============================================================================= Seidman's Online Insider ============================================================================= Weekly Summary of Major Online Services and Internet Events ----------------------------------------------------------------------------- Vol. 3 Number 14 April 7,1996 =============================================================================  Copyright (C) 1996 Robert Seidman (robert@clark.net). All rights reserved. May be reproduced in any medium for non-commercial purposes, so long as attribution is given.   IN THIS ISSUE ============= -Notes from the Editor -More MSN on the Desktop -AOL Enterprise? Whaddabout CompuServe? -A Metamorphosis for Prodigy -Steve Case's 15 Minutes of Fame -NewsWorthy Notes -Disclaimer -Stock Watch -Subscription Info   Notes from the Editor ===================== Be sure to check out my c|net column which should run beginning sometime Monday night EDT at < http://www.cnet.com/Content/Voices/Seidman/ >. The topic is "Kicking and screaming into the information age".  Special thanks to Felix Kramer who has volunteered to edit my newsletter. Though many have volunteered such services in the past (and I thank them for their generous offers!) Kramer went a step further and actually edited last week's edition to show how he would've edited it. He passed the audition, and if all works out, I'll have to change the heading of this section to "Notes from the Publisher".  More MSN on the Desktop =======================  Several people wrote about last week's piece more or less asking why I had taken such a pro-MSN stance when MSN is not a very good online service. For my part, I agree that the proprietary MSN is nothing to stop the world over.  I understand that they had some favorable pricing for charter members and that we have no idea how many "trial" memberships are included. But hey, if AOL can include trial memberships, why shouldn't MSN? Some of you wanted to know why I was making a big deal out of MSN's march to one million since they're allegedly moving all of their content to the Web.  I got notes saying "I'm surprised you like MSN in any way at all!" I'll confess, I do. MSN is great one button Internet access. I'm not talking about the slow and slower proprietary service! When you install the version of MSN from the Plus pack or download that version and install it, an interesting thing happens. MSN writes a "Connect to the Microsoft Network" script/icon into your "Dial-up Networking" folder. If you select that instead of the MSN icon on the desktop, you make a straight PPP connection to the Internet. You don't even ever have to see that you're on MSN. No MSN welcome screen, no slow display of graphics. It's easy one-button access to the Internet, and other than the occasional -- okay, sometimes frequent-- busy signals, that seemingly are experienced many other places in Net-land, it works very well.  Some of you also wrote into say, "Hey! Microsoft DID send me a piece of diskless direct mail asking me to sign up for MSN with one month free. You're amazing!" Well, predicting that wasn't exactly like predicting who was going to be playing in the NCAA basketball tournament championship game before the tournament started. After I sent my piece last week, I considered maybe one of the reasons MSN has not marketed the service heavily is lack of a solid network to support it. There are frequent busy signals where I live during prime-time, and we all know that can be a major turnoff. While it's a major turnoff for everyone, I suspect that in some ways it's more frustrating for the new user trying to get online for the first time.  Microsoft has already asked UUNET to pick up the pace for increasing network capacity. Meanwhile, we're still wondering what role, if any, MCI will play in offering dial-up and ISDN access to the Microsoft Network.   AOL Enterprise? Whaddabout CompuServe? ======================================  Many people wrote taking me to task for not pointing out that CompuServe has had the equivalent to AOL's new Enterprise service I wrote about for many years. It's true. In fairness AOL also had such a program for a while, but until now, hasn't stoked up the PR machine and established Enterprise as a separate offering.  What CompuServe lacks is the momentum of AOL. AOL has about twice as many subscribers as CompuServe in the US and they have a much better interface. That may change when CompuServe launches the 3.0 version of their CIM software, but for now the wind is blowing in AOL's direction.  Still, I think we can expect to see both AOL and CompuServe aggressively go after the business customer for enterprise type services. Why? Because, as many people have pointed out to me recently, the consumer space is a high volume, low margin business now. The real money is in the commercial space.   A Metamorphosis for Prodigy ===========================  Last Monday, Ed Bennett, the current President of Prodigy made his way into the pages of the New York Times business section. The basis for the piece was that Bennett was considering buying Prodigy and turning it into a content machine for the Internet. The ballpark figure for the management buyout in the Times was in the $500-$700 million range.  My initial thoughts on the subject were: okay, if you strip away all the baggage and reinvent yourself as a content production company for the Net, you could have a profitable business. While not a billion dollar a year revenue generator like AOL for the foreseeable future, it could definitely make a profit. As one of my higher-ups at IBM put it, it would sort of be like a c|net.  Later, I read reports that Prodigy had engaged investment banking firm Wasserstein Perella Securities and preparing a buyout offer in the area $250 million. Wire services reports also said sources at Prodigy confirmed that layoffs were imminent in the next few weeks for about 100 of Prodigy's workforce of 650.  I'm definitely NOT speaking for IBM now. But if the reports were true and I were speaking for IBM , I'd say "no thank you" to Mr. Bennett. Then I'd fire him. Prodigy insiders have told me that officials at IBM and Sears felt that the $500M-$700M asking price quoted in the Times was high. Perhaps, but $250 million?! After IBM and Sears have reportedly collectively poured over $1 billion into Prodigy. $125 million to IBM? I'd let the company run into the ground and go ahead and lose the last $125 million out of spite, before I'd let Ed Bennett and his band of merry content producers pull that sort of fast one on me.  Buying the service for $250M may actually be a fair price -- in the real world. But we don't live in the real world. We live in a world where the market says that America Online and Netscape are worth billions and billions. Of course, much of the value put on those two companies is in terms of future growth. Sadly, nobody knows what that means for Prodigy or whether it will be worth anything or not.  In some ways the Prodigy name all by itself may be worth $250 million. A lot of the dollars poured into Prodigy were spent on establishing it as a brand name. Some of you may say, "yeah, well a lot of good THAT did!" I wouldn't argue with that notion, except for one thing: most of the people out there have never USED an online service. Every now and then I get e-mail from someone who has recently joined the online fold complaining about a horrible experience logging onto Prodigy. "I logged on and I was ready to go! But everywhere I turned, I had to spend 10 minutes downloading something. Ten minutes may not sound like much, but when it's ten minutes here and ten minutes there, it adds up!" Inevitably I ask, "Why did you pick Prodigy?" Usually the reply is, "I was familiar with the name." I believe Prodigy still has a great deal of mindshare among the masses of people who have never used an online service.  Bennett's theory is to buy the company for around $250M and then turn it into a high-tech multimedia content production company. Let's say Bennett gets his way, then what happens? Well, we can take some guesses. You have to imagine that they will SELL off all the crap that they don't need to raise some money. Then they'll strip down to a lean, mean, fighting machine, hire some programmers who can do wonders with Java and VRML, Shockwave and whatever the state-of-the-art du jour is. They'll produce a couple of sites that will leave the small audience actually equipped to view the content in its intended form utterly amazed. Then they will ramp up the PR machine. And then? Then they will do what every red-blooded, hyped-up Internet related company does -- they'll announce an initial public offering.  If I were IBM (and though I *am* an IBM employee, I am not IBM!), I'd find out if Sears is game for the $125 million. If they are, I'd give it to them. Then I'd call up Halsey Minor of c|net and I'd say, "Halsey, we'll give you Prodigy in exchange for a stake in c|net!" Some of you may be saying, "Aha! You're a sneaky one Seidman! You're a columnist for c|net." Yes, that's true, and while I won't divulge my terms with c|net, I'll tell you this much: IBM is paying me MUCH more. I'd do the deal with c|net because they have proven, at least to me, that they know what they are doing. Halsey Minor and Kevin Wendle "get it". You may think that sounds strange, but I can tell you from my own experience, that most people, even inside the industry, don't "get it".  Does Prodigy "get it"? There are some people there who do, I'm sure. If Ed Bennett can pull off his $250 million dollar buyout plan, I'll be the first in line for an "Ed gets it!" pin. But Prodigy has not done a great job during the Bennett regime when it comes to the most basic online skill: PUBLIC RELATIONS. Oh, on the human side, they're very good. Mike Darcy and Barry Kluger set me up with a face-to-face interview with Ed Bennett.  But all that really proved to me was that Ed, Barry and Mike are very nice people. Bennett is very charming, and it was clear to me, even several months ago when I met with him, that producing content was where his heart was. You can't blame him, he comes from the world of television. And let's face it, Prodigy had a malignancy by the time Bennett got there. For all practical purposes they were dying and the insurance company (in this case Sears and IBM) said, "We aren't giving you any more money for treatment!"  Brian Ek gets appointed to a position on the congressional committee to think-tank on the cyberporn issues and Prodigy does a press release. Okay, that's cool, no problem. That's good PR. But, it isn't PR that can get them much business. I'd like to tell you a little story about a couple of women I know that "produce content" for Prodigy. I set "produce content" off in quotes, because remember, Bennett's vision of a new Prodigy is based on CONTENT.  Jaclyn Easton and Spike Gillespie both write columns for Prodigy. Easton leverages her experience as an Internet shopping authority to offer insights on effective online business marketing options. Gillespie, who the USA TODAY called a " A mouthy 'macho chick' with a modem," writes for Prodigy's Avenue-W (a Women's area) and offers a weekly column which basically gives you a from-the-heart insight into her life, and a profile/Interview of a female "net celebrity."  Had Easton and Gillespie not told me about their work themselves, I'd never known about it. While the content written by Easton and Gillespie is intended for the Prodigy audience, some of it is available to anyone on the Internet via e-mail. It doesn't take a lot of money to promote this content. I ought to know! If nothing else, the content serves as a pretty good advertisement for Prodigy to those people on the Net who are not Prodigy members. It would make a lot of sense -- and cost very little -- for Prodigy to promote this content a little more to the Net at large. Peter Nemarich religiously sends out the Prodigy chat highlights on a weekly basis. It isn't as though they're doing nothing, but in my mind it is clear they're not doing all they could even on a $0 budget.  On the other hand, if someone so much as sneezes at AOL, CompuServe or yes, even c|net, I usually get a press release. In fairness, as Prodigy has dwindled they haven't done as many deals as the other services. Still, they could do a better job. In the USA TODAY report last month, it said Gillespie had almost a thousand people on her mailing list. Spike should easily have 10 times the distribution I do (around 20K) because her content has a much broader audience. While Prodigy has done a pretty good job of leveraging traditional forms of PR (and they did throw Spike a press party on Valentine's Day) they haven't done well using the Net itself as a marketing tool.  Then there's the forthcoming Stim site which is aimed at the 20-something audience. People who have seen the demo have found it impressive, but analysts fear that Prodigy may alienate the remaining core customers in the push to attract the 20-somethings. I think Prodigy is smart to emphasize content that will draw in a younger audience, but they need to find a balance. Prodigy did have an image of being the "family service" and that's an image worth working to keep. If they could build up the "hip" crowd while growing the "family service" they would be on to something. One industry insider told me that the end result so far "has been to cloud exactly what the Prodigy name means without growing the brand." The same insider also said, "As a family vehicle they are minting money. Its a big mistake to try to turn a brand into something you want it to be and not what the market demands."  That said, Stim, which was originally scheduled to launch this month, is now looking to launch somewhere between May 15 and June 15.  Can Bennett transform Prodigy into a content super-store? He just might be able to pull it off. Still, I find it hard to trust an executive who seemingly couldn't turn the company around when he comes a-calling with a bargain basement offer to buy the company. Personally, I hope IBM will just say no.   Steve Case's 15 Minutes of Fame ===============================  Several months ago I wrote a piece called Steve Case's 15 Seconds of Shame. The piece was about AOL's practice of essentially adding 15 seconds to the first minute of every sign on. I didn't like the practice then, and I don't like it now. But mostly, when I write about AOL and Case, my comments have been positive. Probably more positive than most critics. But, I have thought for the most part that they "get it" in a huge way. Steve Case more than gets it. He lives it. And the mass media are starting to understand that Case and AOL have positioned themselves as players.  First the Spencer Katt comic in PC-Week where Case has beefed up into a muscle bound Net god. This week, Case made the cover of Business Week mugging for the cameras as he was sprawled out on a mountain of AOL disks! The piece was very good and points both to the things AOL has done well and the problems it may run into in the future. It's worth a look.  *More on Case*  This weekend several people wrote in to joke about this month's letter from Steve Case to AOL members. The letter quotes Case talking about how he uses America Online. Some people wrote me basically saying "Like he really has time to do THAT!"  I don't really know Steve Case. Most of what I learn, I learn from things like the Business Week article. But at some level, I relate to Steve Case very well. There's a saying I've heard which goes "he does what he loves so he loves what he does." For myself, I probably didn't even know what that meant until a few years ago, and it probably took this newsletter to really drive the point home. While saying there are orders of magnitude of difference between my little newsletter and America Online is an understatement, at the root, it is the same for Steve Case.  Many executives talk the talk of the digital world. Steve Case lives the life he preaches. He knows his service very well. If America Online decides to create a breakfast cereal, Steve Case will eat it for breakfast.   I'm sure Case sometimes thinks, "Sheesh! This guy just won't quit!," when it comes to my sending him e-mail and instant messages. Sometimes he doesn't answer, but sometimes he does. If he thinks it is important enough to take the time to spend a minute answering my e-mail, you know he thinks using his own service is important. Besides, I've seen Steve Case online enough to have actually seen him in a chat row at a couple of AOL's Center Stage events.  I don't believe everything I hear out of AOL, but I do believe Steve Case practices what he preaches when it comes to using America Online.   *Sidebar*  The Business Week cover story, "The Online World of Steve Case", had an interesting sidebar called "We Have to be Prime Time", which is just what AOL Services Co. president Ted Leonsis said in the piece. When asked who the competition is these days, Leonsis will tell anyone who'll listen that it's Seinfeld. The piece said that on a good Thursday night, AOL gets 400,000 people logging on during prime time, while Seinfeld pulls in 20 million viewers.  "We are pathetic compared to that," Leonsis said. "But we have to get there. We have to be prime time."  I received a piece of e-mail from AOL director of communications, Susyn Conway. Conway talked about AOL's emphasis on customer service and how she felt that would position AOL well against commodity access providers and giants like AT&T and Microsoft. Being on the desktop with an icon is not enough, according to Conway.  "There's a reason customer service is the biggest body count at America Online -- with customers comes customer support. It's a heavy-duty commitment," said Conway.  "Customer-friendly is part of the code we don't expect Microsoft to crack for some time," Conway added.  AOL is still focused on making the service easier according to Conway.  "Today's online users ARE NOT click-and-browse types. Seinfeld is easy -- you just have to watch," she said.  Overall, AOL seemed very happy with the Business Week piece, but Conway to an error in their coverage.  "...we're still pathetic compared to Seinfeld, but we get over a million people on AOL in prime time, not 400,000. Over 300,000 people sign on per hour in prime time, which is 8-11 (p.m.), M-F."   NewsWorthy Notes ================ COMPUSERVE STRIKES DEAL WITH AT&T. Like AOL before it, CompuServe announced that the CompuServe online service would be made available as an option to AT&T World Net subscribers. Also like AOL before it, no details on pricing were disclosed. -- PENTHOUSE IS #1 on the Web, according to a press release from Penthouse. "Employees at IBM, Apple, AT&T, NASA and Hewlett-Packard are also among the most frequent visitors to < http://www.penthousemag.com > on the Internet, which registered a total of 2,085,520 "visits" and 54 million "hits" in one-month period, according to Nielsen-I/Pro," said the press release. -- SPEAKING OF PENTHOUSE: Once I saw the press release well, I had to, you know, check the site out. I know, I know, it's a tough job! Not surprisingly I found that Penthouse is using the "Communications Decency" legislation to its advantage. Earlier in the week when I "looked", there were no pictures in the "free" content area. Instead, I got a message telling me that if I lived in a "free" society, I would get to see the pictures, but because of the recent legislation: sorry! They've scaled that back to now cropping the pictures in such a way as to not violate the law. The "free" society bit kind of made me chuckle, especially since the nude pictures are still available on the Internet in the "pay" society. When you get right down to it, this is part of the reason I haven't given this issue more coverage. I'm still trying to figure out the difference between those who are really trying to figure things out and those who are merely exploiting the situation to their advantage. The only thing I have figured out is that I haven't figured it out yet. -- APRIL FOOLS! Well Taco Bell and AOL have something in common. Maybe it's because of Steve Case's time spent at Pepsi. Taco Bell ran ads in several major papers stating that they were buying Philadelphia's Liberty Bell and were going to re-christen it as the Taco Liberty Bell. That actually amused me. AOL on the other hand, leveraged its Welcome screen to put up a bogus "Top News" story announcing life had been discovered on Jupiter. The Top News icon linked you to a full-blown area. In the "did you know the word 'gullible' wasn't in the dictionary" department, I read numerous wire stories about people who had fallen for the hoaxes. Sheesh, it was after all, April Fools Day!   Stock Watch =========== I'm not all that excited to add the search engine services, Excite and Lycos to the fold.  This % 52 52 Week's Change Week Week Company Name Ticker Close 1 Week High Low  @Net Index IIX $223.47 1.3% $259.85 $185.76 America Online AMER $54.75 -2.2% $60.00 $16.75 Apple AAPL $24.13 -1.8% $50.94 $23.00 AT&T T $62.88 2.9% $68.88 $47.88 BBN Corporation BBN $25.13 -1.0% $48.75 $16.50 CMG Information Svcs. CMGI $33.25 -15.8% $50.25 $5.50 CyberCash Inc. CYCH $32.50 -4.4% $64.50 $24.50 Excite Inc XCIT $20.00 -- $21.25 $19.25 FTP Software FTPS $9.50 -22.4% $40.63 $9.50 H&R Block HRB $37.75 4.5% $48.88 $31.50 IBM IBM $117.75 5.8% $128.88 $83.13 Lycos Inc. LCOS $18.00 -- $29.25 $16.50 MCI MCIC $29.88 -1.2% $31.13 $19.09 Mecklermedia Corp. MECK $12.75 6.3% $24.38 $6.56 Microsoft MSFT $104.38 1.2% $109.25 $69.38 Netcom NETC $24.63 2.6% $91.50 $19.00 NetManage NETM $10.00 -8.1% $34.00 $9.38 Netscape Comm. Corp NSCP $45.63 10.0% $87.00 $22.88 News Corp. NWS $22.63 -1.6% $25.13 $18.13 Oracle Corp. ORCL $45.50 -3.5% $55.00 $28.00 PSINet Inc. PSIX $9.38 -3.2% $29.00 $8.75 Sears S $48.38 -0.8% $51.88 $25.25 Spyglass Inc. SPYG $20.88 -3.5% $61.00 $13.25 Sun Microsystems SUNW $46.13 5.4% $57.13 $16.94 UUNET Technologies UUNT $29.00 13.7% $98.75 $21.75 VocalTec LTD VOCLF $9.00 -25.0% $20.75 $8.50   Disclaimer ========== I began writing this newsletter in September 1994, at the time I was working for a technology company that is now owned by MCI. In March, I began working for International Business Machines Corporation. I speak for myself and not for IBM.   Subscription Information ======================== To subscribe to this newsletter by e-mail:  Send an e-mail message to: LISTSERV@PEACH.EASE.LSOFT.COM In the BODY of the message type:  SUBSCRIBE ONLINE-L FIRSTNAME LASTNAME  Example: Subscribe Online-L Robert Seidman  If you wish to remove yourself from this mailing list, send a message to: LISTSERV@PEACH.EASE.LSOFT.COM and in the body of the message type: SIGNOFF ONLINE-L .  A Web version of the newsletter is available at: .