication technologies, users -- especially business users -- will see more divergence and diversity.

The boundary lines between office and home, between work life and personal life will become increasingly blurred. The same devices will be used to access capabilities and resources that are business-oriented or personal-oriented, that are private or public.

Today, every Internet user can become a publisher. In the future everyone (even those who have no awareness of what the Internet is or what computers are) will be able to be a broadcaster as well as a publisher. Here "broadcast" is meant in two senses. On the one hand it emphasizes that the modes of communication that are readily available to everyone will be multiple -- one-to-one, one-to-few, few-to-one, one-to-many, and many-to-many; and in both "pull" and "push" styles. It also emphasizes that the content will include not only text but also audio and video, which today we normally associate with "broadcast" media.

Enabling and encouraging interaction among users and building communities of interest will become increasingly important to the growth of new businesses.

"Content" will be much more broadly defined than it is today -- including not just information and entertainment, but also the experience of interacting with other people and also with simulation programs and agent programs in this new multi-dimensional communication environment. For example, some tasks that today are performed by computer service people will in the future be performed by interactive simulation programs with access to extensive data and with the possible help of humans. In other words, activities that today are a key element of Digital's business will become more "content" businesses and less "service" businesses.

The enabling of on-line multi-person experiences (from small meetings to conventions to games) will be big business (a "content" business).

Getting from here to there will be extremely difficult, but the difficulty will (for the most part) be masked from the user. Business imperatives -- the high-stakes profit opportunities -- will drive us there quickly, attracting the needed investment dollars and spawning the entrepreneurial and technological creativity necessary to bridge the gap.

But from the business user's point of view, things will get a lot harder before they get easier.

By the year 2002 (five years out) everyone will have gadgets galore, but only a few people, working for advanced companies, will be in a position to take advantage of them all and have them work together smoothly. (Smooth working will be possible, but not common)

Yes, there will still be clients and servers. Yes, there will be personal computers and networked personal computers and network computers. But there will also be a multitude of relatively "dumb" specialized devices that use the Internet -- communications devices and also ordinary appliances ("things that think" in the MIT lingo). And we will be well on our way toward the "utility" when users of the global communication environment rarely, if ever, touch anything that we would today call a "computer." In other words, in 2002, advanced companies will be able to offer their employees the kind of smoothly operating, integrated communications environment that won't be available to the ordinary user for another five or ten or even twenty years. And that environment should be a major competitive advantage for those that have it.

Though the end state is smooth and simple, it is not provided by some magical do-everything box. Rather you have input/output gadgets of many kinds, using various transport media, that connect you to an assemblage of gadgets and software which together perform the functions you need.

All this diversity will be mediated by systems that understand "who" you are -- your needs, knowledge, tastes, and capabilities; the resources you have access to, the prices you need to pay for the resources you want, and your ability to pay and how you prefer to pay. You -- the person lucky enough to work for such an advanced company in 2002 -- might, by extension from today's world, think of the set of resources and capabilities at your disposal as your "virtual computer" or your "virtual personal network". But even in its 2002-infancy this new communication environment will be far broader than "computing" -- this will be the space in which much of your business interaction with other people and other people's agents will take place.

The rest of the world -- the have-nots farther down the value pyramid -- will have access to Internet-based capabilities and resources far in advance of those we have today. But those capabilities and resources will be isolated and uncoordinated, and their multiplicity and immensity will make them ever more difficult and complex for the ordinary user. Hence many people and businesses will only take advantage of a small part of what is available to them, and will spend much of their time and energy trying to pull together and juggle the various pieces of their on-line existence.

Survival of the Startups

This article was prompted by reading Clicks and Mortar: Passion Driven Growth in an Internet Driven World by David Pottruck and Terry Pearce and from a recent chat program where we had Terry Pearce as a guest. For an edited transcript of that chat session see www.samizdat.com/chat131.html.

As Terry put it, the world is changing so fast that the ultimate competitive advantage is to institutionalize the ability to change. This is done by building commitment from people, by building a culture based on values that do not change. This is primarily the responsibility of leaders, who inspire commitment rather than merely requiring compliance. The entire organization has to be aligned behind this idea, and the business practices, from measurement to compensation to marketing, have to be consistent with that culture.

My take on that from the employee's perspective is that you only have one life and you want it to mean something. If the company you work for is striving to accomplish goals that you believe in, that's more important as a motivator than cash and perks.

Internet startups face the problem that they must build a "culture" extremely fast, from scratch, and motivate a team that is probably geographically dispersed and that consists of people who have been recently thrown away by big companies or are coming for other startups where they stayed for less than a year. That's not easy.

Terry noted that if the entrepreneur starts with the right stuff, then he or she can draw people to the company who share the right values in the first place.

But, from what I've seen, the founders typically have great business ideas and passion, but may not have lots of experience running companies. Hence they may not appreciate how difficult it can be to strongly motivate employees over long periods of time and hence may not value the concept of corporate culture.

In any case, in today's tight labor market, you can't cherry-pick your employees. It's extremely rare that the founders will be able to recruit significant numbers of people who they have worked with before and who already understand and trust them.

The founders are moving very fast, and have no time for courses on culture building and leadership. Typically, they have 6-9 months from when they got their angel money to recruit dozens of skilled people, develop product, and find early customers, so they'll be in the right position for the first round of venture capital. They work 30 hours a day, eight days a week.

My sense is that the business plans and prospects get close scrutiny, but that corporate culture gets short shrift, if any shrift at all. In the first weeks and months, when everyone is running on adrenalin and dreams of fortune, and when the company is small enough for the founders to know and talk to everyone, the value of culture may not be evident. But when the founders get wrapped up in making customer and partner contacts and trying to raise the next round of money and don't meet face-to-face with the team for weeks at a time; or when much of the team is dispersed; or when critical elements of the team are not "employees" but rather are contractors and consultants and partners, the gears may start to grind.

To move as quickly as they must, the founders have to inspire and motivate a work force that, in recent years at other companies, has been treated as "disposables." And they have to make a strong and clear impression right away, while they still have the luxury of being visible and accessible to employees. They have to pay attention to the corporate culture that they help shape -- either knowingly or inadvertently -- by their every action -- how they treat their people and respect them and give them responsibility and reward them for team behavior. Building a culture is as tough as building a brand -- it's not the words that count, but rather the actions that people perceive and remember.

Beyond McLuhan: Parallel Media and Discussion

In Understanding Media, Marshall McLuhan said "the medium is the message." Well, in the world according to John Hibbs, the medium is not the message, should not be the message; in fact, there should not be a message (in the sense of prepackaged content to be delivered to passive consumers). Rather, you focus on the preliminary content and the audience, and the medium is just a means to the end, which is the global discussion that results from allowing large numbers of people around the world to receive preliminary content, react to it, and react to one another.

In other words, rather than picking a single medium (such as, Web, text chat, voice over IP, telephone, radio, etc.) and designing for it, you plan to use as many media as possible, to make it easy for the maximum number of people to connect and participate. Some of these media may be integrated to some extent, but the objective is not to build some massive well-engineered mega-medium, but rather to use whatever is available in parallel -- taking advantage of low-cost and free mechanisms for connecting thousands, even millions of people -- many of whom would be shut out if you limited yourself to just one, or even to just several of these media.

The project at hand is Global Learn Day V, scheduled for Oct. 7, 2001. People around the world involved in distance education will share their progress and the challenges they face -- with the virtual podium starting in New Zealand and moving ahead one time zone per hour for 24 hours. The whole event will be available for hearing/viewing by multiple means (including telephone, streaming audio, Paltalk voice chat, text chat, and broadcast radio). Archives will be available on the Web to check out and react to later. And simultaneous with the "main event", many side conversations will take place on related topics through those same multiple media.

I'm fascinated not so much by the event itself (which is certainly amazing), as by the potential of this approach for promoting global discussion on a regular basis -- setting up a sort of ad hoc multi-media network -- in the true sense of multi-media: not meaning just voice and video, but rather meaning many different means of communication. Such a network could be used to hold regular, scheduled educational and social/entertainment events.  This is a way to build global communities, taking advantage of free and low-cost media to facilitate discussion and move us beyond the corporate-dominated world that McLuhan took for granted.


Ask the Right Questions

Do you want to start doing business on the Internet or improve your existing online business? If so, your first task should be to learn enough about Internet business to know what to ask.

Typically you'll go to in-house experts or specialized service companies, tell them what you want, and get exactly what you asked for. But often that turns out to be the beginning, not the end of your troubles. Sooner or later, you discover that what you asked for isn't really what you need or costs far more than an alternative approach that you never would have imagined.

Answers are easy to come by. It's asking the right questions that is hard.

You aren't alone. Internet business has grown so quickly that it has led to the proliferation of specialties. You can turn to different service companies for Internet access, email, Web hosting, Web page design, electronic store services, and a wide variety of Internet marketing specialties, like "search engine optimization." Each might do an excellent job within its own sphere, but the pieces need to make sense working together, and need to be designed with your business goals in mind. You want a Web site that attracts and serves potential customers, rather than one that wins design awards.

To succeed, you don't need to become an expert in everything, but you do need to know enough so you can ask the right questions.

You need to familiarize yourself with a wide range of interrelated opportunities, some of which you may never have heard of, but that could give a boost to your business. That means not just reading a few books, but also getting some hands-on experience so the answers make sense to you, and also so you can properly evaluate the potential costs and benefits.

You don't need to learn about every aspect of ecommerce. You do need an appreciation for factors and opportunities that are interrelated. For instance, Web design is often handled by a different department from marketing or by an outside service company. But design affects whether and how well search engines can index your pages, which can have a major impact on the traffic to your site and the kind of marketing expense it will take to meet your business goals. And while advanced design techniques may require advanced training and artistic/creative talent, everything you need to know to understand search engine requirements is very simple, and can be done by anyone who can type, just using Word. Here marketing managers with a little hands-on experience in creating Web pages and some basic knowledge of how search engines work are in a much better position to make sure their companies' design efforts support business and marketing goals. Similarly, experience in reading and posting comments in newsgroups and email discussion groups can give you a feeling for the immediacy and candor of the dialogue there, what kinds of postings these audiences appreciate and what quickly stirs their wrath. Soon, you should develop an appreciation for the risks and possible benefits of using such unofficial channels to try to spread word about new products and services.

Likewise, managers responsible for ecommerce success should get hands on experience buying and selling stuff from their attics at auction sites, like eBay. There they can gain an appreciation for person-to-person online interaction and the effect of your reputation on customer demand and the prices you can command. There, too, you can learn the power of simple tools -- like email -- for finding out what customers really want and why. You can complete your sales simply and effectively by email, learning that ecommerce is not dependent on automated transaction solutions. And you also can gain an appreciation for time-consuming tasks like record keeping and fulfillment, and give some thought to how such tasks can be simplified and organized. With such experience, you can learn a lot about the personal dynamics of the Internet and the logistical challenges facing any ebusiness. Having a feel for what it takes to conduct business manually can give you a better appreciation for the potential costs of automation in lost customer interaction as well as in dollars spent. And that insight can then lead you to ask good questions about how to maintain customer contact and learn from customers, while serving them well, and filling their unique needs in an automated environment.

Hands-on experience for managers? Even managers at large companies? Yes. Definitely. The Internet business environment differs radically and in unexpected ways from the traditional business environment. It involves unexpected risks and opportunities. And to make effective decisions, you need an appreciation of the range of choices and the implications, which can only come from direct experience. You don't need to become an expert, but you do need to know enough to ask the right questions when talking to your experts.


Sales channels and the Web

The Web is a new way of connecting people to people. It fundamentally changes relationships between companies and their customers and between companies and the indirect channels they use to work with their customers.

Indirect channels include distributors and sales reps and brokers and value-added resellers, as well as physical stores and even Web-based affiliate programs. The problem arises in computer manufacturing and also in the automotive business and insurance and stock sales -- many very diverse industries.

Even before the Web, the relationship between companies and their sales channels was often adversarial. Companies were reluctant to "give" their distributors and reps their margin, and the channels often distrusted the manufacturers, always expecting to be cut out of the loop. On the one hand, the Web adds to that distrust, by making it far easier to sell direct and eliminate the channel.

But the Web also makes it possible to deal with customers and partners in flexible and creative ways, setting up new processes and making changes quickly based on feedback.

The Web makes it far easier and less expensive to communicate and to provide detailed information and to personalize it for particular visitors or classes of visitors, to connect people who have questions with experts who have answers and to allow knowledgeable customers to interact with one another -- all of which can help build relationships with customers.

The main challenge seems to be deciding what your goal is.

Should companies be looking for ways to sell directly? Or should they steer clear of that to avoid alienating the channel?

Should companies be trying to come up with creative ways to better know and build relationships with customers? Or once again, would that risk alienating the channel?

So many people have stakes in the old ways of doing things, is it possible to consider this question from the point of view of what would work best now for all parties?

What should be the role of the distributor?

Who should own the customer relationship?

Can resellers overcome their reluctance to share customer information with manufacturers?

Can a manufacturer share the information it gains from end users with its channels in ways that speed the sales cycle?

My personal bias is to see the Web not as a way to reduce selling costs, but rather as an opportunity to build relationships with customers. I'd be inclined to set up operations that were people-intensive rather than automated, encouraging more, not less dialogue with end users and bringing partners/channels into that dialogue whenever appropriate.

In the past, if you sold through channels, that meant that you abandoned the customer relationship. Often you didnt even know who the customer was, except by roundabout tricks, like warrantee registration. It feels like the Internet makes it possible to both sell through channels and build relationships with the end user customers.

Bob Zwick asked, "Do companies really want to build a relationship with end users or do they want to outsource "hand holding" to the channels?"

Jay Owen replied, "I think what companies need and what they think they want are different. They really need to understand their end users and have an informed relationship and the channel needs to provide individualized service appropriate to the offering.

My own take is that in the past the hand holding has been outsourced to channels/brokers. But that entails enormous risks. Your reseller is also (often) your competitor's re-seller, and the customer's loyalty tends to be with the re-seller, not with you. I believe that the Web opens opportunities for companies, in all industries, to once again build direct relationships with end users, which can become an important and enduring asset.

Mark Gaydos countered that partners provide true value. They enable people to differentiate their solution offerings. The key with the Internet is to allow everyone to provide "their" distinctive value, instead of trying to cut them out. Direct interaction is not going to take over. Otherwise, you will find yourself in huge netmarketplace competing only on price.

But I contend that the manufacturer making direct contact with customers does not necessarily cut partners out and can in fact add value for partners. Imagine setting up an environment where a customer is automatically recognized as "belonging" to a particular re-seller whenever he connects to your site. Hence the look and feel of the pages and the information presented directly relates to that reseller's offerings/services/pricing.

Everything helps promote the partner's business, but you are getting great info about what the customers are really interested in; and the customer is getting used to going to your site as the source of great information and answers.

Neal Lightfeldt objected that distributors and reps will resist any attempts to gain access to customer information. It is really the main asset they hold in their relationship with suppliers.

I contend that you need to provide value to your re-sellers through your Web site. That can be by way of customer referrals, by way of providing good and fast answers to questions that it would be difficult or time-consuming for the re-seller to answer. Don't cut the channel out. But clearly focus on building direct relationships with customers as your number one goal. If you don't, your competitor will, and your former customers will be asking "your" re-sellers for that competitors' products instead of yours.

But Mark Gaydos contended that most companies don't want a relationship with the customer. They developed partterships because they couldn't handle one-to-one issues. This still remains true on the Internet.

As Bob Zwick put it, the channel is actually an extension of the company and the one-on-one is transfered to them. That's why there are certifications and quotas required to maintain channel status. Large companies have to concentrate their resources on producing high quality products. Smaller companies would benefit from close relationships only until their sales grew too large to justify the expense of one-on-one.

But I believe that one-to-one relationships with customers are where the future lies. I believe that quick, effective, inexpensive Internet-based communication, and taking full advantage of partners and knowledgeable customers as your allies in this endeavor makes such relationship building possible today.

Building A Lasting Business

is article was heard on the radio program "The Computer Report," which is broadcast live on WCAP in Lowell, Mass., and is syndicated on WBNW in Boston and WPLM in Plymouth, MA.

Yesterday, I was walking past our neighborhood video store (a West Coast Video) with my 12-year-old son, Tim. We had returned a game there the day before. Now, with no warning, the place was closed -- the windows were covered with brown paper and a sign indicated that the building was up for rent.

Tim asked what had happened, why had they gone out of business?

I pointed out that they rented and sold the very same videotapes and videogames as several other nearby stores. We went to them mainly because they were the closest. But there really wasn't much else to distinguish this West Coast from the Hollywood Video across the street or the Blockbuster a couple miles away. We might "miss" this particular store; but its passing wouldn't have any effect on our overall rentals -- we'd just rent more at the remaining stores.

Yes, they had special deals like rent-two-for-the-price-of-one on Tuesdays, kid rentals were just $1; and for every 10 you rented there, you got a free rental. But the other stores had deals too. Yes, a deal might encourage you to go to this store on a Tuesday, but having once gone there, there was no special reason for coming back instead of going to a different store. In fact, if you wanted to, you could hop from one store to another, taking advantage of each store's specials when they were on, but not giving any of them the repeat business they wanted and needed. Price-related specials wouldn't win them a loyal audience; it would simply reduce their profits.

Then Tim asked what they could have done that would have helped them survive. We speculated a bit:
-- Have game systems available for customers to try out games they might want to rent.
-- Instead of the overhead monitors running the movies that the staff felt like watching, have VCRs and DVD players available for customers to sample movies.
-- Pick one kind of movie (in addition to the latest releases) and build a great/complete collection, so, regardless of how small the store might be physically, it has the very best selection anywhere around of that particular kind of movie.
-- Put their inventory on the Web, so people could check which movies the store stocks and which ones are available now before leaving home.
-- Give in-store customers ready/handy access to that same Web resource.
-- Allow regular customers ("members") to reserve the movies they want (held for them for 6 hours, 12 hours, maybe even a day).
-- Allow "members" to request email alerts and even automatic reservations for when a movie they want is returned and available.
-- Allow "members" to custom-order movies that the store does not currently stock, for purchase and/or for rental.
-- Give "members" a first shot at the latest releases that they have reserved in advance.
-- Set up movie and game "clubs", like the reading clubs run by libraries; everyone watches the same movie or plays the same game and gets together to talk about it, either physically at the store or online or both (with the folks in the store seeing/hearing the online input, and the folks online seeing/hearing the face-to-face input).
-- Have guest speakers (like some bookstore chains do): game designers and people connected with movies (not necessarily "stars"; this could include behind the scenes and business people, such as the key grip and the publicist and the makeup person), both face-to-face and live over the Internet.

In general, give customers many reasons to come back, to want to be "members", to build loyalty and a sense of community.

Appropriate Contents of A Web Page

This article was heard on the radio program "The Computer Report," which is broadcast live on WCAP in Lowell, Mass., and is syndicated on WBNW in Boston and WPLM in Plymouth, Mass. It

This article is based on a speech which Richard delivered at a SCORE seminar in Roxbury, Mass., for Internet entrepreneurs, on May 24, 2000.
What belongs on a Web page and why?

The simple answer is -- words.

Why? -- because of search engines.

Why? -- because of the free traffic they can bring to your site.

Static, searchable text drives Web traffic -- not graphics, not expensive design effects, not constantly renewed content.

Web designers typically focus on the user experience at a Web site. Hence they pay close attention to the look and feel. They go out of their way to personalize the experience. They like to use databases so pages can be created on the fly to match a visitor's profile, or to be able to add new content and new graphics to a site with the greatest of ease.

But they often ignore what is far more important -- what it takes to draw traffic to a site. And the techniques they use that look so wild and wonderful, and that even outshine the great sites of your competitors, inadvertently lock out search engines, reducing the traffic to your site without you even knowing it, and lead to your incurring advertising expense, again and again, to bring in traffic.

Ask them about search engines, and they'll give you well-meaning and wrong-headed answers. They'll say that search engines use metatags -- give them the keywords that are important to you, and they'll make keyword metatags for you, and for just a few bucks they'll sign you up with a search engine submission company; and you're all set. They sound confident; you're impressed; your beautiful site goes online, and nobody comes.

In fact, metatags do not matter, and search engine submission companies typically submit just your home page, when, at least at AltaVista, you should submit each and every page.

In fact, search engines pay no attention to "key words" except for advertising sales. For full-text search, every word on every page matters. The more content -- static HTML text -- the better.

More content does not affect your ranking for queries that involve single generic words -- like computer or photography or database -- which may appear on millions of Web pages. But it does on unexpected searches -- when people enter a series of words and phrases that match just what's on your pages, people who really want to find what you have.

Designers typically prefer small Web pages -- no more than you can see on a single screen; they don't like the visitor to have to scroll down.

But search engines, like AltaVista, give more weight and relevance to large pages than small ones. And people seeking real information prefer it all in a single page that they can easily search and easily print, rather than having to load page after tiny page.

Designers typically use tools that automatically generate directories inside directories inside directories.

But search engines give precedence to pages in the topmost directory; and sites with a flat structure do far better than those with an elaborate and deep directory tree.

Designers typically use tools that pay no attention to the HTML title or generate it automatically.

But to search engines the HTML title is the most important part of the page. That is what appears as the linking words in a list of results, and when words of a query match words in an HTML title, that page typically goes to the top of the list.

Designers routinely remove old and stale and obsolete content and replace it with what's current.

But, on the Web, old content is far more valuable than new content, because it has had time to become a part of the overall Web infrastructure -- included in search engines and directories, included in the bookmarks and favorites of individuals, and linked to by other Web sites. You should never remove a Web page or change its directory or its file name. Simply add text to explain what has changed and provide links to the new pages that have the latest and greatest info.

In other words, if you are responsible for marketing or for the overall business of a Web site, you should not abdicate responsibility for Web site design to professional designers. You need to know what matters to you -- which in many cases is traffic, new visitors, new prospects. And you need to know enough about the value of content on the Internet and how search engines work that you can make your priorities clear and lay down clear guidelines for the designers.

Tell them you want traffic-oriented Web design, not design for its own sake.

Let them know you want to build a successful business, rather than collect design awards to decorate your walls with.

Varieties of Content On A Website (spontaneous, crafted, and engineered) 

Investors evaluating the prospects of Internet startups often presume that the value of content is the advertising revenue that could be generated. That approach simply translates to the Web business models from television, radio, and magazines, with different equations for calculating the ad revenue you should expect with a given size of audience. It's easy to understand how that has become common practice -- providing an element of predictability in a realm where very little can be predicted with any degree of certainty.

But that model presumes that content on the Web is similar to TV, radio, and magazine content. And that may not be the case.

Yes, some Web content is lifted straight from other media -- typically magazines and books. And some content is generated based on old publishing models. I call that "crafted" content, to emphasize that it is carefully made and shaped, involving the efforts not just of an author, but of also of one or more editors.

But the Internet also opens the possibility of generating and preserving "spontaneous" content and turning that to value. This is content that is written once and probably not edited, and the creator is probably not a professional communicator. The mode of creation might be email or chat or forums. The flavor of the discussion might sometimes resemble talk radio, but the material can be saved and found by search engines, which opens the door to new and different business models.

Because of full-text search engines (like AltaVista), the static saved content from dynamic online interaction, no matter how impromptu and raw, can draw traffic to a Web site. The more the better.

Basically, spontaneous content brings new visitors, and crafted content brings them back -- because it's clearly written, carefully shaped to meet the needs of the target audience and makes valid and useful points efficiently. And spontaneous content can be used as raw material for generating crafted content. For instance, the raw transcript of a chat session would be spontaneous. An edited chat transcript would be one step closer to crafted. And articles based on that transcript would be crafted.

Also, keep in mind that crafted content is expensive to generate (writers and editors are not cheap), which limits the volume of content available, which in turn limits the number of new visitors that will find that content by way of search engines. So sites that have only crafted content depend heavily on paid advertising to draw new visitors. It's an expensive and risky business model -- trying to create a Web experience so useful and enjoyable and sticky that people will come back again and again, justifying their ad expenditures, because so many of their new visitors become a regular part of their audience, raising the revenue they get from the advertising they sell.

Spontaneous content is very low cost and can be generated in high volume. It is an inexpensive way to draw traffic, and by serving as raw material, it could also help reduce the cost of crafted content.

Examples are hard to come by because, today, most content-based Web businesses don't take advantage of the traffic-generating opportunities of search engines. They typically lock their content up in databases or behind registration procedures that prevent search engine crawlers from ever getting to it.

But the potential is there for businesses based around the generation of large volumes of spontaneous content -- for instance, expert sites that match people with questions to people with answers, like ExpertCentral -- to present that content in indexable form and use it to attract search-engine-driven traffic; reducing their cost of building their audience, and fundamentally changing their business model.

Also, keep in mind, that just as spontaneous content can serve as raw material for new crafted content, crafted content can serve as raw material for "engineered content." In this case, crafted elements are assembled to build large and complex structures that serve new functions -- like bricks assembled into a building. For example, Learnlots.com takes screen-size chunks of content -- that can be quickly read by busy cyber-visitors -- and assembles them into tutorials, and commissions tutorials on target topics to thoroughly cover target subject areas. As a result the material at their site doesn't just inform, it teaches. Also, at a much higher level of complexity, Compaq has assembled many thousands of separate content elements (from technical specs to white papers to decision-support tools) to create ActiveAnswers www.compaq.com/activeanswers which acts as a total system to help partners and customers select, deploy, and manage solutions for complex business challenges.

Basically, with "engineered content," numerous separate elements are constructed, planned, and linked to produce a significant result, where the whole is far more valuable then the sum of the parts. The difference between crafted content and engineered content is like the difference between a course and a curriculum/degree program, or between a single book conceived by an author, and a series of books, like Dummies, covering an entire field and written to a fixed template so the efforts of many different authors or teachers and many different editors or administrators can combine to fill a single business purpose, where independent pieces come together to form a single system which produces predictable valuable results.

Defining Internet Marketing

In the physical world, there are many, very separate job functions, of which marketing is one.

On the Web, everything that affects the visitor is marketing:

"Marketing" is where all these many elements should come together. It isn't a separate function, so much as the function of coordinating all others.

The Internet marketing plan is not an add-on. It should not be developed in isolation or put together after other business decisions have been made. It should be at the heart of the business plan.

Branding rules should not be developed and enforced separate from the Internet marketing plan. Graphics and logo-oriented branding programs -- legacy programs from the old era of print-based marketing -- have no place on the Web. And efforts to translate those rules into cyberspace often lead to page design templates and practices that wind up blocking search engines, and hence reduce the traffic to the site. Efforts focusing on attracting and serving the audience should come first.

Likewise, the design of the site should not be determined by what is possible with the latest technological gimmickry. Just because it can be done and is technically impressive does not mean that it should be done. The design must serve the needs of the audience. That includes, above all, making sure that all the content can be fully indexed by search engines, so the target audience can readily find the site.

Web visitors, except those who arrive randomly -- having clicked on a banner ad in a semi-conscious daze or having clicked on a link by mistake -- arrive with expectations. They may be looking for information or an opportunity for social interaction or might want to shop. In any case, they expect easy navigation within a site, clear explanations of what's what so they don't have to waste time, and quick satisfaction of their immediate expectation or at least handy customer service contacts that can help them get it.

When I pick up a brochure, I expect nothing, and rare is the occasion when I hesitate for more than a second before throwing it in the trash.

When I arrive at a Web site, I arrive with a purpose in mind. Yes, I'm impatient. Yes, I can with a click go somewhere else. But because of my expectation of satisfaction, I am willing to suspend disbelief for a brief while and poke around a bit to see if I have in fact made a mistake or if what I want is really there.

The concept of visitor expectations -- making sure that everything you do to attract visitors sets the right expectations, and also making sure that the satisfaction is easy to find, and that help is also easy to find -- should be foremost in the mind of Internet marketers. This is extremely difficult, and in many ways unrelated to the activities of marketers in the physical world. It is also a remarkable opportunity so long as you approach this task with the right attitude. Your job is to serve and to satisfy. The role of your Web site is not as a replacement for printed marketing materials, rather, from the perspective of visitors, it should do something. To visitors the site itself is a service or product that they are paying for with their time and attention.

To be effective, the person in charge of "Internet marketing" needs to be able to control or at least strongly influence all factors related to the visitor experience and coordinate them. That person needs to be more of a ringmaster than a traditional marketing person, with heightened sensitivity to the interests, concerns, and expectations of the audience and how to bring together the full resources of the company to meet them. Do that right and many target visitors will find more useful information than they anticipated and will linger and explore, or they will become engaged in useful and pleasurable activites that they hadn't imagined. They will want to return again and again and spread the word. They will want to help you succeed, because they value your service. And if you provide ways to let them help you (through online discussion, affiliate programs, etc.), they will become not just visitors, not just customers, but volunteer partners, increasing the value of your business.

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