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============================================================================== Seidman's Online Insider ============================================================================= Weekly Summary of Major Online Services and Internet Events ----------------------------------------------------------------------------- Vol. 2 No. 42 (Formerly known as In, Around and Online) October 28, 1995 ============================================================================= Copyright (C) 1995 Robert Seidman (robert@clark.net). All rights reserved. May be reproduced in any medium for non-commercial purposes. IN THIS ISSUE ============= -From the Editor - More on "Spamming" -Numbers, Numbers Everywhere -And We Keep Getting Richer... -Prodigy's Ed Bennett -This and That -Stock Watch -Disclaimer -Subscription Information From the Editor =============== I could tell you that I received a "few" pieces of mail about the Promo Enterprises and CompuServe piece that I ran last week, but that would be like saying Ismelda Marcos has a "few" pairs of shoes. I do still read all e-mail, but regret that I can not respond to all of it. The consensus based on my mail is that almost everyone hates "spam". Though I did receive notes from a few people who claimed to enjoy the messages. The vast majority supported CompuServe's decision. Many pointed out that "spam" is different from junk mail because on CompuServe (as well as several other services, both Online and Internet) it takes "time" to read the mail, and time is money on CompuServe. "Real life" junk mail does not cost the recipient anything. Others pointed out a spammer who I am somewhat familiar with -- Jeff Slaton, who bills himself as the "Spam King". Slaton, like his brethren at Promo Enterprises, also mass mails advertisements via electronic mail. Slaton's approach is somewhat different though, because he also mass mails many mailing lists and Listservs and newsgroups. Slaton charges a flat fee of $425 per "spam". According to a story last week by the San Jose Mercury News written by Simson L. Garfinkel, Slaton says he averages about 15 spams a week, which if correct, works out to more than $330,000 per year. But the gang at Promo Enterprises looks almost angelic compared to the Spam King. While Promo at least allows users to "unlist" themselves from Promo's services, Jeff Slaton has taken a different tack. Here's a blurb from advertisement from the Spam King I received on my AOL account this week: "If you would like to be removed from any future E-Mailings ... Please send $ 5.00 for a computer search and I will remove you from the mailing list." Slaton then gives a mailing address. $5.00 indeed. Sick. Several readers wrote in saying that my position was too liberal. Trust me, what I think is a proper "punishment" for the like of Jeff Slaton is far too graphic for me to print in this newsletter. That notwithstanding, I still believe censorship is a dangerous approach. Open communications are the way of the net. In the case of CompuServe trying to "censor" Promo's messages, I believe they actually did the right thing. It's easy to say "well, they should just give their users the right to set-up filtering!" Someday, I'm sure they will offer such a service -- in the meantime, they have 150 other things on the development table. But if a huge majority of members don't want spam, and there is currently no feature to filter mail, spam might be bad for business. What I question is the unilateral decision making process. This is a huge issue. Rather than let legislators who are clueless about "cyberspace" decide, I think the leaders of the Net should form some sort of coalition to address this issue. The title of "father of the Internet" has somewhat been bestowed on Vint Cerf. Vint, look what they're doing to your baby! I'm sure Cerf saw this coming and he probably has many thoughts on this subject. It would be nice to see Cerf, representatives from the major online services, major ISPs and smaller ISPs should band together to address this issue. Today, it may be a minor problem, but the long term ramifications are much bigger. On a lighter note, one reader wrote in to say that the Internet is often referred to as the Wild, Wild West. The reader points out, that in the Wild, Wild West, people used guns. Numbers, Numbers Everywhere =========================== Jupiter Communications and Yahoo! released the results of an unscientific study based on 63,000 responses to a survey form that was available on Yahoo! According to the survey, Web users spend an average of 20 hours a week online. The survey indicated that 55% of those who access the Web access from personal computers at home and 61% said that they watched less television as a result of being online (hey, there are only so many hours in the day). Though 60% of the respondents said they had access to a major online service, only 8% used an online service to access the Web, opting instead to use Internet service providers. This statistic raises questions about the number of people that have accounts on multiple services. That statistic also generated the quote of the week, with regard to the numbers game, which I read in a story by Houston Chronicle columnist Dwight Silverman. Silverman reported on the survey and Jupiter's conference, "Defining the Digital Consumer IV: The Demand for Home-based Access to the Net." AOL senior VP (and former GEnie president, remember GEnie?) Mark Walsh said that based on AOL's tracking, the % of Web usage from online services should be "significantly higher than that." "I don't want to talk trash about Jupiter's survey," said Walsh. "But you know, there's that old saying -- There are lies, damned lies and statistics," according to Silverman's story. I can only speak for my own Web site's statistics and others to whom I have spoken. Since my site is "about online", it is not necessarily surprising to find that the number one domain accessing my Web page is America Online. However, when you consider America Online uses caching (and I have yet to receive any info on America Online about the # of "hits" my page actually gets from their service), it is somewhat surprising to see that more Web accesses of the "current edition" of this newsletter come from America Online than anywhere else. I've spoken to others who don't have online-centric Web pages, and some have reported similar results. Maybe my pals at Pathfinder <http://www.pathfinder.com/> or HotWired <http://www.hotwired.com/> will tell me what % of their traffic comes from America Online. I know, some of you are thinking, "Aw c'mon, Robert, 63,000 took that survey, give it up, AOL is a dog -- people prefer the ISPs." It's a nice thought, but not based in reality. I have another theory: America Online members don't need Yahoo! You heard me right. Why would they? AOL's browser may still have more kinks than a slinky, but one thing they did an excellent job of with their Windows version is integrating some of the best Web sites into their various "channels" and areas. Such a good job, in fact, that there isn't much need to go to a "Yahoo!" style page. Oh sure, the rumor mill had it that AOL was trying to buy "Yahoo!" and I couldn't understand why they would want to (other than the fact that they sometimes seem to buy everything) -- I mean, the links are integrated on AOL, and GNN can serve as their version of Yahoo! for their Internet based GNN brand (which finally officially launches on Monday at Internet World). AOL spokesperson Pam McGraw has denied that AOL is pursuing Yahoo! I'm guessing that most people who access the Web from AOL do not use the service 20 hours a week. That would equal 80+ hours a month and would be very costly on America Online. AOL is aiming for the mass market though, and as far as the Web has come, there isn't currently anything on the Web that is going to get the mass market to replace 80+ hours a month of whatever they're spending their leisure time on with Web access. Unscientific or not, it would appear that the respondents of the Jupiter/Yahoo! survey represent a specific niche rather than the online masses, either that or this is a very meaningless survey. With regard to cyber-shopping, the survey showed that almost 30% of the respondents had bought something via modem (68% made purchases on the Web, while only %34 had made purchases via an online service). But check this out, the survey shows they spend, on average, $470/year! No way! I wish it were true, because it would present interesting possibilities for this newsletter. If we take estimates of users of online services and ISPs in the US, and say very conservatively that there are only 7 million, the survey would represent "cyber-shopping" as almost a 3.3 BILLION DOLLAR industry. TODAY?! Someday, yes! Today, NO! All I am saying is don't start salivating over those statistics just yet. If you put up a Web site today and expect to get rich quick with it, you'll likely be disappointed. And We Keep Getting Richer... ============================= If online services were rock stars, America Online would be on the cover of Rolling Stone magazine (in spite of RS' affiliation with CompuServe). As a casual observer over the last year, the America Online stock has continued to amaze me. Recently there have been a couple of stories written about the accounting practices (all very legal) used by America Online. This week, the Washington Post ran a story by Newsweek's Wall Street editor, Allan Sloan. By Sloan's estimate, AOL is running a $75 million/year cash deficit which they cover by selling stock. According to Sloan, AOL recently raised about $100 million in cash from a stock sale. When the sale was announced in September, the stock was around $72/share. At the time of the sale in October, the stock had fallen about 14 points. Sloan said most companies would delay such a sale, waiting for the price to go back up. That AOL didn't delay, Sloan suggests, indicates that AOL may have really needed the cash. In Sloan's piece, AOL's CFO, Lennert Leader denied such suggestions saying, "We're not in the business of trying to roll the dice by timing the market. . . . We sold into the technology meltdown." Leader said that if the stock would've fallen lower (no specifics), AOL would've canceled the offering. Sloan points out AOL's practice of treating marketing and research and development costs as capital items instead of expenses. By Sloan's accounting, such items represented about $130 million last year. AOL amortizes the R&D costs over a 5 year period and the marketing costs over a 2 year period ( until July they charged these costs over a 15 month period). Sloan points out that all of this is legal and calls this "hidden asset" a "brilliant accounting decision". According to Sloan, had AOL run in their fiscal year 95 with the marketing expenses charged off over 2 years instead of 15 months, AOL would've more than doubled their operating profit on paper ($50 million vs. $23 million). Sloan closed the piece by saying that none of this means AOL is going out of business tomorrow, but considers AOL riskier than it appears to be if you don't look under the covers and said, "The point for tech investors: Don't be so blinded by the glamour of on-line that you forget to look at the real bottom line." But stories like Sloan's don't seem to hurt AOL at all. AOL stock had an excellent week, ending the week up $8.50/sh. vs. the previous week's close. I sent Steve Case a tongue-in-cheek note saying, "I guess nobody pays any attention to Allan Sloan!" I'll admit to taking a somewhat lighthearted approach at times, perhaps too lighthearted. Because for Case, such things are no laughing matter. Running an online service may be Steve Case's business, but it is more than just a job for Case, it is his passion -- America Online is his child. As such, he doesn't take such stories lightly. "The 'issues' Sloan raised regarding accounting policies are old news and his characterization was unfair -- he failed to note, for example, that our policy for marketing amortization is identical to CompuServe, nor that many other communications and media companies also use a similar approach," Case said. "Wall Street knows better and reacted accordingly," he added. Prodigy's Ed Bennett ==================== My thanks to Prodigy's Mike Darcy, Barry Kluger and Ed Bennett for giving me the opportunity to spend over an hour chatting with them earlier this week. I'm still digesting my thoughts, and have a few follow-up questions, and am fearful that the piece by itself would be as long as this newsletter! But I will offer several paragraphs now. Look for a longer piece, here, or on the Web in the near future. I'm not easily impressed and Ed Bennett impressed me a great deal. I don't think he knew exactly what he was getting into with Prodigy. He gave me the impression that it was different than what he thought it would be like. But from what I could tell, he's wasted no time learning the realities of the online world. When I commented that I'd just received my first ever direct mailing from Prodigy, Bennett smiled and commented that it was the first direct mailing Prodigy had done. America Online had been having success with direct mailing for a while, Bennett didn't need to be hit on the head with a shovel. Bennett said from the start of his Prodigy tenure that he was interested in attracting a younger audience, especially the all-important 25-34 demographic. He and Kluger know something about that, as both Bennett and Kluger worked for Viacom's MTV Networks. Bennett was formerly the head of the VH-1 channel and founded Ha! which later became comedy central. Kluger was a public relations VP for MTV Networks and oversaw all public relations activities for MTV, Nickelodeon, Nick at Nite and VH1. Their backgrounds will serve Prodigy well. While Bennett came from an industry that wasn't very "interactive" and was largely centered on "content", it hasn't taken him long at all to adopt the belief of many in the online industry: people don't want to interact with content -- they want to interact with people. If Bennett ever had any doubts, he's certainly a convert now. Bennett told me that "chat" logged more hours than any other Prodigy service. He's also a big believer in "communities of interest" that form around bulletin board postings and chat. Look for Prodigy to try to leverage those strengths -- especially since they are areas where Prodigy performs very well. Can Ed Bennett save Prodigy? Given enough time and money, perhaps he could do just that. I am concerned about Prodigy's architecture because the new system performs very sluggishly, even at 14.4 with more than a middle of the road computer. Bennett shares the speed concern and it is apparently a big focus, but Bennett has found that it isn't something that can be done overnight. At the point Bennett took over the helm, Prodigy wasn't exactly an ideal place to land. But I don't feel sorry for Bennett, because he seems to find the whole online/Internet scene as fascinating as I do. If Bennett can turn Prodigy around, he will be labeled a hero. If he can't, I'd still look for Bennett to have a significant presence in the online world. This and That ============= YOU WILL?? I doubt it, but AT&T is officially launching the AT&T Business Network via Interchange on Monday. The price -- a whopping $39.95/mo. for 10 hours of service. Bargain hunters can knock that down to $24.95/mo. through June '96 if they sign up by 12/31/95. Additional hours are $2.95. Why so expensive? They have some good content providers like Dow Jones, Information Access Company and Standard & Poors. Traditionally, this sort of content has been available on a pay per view basis or at very high per hour charges. While some of the above content is pay-per-view (most of the data from Information Access Company), most isn't. For a business service, the pricing is reasonable. If they'd fix their client client (the software continues to crash, and that scrags the database indexes), I would be more positive. I still expect them to back off of the $39.95 charge and either bundle in the rest of Interchange or lower it to the $25.00 range that they're debuting with. -- NO BOLOGNA! Sony Corp. and two of its subsidiaries plan to form Sony Network Corp. sometime in November and plan to offer Internet access (with some content) throughout Japan by January. No pricing has been announced yet. -- LOOK MA', NO COMPUTER - CompuServe announced plans for a product code named "CallingAll Card", which will offer subscribers access to e-mail, news and stock quotes via a telephone without a computer. The long and short of it is that subscribers will be able to call a toll-free number and preview messages and content that have been filtered to the service based on customer preference and then have the option of sending the messages to any fax machine. Text to speech conversion which would allow subscribers to actually hear the information is planned for a future release. The service will be included in the regular $9.95 monthly CompuServe charge, but usage of the card will be billed at 25 cents per minute. -- FINALLY ON THE WEB. AOL announced their web pages were officially up and running and accessible to the entire net at <http://www.aol.com>. They also announced their "Give Back to the Net" program -- you can read about it on their Web pages. -- LYCOS, Inc. purchased Point Communications Corp. Point runs a "best of the Web" review site at <http://www.pointcom.com>. They've subjectively selected and reviewed the Top 5% of the Web. I'm not sure of their criteria, but they picked my modest site. But, not even that takes the question mark away from the value of the transaction, which according to LYCOS was $3 million. Look for a column by yours truly that reviews Point and Magellan <http://www.mckinley.com> scheduled to appear on c|net <http://www.cnet.com> on 11/6. -- PRODIGY AND STRATTON OAKMONT reached an agreement in the libel case Stratton Oakmont had brought against Prodigy. In May, a New York judge ruled that Prodigy acted as a publisher, and as such, could be held libel. In a joint statement issued by the companies, they said they had agreed that withdrawing the motion was in the best interest of the parties as well as the online and interactive service industries. Prodigy admitted to no wrong-doing, but apologized for any harm that came to Stratton Oakmont as a result of messages that appeared on Prodigy's financial bulletin board in 94. They've won the battle, but not the war. Now Prodigy seeks to reverse the judge's decision that online services can be held libel for their content. -- BILL GATES said on Friday that Microsoft is working on a World Wide Web server product and said it would be available early next year. Gates also said they would continue to improve on their Internet Explorer browser. -- INTEL has joined with NBC and a host of other media, software and hardware companies to launch plans for "Intercast", a service that will marry television and the Web. Hardware in the computer would allow users to watch television in a corner of their monitor. Data sent over the "vertical blanking interval" -- a portion of the broadcast bandwidth that is not viewable would allow transmission of Web pages that would provide information complementary to the television programming. I don't think this is going to take off, at least not based on present technology. You can find out more and decide for yourself at <http://www.intercast.org>. -- I WILL be the guest in an online conference on CompuServe Sunday, November 5th, beginning at 9 PM Eastern time. The conference will be held in the CompuServe CONVENTION CENTER (GO CONVENTION). The conference is being sponsored by the CompuServe INTERNET RESOURCES FORUM (GO INETRES) which offers help and support in using CompuServe's full range of Internet services. We'll talk about "whatever". Hope to see you there. -- Stock Watch =========== Netscape soars on positive quarterly earnings report... This Last 52 52 Week's Week's Week Week Company Ticker Close Close High Low ------- ------ ------ ------ ------- ------- @Net Index IIX $223.37 $218.08 $223.86 $185.76 America Online AMER $74.25 $65.75 $74.50 $15.25 Apple AAPL $34.75 $35.13 $50.94 $33.63 AT&T T $62.13 $61.25 $66.38 $47.25 Bolt,Beranek & Newman BBN $32.13 $34.25 $39.38 $12.63 FTP Software FTPS $25.63 $25.13 $35.50 $20.25 General Elec. GE $62.25 $64.63 $65.25 $45.38 H&R Block HRB $41.25 $41.25 $46.63 $33.00 IBM IBM $96.50 $95.38 $114.63 $68.00 MCI MCIC $24.88 $25.00 $27.13 $17.25 Mecklermedia Corp. MECK $12.50 $12.50 $24.38 $ 2.13 Microsoft MSFT $100.00 $95.50 $109.25 $58.00 Netcom NETC $52.75 $47.13 $54.75 $16.75 Netscape Comm. Corp NSCP $81.50 $69.75 $88.00 $45.75 NetManage NETM $19.38 $19.81 $27.25 $12.25 News Corp. NWS $19.63 $20.50 $25.13 $14.38 Performance Syst. Intl PSIX $16.38 $14.25 $25.50 $12.00 Sears S $34.13 $36.00 $37.63 $21.50 Spyglass Inc. SPYG $41.50 $36.75 $54.00 $26.50 UUNET Technologies UUNT $47.50 $41.50 $51.75 $21.75 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. 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. Subscribing and Unsubscribing ============================= 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 the list please DO NOT reply to this message -- send an e-mail message to: LISTSERV@PEACH.EASE.LSOFT.COM with the text SIGNOFF ONLINE-L in the body of the message. An HTML version of "Seidman's Online Insider" is available on the Web at: http://www.clark.net/pub/robert/ .