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[RRE]online bookselling: another view
``` [Let me put the great Amazon.com debate to bed with a couple more responses to comments. One respected technology-and-policy person wrote to say that Amazon's real barrier to entry is its ability to use accumulated information on an individual's purchases to recommend new books. She explained:
As Internet users ramp up they get information overload. What they will want, more than anything, is filtering. Amazon provides filtering, that is the core of its customer buying pattern analysis. You don't have to troll around -- you get bestsellers and publications in your interest. But this makes it sounds as if Amazon were the one island of order in a chaotic world. Another view is that the Internet is one big filter. People join the mailing lists that suit them, their friends forward them relevant stuff, they look at the online publications they find useful, read the critics whose opinions they agree with, and so on. The question, then, is not whether people want filtering, but whether Amazon's extra increment of filtering will justify enough of a premium to support their excessive overhead and justify their enormous stock price. Another view is that Amazon is like an old-fashioned stock broker that both provides investment advice and executes trades. But those stock brokers are on the way down, both because of the much wider range of alternative information sources for investors and because of the same conflict of interest that has gotten Amazon into trouble in recent weeks. Yet another view is that Amazon is trying through diversification to become the merchant equivalent of a portal, whose value lies not in the price of its offerings but the certain knowledge they they have whatever you want. This is a more plausible strategy than competing purely as a bookseller. Still, it's a strategy that depends on consumers to be relatively ignorant of their options. As such, it expresses little faith in the ability of the Internet as a whole to connect people to the information they need. I guess we'll have to see about that. Final note: we've been seeing a proliferation of mechanisms that prowl around through different online stores, automaticatically comparing prices. As far as I know, those mechanisms have only operated in response to a specific query from an individual consumer. The next step is for an online publication to write a dozen lines of Perl that runs such a mechanism every night with a shifting "market basket" of products, with the price rankings both on individual products and overall to be published automatically as a nicely formatted Web page or message to subscribers in the morning.]
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Date: Sun, 28 Feb 1999 22:18:49 MST
From: "Seidman's Online Insider"
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Seidman's Online Insider - Vol. 6, Issue 3 < http://www.onlineinsider.com >
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Copyright (C) 1999 Robert Seidman. All rights reserved. May be reproduced in any medium for noncommercial purposes as long as attribution is given.
IN THIS ISSUE:
Barnes and Noble: Scrambling
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If I am Barnes and Noble, I'm asking myself what do I need to do!!??. Let's have a look at Barnes and Nobles' online presence. It reported fourth quarter revenues for its online endeavors of $31.1 million, boasting a 288% increase over the same period from last year. It also boasted Media Metrix ranking it the fourth largest shopping site. That's an interesting but altogether meaningless statistic. Let's face it, Barnes and Noble got the tar kicked out of it when you consider that Amazon had $245 million worth of revenues during the same period. I'm not picking on Barnes and Noble, the company reported record earnings overall, but the Internet business isn't setting the world on fire and Amazon is definitely starting to eat into Barnes and Nobles off-line business.
In a growing e-commerce market, even though Amazon had a good online lead on Barnes and Noble, it wasn't unthinkable that Barnes and Noble would begin to close the gap between it and Amazon. That's not happening. Not even an online exclusive with AOL seems to be helping much. In fact, despite the fact that Barnes and Noble is paying AOL around $10 million a year to be its exclusive bookseller on the proprietary AOL service (Amazon is the bookseller promoted on AOL.com) it would appear that more users of AOL's proprietary service are using Amazon to buy books! I'm extrapolating given the size of AOL compared to the overall Internet base of users and the disparity in revenue between Barnes and Noble and Amazon.
Here are a few things I would do if I were Barnes and Noble:
1. Change the URL to something else. Barnesandnoble.com is too long and too confusing (is it nobel or noble -- most uv us doughn't spell thaght whel)
2. Do a better deal with AOL. Do something, give AOL a stake in the company, whatever, to promote Barnes and Noble everywhere! The online exclusive obviously isn't enough (longer term, I think that is also a big problem for AOL).
3. Put massive energy into promoting barnesandnoble.com (or preferably a new, shorter, easier URL) in the Barnes and Noble stores. Give customers a reason to remember. Discount certificates, whatever, just get them there, and get them there quick. Your customers are IN YOUR STORES, promote the web BIGTIME there! Don't think of the brick and mortar and online based businesses as separate entities. Work to let one feed off the other (i.e., you go to the web and there's a book signing at YOUR local Barnes and Noble, promote it on the Web -- if you're going to have an online chat with Stephen King, promote it IN the stores). Think of it as one big business not separate businesses. Barnes and Noble does have a big advantage over Amazon because of the brick and mortar -- start to use it! Hey Borders -- YOU TOO.
4. Spend a LOT of money promoting the new URL! It's a big part of future of your business, and you know it.
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The Return of CompuServe?
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As predicted last year, the latest release of CompuServe dubbed CompuServe 2000 is a hybrid of the America Online software and the "C from CompuServe" web-based service that launched late in 1997 and then was scuttled when AOL acquired CompuServe.
With the exception of the wrapper (the proprietary AOL "shell"), electronic mail, and Instant Messaging and the "top menu bar" navigation, everything else seems to be web-based. The instant messaging ties into what AOL has already with its own instant messaging and the internet-based AOL Instant Messenger (AIM). This is problematic because the address/name space is the same space used for AOL and AIM, which means there are pretty much no creative names left for the CompuServe 2000 service!
Overall, I found the service somewhat disappointing. The web-based portions ARE nicely done, but the simplicity, integration -- the overall ease of use is not as good as it is with AOL. I understand it is trying to go for a different brand play, but think it can and will ultimately do this by more fully using the AOL-style online service. I think this is just an incremental step in that direction.
An example of this is online chat -- which instead of happening in the AOL-style chat rooms, happens on the web. Unfortunately, in order to begin using it or the message boards, you need to download the 1.4Mb Virtual Key software that authenticates you for the Web. I whined about this with the "C" service, where the same dilemma existed -- but then it was more understandable. It was totally a web-based service. Here, it's inexcusable that the installation of the CompuServe 2000 software doesn't: a.) come with the software and b.) install it during the installation process.
If the goal is commerce and advertising revenue, the straight AOL approach will work better. Judging from the current offering on CompuServe there are very few things differentiating CompuServe from the type of information you can get on AOL (there are some things like better research, but there's no reason AOL couldn't add that).
At this point, I question whether it's truly worth spending a bundle to market the new service and I stick with my original connection that AOL will wind up making CompuServe a branded offering via the AOL service. There is ultimately no reason it couldn't add all the CompuServe stuff to AOL, giving everyone access to both then market the same service under 2 different brands if that's what it wants to do. I think the bigger push with CompuServe 2000 will be to push existing CompuServe subscribers to CompuServe 2000. An especially difficult proposition as the e-mail names from existing CompuServe accounts don't port to the new service and AOL's e-mail client isn't exactly a step up. If CompuServe customers are a different breed, they are a different breed that probably doesn't want AOL's e-mail client. It's clear AOL will try to push this on the existing users and then retire the existing stuff. This is what AOL said it wouldn't do, but bet on it. It will enable AOL to leverage its own infrastructure and the web, which is a lot cheaper than maintaining CompuServe's old infrastructure too.
DSL: WOW!
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I went through two DSL installs recently, one for myself and one for a friend. Both installs were somewhat painful, though one was only painful because it took so long. But in both cases, whatever the pain, the end result was worthwhile. In both instances Pacific Bell's low-end DSL residential service was installed ($49 a month for guaranteed 384Kbps service with up to 1.5Mbps depending on how far you are from the phone company's central office -- including ISP access) and in both cases we must be pretty close to the central office. I just downloaded the 10 Meg updated for McAffee's anti-virus software and was getting sustained download rate of 148Kbps! The upload rate is limited to 128Kbps with the low-end service.
A couple of observations... When I got home Friday night my DSL data connection was down (though it didn't affect my voice line). I called the repair line and they said that there was a problem with the "d-slam" and that it had been out since the afternoon and would be fixed by morning. And indeed it was fixed by morning, but the thing is on my main machine, I no longer have a modem hooked up. So I was down for the evening. Don't get me wrong, it's not like I don't have about 10 modems of varying speeds lying around the home office, but I wasn't in the mood to open up my machine. When I think about the upcoming Bell Atlantic/AOL DSL offering, I think okay, AOL customers who sign up for the service will really like it, but when outages occur, even brief ones, it's going to be ugly in AOL's service centers.
Observation number two: while the speed increase, even over ISDN is MAJOR, basically when all conditions are good, it makes the Internet work the way you always thought it should. So it is evolutionary rather than revolutionary from that end and you get used to the speed rather quickly. The "always on" aspect is nice. Even though ISDN connected rather quickly, this is even faster. You want information? You've got it, more or less immediately and will definitely be more prone to use the Internet.
Observation #3, cable access will never get my business now. I think @Home has lost every single early adopter and beyond in San Francisco as it looks like it may be a couple of years before @Home is here, while there is already very good DSL coverage in San Francisco. I can't think of any reason I will switch to @Home when it becomes available. Everyone I know who is on @Home isn't getting the bandwidth I'm getting with DSL. Even if @Home comes offering cheap, cheap, cheap services, the phone companies will lower rates to compete. Bummer for @Home...
Observation #4 -- Yahoo! is AMAZING. Built with speed in mind, you really get an idea of what a truly phenomenal job Yahoo! has done when you have a 1.5Mbps connection. Yahoo! must cache almost its entire site in RAM. It's really impressive. I'm not making this up, the pages load quicker than I could bring them up from MY OWN HARD DRIVE. It is very impressive. Excite is no snail at 1.5Mbps either, but it's no Yahoo! There is a perceptible difference. It makes me wonder if the high-speed portal service being designed by Snap! (Cyclone) will be worthwhile. But now that I have the bandwidth I confess I'd like to see more sites that take advantage of it.
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I have my own "home network" of three machines. It sometimes seems ridiculous to have it in many ways, as all three of them are in the SAME ROOM. Hey, my apartment is small, what can I tell you? Why 3 machines? Well, I upgraded to a Pentium II 450 last year (an outstanding machine!), but it didn't make sense to get rid of the old Pentium II 266, so I use it as something of a server. One of these days I'll get around to putting Linux on it. Then there's the new laptop I bought in January, a 2.9 pound Sony VAIO -- I'm very happy with it. And I can access the DSL connection off all three of them.
There were a couple of ways to achieve this, but I went with a program called Sygate < www.sygate.com >. It allows you to configure one machine as a "server" and then seamlessly access the connection (it will work for dial-up or ISDN too, assuming your machines are all networked together). Even though all the machines are in the same room, there are some benefits, especially with the laptop. I can keep my mail file on the laptop, and access it with the client software on the 450Mhz desktop machine. Then when I'm on the road, I always have the most recent version of my e-mail, without having to move files around.
Revisiting MP3
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Now that DSL is installed I have over 500 MP3s! Before any record company executives start freaking out I made most of them myself. Though I did download quite a few after the DSL got installed, it was all stuff I actually had bought anyway.
I've definitely got the MP3 bug in a big way though. I finally broke down and bought the Diamond Multimedia Rio player < http://www.diamondmm.com/products/current/rio.cfm>. A little pricey still at around $200, but I expect there will be new versions/price cuts coming soon. The fidelity is excellent and it's tiny (VERY portable). My only complaints have to do with memory and volume. While it claims 60 minutes of music, it only has 32MB of memory. Though you could record MP3s with lower fidelity, the standard close to CD quality 128KBIT/second will only provide about 30 minutes of music or around 8 songs (unless it's older stuff where the songs are between 2-3 minutes). You can buy additional memory, but hopefully memory prices will fall more and you'll see more memory in future versions. I think an hour standard with an additional hour back-up memory card would be more optimal (about 32 songs in total). My other complaint is that sometimes I like to listen to music really loud, and while some MP3s can get loud enough for me, others are somewhat lacking. This doesn't happen on my PC where I can crank the volume to taste.
That said, I'm very happy with it. So happy I went to the local Radio Shack and got one of those converters that hook up to the portable CD players and plug into your car cassette player, allowing you to play music from the Rio via your car stereo. It worked beautifully.
Rumor Mill: AT&T and AOL to Wed?
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Business Week, The Wall Street Journal and CNBC are spreading the rumor that AOL and AT&T are in merger talks.
I don't see it. Oh sure, it would be one heckuva merger, no question. And I could see where both companies would benefit big-time. But I don't see it for a few reasons.
First, though AT&T does have a substantially bigger market capitalization than AOL (roughly $148 billion to AOL's $83 billion), it wouldn't seem likely. What premium would AT&T have to pay for AOL? Would AT&T want to do it on the heels of its $57 billion acquisition of TCI? Perhaps.
But AOL seems firmly in bed with MCI Worldcom and I'd be surprised to see AOL head Steve Case dis his billionaire boys club buddy John Sidgemore at WorldCom.
Moreover, as several people have pointed out to me, the regulators would very carefully scrutinize this one, and there would be a good case for such a merger being anti-competitive. Stay tuned...
Prodigy: Finally a Winner?
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Wow, Prodigy and CompuServe in the same newsletter. Not just AOL! Everyone happy now?
Prodigy's initial public offering took advantage of the current Internet frenzy resulting in a market cap as of last Friday of around $2.3 Billion. For a piddly after-run, after-thought, shadow-of-its-former-self online service. RIDICULOUS!!!! I don't see any upside for Prodigy other than the stock itself. I believe in the potential for Mindspring, Earthlink and Verio -- even AT&T WorldNet and MSN more than Prodigy!
Prodigy is down to 671,000 accounts as of December 31- 505K Prodigy ISP and 166K Prodigy Classic, which is being scuttled for what Prodigy claims are Y2K concerns (this may be legitimate, heck I wouldn't want to pay to remediate for a service with only around 150K subs). According to the prospectus amendment, Prodigy actually increased billable accounts by a whopping 58,000 during 1998. For purposes of comparison AOL probably added that many in the time it took me to write this newsletter. Anyway, Prodigy must've had a boatload of non-billable accounts as it claimed (to me) around 850K total in January 98 (500K Classic and 350K Internet). Most of the growth in Prodigy Internet apparently came from Prodigy Classic converts.
The big winners here may be IBM and Sears who each have mega-million stakes plus warrants to buy more shares and will finally recoup some of the losses for the service the partners sold in 1996.
Speaking of IBM...
Revisiting IBM's Web Site
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Last May I slammed IBM pretty hard for the site redesign it put up, which from my point of view made it a lot harder to find anything. Oh sure, it was cool and used the latest and greatest technology. It just didn't achieve the goal of allowing its audience to quickly and easily find information.
So here we are 10 months or so later and IBM has redesigned its site again. I think it must've heard a ton of customer complaints about the site and I applaud IBM for listening. The site is MUCH, MUCH, MUCH better. The new site is a lot quicker, and it's a lot easier to find what you're looking for.
About the only major complaint I have is that on its new home page at www.ibm.com, the text is blue on a different shade of blue. I know IBM is big blue and all, but this is kind of a stretch. Again, it is going for a cool look, but it has apparently not yet learned the lessons Yahoo! has taught the Internet -- FUNCTION over form. I know people will say, "brand image is everything!" Okay, does Yahoo! have a bad brand? I rest my case. The bottom line is that the blue-on-blue will be hard for some people to read. But the improvement is so vast and this particular complaint is so easy to change, I won't get too hung up on it.
My other complaint is more about how the Web site is used than the design itself. Unlike last May, I can now easily find the ThinkPad section without using the search feature. But I think IBM needs an executive editor or something for the whole site that helps IBM leverage the web and how people use things and think. Though it is easy to get to the ThinkPad page, it's still a little too cutesy and has gratuitous graphic rollovers. When you get to the ThinkPad page and put the mouse pointer over the "Road Trip" graphic of a tire -- I am not making this up -- the graphic changes to something that indicates the model number 560, and says "think.ultraportable" (sadly I am not making this up either). But that's a style preference -- though I do worry some people may not be able to find what they are looking for, for the most part, I didn't find the metaphors too confusing.
What upset me was this: when I "think.ultraportable" I.think.how.much.does.it.friggin.weigh? And here's where an editor comes in handy. A good editor would know that one of the first things you want to point out with the portables is HOW MUCH THEY WEIGH! But NOOOOoooOOoo. Not on IBM's web site. On IBM's web site, once I click on the "product details" section of the tire, the first set of info for the 560 doesn't discuss weight. I click "more details", it's still not there. Then I click "find out more about this model", and when I scroll way, way, way down (or is that weigh, weigh, weigh down) in the dimension specifications there is the weight of 4.2 pounds. That's a lot to go through.
Some of you may be thinking, "C'mon, that's a nit! You're just a disgruntled ex-IBMer!" Au contraire! I love IBM. I left on good terms and I think it is a GREAT, GREAT, GREAT company. And others of you may be thinking, "C'mon Robert, your web site isn't that great either!" True, but the main purpose of my web site is to be able to read the newsletter there, if that's your preference, and I can promise you, you won't have any trouble finding it there. Also let's consider the fact that I AM NOT TRYING TO MAKE ANY money from my web site. If I were, I'd call my pal Mark Hurst and write him a check to redesign my site.
Speaking of Mark, while I am no longer in the Good Reports business (www.goodreports.com), Mark has revised the report "In Search of E-Commerce" and is now selling it for $600. It got a recommendation from none other than ease-of-use guru Jakob Nielsen who said in a recent AlertBox < http://www.useit.com/alertbox/990207.html >:
"Unfortunately this report is rather expensive (editor's note: if you use discount code "Seidman", the price is reduced to $500) so I can only recommend it for people who are in fact responsible for e-commerce sites. But such readers will easily save at least a week's work in collecting usability information about specific design elements that work and don't work when doing commerce on the Web."
IBM is eBusiness this and eWhatever that. IBM is positioning itself as THE leader in this space and as such it really has to raise its own bar. But the recent redesign is certainly a step in the right direction.
Musings
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FREE PC? idealab launched the web site offering users the opportunity to apply for a FREE PC. You get a 333Mhz processor, 32MB of RAM, a 33.6 modem, a 4GB hard drive (although only 2GB are available to the user), CD ROM, Win 98, 15" monitor, and speakers. FREE.
Sounds like a good deal, and FREE usually is. The catch? Advertising, of course. The perimeter of the 1024x768 desktop is taken up by Free PC to showcase ads (effectively leaving the user with 800x600 of desktop). It also throws in free Internet access and e-mail into the deal.
Free PC is currently reviewing the hundreds of thousands of applications it received to pick 10,000 to try the service out. Now it boggles my mind here because who are they going to pick? They are going to pick the people with the most money. People who a.) already HAVE a PC, and could afford to upgrade on their own but are too cheap...err thrifty. If I'm an advertiser, that's kind of a tainted base.
The other thing ridiculous about this is that:
Assuming that it comes with the Win98 CD, it's going to be pretty easy to get rid of all that advertising. The worst case is you reformat the hard drives and reinstall Win98 clean. They may have some blocks to prevent this, but ultimately, I'll be surprised if it can stop this.
That said, I don't think the Free PC concept is a bad one. It's day will indeed come. We're already seeing ISPs offering similar PCs in return for long-term agreements. But it's still ahead of its time.
There's no real money in this yet -- unless perhaps you're a brokerage company or bank and offer a free PC in return for a sizable deposit, or an airline trying to get your agents/bigger customers to use the web. When there is finally something to this, you can bet that it will be AOL, and not idealabs that is the leading distributor of free PCs!
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