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=============================================================================
Seidman's Online Insider
-----------------------------------------------------------------------------
Brought to you by NetGuide Magazine < http://www.netguidemag.com >
=============================================================================
Weekly Summary of Major Online Services and Internet Events
-----------------------------------------------------------------------------
Vol. 3 Number 25 July 7, 1996
=============================================================================
Copyright (C) 1996 Robert Seidman and CMP Media Inc. All rights
reserved. May be reproduced in any medium for non-commercial purposes,
so long as attribution is given.
IN THIS ISSUE
=============
- Clarification
- Editor's Note
- Free for the Asking
Juno
c|net
PointCast
Mercury Mail
- Miscellaneous
- Subscription Info
Clarifications
==============
Last week I inadvertently ran the following line:
"Farcast also named SCOTT KURNIT, the former Prodigy#2 and former head of
News Corp./MCI's aborted joint Internet venture."
Kurnit was named to Farcast's board of directors.
Last week there was a little piece called "The Check is in the Mail,"
which mentioned that the Microsoft/NBC MSNBC Web site went down, most
probably (according to the Cowles/SIMBA Media Daily) for nonpayment of
$100 registration fee for the domain name to the InterNIC. This piece
drew quite a bit of feedback. Apparently, Microsoft wasn't at fault at
all. It seems the InterNIC was having some accounts payable problems and
cut off several sites that had actually paid. I received e-mail from
several disgruntled sites who had been cut off even though they had paid,
as well as the apology letters they had received from the InterNIC.
Editor's Note
=============
In light of the short week due to the July 4th holiday, this week you*ll
find one big piece and a few miscellaneous items. I hope all of you in
the United States enjoyed your long weekend!
Free Content for the Masses
===========================
In December 1994, Esther Dyson wrote a piece in the Release 1.0 newsletter
on intellectual property rights. In the piece Dyson predicted the
issue of intellectual property rights would become less important as free
advertising-supported content began to proliferate. I'm just reading this
now at :
< http://www.edventure.com/release1/release11294/release11294.html >,
because back in December 1994, I couldn't afford to spring for a
subscription to Release 1.0.
While I don't see eye-to-eye with Dyson on everything, the piece is still
very much worth the read today (and now it's free.) As someone who has a
"free" newsletter, Ms. Dyson's piece holds special meaning for me. I
agree with many of the ideals espoused. But for those of you trying to
figure out how to make money on the Web or Internet, this is a great frame
of reference. Here's a brief excerpt from Dyson's piece:
"Frustratingly to creators of content, the value of their work doesn't
generally get recognized without broad distribution. This means that any
artist or creator must somehow attract broad attention to attract high
payment for copies -- which means you give the first performances, books
or whatever away in hopes of recouping with subsequent works. But that
very breadth of distribution lessens the creator's control. In principle,
it should be possible to control and charge for such works, but it will
become more and more difficult. People want to pay only for that which is
scarce -- a personal performance or a custom application, for example, or
some tangible manifestation which can't be easily reproduced (by nature or
by fiat; that's why we have numbered lithographs, for example)."
I doubt I could've written that myself, but for the past two years, I've
lived it. This newsletter is on the "free" spectrum and early on I
learned that the way to get broad distribution was to give it away. This
discovery was serendipitous, since originally I felt like I was just
posting a note to a newsgroup. Release 1.0, a printed monthly newsletter
that has been around since 1982, is more on the premium (scarce) side.
I'd hazard a guess that in less than two years this newsletter will easily
have 10 times the distribution of Release 1.0, but Release 1.0 costs $595
per year. I'd estimate that Release 1.0 easily has more than 1,000
subscribers, and given that it's put together by a small team, it*s paying
for itself. It also serves Dyson and associates well as a method to
generate speaking/consulting/conference business. (Note: After writing
this I read a New York Times Sunday Magazine piece on Dyson that confirms
the above conjecture.)
I'd definitely give the site a look, as the words there are well worth the
time it takes to read them. Still, I was amused by this little note
posted on the Web site: "Occasionally it makes sense to put materials into
the public space to foster and participate in the discussion of important
issues." Okay, I buy into that theory, but let's face it, the Web site is
itself an advertisement. Why not just say, "Occasionlly it makes sense to
advertise!" Still, Dyson is on the money. A year and a half later, and
we're seeing Dyson's words regarding advertising supported free content
ring true. This week, we'll examine 4 different "free" models.
*Juno*
Unlike the other models mentioned, Juno actually is providing a service
and software for free. The deal is you get free e-mail software, a free
e-mail account, and you can connect to pull/send e-mail at no cost. The
catch? There are "multimedia" ads that get sent to you. While there are
several companies offering or planning to offer free e-mail services, Juno
< http://www.juno.com > is in the early lead. Earlier this week Juno
announced it had signed up 100,000 subscribers to its free, advertising
supported e-mail service. Juno has a problem, though. Unlike an AOL,
CompuServe, or Prodigy where a $9.95 per month subscription translates
into $9.95 in revenue, a Juno subscriber doesn't necessarily mean revenue.
With an advertising-supported service like Juno, subscriber numbers mean
nothing - usage is everything. If someone signs up for Juno and doesn't
use it, there won't be any revenue. Juno will have to come up with
creative ways to stimulate usage. If it doesn*t, it could literally have
millions of registered subscribers and not make any money.
But the first trick is getting the users, and Juno is hard it work on
that. It recently announced it will begin distributing the Juno software
to more than 6 million Marriott Honored Guest Awards and Marriott Miles
program members; in return will run advertisements for Marriott.
While Juno doesn't offer access to the Web, newsgroups, or other Internet
features, it does offer the one true killer application: e-mail. Further,
through its proprietary software, Juno has made advertising more
compelling, both for end users and advertisers, by offering graphics.
I believe Juno made a mistake, though, by doing everything via a private
network. Had Juno offered access to pull e-mail (even with its own
proprietary software) via TCP/IP, I believe it would already have much
more than 100,000 registered subscribers. For one thing, assuming Juno
stays in business, it offers a free e-mail address for life. This means
you can change access providers and still keep the same e-mail address.
The problem is, you can't use the service over an existing Internet
connection. You have to dial into Juno's network. Some might not think
that's a problem, but those of us with second phone lines (and we're
growing) and unlimited Internet access for one low price really don't like
to disconnect from our Internet connections for any reason. Seriously,
though, I believe that TCP/IP connectivity provides a more functional
service and would yield Juno more subscribers; I would not be surprised
to see them offer this in the near future.
*c|net*
c|net is just one example out of the thousands of sites that offer content
that isn't available anywhere except the Web. The original c|net site at
< http://www.cnet.com > has become a well known Web brand name in less
than a year. c|net's success may, in some measure, be a result of
targeting a common theme among all users coming to its site - it uses
computers. But c|net offers both specialized and mainstream content to
target both the mainstream person as well as the more technical folks. As
a former c|net columnist, I can say that the editorial staff is excellent
and the company seem to be hiring top-notch editorial and writing staff on
almost a weekly basis.
The shareware.com and search.com sites also make a great deal of sense.
While not technical marvels, c/net has aggregated net services in a way
that is very useful and in ways that didn't cost very much.
But for all that, c|net has one problem, you have to go to its site to get
its content, or go through the trouble of downloading, installing, and
configuring software like Freeloader or Web Whacker to pull the content
automatically for you. I believe most people will not do this in general.
If I am any example, even downloading and configuring the software is no
guarantee that it will be used on a regular basis.
I'm pretty sure the smart folks at c|net recognize that there are probably
a lot more people that would be reading c|net content if they didn't have
to go and pull it off the Web. I expect c|net will come up with a
solution for this at some point.
*PointCast*
Ah, PointCast, the darling of the net. I'm a big fan of PointCast,
available at < http://www.pointcast.com >. It is probably one of the most
compelling applications out there. PointCast "delivers" information
based on a simple profile an end user fills out. The presentation, with
scrolling stock tickers, scrolling sports scores, and scrolling weather
that rivals the Weather Channel, is very compelling, indeed. But as
compelling as it is, I find myself not using it much. I believe this is
because I am limited to its content sources. While the sources it has are
good, and the price is right (FREE!), it's not enough. PointCast could
add content all the time and still not rival the wealth of content
available on the Web. If I could set PointCast up to pull any Web content
I wanted, I'd like it a lot more.
Its screen saver technology is impressive, though, and getting better all
the time. Advertisers love it because it gives them many opportunities to
get their ads in front of people. But I hear time and time again from
people who tell me they had PointCast on their systems for two weeks, and
then took it off. Improvements to the software and additional content
will help, but it's still worth your time to take a look. If nothing
else, it's so slick that it's nice to have around when you're trying to
impress people that wonder why you're spending so much time on the
computer. Show them the scrolling weather, and for some reason people get
excited.
But for all PointCast's slickness, like the Web, it still requires people
to learn a new behavior. Even if it's only downloading the software and
configuring it for themselves, leading the horse to water can be a
difficult task.
*Mercury Mail*
Keep a close eye on the folks at Mercury Mail < http://www.merc.com >.
They've recently made their useful subscription e-mail services FREE!
Closing Bell" provides you with a closing stock quotes and news on the
stocks you select within about an hour of the market close. There's even
a WeekEnder version of Closing Bell, which pretty closely resembles my
Stock Watch, but hey, I don't care*it saves me the trouble of having to
look up quotes! WeatherVane provides personalized weather forecasts for
the cities you choose. There are personalized news and sports services,
as well, all delivered directly to your e-mailbox. As I've said before,
when it comes to e-mail vs. the Web, especially for things like delivering
news, the difference is as great as receiving the newspaper directly on
your doorstep vs. having to run down to the corner to pick up a copy.
Look for Mercury Mail to begin adding advertising to these services soon.
They even care about the cranks who are dead-set against advertising!
They can still pay the full subscription price and not get any advertising
whatsoever.
I recently spoke with John Funk, president of Mercury Mail. Funk is
counting on a couple of things to happen down the road. Primarily, he's
counting on multimedia e-mail to become more mainstream. Netscape's
e-mail already has the capability to display HTML, complete with graphics.
An upcoming version of Eudora will offer similar features. The ability to
send a picturesque message is important to advertisers. Second, Funk is
counting on getting hundreds of thousands of free subscriptions, so there
will be hundreds of thousands of opportunities each day to present ads.
(It is important to note the difference between subscriptions and
subscribers. If 100,000 people subscribe to five services each, the
opportunities for presenting ads would be based on at least 500,000
messages rather than 100,000.)
I think Mercury Mail has a good chance for success if it can get the word
out. E-mail is the most used Internet application, and some of the
services offered by Mercury Mail are extremely useful. When you fill out
profiles for the various services (on the Web), different information is
requested. For example, Closing Bell will give you the option to receive
the data as an attachment that can easily be imported into Quicken or
Excel. WeatherVane wants to know what type of e-mail program you use so
it can send you enhanced text/graphics* if your e-mail program supports
it. If you want information delivered directly to you, Mercury Mail is
definitely worth a look.
Miscellaneous
=============
AMERICA ONLINE has settled the 11 class action suits brought
against it regarding its billing practices*mostly, the practice of
adding 15 seconds of time to each login to account for the network time it
takes to make the connection, the not infrequent enough glitch where
members are billed for time in the FREE area, and rounding up to the next
minute.
The settlement calls for AOL to give all existing customers one free hour
of time. Additionally, those who were members between July 15, 1991 and
March 31, 1996 and had in excess of $300 of charges in that time, are
entitled to an additional free hour of time for each $300 of charges.
San Francisco Superior Court Judge James Robertson II, gave preliminary
approval to the settlement, which is subject to final court approval after
a public hearing.
While the problem with the 15 seconds likely affects less than one-third
of AOL's users, AOL still got off pretty easy. Why? Because they STILL
add 15 seconds to each login for network connection time and it doesn't
take nearly 15 seconds for anyone connecting faster than 2,400 Kbps. The
settlement does not require them to change this practice and I have a
problem with that. If you're actually online for 46 seconds, you'll be
billed for 2 minutes. This is because AOL adds 15 seconds and then rounds
up to the next minute. If my "network connection time" actually took 4
seconds, and I was on for 46 seconds, it would add the 4 seconds to bring
it up to 50 seconds and then round me up to 1 minute. I could live with
that. But it adds 15 seconds and I wind up racking up two minutes of time
when I actually used less than one minute of service. Fifteen seconds is
too much time to add for those accessing at speeds of 9,600 Kbps and
above.
Last week I spoke with AOL CEO and chairman Steve Case about these
issues. Case suggested that the issue wasn't the practice of adding 15
seconds itself, but that the information wasn't disclosed properly (it is
now.)
"The mistake a year ago was not making clear what we were doing and why we
were doing it," Case said.
I suggested to Case that it wasn't a problem to bill for the network
connect time if AOL could bill for it accurately. Case said that they
couldn't bill for actual time, so they estimate. The more I thought on
this, the less I liked it. First of all, I don't buy into the estimate.
If they estimated five seconds for 9,600 and 14.4, and two seconds for
28.8 and added no time for TCP/IP connections (where AOL doesn*t pay time
charges for the network connection), I'd be OK with them adding 15 seconds
to those accessing via 2,400 Kbps. It seems to me those who exceed the
five hours that come with the monthly subscription and are accessing at
speeds faster than 2400 Kbps are getting hosed. If AOL can't bill for
actual time or estimate fairly based on access speed, it ought to write it
off as a cost of doing business.
Based on hourly access charges of $2.95, the suit could add up to a retail
value of about $22 million, according to attorneys for the plaintiffs.
But it won't cost AOL nearly that much. If it gives away almost 6
million hours away (and insiders are claiming that the U.S.-based AOL
service still has not exceeded 6 million subscribers), two out of three
people won't use it. For the 2 million or so who might, the actual cost
to AOL would be more like $1 million to $2 million based on actual network
charges ranging from 50 cents to 1 per hour. Thankfully for AOL, nearly
all of its subscribers have come aboard in the past 2 years. Pulling
billing records beyond that to calculate how many increments of $300
somebody has earned is probably going to be a nightmare (and you can be
sure that it will only be giving it to those people who ask for it).
Those who are no longer members, but who were members between the said
dates can also apply for a cash award of $2.95 for each $300 of service
used. Interestingly, according to The Washington Post, (which is now on
the Web with a great site at: <http://www.washingtonpost.com > ) in an
article at:
<http://www.washingtonpost.com/wp-srv/WPlate/1996-07/06/072L-070696-idx.html>
America Online has only tagged $500,000 of funds for former customers
applying for the $2.95 awards.
--
THE C|NET IPO came out priced at $16, slightly higher than the anticipated
price of $13 to $15. It got as high as $21.25 before settling down to
close the week at $17.50. It's hard to say if the drop off was due to
lack of enthusiasm. More probably, the tech market in general had a tough
week. According to a story by Reuters, Manish Shah, publisher of
the IPO Maven, said that though c/net offers a bold vision of developing
original content for the Internet and an advertising supported model to
support themselves, the company "lacks vision on earnings."
--
PATENT THIS! The folks at E-Data Corp (formerly Interactive Gift Express)
suffered a setback this week regarding their "Freeny Patent" on
electronic commerce. U.S. District Court Judge Barbara Jones ordered that
within 60 days the company identify each product or service offered by the
18 defendants it contends infringe on its patent and explain the meaning
of unique technical terms used in the Freeny patent. A copy of the order
is available at: < http://www.patents.com/ige/june25.sht >.
--
GENIE NEEDS A GENIE. According to Newsbytes < http://www.newsbytes.com >,
Yovelle Renaissance Corp. has defaulted on its payments to General
Electric Information Services (GEIS) for its purchase of Genie. GEIS is
attempting to block the collection of credit card charges by Yovelle, and
the Newsbytes piece quotes insiders as fearing a shutdown may be imminent.
Yovelle bought the service in January and made one payment. According to
the story, it tried to renegotiate the remainder of payments because there
weren't as many subscribers as there were at the time of the sale. Since
Yovelle saw fit to raise the monthly subscription fee from $8.95 to
$18.95, this isn't exactly surprising.
Stock Watch for the Week Ending July 5, 1996
=============================================
This % 52 52
Week's Change Week Week
Company Name Ticker Close 1 Week High Low
============ ===== ====== ===== ====== ====
@Net Index IIX $245.57 -2.7% $273.13 $185.76
America Online AMER $41.13 -6.0% $71.00 $22.25
Apple Computer AAPL $19.50 -7.1% $49.88 $19.25
AT&T T $60.00 -3.2% $68.88 $51.38
BBN Corporation BBN $20.88 -4.0% $48.75 $20.25
CMG Information Svcs. CMGI $25.00 -7.4% $50.25 $9.63
c|net CNWK $17.50 --- $21.25 $17.00
CompuServe CSRV $20.56 -2.7% $35.50 $20.00
CyberCash Inc. CYCH $47.75 -12.8% $64.75 $24.50
Excite Inc XCIT $7.25 -13.5% $21.25 $6.75
FTP Software FTPS $7.13 -13.6% $40.63 $6.88
H&R Block HRB $31.75 -3.1% $48.88 $31.50
IBM IBM $97.88 -1.1% $128.88 $83.13
Lycos Inc. LCOS $10.00 -10.2% $29.25 $8.75
MCI MCIC $25.38 -1.0% $31.13 $20.88
Mecklermedia Corp. MECK $19.88 -1.8% $24.50 $8.50
Microsoft MSFT $118.38 -1.5% $125.88 $79.88
Netcom NETC $25.00 -7.4% $91.50 $19.22
NetManage NETM $11.00 0.0% $34.00 $9.38
Netscape Comm. Corp NSCP $58.25 -6.4% $87.00 $22.88
Open Market OMKT $21.50 -11.8% $42.28 $21.50
Oracle Corp. ORCL $37.13 -5.9% $40.38 $23.31
PSINet Inc. PSIX $10.38 -9.7% $29.00 $6.75
Security First Bank SFNB $33.00 0.0% $45.00 $31.75
Spyglass Inc. SPYG $19.88 -7.3% $61.00 $14.38
Sun Microsystems SUNW $55.75 -5.3% $67.13 $19.75
UUNET Technologies UUNT $65.00 -1.9% $98.75 $24.25
VocalTec LTD VOCLF $8.88 1.5% $20.75 $8.50
Yahoo YHOO $20.00 -4.8% $43.00 $18.25
Subscription Information
========================
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