Copyright 2000 John Zipperer.
6 and the Laffer Curve
By John Zipperer
(11/14/00) Netscape Communications released Netscape 6 Tuesday and promised a worldwide push to get the Internet suite adopted. The long-delayed Web browser (and related programs) is the first sign of real life in years from the once-mighty Netscape.
Netscape, a subsidiary of America Online, might do well to study the Laffer Curve. As you supply-side fans know, the Laffer Curve is the bell-shape chart purporting to show that after taxes are raised beyond a certain point, actual revenue to the government would fall instead of rise (thanks to tax-avoidance strategies by taxpayers). The theory seems sound enough; however, for decades the argument has been over exactly what that point is at which revenue begins to decline.
Netscape's market share has plummeted in the past few years from more than 90 percent to maybe a quarter of the market. That raises the question of whether there's some point at which Netscape stops mattering at all, some point beyond which the program could print money for people, and they still wouldn't use it. But like the Laffer Curve, there's no clear way of knowing what that point is or if Netscape has already dropped below it.
We should hope it hasn't already reached that point, because Netscape 6 is a nice suite of Internet programs. As well as offering a welcome change in basic design from previous versions of Netscape, the Navigator browser is integrated with Instant Messenger, Composer, Netscape Mail, and other features such as news feeds, searches, and translations. Individual users can select other skins for the window, or they can make their own; corporations can customize the browser and distribute it free, something 95,000 companies have signed up to do, according to Netscape.
Netscape is unveiling international versions of Netscape 6 covering the usual culprits: French, German, and Japanese. In future months, it plans to offer Chinese (traditional and simplified versions of that language), Korean, Italian, Swedish, and Spanish. In addition, the suite will be distributed over the Internet and on CDs, some of which will be included in various Time-Life magazines.
But will any of that matter in the face of the on-the-ground fact that Microsoft's Internet Explorer is so well integrated into the Office suite of programs that corporate IT departments simply find it easier to support that one browser rather than a variety? (After all, how many IT departments promise to support their users' Opera Web browsers?)
The life-and-death struggle of the browser wars is long over. To their credit, Netscape and its parent don't seem to be fighting that battle; they've moved on. The standards-compliant Netscape 6 runs on the Gecko engine, which Netscape Communications sees as the base of a range of platforms that parent AOL will use in its plans to get the online service to consumers over multiple devices. And that may be the real reason that, in the end, AOL and Netscape still care about its Internet suite of programs.
Enjoying the Search for the Killer App
By John Zipperer
(11/7/00) Harper's Bazaar magazine is going to produce a miniaturized print version of itself. It'll be half the size of the regular print magazine and will include all the advertising and editorial content of the full-size edition -- which will continue to be published.
In short, it's ridiculous, but editor Katherine Betts told the New York Times that she was inspired by people's obsessions with handheld devices. Naturally, if they use a pager or a Modo, then they'll want a small print magazine, right?
Not likely, as the Modo itself can attest. Modo is that device that was updated nightly with events and restaurant listings. Why people would want to carry around a separate device just to get such listings always escaped me. It apparently escaped other people, too; the Modo recently went under.
But Bazaar is just one example of how clueless the entire effort to come up with new products and services is. I'm tempted to narrow that to "the entire e-business effort to come up with new products and services," but let's not forget that nine out of 10 restaurants have very short existences. Guessing what consumers and businesses will take to is just that: guessing.
And yet, there are still some people who think the "make and sell" process works. That's where a company makes a product and then hands it off to marketing to sell it. At the eBook World conference in New York City this week, literary agent and head of eRead Richard Curtis reflected on the lack of consumer demand for e-books: "Whether they attain consumer acceptance is a matter of marketing."
It is enough to make us envy someone like John Trobough, CEO of Gravitate, which sells a software platform for developing applications for fixed wireless services. He's in a nice place, because his product, which he says is agnostic toward device and location-based technologies, can be used regardless of the types of applications being built on it.
So he can afford to be agnostic himself about the eventual killer apps in his field. "At Gravitate, we create tools so people can create the killer applications," Trobough told me recently. "In the U.S. [wireless] marketplace, the killer app will not be something we predict."
He points to the surprise mobile services that are popular in Japan and South Korea respectively: daily cartoon downloads and husband finders. We might add the popularity of NTT DoCoMo's service that lets you know when your favorite type of fish has been caught.
Maybe the uncertainty about what will have traction is why I found the advice from Stephen King's literary agent, Ralph Vicinanza, particularly valuable. He acknowledged that things like computers, the Internet, and e-books all started from people who loved what they were doing and were willing to take a chance; maybe it'll work, maybe it won't. Either way, the process itself "should be fun," Vicinanza said.
Those are not words to warm the hearts of bankers, but they should help the dot-comrades who've been taking such a beating lately. Just like the early Net creators and even more like the entrepreneur opening her own restaurant, you shouldn't be in this business unless it's fun and rewarding in some way other than just windfall stock cash-ins.
(Internet Whirl is a weekly column written by John Zipperer, associate managing editor of Internet World magazine. It appears every Wednesday.)
Whirl: Small Net Companies Are Still Net Companies
(10/30/00) A friend's e-tail site recently went bust. It didn't make the headlines, because he didn't have 400 employees -- only 20 -- and he could only dream of something as exotic as a market cap. Instead, he had a sports apparel business, a number of partnerships with bricks-and-mortar shops, and too few customers.
Another friend of mine is fairing better, though his business model -- a free television news site and the syndication of his content through other sites -- has everything but the immediate-profits element in place. Still another friend is planning his own business site for information and products aimed at outdoor-sports aficionados.
What do all of these people have in common (besides being my friends, that is)? Each of them runs an e-business that is not only small, but whose creators have no intention of having it balloon into a giant. But you'd never know such people and companies exist by following the popular (and much of the specialty) Internet business reporting. There, the focus is on IPOs and stock options and mergers and acquisitions.
Just last week, Bill Gross, chairman of incubator idealab, explained to the Internet World Fall 2000 crowd in New York his criteria for funding interesting e-business ideas. Beyond the elements that would be important for any business -- good management and interpersonal dynamics between management personnel, for example -- he emphasized the need for the proposed business to have a value proposition that so blows away competitors that it can market itself. Furthermore, he promoted the Internet as a force that can create businesses with high profit margins. (That last part was an interesting contrast to a point made by another speaker, former U.S. Treasury Secretary Robert Rubin, who said the transparency and decentralization of the Internet should create tighter profit margins.) Those just aren't the same concerns as those of the band wondering how to sell its music directly over the Net or the real estate professional creating an online property forum.
So, fine, the large companies are behemoths that can't be ignored. And those upstarts with the sexy value propositions will naturally attract attention; whether they are worthy of financing is a case-by-case matter for individual investors. But the world of Internet business goes beyond such obvious topics and includes those of my friends, who are also using the unique distribution and networking aspects of the Net to be in businesses that they couldn't logically pursue in a pre-Net world. If they're low-profit areas now, they were no-profit areas before, fit only for a rich person willing to indulge a fancy.
This isn't just about gooey good feelings for independent business people. Even these small companies need ISPs, promotional services, maybe routers and servers and databases and everything else a company requires to be an online business. Also, they can enter into partnerships with other small and large e-businesses to syndicate content or be included in marketplace catalogs.
In the end, unraveling the networking interconnections among independent players is often more interesting than figuring out how all the elements of an AOL Time Warner will work together.
(Internet Whirl is a weekly column written by John Zipperer, associate editor of Internet World magazine. It appears every Wednesday.)
Voteauction.com comes back as Vote-auction.com
Voteauction.com was shut down after the Circuit Court of Cook County (Illinois) issued a temporary restraining order and injunction against it last week. (See IWN Oct 18, 2000.) The court was responding to charges by the Chicago Board of Election Commissioners that the site violated state and federal laws against vote buying, a subject officials of the board admit they’re particularly sensitive to in a city with a history of political corruption. But Voteauction.com, claiming that the election system is already so corrupt that voters might as well get some of the money, has wriggled back as Vote-auction.com and a slight redesign of its site.
That the site returned at all is testament to the owner’s apparent belief that the site still has untapped potential. That it returned in largely unchanged format and without a sense of irony suggests that it is intended as a serious venture, and not the parodic anti-corruption statement some supporters have claimed.
The vote-buying site issued a press release announcing the new URL and blasting Chicago’s commissioners and its own former registrar, Domain Bank, which was named in the Chicago suit. Domain Bank has cooperated with authorities by removing the original site’s DNS from the Network Solutions database. In its release, the site claims that Domain Bank "‘politely asked’ Vote-auction.com to provide them with a USD100,000 bond for potential legal costs. Vote-auction.com decided not to comply."
Charging the Chicago Board of Election Commissioners with using "indirect means of repression" by targeting its service providers, Vote-auction.com may think it has some international leeway by being owned by an Austrian businessman and being on what appears to be a German or Austrian ISP. (The release mentions silversurfer.at, though www.silversurfer.at takes one to an Austrian water surfing site; however, there is a placeholder site at www.silver-surfer.de, and the release is datelined Berlin.)
But Vote-auction.com doesn’t have a leg to stand on, according to Thomas Leach, public information director for the Chicago Board of Election Commissioners. "This is in complete violation of the court order we got last week," he said, adding that the order forbade Voteauction.com from operating under a different name. His organization is due back in court on October 30; it is seeking a permanent injunction against the site and is also seeking damages on the basis of a class action suit filed in the name of the election commissioners.
Leach repeated his assertion that his organization would turn over to the Illinois state attorney’s office the names of anyone registered on the site if it gets a list of the users. "We’re cautioning anyone in the state of Illinois -- especially in the city of Chicago -- not to log on to that site and register to bid."
For its part, Vote-auction.com continues with its no-apologies offense, claiming that targeting Domain Bank was an "illegal practice in total violation of standards set by ICANN." If they believe that, they can press the matter in Cook County Circuit Court on Monday; they failed to appear at last week’s hearing.