Copyright © 1995 Robert Seidman (robert@clark.net). All rights reserved. May be reproduced in any medium for non-commercial purposes.
In This Issue...
Well, big news from MCI this week-a lot of good stuff is going on for them, even if they are cutting up to 3,000 jobs. But, there is still no word on any combined effort between MCI and NewsCorp. An inside source tells me to fear not, "the obvious isn't lost" on MCI and News Corp.
Prodigy didn't announce a reorganization this week, but sources there say that the reorg is still on. Prodigy did announce on Thursday that Iris Burkat had been named to the new position of VP and general manager, financial services. Also in the Prodigy rumor mill-rumors that the move of Prodigy's office from White Plains to NYC had been called off were labeled as incorrect. They did say, however, that they were scaling back the move to 50 or so people initially.
Mr. Bennett decided that a full move would be disruptive at this point in time.. No kidding! But we'll cut Mr. Bennett some slack since he was still very new at the time he made the original announcement-though, we didn't cut him much slack at the time...Ah, what the heck, if Mr. Bennett can't find a way to speed up the New Prodigy interface, the move may become moot. At this point it's pretty clear that the speed performance has nothing to do with caching.
Last week, I wrote about AOL's billing practices as brought up in a law suit by Palo Alto attorney, Stephen Hagen. In the piece, I theorized that the problem was that a couple of years ago, America Online began adding a 15 second fluff factor to ensure that they could bill for the first minute. At some point prior to two years ago, members could sign on for a brief period of time and sign right back off without being billed. The problem for AOL is that they are being billed by their network providers for that time. In this month's letter to the subscribers from Steve Case, he validated the "15 second fluff" theory:
"Your session begins when the local modem connection is first made. The elapsed time from the moment the connection is made to the moment the "welcome" screen appears, and from the moment you "sign off" to the moment the connection is broken, is about 15 seconds."
Well, it isn't exactly wrong. I appreciate that Mr. Case at least has come clean with this much. But, it isn't exactly right either.
At one point, it probably was 15 seconds. In some instances, 15 seconds may still be the right number, but it definitely isn't the right number for all instances.
In quick testing with Windows AOL 2.5, the time it took between logging on, "checking password" and hitting the "Welcome"screen ranged from 1-8 seconds depending on the network used, and the type of connection. Adding in the time that it takes between signing off to the AOL "Goodbye", the total "network" time ranged from 2-10 seconds. Now, I will admit, that 10 seconds isn't all that far from 15 seconds and it is really just a matter of degrees. But remember, sometimes it is 2 seconds.
Mr. Case also admits that they round up to the next minute, a very common telecommunications practice. It is. Even though Prodigy doesn't do it, and even though it appears that CompuServe rounds up only after 30 seconds. While AOL _is_ a telecommunications company, their competition is not the long distance service companies, it's CompuServe, Prodigy and the up and coming services. But, here, the customers should decide. I think AOL is a better service today than either CompuServe or Prodigy and the 15 seconds of overhead for network time doesn't affect most users as most don't go over their allotted 5 hours of "free" time. For those people, the 15 seconds is not an issue.
Consider this though-via a TCP/IP connection, the elapsed "network"time between signon and welcome, and signoff and goodbye is about 2 seconds. Which, in seconds, is not all that close to 15. According to Steve Case, TCP/IP logons make up less than %1 of the accesses to AOL. I can buy that, but it doesn't appear that 15 seconds is the typical "network time" and since AOL doesn't pay time charges for AOLNet, and TCP/IP accesses, the 15 seconds is irrelevant as the charges AOL incurs for those networks are fixed. AOL doesn't pay for those networks on a "time"basis.
Whether the customers should actually pay for the time of the connection will probably be a subject of much debate. If I call someone long distance in this day and age, I don't pay for the call if it rings 5 times and nobody answers, but I used the network.
Steve Case can't have it both ways. If he wants to be able to round up to the next minute because that is a common telecommunications practice, then he should stick with the rest of the common telecommunications practices and only bill customers from "Welcome" to "Good-bye".
If the only thing AOL can do to ensure that they don't lose in the deal is to tack on a some number of seconds of overhead, 15 seconds isn't the right number. It seems to me that if someone loses, it should be AOL and not the customers who are affected by this.
But don't throw around that 3 million AOL customers are being ripped off. At least 66% of those 3 million never use their 5 "free hours", and it's probably closer to %75. Of the percentage who go over 5 hours, heavy connectors are the most at risk, not heavy users. Users who connect 10 times a day for brief sessions have more exposure to the problem than users who log on once per day for an hour.
In his monthly letter, Case also said that AOL is evaluating methods to accurately inform you of what you'll actually be billed on the "Good-bye" screen. But accurately displaying what a customer will be billed is not the same thing as billing a customer accurately.
If Mr. Case wants to bill his customers for the network time AOL is charged, he'll have to figure out a way to charge for that accurately. He still has to answer to that, even if it only affects a small percentage of AOL's customers.
In what is no surprise to anyone following the industry, CompuServe made its move to stay competitive with AOL and to battle the forthcoming Microsoft Network. In the process, CompuServe also announced that it would be launching a new online service in '96, that will be separate from the CompuServe Information Service (CIS). CompuServe is also beefing up its customer service staff and coming out with a new interface for CIS. To facilitate these moves, CompuServe's parent company, H&R Block, is putting over $70 million into CompuServe.
CompuServe has gone the AOL route like Prodigy before it. Effective September 10th, CompuServe will do away with its pricey $4.80/hr. surcharge for "extended" services, and introduce a billing plan that is $9.95/mo. for five "free" hours and $2.95/hr. afterwards. Sound familiar? CompuServe has gone a step further though, with a deal for power users offering 20 hours for $24.95, with additional hours billed at $1.95/hr. Note: This months letter from Steve Case confirms the rumor reported here two weeks ago stating that AOL was testing volume plans.
CompuServe is now playing catch-up. Many of us were already predicting that CIS would announce another rate drop prior to the launch of the Microsoft Network.
Finally, I can no longer complain about CompuServe's high dollar pricing for extended services. However, I'll no longer be able to praise CompuServe for its "Basic" service pricing, which will go the way of the wind. However, in light of America Online's success and experience in the past with Basic/Plus pricing, it would seem clear that basic services aren't what customers want.
"Not that many of our customers are using CIS to read unlimited news in the Basic area," said CompuServe spokesperson, Michelle Moran. Ms. Moran said feedback from its subscribers overwhelmingly was in favor of lower pricing for extended services. Ms. Moran also said members often complained that the charges for e-mail were too confusing.
CompuServe users who liked the Basic pricing structure may be complaining loudly (and they are), but CompuServe had to make the smart business decision. Delphi will experience a similar phenomena if it decides to do away with the text based service totally, in favor of the "Netscape" service currently in testing. The 100,000 or so remaining Delphi members won't be happy if that happens, but, the success of the GUI based services is hard to argue with.
Speaking of GUI's, there will be one more revision to the current "CIM", and beta testing for the 2.0 version of its WinCIM will begin on Monday. But 2.0 is just an interim measure that was already in place that will offer some enhanced features. The big news is the 3.0 version, which will be standardized for all platforms (Windows, Mac, OS/2). CompuServe expects to launch 3.0 "later this fall". Version 3.0 will be completely redesigned and sport a whole new look and feel. Among other things, 3.0 will offer improved navigational control and tighter integration of Web services. Ms. Moran stated that extensive usability and design testing was done for version 3.0.
"It is a completely different way to navigate the system,"said Ms. Moran of the 3.0 version which will offer "integrated and seamless access" to CompuServe and Internet content.
While the pricing and interface announcements weren't a big surprise, the launch of a new and separate service code-named, "Wow!"(at least for now, perhaps it will become Wow! '96) is somewhat surprising.
Wow! will be aimed at novices and people who just don't care about computers all that much. According to Ms. Moran, the new service will offer the "breadth of CIS, but not the depth."
"What WOW! will do is make it super easy to get at the information,"said Moran, adding that "the users will be spoon-fed the information that they want."
I asked Ms. Moran if WOW! would compete with the same market as CIS.
"We don't believe WOW! will target the same market as CIS users-there's a whole market that nobody has catered to,"said Moran, adding that they felt the market aimed towards novices and casual users is very big.
The In, Around and Online jury is still out on WOW!, but we'll wait and see. Even if they miss their launch date, the jury in this trial will probably reach its verdict before the O.J. case is decided.
It would also appear that WOW! will be aimed at families. Content on WOW will be coded in some format (a la G, PG-13, R, etc.) and parents will be able to control access for individual users based on the rating system.
Look for WOW! sometime in '96. It is scheduled to make its first demo appearance at Fall COMDEX in Las Vegas this November.
Well, I was going to do this big follow-up piece on how hyped the Web numbers that are appearing in the traditional media are, but I ran into a small snag. Nobody would quote the specific numbers I asked for on the record.
I spoke with representatives from several of the "Top 10"sites listed in an Interactive Age article several weeks back asking very specific questions like:
Usually, I'd get responses that were measured in hits. Hits are pretty meaningless since each graphic accessed on a page also counts as as a hit.
And some replied, "We estimate, blah, blah, blah..."
I replied with statements like "Okay, forget the estimates, tell me how many hits you got specifically on your home.html page."
That usually led to some hemming and hawing, but no numbers. So, to satisfy my own curiosity, I let them tell me off the record. I'd have gotten nowhere otherwise. I could do this big spiel on how all the off the record numbers were 50-90% lower than the findings produced in the Interactive Age top-ten, but that serves no purpose since I can't provide you with the detailed quantitative analysis to support that spiel.
The most frequent response I received was that it was too difficult to convert the numbers into unique users. More accurate numbers can be generated than the ones that have been previously reported, but identifying unique users is still difficult.
Just as new software to simplify reporting rolls down the pike, the commercial online services compound the difficulty in accurate reporting by offering Web service to the masses. Because the big 3 cache pages on their servers, AOL, CompuServe and Prodigy need to come up with a mechanism for providing (hopefully free) usage statistics for Web sites.
The advertising push is on and it is important for web sites to have big numbers and lure users to their sites. From the advertisers perspective, 1,000,000 hits on your page doesn't mean as much as "168 people looked at your stuff based on the ad your placed." The tools available today offer the ability to determine such information. While equating numbers to unique users is still difficult, there are methods to get a lot closer than "hits". But what the Web really needs is a standard for measuring users. A single standard.
Ultimately it is up to advertisers to decide. The Web allows for several advertising strategies. One is the "Billboard"style graphic, which may or may not link to a site by the advertiser that offers more information on the advertisers products and services. As browsers with secure transaction capabilities proliferate, the ability to go from advertisement directly to sale also exists. This opens up many different payment strategies (i.e., pay a little bit for a billboard, a transaction fee for a link directly to your information and an even bigger transaction fee if a purchase is made).
The "in your face" but "out of your way" strategy of billboards is effective in establishing a presence and gaining mindshare. But if this is what you're looking for as an advertiser, try to force the site you're buying space from to put your logo somewhere it has the best chance of being seen. Here, the HotWired approach, where the banner is at the top of the page, will serve advertisers better than the PATHFINDER approach, where sponsorship graphics fall at the bottom of the page. Depending on a users patience, and the size of their screen and browser window, they might not ever see a sponsorship graphic on PATHFINDER. In fact, for all advertising approaches, having the advertising banner in the most strategic place is important.
Truth is, even though I've found that the Web numbers reported in the press are sometimes much lower in reality, someday, and not necessarily too far into the future, the numbers will be there. Advertisers should play the field now and experiment with approaches and they should definitely play hardball if the advertisement they're paying for doesn't stand an excellent chance of getting in front of the user. Ultimately, if the advertisers don't feel they're getting desirable results, they'll pull the plug.
But advertisers should look at other electronic distribution mechanisms besides the Web and online services. They should look at e-mail. No, I'm not out shopping for sponsors, but e-mail is widely used. I'm not talking about the strategy employed by up and coming free e-mail services that will be subsidized by advertising. I'm thinking more of what NetGuide recently launched with NetGuide Now!. Since they launched about a month ago, they've picked up about 5,500 subscribers who receive it every week via e-mail.
NetGuide Now! is sponsored by a large computer company who is not IBM. Okay, okay, it's Dell. Each week, Dell gets a banner at the top of NetGuide Now's ASCII e-mail message and another banner at the bottom, with a little bit of an advertisement. A similar approach is used on the Web based version of the weekly NetGuide Now.
NetGuide Now! offers brief summaries of online news, new web sites and services offerings on the online services, as well as a calendar of events. And yeah, I'm partial to them because they made it possible for me not to have to do a special mailing list for "short takes"! I think it makes an excellent companion letter to this newsletter (or vice-versa). Decide for yourself by subscribing-it's FREE! To subscribe to NetGuide Now!, just send a message to: netguidenow@cmp.com and in the body of the note type: subscribe
E-mail is a part of the daily routine for millions. Junk e-mail will annoy people. But the method employed by NetGuide Now! shouldn't annoy people because it paves the way for allowing free distribution of information.
And now a word from our sponsor...
GOLDMAN SACHS issued a new report predicting that %25 of US households will have access to online computer services within 2 years. The new report also predicts that by the end of the year, 9 million people will have access to the Web. Given the current numbers reported by online services and Internet providers, 9 million with access is a reasonable prediction. But that's far different than 9 million WHO access. But the report made one telling prediction: "Thus, traditional media are bound to lose market share of consumers' time over the long term." How much remains to be seen.
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IN THE HOUSE-the US House of Representatives overwhelmingly passed sweeping new telecom legislation by a vote of 305-117. Among the provisions of the bill an the amendment supported by Christopher Cox, R-CA and Ron Wyden, D-OR. Wyden and Cox's amendment protects online services from liability for distributing pornographic material favoring technological solutions from the private sector.
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America Online Inc. and M/A/R/C Group of Irving, Tx. have formed a joint venture to offer online marketing services. The venture will form a new company called Digital Marketing Services (DMS) that will conduct online market research and offer incentive award tie-ins a la airline frequent flier programs. AOL will be the majority owner with a 70% stake and M/A/R/C Group will own the remaining %30.
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NOT EVEN THE New York Times is "hack proof". Their New York Times Syndicate's Computer News Daily publication on the Web (http://nytsyn.com) was shut down for several days, according to Cowles/SIMBA Media Daily. Apparently, a hacker was able to insert a program through the site's live chat area. The program expanded in size until it brought down the Web server. The site is back up, but Chat is, to say the least, temporarily unavailable.
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SOUTHAM reported that plans to develop a Canadian online service in partnership with PRODIGY were on hold while Prodigy evaluates its international strategy. While they're waiting AOL moved forward by e-mailing its Canadia customers to advise them of AOLNet availability in Canada (7 cities available now, with more coming soon). AOLNet access in Canada will be surcharge free between now and October 1. For more information, see Keyword: AOLNET.
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WE ASSUME that Alan Meckler is smiling this weekend. Mecklermedia Corp. stock went up $7.50 on Friday to close at an all time high of $41. There was a second stock offering on Thursday and the stock dropped off to $33.00 before skyrocketing on Friday as the "we love anything high-tech, including magazines about it"crowd jumped on the bandwagon. Mecklermedia's monthly "Internet World" magazine is now boasting a monthly audited circulation of 250K.
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DelysAir is marketing a "first-of-its-kind" distribution system for delivering sample products to commercial airline passengers, complete with a high quality snack product. DelysAir also produces gourmet snacks including trail mix and Thoz Nuts French praline peanuts. The newest sponsor of the sampling program is, you guessed it, America Online. An America Online software disk and 10 hours of free service was given to Reno Air passengers, together with a gourmet snack.
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NETCOM reported losses of $2.9 million (this time I really do mean millions and not thousands) for the second quarter. But they marched on by acquiring Dallas based Internet service provider, PICnet for an undisclosed amount.
This Last 52 52
Week's Week's Week Week
Company Ticker Close Close High Low
------- ------ ------ ------ ------- -------
America Online AMER $54.25 $56.50 $58.88 $14.31
Apple AAPL $44.50 $45.50 $50.94 $32.50
AT&T T $51.75 $53.63 $55.88 $47.25
Bolt,Beranek & Newman BBN $36.25 $37.25 $39.38 $10.88
FTP Software FTPS $24.38 $29.00 $35.50 $14.88
General Elec. GE $57.63 $58.75 $60.50 $45.38
H&R Block HRB $37.00 $38.25 $47.63 $33.00
IBM IBM $108.75 $110.63 $111.75 $62.63
MCI MCIC $23.50 $24.00 $25.88 $17.25
Mecklermedia Corp. MECK $41.00 $36.25 $41.00 $ 4.25
Microsoft MSFT $93.88 $92.63 $110.25 $52.00
Netcom NETC $33.75 $38.00 $39.50 $16.75
NetManage NETM $18.25 $18.38 $22.50 $ 6.88
News Corp. NWS $24.13 $23.88 $25.13 $14.38
Performance Syst. Intl PSIX $19.00 $21.13 $25.50 $12.00
Sears S $32.13 $33.38 $35.13 $21.50
Spyglass Inc. SPYG $43.25 $42.25 $45.38 $26.50
UUNET Technologies UUNT $40.00 $42.00 $51.75 $21.75
See you next week.
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. As of July, my management has agreed to allow me to do some work on the newsletter during business hours (probably about 6-8 hours a week). I speak for myself and not for IBM.
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