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killer applications

``` [In this sequel to his very popular piece on the televisionization of the Internet, circulated earlier on RRE, Dan Schiller describes some of the market directions that are driving Internet development. Although we often speak of technology as if it were an autonomous social force with its own immanent course of development, serious historical research demonstrates that particular technologies are invariably shaped by the uses that people intend to make of them, and some people's intentions do more shaping than others'. This is particularly true with computer technology, which is, to an amazing extent, a blank slate upon which different forms of social imagination can be inscribed.]

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Killer Applications

(C) Copyright 1997 By Dan Schiller Communication Department University of California, San Diego dschille@weber.ucsd.edu

The Internet embodies an explosive, recurrent paradox. The Internet Protocol is a set of commands that enables computers to set up the Internet as an electronic space, with its own specific rules and functions. Although it was developed within the secretive heart of the U.S. military-industrial complex, however, the Internet's foundational technology lies in the public domain. By military diktat, the rights to use it were made freely available - to a select group of cooperating universities and other military contractors. The result, as Robert H. Reid declares, was that "Nobody owned the network. Virtually nobody made money from it directly. And almost every piece of software that governed or accessed it was free..."1

The Net was an "open" system in a dual sense. Its governing technology lacked significant proprietary constraint, but it also comprised a considered attempt to establish flexible links between previously incompatible computer systems. This technical incompatibility between computer systems had been the consequence of rival manufacturers' success in locking in their customers - preeminently, the U.S. military

On this unlikely foundation, however, a global Internet suddenly became possible. As user communities grew more familiar with e-mail, they sought to extend it to wider circles. Once the decision was taken to separate out the military's privileged network from its fledgling civilian counterpart, a hitherto restricted subscriber base was free to mushroom. Creation of new forms of intercommunication - the World Wide Web has been the most important - added explosively to the resultant surge in usage. The Internet resulted "as much from the free availability of software...as from anything else."2 Had a proprietary logic been applied to the Internet, there can be little doubt that the Net would have been stunted during infancy.

However - as we will see below - this same Internet soon became subject to a freshly unifying and expansionary market logic. "[B]uilt to one set of economic principles," as an authoritative report has recently emphasized, the Net commenced upon a "transition to another set of economic principles..."3 In this transition, the Net's originating paradox between informational freedom and proprietary stewardship was replicated in a new form. The emergent market logic did not suppress, but rather parasitized and subordinated the Net's "open" aspect, to serve the goal of proprietary profit.

1. Shopping The Net

A good entry point for assessing the Internet's current market logic is provided by the recent upset of world chess champion Garry Kasparov, by IBM's supercomputer-powered chess system, Deep Blue.

Columnists and broadcasters speculated effusively on what they took to be the issue at hand: the fate of human intelligence under putative challenge from computational machinery. We may assume, however, that IBM's own zest to sponsor the match was not motivated by a sudden taste for philosophy.

IBM's ongoing quest to endow computers with commercializable functionality, rather, sought to utilize the contest as a means of showcasing an ability to handle a complicated, high-volume event on the Internet. "IBM blanketed the Web with what may have been the biggest single-event ad campaign ever conducted on the Internet," by one account; "clickable" banner ads were placed at 50 Web sites. The Web site set up by IBM itself utilized a graphical chessboard whose pieces moved in sync with the progress of the contestants' competition, and which - in preparation for expected heavy traffic - required a supercomputer of the same kind that also powered Deep Blue. Over the entire course of the six-game match IBM's site registered more than 4 million visits by individual computer users hailing from 106 countries. During the final game, the site garnered about 420,000 individual user visits: enough, as the Los Angeles Times reported, to "compare...favorably with the viewership of some cable television programs."4 IBM had succeeded, in short, in demonstrating that Internet-based events can rival television in targeting "most-needed" audiences - and on a global stage.

Demonstrated for whom? IBM's display of media programming prowess was arguably intended to impress the advertising industry. The advertising community was already well-primed to fix on games, in a variety of formats and business-models. Was not Microsoft's Internet Gaming Zone attracting 200,000 users? Had not AudioNet presented the Super Bowl, with play-by-play coverage in 3 languages, to 500,000 listeners?5 So it should be no cause for surprise that market researchers at once plunged into analysis of IBM's chess match as a prototype for additional, perhaps advertiser-supported, Internet services.

Was this attempt, however, ill-starred? Over recent months concern has floated through a solicitous press, that the fortunes of Web-based advertising, and of the Web publishers who seek to make it a staple, have not mirrored the earlier unprecedented stampede into Internet stocks. Spending for brokered online ads grew steadily during 1996, to around $265-300 million, while online shopping revenues also increased - but not on the exponential slope-line hoped for by boosters. "Advertisers Still Trying to Get a Line on Net Users," suggested the Los Angeles Times last December; "Payoff Still Elusive In Internet Gold Rush" declared The New York Times the next month? What, the press wondered, were the sources of the malaise?6

Was it that Internet advertising was too narrowly based, being confined mainly to computer-related companies? Or that no standard system of audience measurement yet existed, so that proof was lacking that Internet promotions actually work? Or that "click-through" rates remained low - testifying to viewers' sluggishly indifferent movement from banner ads to sponsors' sites? Or was it that trying to generate business on the Internet was intrinsically like "dropping your business cards on a Manhattan sidewalk during rush hour[:] Almost no one knows you exist, and the few who stumble upon your card are unlikely to be the kind of business prospects you were looking for"?7

The questions posed were suggestive - but not of the collapse of advertiser support as a leading Web business model. Brokered space comprises only the tip of the Internet's commercial advertising iceberg: thousands of corporations have ponied up billions of dollars over the past three years to furbish themselves with serviceable Web sites. Marketers, in this perspective, "cannot ultimately succeed on the Web by planting themselves between another site's content and its audience. A brand must rather seek to 'create itself as a destination' in its own right."8 Corporate sites themselves thus are the most important category of Web advertising. Lackluster corporate interest in paying for Internet ads, in turn, is a consequence less of advertisers' indifference, than of their newfound freedom to mediate Web experience for users.

Indeed the Internet affords an especially important extension of direct marketing, by which sponsors achieve means of interacting with individual customers via records of product purchases and media preferences. Originating in direct mail and freephone (or 800) numbers, a whole new set of "brand platforms" is presently being readied on the Web. Transnational consumer products companies, as Joseph Turow has aptly shown, view these platforms as implementing "an ongoing conversation with every desirable customer."9 "The whole purpose of a Brand," declares the chairman of Unilever in almost identical language, "is to create a long term relationship with the Consumer and advertising is simply one way - the most efficient way we've yet devised - to conduct a dialogue with that consumer."10 Leading consumer products companies are consciously designing Web sites as means of communicating in new ways with would-be consumers around the world.

A first important effect of these new brand platforms has been to help loosen established ties between brands and individual media. Advertisers are thereby freed increasingly to craft appeals that are more nuanced and multifaceted than before. But sponsors' attempts to incorporate the Web never lose sight of their constant need to stabilize access to specific, most-needed audiences. This translates into a growing fashion for "Internet communities," virtual neighborhoods populated by steady "netizens" rather than cybertransients - Websurfers

Carrying over into cyberspace as sponsors flex their muscles, in turn, are practices that have long since become customary throughout conventional media. Advertisers cluster predictably around the most heavily-trafficked Web sites (search engines and browsers), forcing less popular sites to shut down14 - the same way their preference for the cost-efficiency of a municipality's leading newspaper once helped to transform newspapers into local monopolies. Who said advertisers have an obligation to support all the publishers that may choose to throw in with them? Similarly, sponsors are not imprudent enough to commit large sums to the Web without reliable audience measurement systems - just as they likewise episodically insist that US broadcast television ratings services require improvement. Furthermore, as sponsors have done with museums, orchestras, public broadcasting stations, and just about anything else that draws the right kind of crowd, innovative Webmasters are enrolling noncommercial sites in the sales effort; the bookseller Amazon.com has established links with no less than 8,000 formerly unrelated Web sites.15

Yet the implications of the Internet as a tool for "relationship marketing" go beyond even this.

The assumption is insistently promulgated that the Internet comprises a prospectively universal mass medium, in which "everyone" will soon participate. Nothing could be further from the truth. Instead, there is every reason to believe that the Internet is bound up in a profound reorientation of the greater media system, from "mass" to "class" and, concurrently, from national to transnational media marketing. Advertisers, once more, are key parties to both changes.

Rapid deployment of the Internet as a transnational medium is spurred by the longstanding, but currently very aggressive, expansion of U.S. program services and distribution channels. Web-originated radio programs are demonstrating a potential to reach global audiences, while The New York Times already boasts to its advertisers that its brand name "deliver[s] a high-quality audience" of nearly a million recurrent Web subscribers around the world.16 Yahoo!'s search engine has attracted a not inconsiderable 70 European advertisers; AltaVista, said to be Europe's most popular search engine, seeks to outflank homegrown rivals by offering service - and advertising - in 17 languages, while another rival, Lycos (a corporate spinoff of Carnegie-Mellon University) has lately teamed up with the German media giant Bertelsmann to furnish access to its directory in 37 local languages.17

Concurrent with this transnational extension, paradoxically, the Internet is also implicated in an equally calculated societal contraction of the mediascape. The point may be made by turning to the ongoing metamorphosis, in the U.S., from the wellnigh universal coverage achieved by unbilled (that is, "free") network television broadcasters a generation ago, to what is now termed "broadreach television." Four network broadcasters today command only some 60% of the primetime TV audience, while cable channels and other new media continue to augment their collective audience share. This is not simply the result of some kind of ineffable audience preference for fee-based cable channels, VCRs, and the Internet.

Rather, viewers' desires are mediated by sponsorship. Leading consumer products companies have long since abandoned one-size-fits-all pitches to an undifferentiated mass market. The sweep of advertiser practice over the past two decades has instead been toward new media channels that target carefully disaggregated market segments: for example, owners of four-year-old and newer Japanese automobiles who subscribe to Time, Sports Illustrated, Money, or Life.18 Access to the relatively large broadcast audience that remains still commands a premium, which helped over-the-air network television ad spending to grow by a healthy 12.8% (to $13.08 billion) between 1995 and 1996. Yet it is more telling that, over the same year, ad spending on audience-segmenting cable TV networks increased by more than twice this rate (26.5%, to $4.47 billion).19 And direct mail media have experienced peerless growth of the last generation. Even manufacturers of the most everyday "mass" products, such as soaps and over-the-counter medicines, have begun to act as if there is no turning back to an era offering only basic, undifferentiated channels to a heterogeneous audience.

The term "demographics," which denotes the dual trend toward media targeting and market segmentation, can harbor a profoundly misleading implication. Current marketing practice portends no carryover into the consumer domain of the principle of equality of representation. Just as the market does not cater to every background and personal taste, so the practice of demographic marketing is not pluralistic: by no means is every member of society equally sought.

On one side, advertisers select and lavish attention on media content that they hope will gain them disproportionate access to favored audiences. On the other hand, as Turow underlines, the greater the income possessed by a given social grouping, the more extensive the segmentation to which it will be subjected. Thus the uneven distribution of wealth is ratified, through the practice of sponsorship, across society's mediascape. Even apparently disparate axes of market segmentation - gender, race and ethnicity, age - often lead back circuitously, to the uneven capacity for discretionary expenditure. In an age of increasing class inequality, this fact has lately led companies from AT&T to Disney to General Motors, openly to embrace "two-tier marketing" plans, whereby products and sales pitches are deliberately polarized so as to reach "two different Americas" - rich and poor.20

As presently constituted, the Internet plays to only one side of this social fracture. No societal commitment has been made to roll out Internet access on a universal basis even in the U.S., let alone worldwide - especially for the next-generation multimedia offerings that will require "broadband" telecommunications links to the home. The technology to support such advanced services is already available in a variety of forms. However, vast debt loads and anxious investors have forestalled cable television companies from following-up on grandiose promises of broadband services to the two-thirds of U.S. households their wires reach. Likewise, the telephone companies whose networks lead into nearly 95% of U.S. homes have been forced by continuing deregulation to keep their strategic attention fastened on more immediate competitive struggles. Broadband access is available only in some areas, and only to those who can afford to pay a premium for it. The U.S. home PC market, finally, on which residential Internet access also relies, has stalled out at around 37% of US households, up a bare two percent over the past year.21

In consequence, there exists what some writers have called "a digital divide" - between wealthy, educated Internet users and poor, disproportionately nonwhite nonusers.22 Far from being a liability in the eyes of marketers, however, the Internet's social exclusivity only entails development of another medium with which to segment audiences. Indeed the Net's evolving multimedia services furnish further compelling incentives to turn the Internet into a new weapon in the marketers' arsenal. By taking advantage of the Net's unparalleled abilities to target well-heeled consumers' interests and tastes, to provide "depth" to brand-related interactions, and to audit audience behavior, companies are hopeful of attaining an altogether new level of involvement with their most-needed customers - worldwide.23

In the second portion of this survey, we will see that advertiser domination of the Internet's consumer segment is merely one specialized expression of the more general trend. As business applications seize control of the Internet's social function, a wider market logic has established itself through an apparent - but actually only nominal - commitment to the Internet's traditional "open" culture.

2. An "Industrial-Strength" Internet

Viewed from the perspective of the computer industry, the Internet's exclusivity and the related top-off of the consumer PC market are fraught with problematic implications. How does the arresting fact, that computers priced at $2000-plus can be absorbed only by the top third or so of U.S. households, fit in the context of the computer industry's need for profitable growth? With the delay in installing widespread, highspeed telecommunications links to homes, how can consumers be taught to enjoy a new generation of highspeed interactive services?

The questions are critical and their answers complex. The difficulty owes in part to the explosive development of the Internet. But it also reflects a second, intertwined factor.

From around 1980 to the mid-1990s, the market success of the PC testified to unrelenting "price/performance" improvement. The industry thus found reason to recognize "Moore's Law": that the price of a given level of computer processing power will halve every 18 months or so. A quantum jump from the large mainframe computers that had previously comprised the mainstay of the industry, the personal computer established a new, broadened plateau in the progress of computerization.

As the top producer of mainframes, IBM, began to waver unsteadily the PC era ushered in new chief beneficiaries: Microsoft and Intel. Microsoft developed the operating system software - Windows - that presently tells over four-fifths of the world's base of installed PCs how to function. Intel is the microelectronics supplier of 84% of the key chips utilized to make PCs. PCs needed ever-growing capabilities - greater processing power, more memory, add-ons such as CD-ROM drives - to drive demand for ever-more powerful microprocessors. Sales of the most profitable high-end chips, in turn, depended on ever-expanding software functionality: word processors, dictionaries, thesaurii.

Together, Microsoft and Intel made PCs into a platform for unprecedented market extension. As standalone machines, PCs were packed anew each season with an expanded array of features. Even when linked together into networks by corporations hungry to develop specialized departmental applications, PCs exhibited a splendid (and for corporate information system departments, a maddening) independence. As the "Wintel" axis extended, in turn, the entire PC industry became what one analyst terms "just a value-added reseller for Intel and Microsoft."24 With each turn of the annual product cycle, Intel and Microsoft gained profit rates that were the envy of modern industry, transforming themselves into two of the most profitable companies on earth.

The success of the Web, however, comprised a sudden affront to this hegemony - at first mainly in the form of a tiny start-up company called Netscape.

In a successful bid to build a prospective commercial platform on the Internet, Netscape commercialized a tool, called a Web browser, which organized, simplified, and helped to expand the functions of Web access. In hopes of gaining future market share, Netscape's browser was made available to most individual end-users for free. The company made money by licensing its browser to corporations. It also began to develop new Internet markets, including those for complementary "server" software - the programs that run the computers, called servers, that "publish" material on the Web. The emergence of Netscape testifies less to the Internet's empowerment of individual creators and entrepreneurs, however, than to the new efficacy of venture capital - the power behind the Internet throne - in reconstituting the Net's often unruly technical imagination on a basis attractive to investors.

Even more quickly than Microsoft had supplanted IBM as the epicenter of the global computer industry, Netscape duly acquired a near-monopoly over the browsers which channeled increasing numbers of novices onto the Web. Proprietary online services like CompuServe, Prodigy, America Online, and Microsoft's own MSN, scrambled to reposition themselves as gateways to the Internet, as millions of new users began to be lured by the Internet's more comprehensive, still essentially nonproprietary information resources. But this was only the beginning of the challenge posed by the new Internet market.

Microsoft's venture-capital-backed rivals were not limited to Netscape. They soon included the much larger Sun Microsystems, a maker of high-end computer work stations, server computers, and related products aimed mainly at corporate markets, and the equally prominent Oracle, a top producer of database software for business computer systems. Even more important, a revived and emboldened IBM also struck up an alliance with this group. These companies proposed a coherent and daring vision of the Internet's future: that the Net itself, in preference to standalone PCs or narrowly-focused inhouse networks of different kinds ("client/server" systems), should become the chief platform for computer industry development.

Not surprisingly, this vision of Internet system development gave pride of place to the subscribing companies' own corporate ambitions. Sun was already far along on a programming language, called Java, through which it hoped it could turn proprietary PC operating systems - read Microsoft's Windows - into an irrelevancy. Java allows software programs of many kinds to be stored not on individual hard-drives, but on the Internet. Once written in Java, moreover, such programs ("applets") should be able to run without modification on different types of computers. For corporations, most of which utilize a mix of disparate hardware, this "portability" could entail substantial cost-savings. Sun's Java reprised the strategy of developing market share and competitive advantage via easy licensing terms; a proprietary product thereby acquired some of the patina of the Net's "open" culture. Java duly became a widely used product.

The attack on the Wintel order did not cease here. Both the initial costs and, most significantly, the annual operating expenses of PCs were drawing complaint from corporate managers; by some accounts, companies had to spend as much as $8-12,000 each year per PC on upkeep, maintenance and support. In a canny response to widespread corporate demands to reduce these expenditures, Sun, Oracle, IBM and others introduced simple, Java-based network computers (NCs). These were stripped-down machines, constructed to optimize the utilization of Java programs, costing less than Wintel's fully loaded PCs, and prospectively imposing far lower maintenance costs. Not coincidentally, given IBM's involvement, NCs may be used to reconfigure corporate PC networks around the large, mainframe computers - redubbed "enterprise servers" - that are sold by IBM and other mainframe vendors. This in turn threatened to tip the center of gravity of the computer industry further away from its Wintel-dominated PC segment.

Microsoft and Intel responded with a barrage of measures, dedicated to ensuring that, in the new strategic theater of the Internet, the commanding roles that they had won over the previous platform - standalone PCs - were not suddenly superannuated. Their efforts again evinced not only a belated recognition of the Internet's significance, but also of the continuing salience of Moore's Law: that continuing exponential increases in the computer industry's price/performance ratio now might come to jeopardize the momentary historical centrality of the PC itself. In contention were three overlapping markets, arrayed loosely along a rapidly extending computer industry continuum.

In the consumer "Internet appliance" market, Intel redoubled its efforts to identify new vehicles for its microprocessors. Seeking to create demand for emergent multimedia services that will make heavy use of its chips, Intel plunged into a series of disparate ventures, from Web video to Internet telephony and beyond. Its efforts to develop markets called forth investments in some 50 companies just over the past two years.25 Following a corporate shakeup in December 1995, Microsoft's product development was reconfigured, and the company's strategic orientation also shifted. Following in the path of Intel, Microsoft's attempt to look beyond PCs necessitated spending big money on television advertising to build awareness of its brands. Especially portentous here was the software giant's hire of the executive Robert Herbold. Herbold had previously been head of advertising and information services for Procter & Gamble - the world's largest advertiser, with a $3 billion annual budget.

Like Intel, too, Microsoft's most vital initiative in the "Internet appliance" market was a growing attempt to make cyberspace accessible via hybrid offshooots of the ubiquitous television set. Actively pursuing both program development and the nascent technology of digital television, Microsoft began to devote hundreds of millions of dollars annually to establishing entry points into the tens of millions of households that do not, and will not, buy PCs. Following a joint venture with General Electric to provide news over the Internet and cable TV through the MSNBC network, and realignment and expansion of Microsoft's own MSN, this commitment to new market development also spawned a $425 million bid to acquire WebTV, which grants users lowcost access to Internet channels - moves quickly challenged by its competitors.26 Seeking to win advertising and transaction fees, Microsoft concurrently sought to develop a new generation of on-line services in entertainment, travel, automotive sales, finance, film, and music.

Second, Microsoft proved a quick study at defending its home market - PCs - against further Internet-based predation. If indeed it "infuriated...Microsoft that the Internet was free," as journalist Ken Auletta has observed,27 then the software giant rapidly realized that it possessed strategic means for coopting and exploiting the Net. When Microsoft brought out its own Web browser, dubbed Internet Explorer (IE), during the summer of 1995, the company bundled IE free into the software that it shipped to run the tens of millions of PCs sold each year. Accompanied by an unprecedented worldwide promotion, this effort succeeded, allowing Microsoft during 1996 to leverage its installed base of PC operating systems into a formidable presence on the Internet itself: IE is said to have captured some 30% of all Web browsers in use.

Browsers continue to occasion ferocious rivalry. Microsoft and Netscape have each sought to incorporate "push" technology in updated versions of their browsers, to let users subscribe to TV-like "channels" that can be automatically updated. The Wall Street Journal explains that "the two dozen or so major channels that come bundled with the software, and are prominently displayed, are expected to attract the bulk of Web traffic and advertising dollars." A scramble for partners to provide this programming has naturally ensued. Netscape has paired with Disney's ABC, Knight-Ridder, Federal Express, Excite, Hearst, CBS and CNN. Attempting with varying success to maximize exclusive commitments to IE, Microsoft has signed up more than a dozen of the largest business-information providers, including Dun & Bradstreet, Forbes, Fortune, Dow Jones, and Reed Elsevier.28

The browser war, however, was only one element in Microsoft's multifaceted response to the threat to its PC market posed by Netscape, Sun, Oracle and IBM. Its so-called "NetPC" showed that Microsoft was prepared to join the attack on the PC if that would help salvage its own hegemony over operating systems. An attempt to coopt the threat proffered by rival network computers, NetPC was offered by Microsoft as a vehicle for tapping into computer networks that utilized its own Windows NT operating system - its more robust software for use in business networks. In a related bit of audacity, Microsoft licensed Java, intending this time to steal a march on Sun by coopting its rival's programming language, and lashing it to Windows instead. In this way, a claimed 100,000 programs written by established developers of Windows-based applications could continue to rely on existing software tools, thereby further embedding Microsoft's own proprietary software. The battle over Java has been joined, and according to Richard Comerford, "Microsoft will be hard to beat."29

At stake in this fracas is the Net's neutrality, that is, its crucial originating capacity to underwrite exchanges between disparately configured computer networks and operating systems. To at least some observers, the risk seemed "dangerously real" that Microsoft's attempt to wrest Java software standards for its own purposes might begin to "balkanize and fracture" the Internet.30

Nearly twenty years ago, Simon Nora and Alain Minc predicted that an effective industrial response to "the IBM challenge" might be crafted only if a broad alliance could be forged with the other then-leader of the converging information industry, AT&T.31 In the ensuing years, however, a veritable gale of destructive creativity turned Microsoft itself into today's undeniable information technology chieftain - and even an alliance that includes a revived IBM may not be able to meet it head-on. Microsoft has a cash hoard of $9 billion, $2 billion in cash flow, and a $1.4 billion annual budget for software research and development.32 Its strategic course is - necessarily - breathtaking: to use its unrivaled ability to intervene so as to lock in as much of the Internet as it can get for its own proprietary software, new programming, and transactional services.

As a result of these selfsame initatives, however, Microsoft has entered into market competition across an unprecedented range of industries. Allies can easily turn into enemies amidst the growing turbulence. Might not Microsoft's new ambitions ultimately place the company on a collision course with its equally expansionary ally, Intel? How, more generally, will this fateful contest for the future of the Internet be decided?

A better question would be to ask where it will be decided. For, as much of the preceding discussion shows, the fierce struggle for market power between contending industry groups has shifted cyberspace's overall center of gravity toward a third market segment. Neither Internet appliances nor even PCs, but corporate computer markets now unequivocally drive Internet system development.

Relentless price/performance improvement in turn pushed Microsoft to extend the reach of its software not only "downmarket," toward Internet appliances and television, but also "upmarket," toward largescale corporate information technology systems. Microsoft's recent deals with manufacturers of large computer systems - first DEC and, more recently, Hewlett-Packard - are about gaining worldwide operational service networks of the sort needed to compete in "industrial-strength" computer system markets.33 The attempt was to upgrade Windows NT, Microsoft's operating system for desktop PCs and the corporate networks that interconnect them. A Microsoft promotion recently tried to impress on corporations worldwide that such enhanced PC hardware and software were sufficient to handle some of the very largest database transactions routinely required by big corporations.34

The same point echoed across the strategic landscape. "Business-to-business commerce is the killer application of the Internet," asserted the Chief Information Officer for Cisco, the leading supplier of corporate networking gear.35 Again, "the first purchasers and implementers of Java," claimed another writer, "will likely be the same people who always purchase, implement, and ultimately standardize new computer technologies: corporate users..."36 Even the most recent instalment of the browser war was a battle for corporate, rather than residential, customers. Leading Internet service providers, meanwhile, such as PSINet and Netcom, actually abandoned consumer markets, in order to serve more profitable business customers; while onetime purveyors of proprietary content to individuals, including CompuServe, changed focus so as to supply network services for major corporations. Indeed, the titans of telecommunications - AT&T, MCI, GTE and Deutsche Telekom - were scrambling to remake themselves, so as to offer business customers, particularly transnational corporations, private voice and data networks that interconnect their worldwide operations. Systems and policies that were previously arranged around national flag carriers were turned topsy turvy, accordingly, in a fevered effort to provide customized services to "the top 2,000 corporations in the world."37

The business market, in short, has emerged as the key fulcrum of system development within the greater networked economy. Perhaps the leading expression of this trend is a burgeoning effort to utilize the Internet Protocol to establish inhouse corporate "intranets."

Protected by "firewalls," such intranets permit access to the open Internet (though sometimes intranets are entirely inhouse applications), but refuse reciprocal access by Internet users. Intranets, accompanied by so-called "extranets" - which allow corporations to expand their shielded activities by linking up intranets for electronic commerce and other collaborative functions - stand athwart some thirty years of mounting private investment by companies in information technology.

The pan-corporate migration toward intranets and extranets comprises a belated response to the longstanding success of computer vendors in locking in customers with incompatible hardware and software. Intranets attempt, in particular, to harmonize and enlarge the more limited functionality of established local- and wide-area networks. These latter systems, like intranets, are proprietary. However, their functionality, and their ability to interconnect with each other and with the public telecommunications network, have imposed significant costs and operational restrictions. In the context of the present global merger and acquisition boom, this need to blend corporate networks takes on added urgency.

Via these proprietary networks, corporate databases can be made available on server computers to employees within a single building or campus, or - prospectively - across the world. Different classes of employees are authorized to enjoy hierarchical levels and differential categories of access to "shared" corporate databases. As islands of corporate activity are linked, startling cost-savings can materialize, and new strategic initiatives sometimes can be realized. British Telecom's internal intranet, for example, grants its staff immediate access to information needed to handle customer inquiries more promptly; it is already used by 55,000 people each day, and is said to comprise "the single most successful systems investment the company has ever made."38 More generally, intranets permit managers to broadcast information to staffers and to monitor projects. They can be made to effectuate more collaborative work processes among dispersed employees and, suitably enhanced, also to enable a raft of once-paid activities to be offloaded onto customers.39 Revealing of the intranet market's escalating importance is Netscape CEO James Barksdale's recent comment: "I don't have any other business."40

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As the Internet's transformation into a fullfledged proprietary medium gains momentum, quotidian incidents are freighted with new import. The online ticket-selling service Ticketmaster recently attempted, for example, to block users of a Microsoft Web site from linking freely (that is, clicking through) to its own site. Ticketmaster wants Microsoft to pay it for the privilege of routing users to its service, on the theory that, otherwise, Microsoft's site gains uncompensated value from its link to Ticketmaster's. Ticketmaster supposes, that is, that Microsoft has "wrongfully appropriated and misused Ticketmaster's name, trademarks and Website..."41 At issue is that Microsoft's link, by cutting through directly to a ticket-buying page, bypasses Ticketmaster's own carefully sequenced content, thereby subverting Ticketmaster's ability to utilize its wellknown brand as a platform for ancillary services on behalf of prospective advertisers. Is Microsoft, then, an information democrat?

When the Internet was still a fledgling open system, Nora and Minc asked of the overall process of computerization: "Are we headed, regardless of appearances and alibis, toward a society that will use this new technology to reinforce the mechanisms of rigidity, authority, and domination?"42 A generation - an epoch - has passed, and yet, as the Internet metamorphosizes into a proprietary global system, the question remains. 1Robert H. Reid, Architects of the Web. New York: John Wiley, 1997: 4, 5. 2Katie Hafner and Matthew Lyon, Where Wizards Stay Up Late: The Origins of the Internet. New York: Simon & Schuster, 1996: 251. 3The Unpredictable Certainty: Information Infrastructure through 2000. Prepared by the NII 2000 Steering Committee; the Computer Science and Telecommunications Board; the Commission on Physical Sciences, Mathematics and Applications; and the National Research Council. Washington,D.C.: National Academy Press, 1996: 105. 4Thomas S. Mulligan, "Match Proves Internet Can Be King," Los Angeles Times 15 May 1997: D1, D5. 5"Microsoft Says Users Of Its Internet Games Have Reached 200,000" Wall Street Journal 10 March 1997: B6; Mark Hyman, "Do You Love The Orioles And Live In L.A.?" Business Week 12 May 1997: 108. 6Jane Greenstein, "Advertisers Still Trying to Get a Line on Net Users," LAT 2 December 1996: D5; Seth Schiesel, "Payoff Still Elusive In Internet Gold Rush," NYT 2 January 1997: C17. 7Peter C.T. Elsworth, "Internet Advertising Growing Slowly," NYT 24 February 1997: C5. 8Reid, Architects of the Web: 239, 236-37. 9Joseph Turow, Breaking Up America: Advertisers and the New Media World. Chicago: University of Chicago Press, 1997: 137. 10Sir Michael Perry, CBE, Chairman, Unilever Pl.c., "Advertising - The Link in the Chain of Supply and Demand," International Advertising Association Perspectives, February 1996: 2. 11Robert D. Hof, with Seanna Browder and Peter Elstrom, "Internet Communities," Business Week 5 May 1997: 64-85. 12Bernhard Warner, "Web-bound Electronic Arts: It's in the Net," AdWeek 12 May 1997: 52. 13Larry Armstrong, "Cars, Beer, And Web Browsers," Business Week 12 May 1997: 113; Rebecca Quick, "Web Sites Start Using A Much Harder Sell," WSJ 24 April 1997: B6, B7. 14Don Clark, "Facing Early Losses, Some Web Publishers Begin to Pull the Plug," WSJ 14 January 1997: A1, A9; Seth Schiesel, "Web Publishers Start to Feel Lack of Advertising," NYT 25 March 1997: C1, 5. 15Sreenatj Sreemovassan, "Web Retailers Finding Allies At Sites With Nothing to Sell," NYT 14 April 1997: C4. 16": - D" (advertisement), New York Times 27 January 1997: A7. 17Kimberley A. Strassel, "Swedish Search Engine Firm Powers Ahead," WSJ Europe, 18-19 April 1997: 4; "A Lycos-Bertelsmann European Venture," NYT 13 May 1997: C21. 18Turow, Breaking Up America: 153. 19Robert J. Coen, "Coen: Ad Spending Tops $175 Billion During Robust '96," Advertising Age, 12 May 1997: 20. 20David Leonhardt, "Two-Tier Marketing," Business Week 17 March 1997: 82, 87. See also Herbert I. Schiller, Information Inequality. New York: Routledge, 1996. 21Jared Sandberg, "PC Firms' Push For Home Use Seems to Falter," WSJ 6 March 1997: B6. 22James Katz and Philip Aspden, "Motivations and Barriers to Internet Usage: Results of a National Public Opinion Survey," 25 February 1997 (Mss.). Bellcore: 2. 23Reid, Architects of the Web: xliv, 213-214. 24Howard Anderson, "Target: Microsoft," Upside April 1997: 72-76, 68. 25David Kirkpatrick, "Intel's Amazing Profit Machine," Fortune 17 February 1997: 62, 64; Dean Takahashi, "Intel Invests to Push Beyond the Usual Borders of PCs," WSJ 14 April 97: B8. 26Damon Darlin, "He wants your eyballs," Forbes 16 June 1997: 114-120; Don Clark and David Bank, "Oracle to Buy a Netscape Spinoff In Race to Build Home Appliance," WSJ 19 May 1997: B2; Louise Kehoe, "CNN, Oracle to offer news on internet," Financial Times 4 June 1997: 17. 27Ken Auletta, "The Microsoft Provocateur," The New Yorker LXXIII (11), 12 May 1997: 71. 28David Bank, "Microsoft Nabs About 12 Providers Of 'Content' for Its Web Software," WSJ 22 May 1997: B8; Don Clark, "Microsoft, Netscape Prepare to Launch New Broswer Battle," WSJ 4 June 1997: B6. 29David Bank, "Microsoft Takes Big Step in Strategy Of PC Programs for Server Terminals," WSJ 12 May 1997: B6; Richard Comerford, "Software Engineering," IEEE Spectrum 34 (1), January 1997: 66-68. 30Reid, Architects of the Web: 164, 163. 31Simon Nora and Alain Minc, The Computerization of Society. Cambridge: MIT, 1980: 78. 32John Markoff, "Microsoft Plans 300% Increase in Spending for Basic Research in 1997," NYT 9 December 1996: C1, C10. 33David Kirkpatrick, "He Wants All Your Business - And He's Starting To Get It," Fortune 26 May 1997: 64-66; Don Clark and Jon G. Auerbach, "Microsoft, H-P to Unveil Broad Alliance Over Windows NT, Business Computing," WSJ 18 March 1997: B4. 34Steve Lohr, "Microsoft Sets Its Sights On Corporate Computing," NYT 19 May 1997: C1, C7; Don Clark, "Microsoft Begins Push to Show Skeptics PCs Can Handle Biggest Corporate Jobs," WSJ 19 May 1997: B2; Paul Taylor, "Companies are asking tough questions about their IT systems," Financial Times 4 June 1997: 4 FT-IT. 35Steve Lohr, "Business To Business On the Internet," NYT 28 April 1997: C1, 9. 36Ilan Greenberg, "Corporate joe," The Red Herring #42, May 1997: 39. 37Jube Shiver, Jr., "MCI,BT Join Spanish Firm in New Alliance," LAT 19 April 1997: D1, D3. 38Michael Wiltshire, "Intranet brings big savings for BT," Financial Times 4 June 1997: FT-IT 5. 39Joseph B. White, "Chrysler's Intranet: Promise vs. Reality," WSJ 13 May 1997: B1, B7; Egil Juliussen, "Computers," IEEE Spectrum 34 (1), January 1997: 52. 40Clark, "Microsoft, Netscape Prepare to Launch New Browser Battle.: 41Dan Trigeboff, "Gift horse or trojan horse?" Broadcasting & Cable 12 May 1997: 59. 42Simon Nora and Alain Minc, The Computerization of Society, 1980 (1978):10-11. ```

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