============================================================================= Seidman's Online Insider============================================================================= Weekly Summary of Major Online Services and Internet Events-----------------------------------------------------------------------------Vol. 3 Number 12 March 24, 1996=============================================================================Copyright (C) 1996 Robert Seidman (robert@clark.net). All rightsreserved. May be reproduced in any medium for non-commercial purposes,so long as attribution is given.IN THIS ISSUE=============-WOW!-Ah, the Familiar Wars: MCI vs. AT&T-Prodigy: Dead or Alive?-The Future of AOL-NewsWorthy Notes-Disclaimer-Subscription InfoWOW!====It wasn't easy, but finally, I saw WOW! It was worth the wait.(Note: Walter Mossberg wrote a mostly positive view of WOW! in his recentcolumn which you can see, at least until Thursday (March 28)at: < http://ptech.wsj.com >. I recommend that all of you who haven'tseen the column check it out, because it gives some very interesting viewpoints that are somewhat in contrast to what I've been saying. )I haven't used WOW! much yet, but I've used it enough to know one thing:It's easy. In the end, being easy was probably the most important thingthey were trying to accomplish. They succeeded in a big way. Rememberthough, WOW! is a service aimed at new users. I believe new users willfind it EXTREMELY easy. It is, in all probability, the more experienceduser who'll have a hard time with it. There are certain things aboutWOW! that I found annoying (i.e., I can't maximize the Web browser allforms stay the same size, etc.) but these things were done for a reason,they wanted the user to always be able to navigate the system."The navigational buttons are always in view so that the user never canget lost," said Alexander "Lex" Crosett, VP, Technology and Developmentfor CompuServe when asked about why I couldn't resize windows. There'scertainly logic in the design, and I wondered as I navigated through WOW!whether I found certain things annoying only because I'd gotten so used todoing things the "wrong" way, that I am not comfortable when I'm forced todo it the right way. New users will find WOW! a breeze to navigate thoughexperienced users will have trouble with features that are lost in theeffort to always present a map to users.For a time, I had difficulty understanding why CompuServe would spin offWOW! as a separate service. I felt, if WOW! was a better interface, whynot just throw everything on CompuServe over to WOW! I understand now.When they said they were targeting new inexperienced users, or people whojust don't care about tinkering they weren't kidding. You have to have aseparate brand for the people who like to tinker, because they probablywon't like WOW! According to Crosett, experienced folks will want to hangon for the 3.0 version of the CIM software for CompuServe which iscurrently in alpha test, and will soon be in Beta. I originally thoughtthat CompuServe was holding back on me, that ultimately they'd rolleverything over to WOW! I can see now that's not the case, and as such,the dual brand makes a lot more sense.Let's face it, most people don't want to tinker they want to use myservice. It's not uncommon really. I recently bought a new TV and it haslot's of bells and whistles. Dual tuner picture in picture, closedcaptioning, closed captioning in Spanish, hook it up to the stereo and itis amazing. Mostly though, when I watch TV, well, I just watch TV. Nopicture in picture, no closed captioning in Spanish, no blasting thesurround sound through my stereo system. Watch TV. WOW! tries to makegoing online that simple, and to the extent that is even possible, I thinkthey succeed.WOW! still has their work cut out for them if they hope to make a run atAOL, and it will take some time, but the premise may be right. They'restill limited to Win 95, and considering that an integrated .dll styleversion of Microsoft's Internet Explorer is the browser for WOW, it isn'thard to understand why (since the 3.1 version of Internet Explorer isstill in beta). I'm sure there are other reasons why Win 95 has been usedfrom a design perspective. It's also not hard to understand why you needa CD-ROM. The full install of WOW! is 49 Megabytes, and that's biggerthan some operating systems by itself. But WOW! is the "Certs" of onlineservices. You see, it's "two-two" two online services in one.It's an adult online service as well as an online service for kids. WhileI understand the reasons for Win 95 and CD-ROM, I think these qualifierswill hold WOW! back until the number of Win 95 desktops overtakes thenumber of Win 3.1 desktops (There are currently 20 million copies of Win95 out there according to Microsoft, and about 115 million Win 3.1desktops according to PC Software analyst, Mary Meeker of Morgan Stanley.)The basic premise of WOW! is in both the kid and adult versions, but thelook is entirely different, and the content, and what may be accessed onthe Net is entirely different. I think I liked the kid's WOW! better!That's because with adult WOW! though I knew it wasn't aimed at me, themore experienced user, I felt sort of cheated that it wasn't aimed at me.With the kids version, I didn't feel that animosity. Plus, I really likedthe cartoonish look a lot.Last week, I said that I thought the all-you-can-eat pricing of $17.95wouldn't appeal to new users the way you might expect. In defense, RichBaker, director of communications for WOW! told me that one thing theyfound was that people wanted predictable pricing."WOW! offers predictable pricing. You can have up to six family memberson the account, and our pricing encourages all of them to use the serviceas much as they want."I understand the sentiment, but still expect first-timers will balk at the$17.95. I agree people want predictable pricing. Unfortunately forcompanies trying to make money, they want that predictable pricing to befree! If it isn't free, $17.95 doesn't sound as good as $4.95, or $9.95,even if it is all you can eat.WOW! still has some bugs to work out, lacks a lot in content (but makes upfor some of that with unlimited access to the Web at one low price), aswell as some features that I think even "inexperienced" users would want.I suspect they'll get the bugs and content issues worked out, and hopethey'll do the same with the features, but I'm not as confident there.I'll go into more detail about WOW! beginning next week, when the serviceofficially launches.Ah, the Familiar Wars: MCI vs. AT&T===================================This is a war we're all familiar with and a war that's entertained us inour living rooms for years. And while MCI one the battle to break up "thephone company", AT&T is winning the war for the long distance market.Fortunately, in this kind of war, MCI is not a loser. It's a battlefieldwhere coming in second place can be pretty darn lucrative.This week, MCI reacted to AT&T's announcement by launching their ownflat-fee service for $19.95/mo. Also, for MCI customers, there will be a"5 hour free" plan like AT&T's, but unlike AT&T's, it will only run untilMay 31. AT&T is offering five free hours to AT&T subscribers for a year.In the MCI plan, after May 31, it will be, $9.95/mo. for 5 hours, and$2.50 an hour after that. To be honest, I think their $9.95 pricingwon't hunt very well vs. AOL, CompuServe and Prodigy. If it were$4.95-$7.95, maybe. I believe, that the flat-fee services offered byMCI, AT&T, SpryNet and now Netcom, will gain a lot of customers currentlyspending more for their access, however, those folks don't represent thebiggest part of the market.Like AT&T, MCI's flat-fee plan will be $5/mo. more for those who don't useMCI's long distance service."AT&T seems to be building its Internet service out of newspaperheadlines, MCI's service is built on a foundation of fiber," MCI's VintCerf told the New York Times.MCI will increase it's network capacity to 155 megabits per second fromthe 45 megabits per second system in place today. They say doing so willhelp with some of the net congestion. Indeed, this will potentially helpa lot for portions of the Net carried by MCI, but outside of that,congestion will still be a problem unless other carriers increase theircapacity, too.Cerf may be right about AT&T, but I think the same thing could be said forMCI as well. MCI missed a tremendous opportunity to gain mindshare overthe last year because their Internet MCI offering was relatively highpriced. Had they begun offering inexpensive pricing a year ago, it mighthave made a big difference. Hindsight is 20-20, but in November 1994,when MCI first announced their Internet offerings, I said that the pricingconcerned me, but I was optimistic to see a company like MCI got in thegame with all their marketing might.Thing is, for all their marketing might, they didn't really do anything.I expect there's a simple reason for that. What MCI understands andexcels at is selling long distance phone service. Getting their salesreps to get fired up about selling Internet access wasn't in the cards.MCI, who was the first long distance company to announce access, buthaving done relatively nothing with it over the last year, they've beenreduced to reacting to AT&T's announcement.AT&T may be fighting it's battle in the headlines, but it's a formidablefoe. They've got bigger marketing muscle than MCI, and a lot morecustomers to market their goods to. MCI may have played a bigger role inthe Internet. They may have Vint Cerf, one of the founding fathers of theInternet. And they were be the first of the long distance companies toannounce access, but make no mistake, they're chasing AT&T now.Prodigy: Dead or Alive?=======================A few weeks ago, Todd Copilevitz, who writes a technology column for theDallas Morning News, called to discuss Prodigy for a piece he was doing.He asked me whether I thought Prodigy was dead, and I told him "No", butthat I thought they were dying.In Copilevitz piece last week, Prodigy COO said that anyone that thinksProdigy is dying hasn't been looking at them lately. They had been dying,according to Lansing, but he seems to think the resurrection is inprogress. He attributes this resurrection, in part, to the work Prodigyhas done in developing content.Developing content to compete should the day come when content and accessare separated is important. Unfortunately, for Prodigy, America Online isdoing the same thing. There can only be so much content that can makemoney. That might be quite a bit of content, mind you, but that is notthe original premise of the Prodigy service. Oh they're hiring contentgurus a-plenty, but without a lot of customers, that won't save them.America Online is being extremely aggressive with the creation of content.There's the Greenhouse program, and there's also Digital City, whichsooner or later will come to a city near you, as well as other new contentthat falls outside either of those programs. America Online has over 5million subscribers, and while Prodigy doesn't release statistics, it'spretty widely accepted that Prodigy is in the 1.2 million or so subscriberrange.If and when the online model does finally tip over content will beimportant. Seemingly though, the more eyeballs who were aware of yourcontent PRIOR to the end of the model, the better off you are. AOL canpotentially expose their content to over 5 million people, about 5 timesas many people as Prodigy. Oh, I know, but if we put our content on theWeb, everyone can see it including AOL members! But this isn't likecable, where if you are blessed to have a channel, you'll get eyeballs.There are so many channels, there's no way to keep up with it all. Thebigger you are the better your opportunities to showcase content at the"front door".Developing brands is a great thing to do, but you need eyeballs. Prodigyneeds money. Money to finish the service, money to acquire customers andmoney to promote it's content. Money to get eyeballs. AOL and CompuServeboth have a lot more eyeballs than Prodigy. Content alone isn't going tosave them.The Future of AOL=================I held an impromptu Q&A session with Ted Leonsis, president of AOLServices Co. Specifically, I was looking to see the view AOL had onseparating access from content, and what the AOL vantage point was onoffering a flat-fee price.Leonsis jumped directly into Marketing 101 with an explanation of the fourgrid service matrix. No or low price/low value, low price/high value,high price/low value, and high price/high value. I've worked for a coupleof really strong marketing types in my day, and I've seen the matrix manytimes in many ways. I've even had it drawn for me on a bar napkin before.Leonsis considers the AT&T five hour offering in the first grid. Lowprice/low value. He felt that the consumers get access and the tools, andwere pretty much left on their own to figure it out. Quite naturally, hesees AOL in the low price/high value grid. He points to the Netcom styleunlimited access pricing (I assumed for their shell account service) as anexample of high price/low value. While I agree that style service is notfor everyone, and certainly not for the average consumer, I think thereare individuals who get great value out of such services, but in themainstream, I'd agree with Leonsis. In the fourth grid, he cited anAT&T/AOL combo as an example of high price/high value. He alluded thatwe'd soon see some interesting pricing plans for access via TCP/IP to AOL."But a WOW like intro IS NOT consumer friendly," said Leonsis. "The realconsumer sweetspot is UNDER ten bucks. So, we will look at a lower pricepoint, and use GNN as a flanker brand."Leonsis said he felt GNN was doing very well with over 150K subscribers."(GNN) will pass Netcom in less than 3 months to become the biggest ISP,"said Leonsis. I find that prediction a little surprising consideringNetcom has more than twice as many subscribers and it has taken AOL fivemonths to get to half Netcom's size.I asked Leonsis about whether he saw separating content from access as anissue in the near term."We don't necessarily see that happening, but we are ready. That'swhy we have been investing in the brand, in content and community," saidLeonsis. Leonsis sees continued strong growth in the near term."My bet is that we will get to 10 million members in 12 to 18 months, andthen have another 1 million come from other sources a la AT&T," saidLeonsis. "Remember today, only 1.5 percent of all AOL traffic comes overTCP/IP," he added.Leonsis also believes that for all the numbers game of the Net, that thereare less than a million consumers paying for direct dial Internet accessservices (like Netcom, GNN, and the local ISPs)."The net is a day time network. (The) Netscape home page peaks at4:00 p.m.," Leonsis said. "We just get started at 6:30 p.m. and we peakat 10:30 p.m."As for the AT&T deal, Leonsis said they would do "interesting pricing" fortheir members and will probably come up with a pricing plan for anyonewishing to access AOL from the Net.When asked if he envisioned any offering from AOL in the near term thatdidn't have connect charges, Leonsis replied, "Yes, I do."I believe you'll see some sort of $20/mo. or so unlimited access plan madeavailable via the Net, and I wonder if that won't take a chunk out ofAOL's revenue stream as high spenders defect to a flat-fee net account anda flat fee AOL account. They might wind up paying $40/mo. for theprivilege, but for members currently paying $40 or more on AOL, it will bea good deal for the members. If that happens, on those customers, AOLstands to lose at least $20/mo.Newsworthy Notes================UUNET WITHDREW their registration statement to offer 6.62 million sharesof its common stock to the public. UUNET said they withdrew the offer dueto a drop in the stock price over the last several weeks."We believe that the market for Internet-related stocks has beenaffected by several recent industry announcements, especially AT&T'sconsumer Internet offering. We have not been able to communicate ourmessage to the market effectively since we were in the quiet periodassociated with the registration process," said UUNET president JohnSidgmore in a statement from the company."AT&T and MCI have both been competing in the business sector for quitesome time with mixed results, and are now making a major thrust into theconsumer sector where we do not compete. We believe UUNET is the leaderin the business marketplace, and we want to communicate that messageclearly and effectively," said Sidgmore.--SOFTBANK CORP. OF JAPAN is looking at investments in more than 30Internet-related companies and recently announced deals with Microsoft andInteractive Marketing Inc. as well as considering increasing itsinvestment in Yahoo! Softbank plan to become an infrastructure providerfor the Internet and is not trying to compete with technology companies,according to a story by Reuters.--AN INTERESTING MODEL. AT&T Business Network announced the "beta" of it's"Lead Story" service on the Web at: < http://www.leadstory.com >.It is interesting because basically the site takes a hot topic and pointsto in-depth coverage on other Web sites. I find it an interestingapproach to adding "editorial" value, and if AT&T New Media Servicespresident Michael Kolowich can convince the consumer side to showcase LeadStory on their home page, it could be a very interesting advertisingmodel, and some have commented to me that AT&T could potentially sell thelinks to the in-depth coverage (i.e., CNN pays for the link.) Ethics bedamned.--PRODIGY NAMED their recently announced $1/hour Internet access service,officially unveiling it as "ACCESS NET DIRECT". The service, which iscurrently in a market trial in New York City, is currently only availablefor Win 95 and Win 3.1, but a Macintosh version is planned when theservice nationally launches later this year. You can find outmore at: < http://www.and.net >.--INDECENCY ON TRIAL? The court case on whether the "indecent" provisionsof the recently passed telecommunications reform are legal under theConstitution began this week in Philadelphia with the three judge panelgetting an Internet primer. So far, it's looking pretty good for those ofus opposed to the provision. U.S. District Judge Stewart Dalzell, one ofthe three member panel said, according to a story by UPI:"The very exponential growth and utility of the Internet occurredprecisely because governments kept their hands out of this and didn't setstandards that everybody had to follow."Exactly.--DRAW 'EM IN PART I. As a way to increase traffic to your Web site,Newsbytes < http://www.newsbytes.com > is offering business a chance topost Newsbytes' "Top Stories" on Web sites at no cost. I can tell youfrom my own, not that many hits Web page, that putting up new contentregularly really does make a difference. Find out more at:< http://www.newsbytes.com/subinfo.html >, or contact Newsbytes editor,Wendy Woods by e-mail at wendy@newsbytes.com .--DRAW 'EM IN PART II. Check out "The PostMaster", an automated URLannouncement service from NetCreations. It lets Internet marketers fillout one form, click on one button, and, within minutes, publicize theirclients' Web sites to more than 350 Web directories, search engines, mediaoutlets, and what's new and what's cool lists. I'd try it myself, but Iconfess, I don't really care about drawing traffic to my site as much asyou probably do! Find out more at:< http://www.netcreations.com/postmaster/ >, or contact Ryan Scott atrscott@netcreations.com .--See you next week.Disclaimer==========I began writing this newsletter in September 1994, at the time Iwas working for a technology company that is now owned by MCI.In March, I began working for International Business MachinesCorporation. 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 theBODY of the message type:SUBSCRIBE ONLINE-L FIRSTNAME LASTNAMEExample: Subscribe Online-L Robert SeidmanIf 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:<http://www.clark.net/pub/robert>. 2 & ' soi0312.txt AOrmAOqc AOrmAOqc ¡èt [² L ⁿ7²└ⁿw∙ ■w°ÿ~s° ╧ √∙ ∩╟?√≤ τ≤┐²≤ ≈∙┐²≤ ≈ⁿ▀ⁿ≤ ≈■▀■s ≈■╧ ; ≈■τ ╣ τ■≤═ τ■√Σ ╟■ⁿ≡?■■?ⁿ 7ⁿ ? ≡∩ⁿ â∩° Ç∩° ∩≡° ╧α 2 ╖vx b 2 styl
