Brad Templeton Home
Business on the Internet?
Is the Internet a place to do business? A number of people have been asking that question recently. After having done business on the net--effectively making our entire income from it--for four years, I think I can safely say that the answer is yes.
Our company, ClariNet Communications, is an electronic publishing firm. We live, breathe, eat and sleep the net and find it a place that allows a small company like ours to do things only big companies could do before.
Our company publishes an electronic newspaper in USENET format which is often fed over the internet. We also publish electronic books that people can buy and transfer to their own machines over that net.
My entry into the network world came long ago (in network terms) when I joined my first ARPAnet mailing list in 1979. The ARPAnet, predecessor to the Internet, was very definitely explicitly for research, but there was a business angle to those early mailing lists that were the fore-runners of electronic conferencing.
People talked, after all, about what they were doing in their jobs, and they got advice (for free) about the computers they used and the tools they needed.
My real involvement came, however, with the birth of USENET. USENET is an electronic conferencing network, and is actually something distinct from the Internet, though not all truly understand the distinction. In fact, USENET began mostly as a network carried by modems over dial-up phone lines.
Electronic conferencing (or what some call "bulletin boards" or "groupware") is really the public lifeblood of the online world. Because USENET software was free, and ubiquitous, and was quickly adapted to allow transmission of material over the internet, USENET has become the de facto method of public communication over the Internet, and most of USENET now flows over that network. Though people confuse the two, the best analogy is to say that the Internet is hardware, and USENET, E-Mail, FTP and other tools are applications that run on that hardware.
USENET is, and was a cooperative. People built it piece by piece, carrying everybody else's information so that all that was said would make it everywhere. These origins, combined with the acceptable use policies of the Arpanet and early Internet, led to a non-commercial spirit on USENET.
USENET, however, is actually an anarchy with no controlling body, and no rules. There are only conventions and practices there, and the only true principle of what's allowed is what people will tolerate.
Discussions on USENET take place in topic areas that are called newsgroups. The use of the word news for many attributes of USENET stems from the fact that one of the earliest functions of the system was to replace the software on Unix systems that presented news about the system to its users. It's still used for that today, but very quickly the primary use became not news, but open discussion.
Not too long after USENET was created, software was put in place to allow what are called moderated groups. These newsgroups are set up so that ordinary users can't post to them. All postings must come from, or be cleared through an editor or moderator. This allows the creation of edited publications and read-only newsgroups. By and large, however, the moderated newsgroups were used for controlled discussion. The moderator's often thankless job was simply to weed out the inappropriate or off-topic postings, duplicates and other bits of "noise."
In 1986, after a long history of activity on USENET, I pushed for the creation of a very heavily edited moderated newsgroup. This newsgroup, which would be devoted to comedy, would be edited by me rather than just moderated. Postings would be chosen on subjective grounds for quality, in this case my opinion of how funny they were. I would end up rejecting 95% of the material that was sent in to send back out the cream of the crop.
There already was a newsgroup devoted to comedy named ``net.jokes'' but it tended to have more comments, complaints and discussion than it did jokes. When ``net.jokes'' was renamed ``rec.humor'' in an attempt to organize the newsgroup nomenclature, the edited group's name became ``rec.humor.funny,'' a satirical comment in itself on the nature of the original unmoderated group.
The edited group was a significant success. Within a year it had shot to the top of USENET's popularity charts, and for several years it remained at #1, often by a good margin. It has since been surpassed by a few groups, notably one devoted to the discussion of sex. USENET's size as an electronic conferencing network exceeds anything in the world, with the possible exception of MiniTel. The top group on USENET is the most widely read electronic conference in the world.
This was all free in the early spirit of USENET, and done as a labour of love. Could anybody make money doing something like this?
The first thing I did to make money was publish a jokebook based on the best comedy of the year from my newsgroup. That sold mostly to people who had already read the jokes but wanted copies to give as gifts. Sales were good enough to make a profit and there are now four volumes in the series.
In 1988 I noticed the extreme popularity of the weekly syndicated column of Dave Barry. Computer people love his column and people were regularly pirating it on the net. People would often send it to me for publication, either in ignorance or defiance of copyright laws. (I didn't take them of course.) I discovered that the underground distribution mailing list had at least 2,000 readers, and perhaps many more.
At this time my firm was a software house, writing and selling packaged software -- spreadsheet enhancements and programming language tools, but I knew that communications and networking would be the next big application for computers.
I called Tribune Media Services, which syndicates the column from the Miami Herald, only to get a reaction of "You're who? You want to do what?" Nobody really understood what electronic publishing was or how it fit into their scheme.
But my thoughts were racing, and I decided to look for more ambitious sources of information, ones with a value beyond entertainment that could be used to build a real business. Examination of the online services showed a few news products drawn from wireservices and packagers. I entered negotiations with these providers and eventually decided to go with United Press International.
UPI, though now back to financial health thanks to owners with oil money, was struggling in its century-long battle with the associated press. Unlike the AP, it was willing to experiment with my concept of an electronic newspaper that would be sold to companies for a flat site-licence fee. UP to this point, electronic services bought news and allowed you to browse and search it for an hourly rate that was often astronomical. Nobody actually read their daily news on the computer. For one thing, the typical 1200 and 2400 bps modems used to talk to online services were just too slow. In addition, the tools available weren't aimed at reading, only searching.
But people on the internet like the idea of a flat rate. Attempts to talk about metered internet service are met with vehement opposition. If you want to sell on the internet, give serious consideration to flat rate pricing of your services or products.
Pricing is important, but what's essential is that the data links of the UUCP net and Internet operate in the background, without human intervention. Data just flows, and the Internet in particular gives the illusion of a permanent high speed connection.
By moving the news directly into people's computers, and then letting them read it there, with no meter running, with their own software, we could produce a news service that people actually could read on a regular basis to find out what's happening in the world. The online databases let you search yesterday's news. We can deliver news so fast that you would have on your computer today the news that would appear in tomorrow morning's paper.
That it's on your own computer, or seems to be, is very important. E-mail you have to dial up to get, like MCI Mail or Compuserve mail, just doesn't hold a candle to the utility of E-mail on your desktop computer. Like many companies today, we use E-mail for everything -- phone messages, memos and almost all our dealings with customers. It's almost too fast. We did the same thing for news.
We took the UPI feed and converted it to USENET format. This requires fancy software and did and still does require human supervision. The wireservice feeds are still meant for human editors, and there are too many problems and errors in them to let them go out unsupervised. We supplemented the wire feed with daily computer industry news from a service named Newsbytes. Newsbytes isn't as large as InfoWorld or PC Week, but their daily delivery of news is unmatched. Finally, we went to the syndicates to see if we could add features like the Dave Barry column again.
Oddly enough, things had changed. Prodigy had come on the scene spending the money of IBM and Sears left and right. Suddenly Tribune Media had an officer whose job it was to sell to electronic services. Dave Barry would come on line, as part of a much larger and more serious package.
At the time of our beginnings, the commercial status of the net was very uncertain. A preliminary acceptable use policy (AUP) for most of the net had been sketched out, and the culture of non-commercialism was still rampant, so most people were frightened of the idea of doing business over such a network.
What they missed was that even the government agencies who financed the network never intended it to be a commune. Indeed, one of the principal founding purposes of such networks was to provide people with access to supercomputers, which they would pay for time on.
The key of course was that the network was not non-commercial. It was for education and research. Commerce in the support of education and research was part of the purpose of the network. The network was built to give that community easier and better access to the information and services they need -- and it was never meant to matter whether they paid for those services or not.
A primary educational use of the network is getting access to useful information. Getting a newspaper or computer magazine over the net for use in education or research is one of the things the net was built for, and nobody expected all these publications to be free.
As such we could sell to schools and research labs, and feed them over the net, and that gave us a hook to sell to other sites, both on and off the net. Once the data made its way over the net for a net-approved purpose, those making rules for the net had no concern about what other trips it took. We arranged to have our research and educational customers provide feeds to other local sites in exchange for the discounts we offered them. This was minimal work for them -- it's all a natural part of the USENET software.
We also fed customers via the phone lines (via UUCP) or arranged with companies like UUNET and PSI, which do that as their business, to have it done. Invoices and billing notes were sent by old-style channels until the AUPs began to vanish.
And so we grew, and the net changed. Some regional networks threw away use policies, and the Commercial Internet Exchange (CIX) appeared to provide content-unrestricted network gateways. Today more and more regionals have done this, and ANS, the company which provides the NSFNet backbone (which still has an AUP) also sells the right to move commercial traffic over the same pipes.
As such, the foundations of the non-commercial internet are vanishing, if they ever were there. In fact, what we really had were rules on the type of business one could conduct, not rules forbidding business.
Some of course, never understood this, and reacted knee-jerk to any idea of commerce over networks founded on cooperation. The net has been called an information highway. They seem to feel it should be illegal to drive trucks on it.
Selling to the network community has not been a party, though. The non-commercial culture is still there, and one has to learn to work with it, rather than against it. To go with the flow and develop natural extensions rather than things that run at cross purposes. When we created our electronic newspaper, we used the standards developed for USENET, but made our own independent newsgroups under our control. Our newspaper looks like USENET but it is not USENET.
We promoted it on the net too, but very carefully. As a longtime net citizen (or USENAUT) I knew what would and would not be tolerated. Most of our promotions consisted of free samples of our news. Such samples bring publicity, but they are also something of value given as a gift to the net in exchange for that publicity. People don't mind that, because the standard of what is tolerated is what the readers like.
Those who attempt to publish traditional advertising on the net--with hype and marketing buzzwords and no real information--often get shouted down or gain negative publicity for their efforts. Promotion on the net is something that must be done with care and with a good knowledge of the principles and history of the community.
Business on the net must be seen as helpful and contributing. While a few will make noise about even that, most people welcome truly useful services and products. If one is seen as simply exploiting the net as a marketing tool rather than helping it, the publicity tends to be negative.
Of course, that's a good rule for business everywhere, particularly business marketing to a new sophisticated customer community. And while it may work in the old world, you can't fool your customers in the network world. They talk to each other. Boy do they talk. Your problems will be brought up for all to see, and you need to be prepared to fix them and give good customer service. A seriously annoyed customer doesn't go away and fume -- he or she tells all your other customers. This can be a new and challenging way to do business, but in the end it's good for both the company and the customer.
Most of our customers today use the internet to get our electronic information products. That's no surprise, for the internet really is the right answer. What it has going for it is the illusion of permanent connectivity. The illusion, if you will, that something far away is right there on your computer. The net allows you to provide services like that in a way that you can't with other media.
It also allows you to put things on other people's computers without their presence, if they grant permission. And that's how we deliver our electronic products. If you have to go out and get something it's not as useful as if it comes to you, or seems to come to you.
The newspaper business, of course, is really the shipping of data. But in the end, it's inherently wrong to ship data in trucks; yet that's what newspapers, magazines, book publishers and even CD-Rom publishers do today. Ship data in trucks.
There used to be a maxim, "never underestimate the bandwidth of a station wagon full of mag tapes." That's still true, but people laugh at it because they know it's not the right way in the end. Once you send data out in a truck you can't change it.
Newspapers already see themselves losing a battle to Radio and TV. TV has moving pictures, but it also has an immediacy and currency that newspapers can't have. An electronic newspaper lets people have the depth of reporting that newspapers have taken as their niche in combination with the speed of the electronic media.
Some day, video, print and photo delivery will merge in what people are calling multimedia, and the print and TV news industries will similarly merge. (Radio will always exist for there will always be times when you want information but your eyes and hands aren't free.) This newspaper of the future will have the best of all worlds: speed, video, photos, in-depth text and a bit of audio. Best of all, though, it will have two things we don't see today -- customization and links.
Links will change the face of the media. Imagine you're reading a story about the firing of a government official by the President of the USA. You'll read that story and a menu will pop up. On the menu, you can ask to see ABC's coverage or CNN's in video. You can read the story from the AP or UPI or the Washington Post.
But you can do more. The White House press release will be there on the menu, and so will any release from the person who was fired, and those who were close who wanted to add a comment. You'll be able to follow that into discussion by your colleagues on the matter, or by people in other walks of life.
The media will still write the news, but they will not block it, for the real story will always be there if anybody wants to say it. Accuracy in media will be improved, and rebuttal will always be available.
We don't do this today. Today our goal has been to provide people with news they can use, and as such that means providing it in a format they can work with easily. So many companies already have USENET software in place that in most cases we can get a customer up and reading in just a few minutes, which is good for us and good for the subscriber.
New software tools and new mechanisms for reading news will require learning curves and as such will not take the world by storm at first. But they will. Today's tools are not that bad. We group the news into 200 categories, so people can select the priorities and topics they are interested in. Each time they go to read the news, they see what is new since the last time they read in the categories of interest. They get menus of headlines which they can easily pick and choose from. Stories are linked together with their sidebars, though we have no links to material from outside the media at present.
We're also moving into multimedia, and plan to add photos to the service as well. Due to the poor quality of newsprint, our photos should look superior to what you see in the newspaper, even at the low resolution of typical computer displays.
We're also moving into electronic books. We recently published the largest Science Fiction anthology in history -- a complete collection of all the nominees for this year's Hugo award, along with the short fiction Nebula award nominees. These are the two top professional awards of this genre of literature. What was really exciting was the fact that we published this anthology in electronic form during the voting, so that voters could access all the works together before making their decision. This has never happened before.
Imagine a videotape with all the Oscar nominees on it, coming out just after the nominations. This is what we did for Science Fiction.
We made these works available on the net via FTP, via modem and on a CD-ROM. In spite of my own feelings of shipping data in trucks, the CD-ROM is outselling the online versions considerably. It is probably too early for online books, but when the time comes we have some very interesting ideas in that area as well.
The network version has some real advantages, which makes this a shame. Any time we find a problem, we fix it and the next customer doesn't encounter it. Try that with CD-ROMs. Mind you, CD-ROMs still are superior for high-bandwidth material such as video. We included videos of some authors introducing their books on the CD-ROM.
It's also essential that we do so much business over the network. Customers E-mail us and we often respond within minutes. We can set up a customer with a trial feed in under an hour in most cases. The net lets us provide a level of customer service that would be impossible by other means -- or much more expensive. And customer service is a key element of the information business.
On the other hand, once customers come to expect this, it can be a drawback. In the days of paper mail, delaying an answer a day was never a problem. Today if a person is away, angry notes can ensue due to queries not answered in a few hours. The world has not yet worked out the rules that govern conduct and expectations in a community so connected.
But it will, and every day more and more of us will taking doing business
in the network world for granted. The culture and structure of the
network world is something to be understood if you wish to do business
on the net, but not feared or avoided. It is a new culture of sorts, but
one of educated and intelligent participants, a brave new world for business
perhaps -- but of the best sort.