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============================================================================== Seidman's Online Insider ============================================================================= Weekly Summary of Major Online Services and Internet Events ----------------------------------------------------------------------------- Vol. 2 No. 43 (Formerly known as In, Around and Online) November 4, 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 -AOL Launches Stand-alone Internet Service -Prodigy Working on Web Based Services -Rumors of the Demise of Steve Case are Greatly Exaggerated -Axel Springer Bails Out of Europe Online -IBM Announces Internet Strategy -Number Please -Follow-up to Spam-o-rama -This and That -Stock Watch -Disclaimer -Subscription Information AOL Launches Stand-alone Internet Service ========================================= As reported last week, America Online launched their stand-alone Global Network Navigator (GNN) Internet based service on Monday, 10/30. In what is actually something of a predictable matter this point, Wall Street reacted favorably to the news and drove the stock up. On Tuesday, AOL announced a 2 for 1 stock split for all stockholders of record on November 14. The split will happen on 11/28. And that drove the stock up even more. The stock shot up to a record high of $88.50/share before closing the week at $86.75, up a whopping $12.50 over the previous week's close. America Online was very aggressive with the pricing of the GNN service. According to America Online, the service will be available in over 600 cities, in the U.S. making it, according to the press release, "the first truly national full-featured Internet service for consumers." Unlike the AOL service, where the typical trial offer waives the $9.95 monthly fee and allows use of up to 10 hours before the charges kick in, the GNN service offers FREE UNLIMITED USAGE for the first month. After that, pricing is $14.95/mo. for 20 hours of service with additional hours at $1.95. Short of flat-fee based services, this is one of the most aggressively priced plans available. *What Will the Competition Do?* CompuServe Vice President, Herbert Kahn speaking at an investment conference in New York said that CompuServe will contribute more than 50% of the overall revenue for its parent company, H&R Block, according to a story by Reuters. According to the story, Kahn said that CompuServe would continue to market their own $4.95/mo. for 3 hours of access as well as their $19.95 for 20 hour package (additionally hours are also $1.95) but had no plans to compete with the GNN pricing, because there would be "no meat left" -- meaning profit for CompuServe. In an unrelated item, Kahn said CompuServe would switch over to 28.8 Kbps coverage within the next 6 months. Prodigy Working on Web Based Services ===================================== Ziff-Davis' Inter@ctive Week Daily on the Web <http://www.zdnet.com/~intweek/daily/> reported on Thursday that Prodigy plans to launch a subscriber based service on the Web called "Informed Investor" The pricing of the service hasn't been determined yet, but Prodigy VP and general manager of "money" (that's what the story said) Iris Burkat said Prodigy is considering pricing of $4.95/mo. "We consider this our experimental period," said Burkat, adding, "We have to find out if we can make money in this line of business." Prediction: NOT YET. And not because they're Prodigy, but because in spite of the millions who are allegedly now on the Web, there aren't enough eyeballs willing to pay for content. If there were, sites like Pathfinder would already be charging. But I applaud Prodigy for their experimentation. Clearly things are moving towards the Web, but with the exception of very specialized content, I still don't see consumers wanting to pay $4.95 here and $4.95 there, $2 here, etc. Not when the AOL model of "all this" for one low price seems to be winning. Yes, there is the matter of additional hours being $2.95 and the matter of almost everything on the web being free. But both of those elements may change. The more people there are online, the cheaper that can go, until ultimately, you truly have the "basic" cable model of one low price for everything with no extra charges. There will always be extra charges for "premium based" services and the question remains of whether there will be enough demand for the style of service Prodigy is offering. With all of the "FREE STUFF" currently on the Web, they'll have their work cut out for them. According to the Inter@ctive Week daily story, Prodigy has plans for similar Web based services. "This is our direction," said Burkat. "We're making ourselves Web-Centric." Rumors of the Demise of Steve Case are Greatly Exaggerated ========================================================== As expected, AOL president and CEO Steve Case was elected Chairman of the Board of America Online succeeding Jim Kimsey. Kimsey will continue to serve as a company Director and as Chairman Emeritus. Kimsey, according to the press release will "apply his talents and resources to the advancement of humanitarian efforts and diplomatic causes worldwide." Additionally, Robert Frankenberg President, CEO and Chairman of Novell, Inc., and Robert Pittman, Managing Partner and CEO of Century 21 Real Estate Corporation have been elected to the America Online's Board of Directors. On Thursday, USA Today reported that AOL was searching for a new President to take over some of the day to day duties for Case. "Kimsey, 56, is reportedly behind the drive to hire an experienced manager to run AOL. Case and his staff aren't happy about the move, but Kimsey has frequently said he is determined that there be ``adult supervision'' after he steps down as chairman," said the USA TODAY story. The story then went on to say that analysts think Case is a brilliant marketer who is the right person to lead the company, but since AOL has now grown into such a sizable company that Case might not have the experience to manage such a "sprawling operation". For some reason, about 40 people saw this story and wrote me telling me that AOL was trying to oust Case. GET REAL. I've said it all along, CASE IS AOL. Period. He's the chairman now, but he isn't going anywhere. I asked Case about the USA Today story because the story sort of gave the impression that Kimsey was leading a behind the scenes movement to bring in an experienced executive. Case pointed me to a story that ran on a Reuters financial wire. Turns out that AOL is in fact looking for someone to take some of the day to day burden off of Case, but that comes in the form of a Chief Operating Officer (COO) and not a chief executive officer. "I have decided to start a formal search for a COO," said Case in a statement. "This position will report to me and help me manage the day-to-day operations of the company," he said in the Reuters story. AOL has hired a search firm to assist with the process, but did not disclose which one. "This has been a pivotal year for America Online as our community has expanded to include millions of new members, thousands of new employees, hundreds of new alliances, dozens of joint ventures and seven acquired companies," Case said. According to the Reuters story, company directors are saying the decision to look for a COO was Case's. According to them (and by default, Case, since he referred me to this story), Case "wants to keep focused on AOL's strategy and vision. Case was not pressured by the board to find a COO." "Steve Case himself recommended it," said General Alexander ("Don't Worry, I'm in Charge") Haig, the former secretary of state under President Reagan. Haig has been on the America Online board since 1989. "He borders on genius in my view," Haig said of Case. Axel Springer Bails Out of Europe Online ======================================== German press group Axel Springer Wednesday said it was withdrawing plans to participate in the planned electronic information network Europe Online. For new readers, Europe Online is NOT the European Version of America Online (America Online has partnered with Bertelsmann for an as yet to be named service). Europe Online's main partners are German publishing group Burda, Pearson Plc, Matra Hachette and Meigher Communications of the U.S. Europe Online will run on the AT&T Interchange platform. It wouldn't surprise me if that is part of the reason that Axel Springer pulled out. The "next generation" Interchange client which has been available in the U.S. since June is infested with some bugs. In the states, there's another problem for Interchange -- the business model won't work (it's the whole, this content for $4.95 a month, that content for $4.95 a month thing -- not to mention that the burden of marketing is put on the content provider.) A couple of years ago, Interchange seemed like a great idea, but during the many delays of the product, the World Wide Web caught on and the America Online model of "all this for one low price" caught on, too. So well in fact that Prodigy and CompuServe changed to that model. Springer had planned a 10% stake in Europe Online as well as a 21.3% stake in the German unit or Europe Online. But according to a Reuters story, Springer has opted out. "We will not participate in this project," a Springer spokeswoman said citing two reasons, "to concentrate more on content and to review other delivery methods, including the Internet." Europe Online has its work cut out for it -- I'm almost ready to predict the total demise of this service. Why? Because it is based on a proprietary software client, and there is only ONE company having any success with that today (well, we won't bring up Netscape!) -- America Online. Prodigy and CompuServe are scrambling to come up with better interfaces. Is there nothing else on the horizon? As a matter of fact, there is. It's called "Blackbird", a set of software tools originally designed by Microsoft to publish content on its MSN service and currently being repositioned to for publishing content on the Internet. I didn't see much at Internet World that made me say, "WOW!", this year. But Blackbird definitely made me say "hmmmmm." Anyway, don't be too surprised if down the road you see Europe Online dump the Interchange client in favor of an Internet based service. More and more, unless you're America Online, the proprietary model makes little sense. And yes, analysts are wondering how long the model will work for America Online. My Answer: at least 1 more year, probably 2. After that, it's anybody's guess. IBM Announces Internet Strategy =============================== IBM made several announcements with regard to its Internet Strategy, but the centerpiece of the press announcements is a service called infoMarket. Before going further, I should say that while I don't work directly on the infoMarket project, the GM of my group (my boss' boss) does have responsibility for infoMarket. That being said: I THINK infoMarket is AN INCREDIBLY AWESOME CONCEPT! The central concept behind infoMarket is simple -- it's copyright protection for publishers. There are other facets to infoMarket, notably the vision of a search tool for a vast set of databases and the ability to serve as a clearing house to sell content for publishers. Today, publishers of electronic content are fearful of the medium because it is so easy to redistribute the content to hundreds, thousands, and potentially even millions who have not paid for the content. Oh sure, today, most everything is free on the Web, but that may not always be the case and specialized content will always carry a price tag. infoMarket offers a solution by encrypting documents and providing end users who have purchased the document with a "key" to unlock the document. This technology has been dubbed Cryptolope (i.e., encrypted envelope). I read with some amusement some of the analysts reaction to infoMarket. They're saying nice things like IBM has enough clout to line up the support of many publishers. Indeed, infoMarket has already lined up 29 content and technology partners. At the same time, the small Sunnyvale, Ca. based Electronic Publishing Resource company unveiled its own rights protection system known as NetTrust. There is demand, and any publisher in their right mind would want to get its hands on technology that will protect their rights. "Rights management and security have been two inhibitors to electronic commerce," said Scarsdale, N.Y. based consultant Sam Albert, in a story by Reuters. He indicated that with IBM's clout they could attract publishers. But this isn't about publishers, this is about technology. To that end, I think Jerry Michalski, managing editor for Release 1.0 newsletter (Esther Dyson's monthly report) has the better soundbyte in the same Reuters story. "I'm not sure how the market is playing out," said Michalski. "There is a gaping hole in the marketplace to comply with copyright law. There is a clear, clear need for someone to do this right." In order for infoMarket to be successful, it will need to provide a totally seamless solution for buying encrypted documents. If there is a hassle involved with opening up the Cryptolope, most people won't do it. The concept is right on the money, but the practical realities of today's technology make it difficult. While a "helper" application with a Web browser may serve infoMarket well as a means to demonstrate the technology, ultimately, it will have to be a lot more "seamless" than that. Ultimately, the technology would have to be integrated seamlessly into every single e-mail, Web, word processing, and any other applications software capable of reading a document. A difficult task indeed. Wouldn't it be much easier to just integrate the technology into the operating system? Ah, yes it would. And there's the rub, really. While IBM has lined up Apple and Sun as technology partners, the big mammoth in Redmond, Washington is notably absent. Perhaps Lou Gerstner can hire singer Robert Palmer and fly him out to the great NorthWest to serenade Bill G. with a couple of verses of "Can We Still Be Friends?" Number Please ============= This week the granddaddy of numbers in the television world, Nielsen Media Research, released summary survey results for a study done for CommerceNet. Executive Highlights of the study are available at <http://www.commerce.net/>. But, if you don't have the time, here are some interesting tidbits lifted directly from the Web page: -11% (24 million) of total persons aged 16 and above in the US and Canada have used the Internet in the past three months. -Approximately 8% (18 million) of total persons aged 16 and above in the US and Canada have used the WWW in the past three months. -Internet users average 5 hours and 28 minutes per week on the Internet. -Total Internet usage in the US and Canada is equivalent to the total playback of rented video tapes -Males represent 66% of Internet users and account for 77% of Internet usage. -On average, WWW users are upscale (25% have income over $80K), professional (50% are professional or managerial), and educated (64% have at least college degrees). -Approximately 14% (2.5 million) of WWW users have purchased products or services over the Internet. None of this surprised me a great deal except the bit about total Internet usage in the US and Canada being equivalent to the total playback of rented video tapes. That's a huge statistic. Especially when you consider that the market is growing. And yet, other than the big commercial online services and big and small access providers alike, not many people are making money. Still, if you can draw anything out of the recent onslaught of numbers, it is that there are already an awful lot of "eyeballs" out there. If the growth triples, the Net will have reached mass-market scale. That's a lot of growth, but given the growth curve and all the interest surrounding the Net, a tripling isn't unreasonable. If it reaches that level, a strong case can be made for advertising subsidized services. But for advertising to pay off on the net, it has to be more than just banners, billboards, and information on products and services. The advertising has to be engaging content -- something that makes people want to look at it. What works in print and television won't necessarily work on the Web. Things like contests seem to be working at some level, but new, yet to even be though of approaches will need to be developed. Thankfully, there are a lot of innovators out there. With all the eyeballs involved, there are a lot of dollars at stake. These are exciting times! Follow-up to Spam-o-rama ======================== My call for the leaders of the Internet community to band together to stop "Spam", and specifically my comment to Vint Cerf where I said, "Vint, look what they're doing to your baby prompted the following response from Dr. Cerf suggests technological solutions rather than legislative ones: "I think spamming is an abuse which users should have the ability to curtail. If a party persists in spamming, it should be possible for any subscriber to request that the originator leave out their email address from any mailing list produced by the spammer. The more complex case may be ones in which the spammer uses a pre-existing distribution list on which the objecting party happens to be listed. The spammer doesn't "own" the list, so it may not be apparent to the spammer that customer X is NOT to be harassed by spam mail. I still think of the spammer as responsible and liable for disturbing the mail list or an individual email box. To deal with these problems, we may need new tools to help users and perhaps service providers to eliminate unwanted email." My thanks to Vint Cerf for sending in his thoughts on the matter, but Cerf is aware that this issue may wind up being decided on a legal basis. Cerf noted that he's polled the trustees of the Internet Society about taking policy positions or at least making informed recommendations. "I suppose many of these problems will have to be thrashed out in legal proceedings," said Cerf, adding that these are "Interesting times!" This and That ============= ONE MORE TIME: There's a ton of stuff going on from Prodigy/IBM licensing Netscape to a court blocking the selling of allegedly bogus securities on the Internet, to AT&T announcing its Web based local consumer online service to Oracle's big plans for the Internet. So many things happening that it is impossible to list them all here. There are several sources of information that I would recommend, but the strongest would be EduPage and NetGuide now because they are FREE. After that, Cowles/SIMBA does an excellent job with their Cowles/SIMBA Media Daily. The whole thing is available on AOL and CompuServe with Internet related portions being available for free on the Web -- with all the eyeballs out there, maybe the whole thing will wind up on the Web. Here are the instructions for receiving Edupage, which is delivered three times weekly and includes abstracts of recent news stories in the high-tech scene(for FREE): To subscribe to Edupage: send a message to: listproc@educom.unc.edu and in the body of the message type: subscribe edupage Bob Massey (assuming that your name is Bob Massey; if it's not, substitute your own name). --- If you see this before Sunday at 9 PM ET, please join me as the guest in an online conference on CompuServe. 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. While you're on CompuServe, catch the US News & World Report cover story by Sr. Editor Vic Sussman: "Gold Rush in Cyberspace" or, check out the new US News & World Report Web site at: <http://www.usnews.com/> which is scheduled to launch on Monday 11/6. Or pick it up at the newsstand starting on Monday. -- LEARN HOW TO USE fax, Web and e-mail based newsletters to promote your company or products in a seminar hosted by Sarah Stambler who produces her own fax-based newsletter titled Marketing With Techology News. The seminars will be held in Washington, DC December 5-6 and New York City January 22-23. For more info contact: 212-222-1713 or <http://www.users.interport.net/~sarahs> on the Web. Stock Watch =========== In which we can only say: WOW! Everyone's a winner, especially, SpyGlass, UUNet, Netcom, Netscape and America Online. This Last 52 52 Week's Week's Week Week Company Ticker Close Close High Low ------- ------ ------ ------ ------- ------- @Net Index IIX $246.03 $223.37 $246.03 $185.76 America Online AMER $86.75 $74.25 $88.50 $15.25 Apple AAPL $36.50 $34.75 $50.94 $33.63 AT&T T $63.75 $62.13 $66.38 $47.25 Bolt,Beranek & Newman BBN $34.00 $32.13 $39.38 $12.63 FTP Software FTPS $27.50 $25.63 $35.50 $20.25 General Elec. GE $62.88 $62.25 $65.25 $45.38 H&R Block HRB $44.38 $41.25 $46.63 $33.00 IBM IBM $101.50 $96.50 $114.63 $68.00 MCI MCIC $26.00 $24.88 $27.13 $17.25 Mecklermedia Corp. MECK $16.25 $12.50 $24.38 $ 2.13 Microsoft MSFT $99.50 $100.00 $109.25 $58.00 Netcom NETC $69.00 $52.75 $71.25 $16.75 Netscape Comm. Corp NSCP $95.25 $81.50 $98.25 $45.75 NetManage NETM $20.63 $19.38 $27.25 $12.25 News Corp. NWS $19.63 $19.63 $25.13 $14.38 Performance Syst. Intl PSIX $22.63 $16.38 $25.50 $12.00 Sears S $36.00 $34.13 $37.63 $21.50 Spyglass Inc. SPYG $72.00 $41.50 $72.00 $26.50 UUNET Technologies UUNT $64.25 $47.50 $69.00 $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. 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