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1996-04-22 · 21 min read · Edit on Pyrite

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OBT -- Internet catastrophe

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Date: Thu, 18 Apr 1996 09:55:28 -0400 (EDT) From: "Online Business Today(tm) @ Home Page Press, Inc." To: circ6@hpp.com Subject: ONLINE BUSINESS TODAY - VOL 2, (#4)

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ONLINE BUSINESS TODAY(TM) NEWSLETTER: Vol 2 (#4) MORNING FINAL MONDAY, April 22, 1996 OBT@HPP.COM

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IN THIS ISSUE:

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INTERNET CATASTROPHY LOOMS

FORMER APPLE EXEC JUMP-STARTS INTERNET-BASED TALK SHOW CHANNEL

INTERNATIONAL TAXATION TO BE MAJOR INTERNET COMMERCE ISSUE

CYBERBELLS POSE STIFF COMPETITION FOR ISPs

FREE WEB PUBLISHING SOFTWARE: NEEDED AUTOMATION FOR BUSINESS

JUST THE FAX, MA'AM SAID THE WEBMASTER

SEARCHING FOR POWER AND MONEY ON THE NET

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EDITORIAL, OBSERVATIONS AND OPINION

WHEN THE LIGHTS GO OUT IN CYBERSPACE

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INTERNET CATASTROPHY LOOMS

Networking guru Dr. Robert Metcalfe, the inventor of Ethernet, predicts the Internet, despite high expectations from the public, industry and U.S. government, "is going to suffer catastrophic collapses in 1996, at least temporarily."

Metcalfe, whose invention now connects almost fifty million computers around the world, is now Vice President/Technology for International Data Group and Executive Correspondent for InfoWorld. "The immediate prospects for the Internet are not rosy," he said. "I think the Internet is going to go into remission soon."

However, he believes it will survive the "remission" in 1996 to help drive a "new era of economic expansion based on connecting the world together. Right now it is reasonable (for someone) to say, 'I don't want anything to do with (the Internet) because it's too expensive and too hard to use.," Metcalfe said. But "as the Internet improves, as we package it better and make it cheaper. . . then I think it's for everybody, like television, like the telephone."

Metcalfe sees a much more positive long-term scenario. "The Internet is going to come out the other side," he says, "with substantial contributions to economic growth and educational opportunity the most important outcomes of the Internet's growth. The Internet will broaden the horizons of its users putting people in touch with remote and distant places . . . (inspiring users to have) higher ambitions and see ways to succeed."

Metcalfe also offered the following observations:- Contrary to conventional wisdom, the application of existing technologies in the Internet offers the prospect of increased personal privacy.- Digital transactions in which Internet users make "micro payments" for information obtained over the Internet, will complement advertising as a major source of revenue for information providers.- The key to ensuring the broadest possible public access to the Internet is not to increase the role of well-meaning governmental organizations but rather to encourage a vibrant, commercial, competitive environment. [That one wasn't too tough, Bob].

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FORMER APPLE EXEC JUMP-STARTS INTERNET- BASED TALK SHOW CHANNEL

Former Apple Internet/online services executive, Peter Friedman, is now the busy President and CEO of a new Internet content studio, LiveWorld Productions, Inc. After five years with Apple, Peter's first launch for LiveWorld Productions is his flagship service, Talk City. OBT interviewed Mr. Friedman about this new online "chat" business which may be a rookie model for a wave of other talk/chat "channels" delivered not on TV or radio, but over the Internet.

Friedman assembled his initial executive team and 70 program moderators from the ashes of Apple's defunct online service, eWorld. This new company creates original Internet programming for the consumer market with a focus on audience participation. Friedman told OBT that LiveWorld's mission is to bring people together through participation in interactive, moderated chat "shows" on the Net. Rather than create a single Web site, LiveWorld operates in a virtual studio model, providing a creative, technical, marketing and financial framework for new class of online personalities, Internet "artists" if you will.

For example, Friedman spoke about Youth Tech, a Talk City program moderated by a 14-year-old boy. In this "show" teens talk technology with each other (and lurking adults) who seek answers to today's high tech questions. In fact, the whole Youth Tech staff is under 20.

Another example of target marketing audience segments is Girls Online, moderated by a 13-year-old girl. From a Talk City Web page OBT read "Go to Girls Online Live for some online chatting. Got a problem? Check Dear Alice. Or go to Girls Link and ask a question. And while you're there, find a friend by putting in a KeyPal request. What else can you do? Click on the Girls Board and read and post some messages about all your favorite things."

Talk City's single "channel" already has 140 "rooms" of pre-scheduled programming moderated by experienced, trained hosts. User participation is the same as tuning in your favorite TV shows at their scheduled times. There's a different line-up every day of the week; morning shows, afternoon and evening programs too. Mr. Friedman has scheduled three more channels for launch in April 1996. He told OBT the goal of each program is to "evolve into interactive forum for relationship marketing."

To make a profit, Friedman has a shrewd and interesting plan because paying for all this content will be advertisers. According to the CEO, Talk City's franchise is to "hold onto audience which will attract advertisers." As you can see, Friedman's Talk City will be able to "deliver" segmented audiences with highly specific demographics, the same promise cable TV made 25 years ago. Internet advertising is now all the rage with big business in America and Friedman said it is expected to reach $10 billion by year 2000. With numbers like that Talk City and other new Internet talk shows could be highly profitable for online business entrepreneurs. Talk City ads "are banners and slugs and set the tone for the room," said Friedman.

OBT learned conventional advertising rates are still basically in the $3.50 - $5.50 per 1000 range whereas Internet advertising often commands very much higher rates. For example, an OBT source said Yahoo! and Lycos each pay Netscape $5 million a year for a prominent link on their home page. A cheap ad on Yahoo! or Lycos to promote your Web site will set you back $7,500 or more per month.

Says Friedman, "Internet advertising rates are all over the place. The mainstream is Internet advertisers are paying $20.00 - $40.00 per 1000. The spread between the two numbers varies by the nature of the audience." That said, the business picture is much clearer now, and much more exciting when an Internet site can command 3.6x to 11.4x conventional advertising rates with about the same expenses. In this case we can assume fixed costs for online talent remain about the same, but delivering content over the Internet costs far less. The bottom line is this online business model has serious potential.

Peter Friedman has a passion about his work which came through loud and clear when talking to OBT. "What do I like about the Internet? That it can bring people together. It will enable people, especially children to see and participate in and shape the world without the barriers of the past. I like chats---you meet people and if the chats are managed well, you learn things.

Some have said that computers and the Internet are the next steps in the dehumanization of the world. That's not true. The Internet heralds a stage of technology, perhaps the first in one hundred years, that actually brings people together; families, friends, new friends." [OBT readers should also keep in mind that today's Interneters, especially children with access to home PCs, are a far more elite demographically than radio, TV or cable TV profiles. See past issues of OBT for proof that today's online prospects are the proverbial cream of the crop for advertisers. http://www.hpp.com and head for OBT Archives.]

Talk City is based on scheduled online conferences, so tuning into Talk City chat "programs" is like tuning in your favorite radio or TV shows. Some estimates indicate as much as 35 percent of AOL revenues come from online chat rooms and everyone knows Oprah earns $45 million a year for hosting a (moderated) TV talk show, so why not do the same on the Internet?

Indeed! Talk City conference subjects include current events, computers, politics, art, entertainment, hobbies, problems, and solutions. In addition, people can create member rooms on just about any "G" or "PG" subject they wish. Over 70 trained conference hosts are on hand throughout the week to manage chats, guide users and in general oversee a friendly supportive environment. Friedman stressed the professionalism of his hosts as a key ingredient to Talk City's business plan.

Let's hear from Wall Street. "Companies that can move aggressively to integrate community, content and technology on the Internet and deliver quality services for the consumer will be leaders in this new media form," said Michael K. Parekh, vice president of On-line/Internet, Goldman Sachs & Co. Yes, this sounds suspiciously like we'll soon have "Burger King Online," "The Ford Repair Hour" and "Geraldo Rivera Suspects OJ" Internet chat programming, but at least we don't have to log on. [OBT wonders what kind of advertiser would consider Geraldo's online Internet chat show a segmented target audience; Prozak?]

Another linchpin in Friedman's start up is his partnership with the Concentric Network Corporation which provides Talk City free Internet access and bandwidth. This arrangement is a perfect fit because Concentric's main business is customized networking solutions for businesses. It operates a large, low-cost gateway to the Internet, multi-player gaming sites and other services and "actively seeks out business alliances that facilitate the cost-effective acquisition of subscribers."

Is there a place on the Internet for local land-based businesses like Joe-The-Entrepreneurial-Plumber? Would there ever be a way for Joe to operate a business and make a profit selling his expertise online on the Internet? Can a local skill be successfully peddled online worldwide?

The Talk City plan is very inspirational as a business model to sell any knowledge or craft and so much more personal than cold, flat, silent Web pages. Perhaps the true interactivity of the WWW will be via chat programs rather than some hyper HTML or Java scenario. Cable TV's repeated promise of 500 channels is still far from reality and lacks interactivity. Today Peter Friedman is already 140 channels down the road in his first month online. Regardless of your special interests, there is now a forum and a format and an interactive business model on the Internet the combines people, moderators and online entrepreneurs. Why not create your own "channel" and troll for listeners? Why not indeed!

Download the free Global Chat client software from Quarterdeck at http://www.qdeck.com/chat/. Get to Talk City at http://199.3.126.253 if http://www.talkcity.com doesn't connect. Concentric Network's web address is http://www.concentric.net.

If you want to participate in Talk City, you'll need Global Chat, free from Quarterdeck, which is a stand alone program that works together with your Web browser. Global Chat is a big improvement over Internet Relay Chat (IRC). For example, you can create web page collections of your favorite chat channels, or include channel references on your home pages. You can click on a link in Q-Mosaic or other Web browsers and Global Chat will automatically open a connection to the server and the channel you clicked on. This facility makes tuning into your favorite Internet chat "shows" a snap. The Global Chat connection is also far more reliable than IRC.

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INTERNATIONAL TAXATION TO BE MAJOR INTERNET COMMERCE ISSUE

With the introduction of secured transactions, commerce on the Internet will pick up sharply. And when it does, it will hit a new and unexpected hurdle---international taxation.

So says KPMG Peat Marwick consultant, Nilesh Shah. Shah is the international tax consulting partner in KPMG's Information Communications and Entertainment practice (ICE(SM)). He says millions of dollars are at stake because governments have not yet established policies governing taxation of commercial transactions conducted over the Net.

"The battle between countries over international tax revenues is an old one but as electronic commerce heats up, this question takes on new life," says Shah. "Tax is generally levied based on the location of a commercial activity, but Internet transactions may not necessarily be based on physical locations. In the physical world it's relatively easy to determine where commercial activity is located, and policies are in place to address disputes. But if a U.S. company sells in Japan via a foreign Web site (which could be 'portable'), where is the company's commercial operation located? What if the Web site is based in Japan? At some point, all these governments will attempt to capture the tax revenues related to the same transaction."

In the U.S., some states have begun to establish policies that govern location-of-commerce questions for electronic commerce in terms of state and local tax. But the question has not been addressed on the international level. "Clearly, the rules that were made in the Industrial Age cannot be applied to the new Information Age. These new rules are still to be made---with as yet unforeseeable consequences for Net commerce," says Shah.

According to Shah, international taxation is the latest in a series of issues, including privacy, censorship and transaction security, that have emerged as the Internet becomes a commercial medium.

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CYBERBELLS POSE STIFF COMPETITION FOR ISPs

An example of growing competition for Internet services in the Mid-Atlantic region, Bell Atlantic Internet Solutions (BAIS) is introducing a line of business and residential Internet products and services. BAIS is a new unit of Bell Atlantic created to develop and deliver Internet-based services to businesses, governments and consumers.

"Bell Atlantic will provide a full suite of Internet offerings backed by the high level of service and value for which we are known," said Stuart Johnson, Bell Atlantic group president-Large Business and Information Services.

OBT predicts the decisive battles to gain and keep Internet consumers will be won or lost with respect to service issues. ISP's and new providers have to recognize that the 90 percent of Americans who are not online will demand much more than the early (Internet) adopters. Although price will be an issue, software, training seminars and round-the-clock support are the critical business issues which will win and maintain market share. For example, BAIS's product line will be backed by technical support and "help desk" services 24 hours a day, seven days a week. This is bad news for those offering or planning less service as ISP contenders.

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FREE WEB PUBLISHING SOFTWARE; NEEDED AUTOMATION FOR BUSINESS

It seems not a day goes by without another new publishing "solution" hitting the Internet, and Microsoft has done it again, free (beta). Competitors find it very tough to compete with that price.

Microsoft has released three free add-ons to Microsoft Office to make it easier for Office users to create and publish information to the Internet or a business intranet. New tools for Microsoft Access, Schedule+ and the PowerPoint enable users to publish information on the WWW using all of their existing Office applications. The new Internet Assistants for Microsoft Access and Schedule+ let users publish their information in HTML format, allowing Web browsers to view the information across an intranet or via the Internet.

Products that help business get data online to the Internet and intranets are critical to rapidly expanding the availability of resources trapped in corporate files. With the release of Internet Assistant for Microsoft Access, business can quickly publish information stored in corporate databases, making data such as product catalogs, price lists and customer information readily accessible to Web browsers. Using a "wizard", businesses can automatically publish reports, form datasheets, queries and tables into HTML language and quickly post them on the Web. Consider using this software because you will reduce the time-consuming and complex task of manually re-keying information and coding HTML language.

More free goodies. Online business can now take advantage of the enhanced animation, hyperlinks, special effects and built-in sound functionality in PowerPoint for Windows 95 to build dynamic, animated Web pages without having to learn and use a complex programming tool. In addition, ActiveX Animation Player makes downloading and viewing PowerPoint effects and presentations over the Internet faster by compressing files before Web site posting.

If your business uses MS Office, we suggests you grab these tools. All add-ons are available to download free (beta) from the Microsoft Web site at http://www.microsoft.com/msoffice/ then click Internet Tools on the left side of your screen.

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JUST THE FAX, MA'AM SAID THE WEBMASTER

Ibex Technologies, Inc. now offers Fax-from-Web, a feature for Web sites that allows business to fax documents directly from the Web. Serving corporate Intranets as well as Internet use, Fax-from-Web retrieves Web, Adobe Acrobat and non-Web scanned documents, then converts and faxes them to a specified fax number.

Internally, employees can use Fax-from-Web to send Web documents via fax to a third party for information requests in call centers or support/sales environments. Externally, Web users with relatively slow modem connections can have multiple format documents delivered to their fax machine, or to a third party, while they continue to search and surf. Fax-from-Web can be designed for companies with large data bases of images and document types that are incompatible with the Web. With Fax-from-Web, companies can make multiple format documents available on their Web page via fax, without the time and expense of converting them to HTML format.

"Ibex's Fax-from-Web is a possible solution for companies with a large number of documents that do not translate well to the Web, such as image formats," said Ney Grant, President of Ibex. "Instead of converting these documents to HTML, they can use Fax-from-Web to link their Ibex fax-on-demand system to the Web. Fax-from-Web allows for all of a company's documents, no matter what format type, to be available via fax to anyone who browses their Web site."

Fax-from-Web consists of a PERL program that runs on the Web server and sample HTML documents to illustrate the fax option to Web users. The PERL program receives the fax request from the Web user and submits it to Ibex's FactsLine fax-on-demand system. Users choose the documents they want, enter a fax number and those documents are immediately sent via fax.

The Ibex fax-from-Web software upgrade kit will be available for $495. For a demonstration of Fax-from-Web, visit the Ibex Web site at http//www.ibex.com.

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SEARCHING FOR POWER AND MONEY ON THE NET

Witness the recent IPO's of Yahoo!, Lycos and Excite, all three making instant multi-millionaires of their founders. Heck, Gordon Geko, the power-monger in the movie Wall Street must be foaming at the mouth. Yahoo! is only a little over a year old and worth slightly less than one billion dollars in one hot day of trading---dollars for Internet dreams. You brokers sure are good salesmen. We're all impressed . . . or confused. But hey, who said there wasn't money to be made online?

Now, OBT readers, it's time to move on and introduce yourself to the next billion dollar search engine IPO. Consider visiting, and getting ready to buy, SavvySearch, an experimental search system from Colorado State University. This "sniffer" is designed to query multiple Internet search engines simultaneously. Oh, we get it, one query does it all. One stop link linking. The super market of WWW information. SavvySearch has its own unique twist claiming, "A parallel search is performed when a group of search engines is selected from the search plan."

SavvySearch queries •Aliweb •Alta Vista •CSTR •DejaNews •excite •EINET Galaxy •FTPSearch95 •Infoseek •Inktomi •Internet Movie Database •LookUP! •Lycos •NlightN •OKRA •Open Text •Pathfinder •Point Search •shareware.com •SIFT - Stanford Information Filtering Tool •Tribal Voice •WebCrawler •WhoWhere? •Yahoo •Yellow Pages and is considering four more.

We tried a number of tests starting with "Telephony" and asked for 50 matches (the maximum setting allowed). We received back 10 matches from OpenText and 50 more from Lycos (that's 60, right?). We then clicked Alta Vista in the Search Plan and got back 10 matches from InfoSeek instead. We decided to invoke Yahoo! and got 24 matches and 10 from NlightN. OBT still had 12 more engines to click so we opted to stop this fun and "Integrate Results" which gave us a combined total of over 100 matches for "Telephony." Almost all 100 were good to excellent matches to the keyword Telephony, a fine performance.

We next asked for 50 matches to Marc Andreeson. Excite results were listed first and gave OBT 10 matches starting with "Person of the Year 1996, Marc Andreeson, founder of Netscape . . . the only person who'll give Bill Gates a good scare for his money and prevent worldwide domination." The Yellow Pages results listed themselves directly below with 50 matches. Unfortunately, the first three were for Marc Bolan, Marc Glade's Home Page and Marc Ahlfs Computer Consultant. OBT scanned for the right Marc but he was not to be found. In the same "Marc" list OBT spotted "Babes, Models and The most beautiful women on earth!" which we felt was well worth clicking. Doing so gave us Error 404, NOT FOUND Search page for Andreeson = Search Plan: marc andreeson & SavvySearch: "marc andreeson".

OBT's third test at 5:25 PM asked for "Internet Marketing" and gave us "Sorry: High Load. The load on our computer is too high to process another search right now. Wait for about 30 seconds and try your search again by pressing the reload button on your browser." We did just that and received 10 matches from InfoSeek. The #1 match was "NOT FOUND" and the #2 match was some drivel called "Postage-Due Marketing, an Internet Company White Paper", by Robert Raisch, RR's 'scholarly' treatise on spamming. Below these "matches" were 50 results from Inktomi the first of which was a commercial, the second was NOT FOUND and the third was also a commercial.

You may have better luck. Try SavvySearch for yourself http://www.cs.colostate.edu/~dreiling/smartform.html

But don't pooh pooh the search engines, regardless of perceived quality. It just doesn't matter anymore because investors are at the ready with trainloads of cash. Witness FRONTIER TECHNOLOGIES' SHIPS CYBERSEARCH 2.0; OFF-LINE SEARCH TOOL for $9.95 per month.

How about GNN's WEBCRAWLER INTERNET SEARCH SERVICE UPGRADE OFFERS ENHANCED TECHNOLOGICAL CAPABILITIES AND NEW USER INTERFACE.

Not to be outdone, INFOSEEK UNVEILS ULTRASEEK INTERNET SEARCH TECHNOLOGY.

These and many more stories pour into Home Page Press every week. To cover them all, HPP would have to launch SED, Search Engine Digest. Enough SED, in the end, we appreciate search engines, but they're all still a lot of work. Users still have to click and link and read and return for more links. There's got to be a better way. Stay tuned to OBT. In May 1996 we'll reveal the true ultimate search engine. You may never need or want another.

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EDITORIAL, OBSERVATIONS AND OPINION EDITORIAL

WHEN THE LIGHTS GO OUT IN CYBERSPACE

Despite all the yahoos on Wall Street sending truck loads of cash to the search engines kids, we have to consider the following scenario: What will happen when we try to log on one day and get the message "the Internet is down." Will Internet stocks come crashing down?

We pose this question because of the startling news from several sectors that the Internet is on the verge of collapse. Consider this latest story as a sign of things to come: Jeff Pelline of the San Francisco Chronicle reported this week that the "The Internet is in a 'disastrous state' and is impeding some high-level research for scientists at big national laboratories, a group of researchers has charged in a memo."

His story advises that the memo, complained about ``very slow'' access and ``catatonic'' connections. It was sent to the Federal Networking Council in Washington, which is a government group tasked to look into such matters.

The memo complains the Internet is experiencing "growing pains" as more and more people log on. The academics complain the network, once the domain of scientists and researchers, is becoming a mass medium.

According to the researchers: ``The postdocs and students, located at our experiments, have found access very difficult over the Internet during this last year so that their effectiveness has been much decreased. The connection is always very slow, and often becomes completely catatonic for minutes at a time."

``It is essentially impossible to log in and control execution of jobs across the network; transferring graphics information is out of the question.''

The dot.edus are not the only ones sending the warning signals. ISPs will also tell you, although not in public, that they are experiencing brownouts and partial network collapses.

Well, as Bob Metcalfe and other network gurus will tell you, networks can be almost infinitely expanded. But the real problem is supply and demand. With increasing demand comes lack of supply (of bandwidth and channels). Until the arrival of key Internet technologies, the Internet will NOT be able to keep up with demand. Even as the rate of log-ons soars the peak will not come this century.

What does this tell you:?

We have to be realistic about our high-bandwidth dreams. Internet Video and telephony will likely take a lot longer to become mainstream services. Software, riding on the Net's popularity, such as Java, will become more widely adopted and used in enterprise-wide information networks and intranets (where it will flourish). That html viewers and browsers will be more widely used on private networks and will become standard utilities (which will be freely distributed as FREE operating system resources). That the people to watch, and follow, in all this activity and publicity, are the ones watching their steps. The ones that seemingly do not have Internet strategies. In fact they have very sound ones.

So what's the point here? We have to watch that we don't get our fingers burned, and raze our houses to the ground in the same process. Bill Gates may thus be right in his prediction that the age of endless high-bandwidth supply is still 20 years hence. That in the short-term all the bandwidth we throw at the Internet will be consumed . . . we will thus be stuck with middle-bandwidth.

In this regard I would like to refer you to our updated report on the Java programming language, which will be published Monday April 22, 1996. (Visit our web site at www.hpp.com. if you want to order the publication. Our Java page (www.hpp.com/java.html goes up on Tuesday, April 23) In our report we warn our OBC subscribers to be cautiously optimistic about the application and deployment of Java in the near term. We also expose the myths about the language, and set the record straight on misleading speculation that is written about this technology.

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PUBLISHER: Karl Slatner, karls@hpp.com EDITOR-IN-CHIEF: Jeffrey R. Shapiro, jeffs@hpp.com

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