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                         Seidman's Online Insider
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      Weekly Summary of  Major Online Services and Internet Events
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Vol. 3 No. 1                                            January 7, 1995
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Copyright (C) 1995 Robert Seidman ([e-mail]).  All rights
reserved.   May be reproduced in any medium for non-commercial purposes.


IN THIS ISSUE
=============
-Notes from the Editor
-CompuServe Caves Under Pressure
-AT&T Business Network/Interchange Head for the Web
-Web Advertising: Still a Drop in the Bucket
-Disclaimer
-Subscription Information


Notes from the Editor
=====================
The following story is true.  I wish I could change the name to protect
the idiot.  I share it with you in the hopes that passing it along to
10,000+ will be a cathartic experience.

Right before the first of the year I received a new IBM ThinkPad.  A
755CS with a 10.4" screen, DX4-100 CPU, and 24 Megs of RAM.  I popped the
hard drive out of my old ThinkPad, and several hours later, had things
reconfigured correctly on the new system.  I was in heaven -- to the
point where I actually moved over to using the ThinkPad as my desktop PC,
not only at the office, but at home as well.  Life was good.  Until today.

Something happened, I couldn't say what, but when I ran my diagnostics it
said there was a problem with the DSP.  Things still worked, I just lost
my Mwave sounds and I couldn't get the video to display in the right
resolution.  Though, the ThinkPad worked fine, other than the DSP when
not "docked".  So, I undocked the ThinkPad and set it on the ledge of the
loft with plans to tinker later.  Then I headed downstairs and made a
tunafish sandwich.  After lunch, I went out into the hall of my building
to check the availability of laundry machines in the laundry room.   Then
I came back inside.  That's where my nightmare started.

I knew immediately something wasn't right.  The ThinkPad was lying on the
carpet when it should have been up in the loft.  My front door is spring
loaded, and it is pretty powerful.  I lost my wall clock when it fell
from the wall after the door shut.  I can't say why the 8 Diet Pepsi cans
remained on the ledge of the loft while the ThinkPad fell approximately
11 feet to its apparent demise.   Most of my computer life is on the hard
drive in the ThinkPad.  I'm holding out some hope that if I plug it into
another machine, it will work.  But, I am not optimistic based on the
loud whirring noise the hard drive made before the ThinkPad gave me error
#174 and wouldn't allow me to continue.

Go ahead, laugh.  I would probably laugh if it happened to someone else.
Except it happened to me, so I'm thinking it's not all that funny.  My
brother, who joined the list this week will probably find this
hysterical.  My father, who also joined this week, will probably have
more compassion for my plight, but I expect even he will get a pretty
good snicker at my expense.   And after I'm reprimanded for damaging a
$5,000 piece of equipment, I think I'll bear the burden of flying
ThinkPad jokes at the office.

Right now, I'm still not amused.  I had all but completed this week's
newsletter.  I'd wait until tomorrow and try the drive in another machine
at the office, but with the blizzard we're experiencing, I'm not sure
there will be anyone there to assist me with getting a machine to test it on.

My apologies in advance to AT&T New Media Service president Michael
Kolowich and to David Shnaider, Vice President at Ziff-Davis Interactive
and GM of ZD Net since my notes and quotes are no longer available to
me.  I can relay the original spirit of their words from memory.

My stock quotes were also on the ThinkPad, so Stock Watch takes a week
off.  Nothing extremely notable except for FTP Software and NetManage.
On news that 4th quarter earnings would be lower than last year, FTP
Software's stock lost half its value, falling to $11.875 on Wednesday.
NetManage, who produces software similar to FTP Software lost about 30%
of its stock value over fears that their results may be similar to FTP
Software's.

Since I like to live dangerously (a.k.a. I'M AN IDIOT), I don't have a
very recent backup.  Since all my e-mail was on the ThinkPad, if you've
written within the last week or so with something important, please
resend it.

I know some of you will write me wondering why I bothered to put this
week's issue out at all, being that the newsletter is free.  I can't say
exactly when, or exactly why, but at some point, at some level, I became
a publisher.  Once that happened, I took publishing the newsletter very
seriously.  This wasn't a scheduled week off and the show must go on.
Besides, if your computer is going to crash, it might as well crash from
11 feet.  And while most of my data lived on the ThinkPad, I have another
computer or three...


CompuServe Caves Under Pressure
===============================
CompuServe recently announced that they were blocking over 200 newsgroups
based on a request from German officials who reported the newsgroups as a
part of an ongoing investigation into child pornography and other illegal
pornographic material on the Internet.  CompuServe lacking a
technological solution to block the newsgroups only to subscribers
accessing from Germany decided to block them everywhere.  Two things
happened.  First, there was a loud protest from most of the Internet
community regarding the censorship issue.  Second, and somewhat
surprisingly, the Germans denied they ordered CompuServe to block the
groups.

Well, I'm not going to waste excessive bandwidth on this issue because in
the end, it is mostly irrelevant.  Before you jump to your e-mail client
to fire me off a missive, please let me get to why I think its
irrelevant.  But first, let's not be too hard on CompuServe.  Oh sure,
they screwed up.  I mean, they've now announced that they're going to put
the groups back up this week and work towards a technological solution
that would allow blocking by country as soon as possible.  They have
assured they will not censor newsgroups in the United States.  This is
what they should have offered to do to begin with.  I'm pretty sure
they've learned their lesson.

While CompuServe is the number two online service in subscribers world
wide and in the United States, the fact remains that America Online is
kicking the crap out of them in the U.S.  I estimate that AOL's reported
4.5 million subscribers in the US and Canada is approximately one to one
and a half million more subscribers than CompuServe has in the same
region.  CompuServe reports over 4 million subscribers worldwide, but
is the strongest of the US providers in the  European and Asian markets.
They have a foothold there and they want to keep it.  Germany is
naturally one of the bigger European markets and with the
AOL/Bertelsmann service recently launched in Germany, and about
to begin beta testing in the UK and in France, CompuServe probably was
motivated to comply to the fullest with the German authorities.

Okay, so maybe the Germans didn't order CompuServe to block the
newsgroups outright, and maybe CompuServe acted a little quickly.  But
ordered or not, if someone says, "we find these newsgroups illegal,
please investigate", whether they were ordered to comply or not seems
moot.  They want to compete in that market and didn't want to risk it.

Earlier I said the whole issue is irrelevant.  I think it is.  You can't
censor the Internet.  Some will say, "but if CompuServe will buckle to
this, then any authority, whether it be from Germany or a small town in
the bible belt can pull the same stunt."  They can try.  They will fail.
You can't censor the Internet.

TCP/IP.  The Internet.  By its very nature what was developed was
something that allows any computer on the network to talk to any other
computer on the network.  That's what it was supposed to do, and that's
what it does.  The theory was get all computers and allow them to
communicate with each other.  That was sort of the point of the whole
thing.   Vint Cerf, who some have deemed the "father of the Internet"
worked hard championing the Internet Protocol (IP).  Dr. Cerf reportedly
was known to wear a T-shirt saying "IP Everywhere".  You have to love
scientific humor.

It's a great thing too, this inter-connectivity.  It's what allowed me to
remain "[e-mail]" long after I moved from Virginia to New York.
ClarkNet is a local provider in the Baltimore/Washington area.  My e-mail
address was something of my net identity so I didn't want to give it up.
With TCP/IP I didn't have to give it up.  Sure, I had to find a local
provider to make my TCP/IP connection via SLIP or PPP or incur long
distance charges.  But I can connect through any local provider whether
it be Cloud9, or a national provider like the IBM Global Network, GNN, or
even the Microsoft Network.  I connect, I bring up my mail client and I
pull my mail from ClarkNet.

So you may be thinking, "What does any of that have to do with the
CompuServe/Germany thing?"   Okay, let's look into the future.  Let's say
you're accessing the Net from Germany.  You use CompuServe as your
provider.  CompuServe, like other local German providers no longer
provides access to about 200 newsgroups.  You want access to them.  It
becomes a question of "how bad do you want it", because if you want it
bad enough there will be LOTS of options available.  You can telnet to
any one of hundreds, if not thousands, of providers outside Germany and
start-up a shell account that will give you access to those newsgroups.

The Internet, like it or not, is designed for the free flow of
information.  You can't play half way.  You either open up to the whole
thing, or you block the whole thing.  It is a broadcast medium like no
other.  It's not radio, it's not TV, and it's not print.  The censorship
models that apply to those mediums can't work in this one.  Can't work.
It seems way too late to change that.

So to the Germans and those wishing to block particular traffic:  You're
better off giving up or deciding to block the whole thing, because there
really is no middle ground here.  Fortunately, one bad apple doesn't
spoil the whole bunch.

If it's an all or nothing proposition, I think everyone will wind up
taking it all.  The benefits far outweigh the risks.   New technical
solutions for the risks (i.e. software that allows parents/teachers, etc.
to block specific newsgroups) are coming all the time.



AT&T Business Network/Interchange Head for the Web
==================================================
On Thursday, AT&T announced that its next version of the AT&T Business
Network would be created for the World Wide Web and that over the next
year, the Interchange platform would be phased out.

When I read the news on Tuesday about AT&T's write off of $6 billion
along with layoffs which will impact 40,000 of its workers, I thought it
might be a fine time to sweep a couple hundred million dollars worth of
mistakes on online ventures like ImagiNation, Interchange and PersonalLink.

With regard to Interchange, AT&T New Media Services president Michael
Kolowich said that the announcement had nothing to do with
restructuring.  Kolowich advised that they'd pretty much began focusing
on the Web as early as last summer.  He said that the move that was
inevitable, but said the reality was that creating a service as rich as
AT&T's Business Network wasn't possible yet on the Web and that if it had
been someone would've already built one.

Especially with regard to bulletin boards, I'd agree with Kolowich.  As
most of you long time readers know, I was never very bullish on
Interchange.  The vision of the client software was a good vision, but
too late.   But it hadn't quite lived up to its promise.  In its release
version, it still crashes on me regularly.  Every time it does the
databases need to be re-indexed.  It's quite annoying.  And even on a
DX4-100, it was pretty slow.  Still, I liked the look and feel a lot.  It
was user friendly and I especially liked the customization features.
Although, learning the customized features took some time, and I suspect
most wouldn't be willing to take that time.

It was more the business model that I didn't like.  With Interchange, you
signed up for specific content, i.e., the Washington Post's Digital Ink
and you also received the basic services offered by Interchange Central.
Had the service launched years ago, maybe that model would've worked.
But AOL, CompuServe and Prodigy offer a lot of content at one low price.
No specific subscriber numbers have been given, but Kolowich has said the
base is in the "tens of thousands range".  Interchange launched last
summer.  Microsoft Network launched at the end of last summer and is
probably nearing 750,000 as I type this.

Kolowich states the move to the Web was inevitable, but I imagine he
fought for the Interchange platform pretty hard.  While the Interchange
model was off the mark, it seemed like a great platform for the AT&T
Business Network.  But the software still needs some work and lacks
chat.  They might have figured the development dollars were better served
re-focusing on the Web.  Kolowich though, said that they're still working
on the Interchange platform and that a new version of the software will
be released shortly.

Most of the problem probably was coming from existing and potential
content partners.  It can be a lot of work to produce content for a
proprietary client, why not just publish on the Web and do it once?  With
America Online, CompuServe, and to a lesser degree, Prodigy, in some
cases it may be worth reinventing content for these proprietary platforms
in order to have the opportunity to get in front of millions of
subscribers.  With "tens of thousands", this isn't really the case with
Interchange.

Kolowich is hopeful that the richness of the service can be recreated on
the Web but he said that AT&T was very committed to growing the base of
AT&T Business Network subscribers on the Interchange platform.  He cited
a recent media blitz of television commercials run during recent college
bowl games and other prime time events.  He says that so far, the
campaign has yielded over 100,000 requests for trial kits.

Kolowich said he was proud of Interchange, and feels it gave AT&T a great
time to market advantage as a platform for the Business Network.  He also
said that a lot of what they've developed is transportable to the Web and
that the experience gained alone was worth a lot.  From the standpoint of
the AT&T Business Network, I'd have to agree with him.  With regard to
the original consumer based Interchange, it was a matter of bad timing.

As for AT&T Business Network, it remains to be seen how well the service
can be converted to the Web.  AT&T did not announce how the service would
be charged on the Web.  Currently, it's $24.95 a month for 10 hours of
service.

It should be noted that none of the employees of the New Media Services
group are among the 40,000 that will be laid off.

In other, perhaps related news, Don Brazeal who headed up the Washington
Post's Digital Ink effort on Interchange left his post to "go on
sabbatical" the day before AT&T announced it would phase out
Interchange.  He'll be replaced by Post technology VP Ralph Terkowitz.
According to Terkowitz, Brazeal's departure wasn't related to the
announcements from AT&T.  Terkowitz told the Cowles/SIMBA Media Daily
<http://www.simbanet.com/> that the "door was open" for Brazeal after the
sabbatical, but that "nothing definite was in place".

Many of you may remember Brazeal from last September's Jupiter Online
Developers conference in San Francisco.  It was there, during one of the
conference panels, that Brazeal claimed that the heads of the major
online services were "five wolves in sheep's clothing."  He questioned
whether there was such a thing as a good deal with an online service
provider and said the cost of producing the content was higher than any
revenue stream the content would yield.  Back then, I questioned whether
Brazeal wasn't perhaps upset that he'd aligned with the wrong wolf.



Web Advertising: Still a Drop in the Bucket
===========================================
Next week, Ziff Davis Interactive plans to announce new advertising rates
for its ZD Net Web site.   Unfortunately, the new rates are resting
peacefully on the ThinkPad hard drive and I can't access them.  If you're
super interested, keep an eye on the Cowles/SIMBA Media Daily as they'll
probably cover it.

I spoke with David Shnaider of Ziff Davis Interactive.  It is in some
ways ironic that Interchange was born in this unit before ultimately
being sold off to AT&T.  It is ironic because with regard to the ZD Net
brand, these guys are everywhere.  Literally!  In one fashion or another
they're on CompuServe, Interchange, Prodigy, MSN, and the Web
<http://www.zdnet.com/>.  Within the next 60 days, they'll be on AOL
too.  If you're going to experiment, that is a pretty good approach.

It is an approach that ZDI can take that some others can't afford to.
The reason is simple.  Everyone on an online or Internet service has a
computer. If what you write about is the various aspects of computing,
you've got a very good target audience since everyone in the audience, at
some level, has an interest in computing.  I believe this is an important
distinction.  If you publish a magazine about aviation, there may be many
people in the overall online audience who are interested in what you're
publishing, but certainly not most people.  Therefore, you have difficult
decisions about how and where to publish.  If you're a Ziff-Davis, you
can afford to try many different approaches.

In the second half of 1995, the ZD Net web site generated $1.2 million in
revenue, most of it came in the fourth quarter.  Shnaider predicts the
Web site will grow to $5 million in advertising revenue in 1996.  ZD Net
is one of the biggest Web sites on the Web.  In the end only the bigger
sites will generate much in the way of advertising revenue.  We can
estimate for purposes of discussion that total advertising revenue from
the Web will be roughly $100 million in '96, give or take $50 million.
Compared to overall advertising revenue, this represents only a fraction.

The Web is still growing though, and  more reasonable recent predictions
(from companies like Forrester research who predict 13.8 million Web
users by the end of 1996) show promise for the future.

ZD Net's biggest success story is on CompuServe where it has about
285,000 subscribers.  The CompuServe ZD Net subscribers pay $3.50/mo. on
top of the CompuServe monthly charges.  Some of the CompuServe ZD Net
content doesn't incur per minute charges, but much of it does.   ZD Net
was available on CompuServe for several years in some form at no
additional charge.  They built up to about 250,000 registered users under
the free model before going to a pay model in the spring of 1992.
Shnaider told me that they went from 250,000 to 0, and that they were
"flamed" extensively.  With time, the service built back up and surpassed
where it once was, even with the subscription fee (when it launched in
'92, the fee was $2.50/mo.)

Shnaider said that there are value added services on the subscription
service that aren't available elsewhere.  Shnaider spoke of ZD
University, an online education service offered by ZD Net.  When they
offered a course on HTML via the  CompuServe service,  they filled up the
same day it was announced.  Shnaider said some CompuServe members who
didn't make it into the class were offering to buy slots from those who
did.  Imagine that, scalping an HTML course!  Shnaider said that many of
the ZD Net subscribers on CompuServe had their accounts underwritten by
their companies.

The Web may be the next big ticket, but for now, the subscription service
on CompuServe will generate almost 2.5 times the revenue that advertising
will generate on the Web.  Shnaider hopes to begin offering a
subscription version of the ZD Net service on the Web sometime this year,
but was quick to point out that most of the magazine content currently
available for free on the Web would remain free a la the ESPN SportsZone
model.   Shnaider said he believed that there will someday be enough Web
subscribers where, like with magazines, they could charge subscription
fees and sell advertising.

Look for ZD Net to appear on AOL within the next 60 days.  Don't be
surprised to see ads there. Shnaider said that he didn't think a
publisher could make a lot of money from revenue sharing on time charges
alone.


Other Items of Interest
=======================
MSN recruited away Dan Fisher, the head of the LA Times electronic
venture, TimesLink.  TimesLink had only 21,000 subscribers after about a
year of service on Prodigy  and announced plans to migrate to the Web.
The Web site plans to beta soon.  According to the Cowles/SIMBA Media
Daily, Fisher signed a non disclosure, but quoted a source at the Times
as saying the position was, "something to do with information products
separate from the news operations at the Microsoft Network."

According to the Media Daily, Fisher, who is in his early 50s will report
to Melinda French, who heads up Microsoft's consumer division and is
married to Bill Gates.
---
FORMER NETGUIDE Publisher Don Tydeman plans to join Digital Delivery, a
company that develops agents for delivering electronic content.  One
example can be found at CMP's TechWeb is an agent that pulls content from
the Tech Web site.  The benefits are the profiling capability and that
the information can be pulled off the Web, and then be read much quicker
on or offline.  There are a couple of similar services available, and I
expect to see many more in the coming months. Other products from digital
delivery allow the electronic distribution of high quality graphic
publications.   Digital Delivery can be found on the Web at:
<http://delivery.reach.com/>.  CMP's TechWeb is at <http://techweb.cmp.com/>.
--
PRODIGY took a page from the E! Entertainment Network and launched "Chat
Soup", which will cover celebrity chats that happen online.  Prodigy will
not only cover the chats that happen on its own service, but will also
cover its major competitors and the Internet.  Will the next Greg Kinnear
be born online?
--
NEW JERSEY ONLINE plans to launch officially on January 8th, but by the
time you read this, it probably will be January 8.  Besides, it's already
there and looking pretty good at: <http://www.nj.com>

See you next week.  Say a prayer for my hard drive and please go easy on
my typos this week! :-)  My latest c|net column is available on c|net
under the personalities department at http://www.cnet.com/ .


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.


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