Seidman's Online Insider - September 21, 1997

Thema:       Seidman's Online Insider - September 21, 1997
Datum: 22.09.97 02:59:59 MEZ
From: robert@onlineinsider.com (Robert Seidman)
Sender: ONLINE-L@PEACH.EASE.LSOFT.COM (Seidman's Online Insider)
Reply-to: robert@onlineinsider.com (Robert Seidman)
To: ONLINE-L@PEACH.EASE.LSOFT.COM

============================================================================
           Seidman's Online Insider - Vol. 4, Issue 32
   Visit the Online Insider on the Web < http://www.onlineinsider.com >
============================================================================

Copyright (C) 1997 Robert Seidman. All rights reserved. May be
reproduced in any medium for noncommercial purposes as long as
attribution is given.

IN THIS ISSUE

- Editor's Note
- Corrections
- Survey Participation
- A Little More on AOL and CompuServe
- Hyping the Community Chest
- CNET Launches Snap! Online
- Stock Watch
- Subscription Info


Editor's Note
=============

Be sure to check out the new "Side Rant" at:
< http://www.onlineinsider.com/html/side_rant.html >.


Here's some stuff running in the "Insider Talk" discussions:

For some early thoughts on the new WebTV check out:

< http://www.wellengaged.com/engaged/seidman.cgi?c=online&f=0&t=9 >

For discussion on Microsoft abandoning Java on its web sites see:

< http://www.wellengaged.com/engaged/seidman.cgi?c=web&f=0&t=10 >

For some early thoughts on the redesign of MSNBC see:

< http://www.wellengaged.com/engaged/seidman.cgi?c=web&f=0&t=11 >


Corrections
===========

I haven't really messed up in a while, so I was due for a bad week, I
guess. Last week I wrote that MindSpring had purchased Delphi's customer
base. That isn't the case. MindSpring picked up about 1,100 Delphi
customers who were still accessing via Delphi's lines, but MindSpring
didn't acquire those customers who access Delphi through Telnet or the
Web via other access providers

I also wrote that if CompuServe moved totally away from its text-based
system, it would cause problems for all the third-party software that
automates retrieval of information on CompuServe. I'll spare you the
technical details, but the bottom line is that isn't the case. The
third-party software will still work.

Survey Participation
====================

Planetary News (Steve Outing), Catchup! Communications (Norbert
Specker), and Interactive Marketing & Research (Riley Kirby) are
collaborating to conduct quarterly international surveys of
interactive-news professionals. Detailed results of the research will be
given FREE to those QUALIFIED individuals who take part in the surveys.
Take 15 minutes to fill out the surveys once every three months, and you
get an electronic version of a report on the results that otherwise
would cost you $400.

If you're interested, you can find more information on the Web at:
< http://www.planetarynews.com/surveys.html >

A Little More on AOL and CompuServe
===================================

Quite a few folks deemed it necessary to lecture me on the value of
brands, in response to last week's piece about AOL and CompuServe. I
chastised AOL Networks president Bob Pittman for using the cable brand
analogy to sell CompuServe employees on AOL's intent to keep CompuServe
a separate entity.

I understand the value of brands. I understand why there's Budweiser,
Michelob, Busch and all the "light" products coming from the same
company. I believe very much in brands and brand diversity. But I don't
think America Online needs two diverse entities to maintain separate
brands. There could be, in theory, a CompuServe-branded version of AOL
that provided CompuServe customers with everything they have today.
Sure, AOL would have to change some things to accommodate this, but in
the end, I think that makes more sense than maintaining two systems.
Several CompuServe customers wrote to say they wouldn't consider using
AOL unless AOL offered direct billing -- their companies' accounting
systems require it. So I passed this info on to AOL chairman and CEO
Steve Case with a footnote saying, " Of course, if you really, really
plan to leave it as a separate stand-alone service, I guess that doesn't
matter. :)"

Demonstrating that AOL's Internet e-mail gateway does have the ability
to zoom sometimes, Case fired back within minutes with "We do plan to
leave it separate so these companies will continue to get what they want
the way they want it."

I replied with a message saying that I could understand a CompuServe
brand, but not separate systems. I offered to bet lunch that in a
couple of years there would be only one system. He didn't reply. I
can't complain; over the years Case has been extremely generous about
granting me access. I meant no disrespect, as I have a great deal of
respect for Case's vision and what AOL has accomplished. While the
first crack at Seidman's 25 strove to look at the landscape "right now,"
if it had been a measure over the continuum of my entire online life
(more than 15 years now), Case would be the undisputed No. 1 in my
book. I get a lot of e-mail giving me grief over my love of guys such
as Case and CNET's Halsey Minor. Even my girlfriend rags me, making
cracks like "How's your boyfriend Halsey and your boyfriend Steve?"
(Then she smacks her lips making kissing sounds).

So, it's not a matter of respect. It's just that over the long term,
keeping the systems separate makes no sense to me. I suppose if you're
Steve Case, you could easily slip into thinking "Well, Mr. Online
Insider, I don't really care what you think. *I'm* worth millions and
MILLIONS of dollars. *I'm* on the cover of this week's magazine! And,
well, you, Mr. Online Insider, are not." And I wouldn't fault that line
of thought one bit. Nonetheless, I'm still game for betting lunch. If
I lose, it's "Big Kings" at Burger King for Steve and if Steve loses, he
can take me to Morton's!

The prediction goes something like this. In a couple of years there
will be only one system.

Me: So, you've decided to consolidate everything into one system.

S.C.: Yes. We recognized that there were a couple of issues with
CompuServe subscribers. One was they had many very loyal customers who
loved the service they had. It's not unheard of in the industry.
Prodigy faced a similar predicament with those loyal to the "classic"
Prodigy service. The other issue was CompuServe provided content and
services that AOL did not. With time, we have improved AOL to provide
such services. While we understand there were hundreds of thousands of
people loyal to the CompuServe system and various interfaces and
third-party software, we could not continue to justify the expense of
two separate services. We have added some of the functionality that
enables existing third-party software to access the system. We feel
this will accommodate a majority of the users. We believe that the new
AOL offers a better interface for accessing the same quality content and
community CompuServe has provided.

This week PointCast announced 10 new channels (effectively 10
differently branded versions) of PointCast. There will be a PointCast
for health and medical professionals, a PointCast for the financial
community, and so on. But it's all being done within the existing
framework of PointCast.

There's nothing CompuServe does that AOL inherently cannot do as an
online service. There are issues to contend with such as CompuServe
users' not having the minimum hardware and software requirements for
accessing AOL and the lack of third-party software to automate aspects
of the AOL experience. Those issues should be resolved in a
well-thought-out, strategic matter. But if the rest of the issues are
along the lines of "CompuServe is perceived as more reliable, with
better content and better forums," I think AOL would do well to solve
these perception problems by improving its core service. One of AOL's
strengths has been Case's recognizing early on that more important than
dollars was market share. Build a dominant market share and figure the
rest out later. It's an oversimplification, for sure, but if you look
at it that way, AOL has executed almost flawlessly. The adage says
there's strength in numbers.

Wouldn't AOL be better served figuring out how its 9 million existing
subscribers can enhance the 2.6 million CompuServe subscribers'
experience than by keeping CompuServe a separate, elitist service? Of
course, if AOL decides to drop the flat fee for CompuServe or make it
$30 to $100 a month, AND the existing subscribers actually take AOL up
on it, well, in that case, CompuServe will probably be around for a long
while to come.

Hyping the Community Chest
==========================

Online communities, virtual communities, call them whatever you will,
but it's becoming quite the buzz. I believe in online communities -- it
was one of the things that amazed me all those years ago. It still
amazes me. But even with that said, I think online communities are
being hyped out of proportion. There are only 24 hours in a day. Most
people don't have much of their day to devote to a few people. There
are, however, folks who'll put 10 minutes here and an hour there into
several communities. This group makes up the core of most online
communities -- newsgroups, message boards on AOL, Prodigy or CompuServe,
or on the Web. These "core" users provide a valuable service to a much
broader range of folks who read messages occasionally or regularly
without posting much. With enough scale, a broad community can be built
that's composed of the frequent and infrequent posters. It's here that
the broader good is served, provided the discussions stay on topic,
don't include spam, and so on.

Some guys named Hagel and Armstrong have written a very popular book on
online communities. In the book, titled "net.gain," they suggest that
communities will be a device to generate millions and millions of
dollars in revenue. I agree with the basic principle that if a company
offers information and a community, a valuable service is being
provided, that some brand loyalty may be built, that service costs can
be reduced, and that there's a chance of additional revenue. But I look
at these types of communities in the same fashion I look at the customer
service function. A lot of companies don't get the importance of
customer service. Some see it as an expense, albeit a necessary one. An
online community provided by a company doesn't have to be expensive, but
most companies won't see a lot of revenue from communities they develop
anytime soon, and I think it's important to have realistic expectations.

This week some analysts were hailing the Microsoft Network's success in
obtaining a few CompuServe community-forum leaders as well as a former
CompuServe developer who'll now be in charge of MSN's community
systems. I don't know that this is the coup some folks seem to think it
is, though it may help strengthen MSN's appeal in the business
community. It won't help MSN gain much on AOL, though. Far more likely
to help MSN, in my opinion, is the next version of MSN, which will be
based on Microsoft's Internet Explorer 4.0 and will use Outlook Express
as its e-mail program. The addition of Outlook Express will, I think,
have far greater impact for MSN as an online service than anything it
does or doesn't do with communities. I think communities are very
important, but at the end of the day, easy-to-use e-mail is way more
important right now.

I also think that not all companies can get the relationships they want
with all their customers -- whether they provide communities or not.
For example, many companies now provide certain kinds of awards programs
if you use their "special Visa or MasterCard." I can do airline miles,
discounts on long distance, rebates on products, free gasoline, savings
on a new car. But the reality is that to maximize my results, I can
pick only one. Communities don't limit one in the same way, but there
are only 24 hours in a day. The nice thing is, we can participate in
whatever communities we want, when we want to. The real advantage here
is for US, so I'm not really all that concerned about whether companies
figure out how to make money off us. As long as the companies are
building relationships, their communities don't have to be able to tie
to tangible dollar values. Here's hoping the folks looking at the
budgets will see this the same way I do, but I'm not counting on it!

CNET Launching Snap! Online
===========================

I celebrated (without telling anyone) the third anniversary of my very
first newsletter by spending an afternoon with CNET president and CEO
Halsey Minor, who was on a press tour for Snap! Online, which launches
officially on Sept. 22. In Minor's hotel suite, we both dined on french
onion soup. The gloves were off. I mean, c'mon, you can't eat french
onion soup and maintain too many pretenses. Minor is billing Snap! as a
David to AOL's Goliath. Mostly, I think this is a strategic marketing
ploy. If you say your competition is the biggest company around, more
people will take notice of you. The Snap! T-shirt that says "Welcome to
Snap!" on the front jokingly says "Goodbye AOL!" on the back. Maybe it's
not intended it as a joke, but my sense from talking to Minor was that
his expectations are very realistic. He's not looking for Snap! to be
bigger than AOL anytime soon. I hope the real message of Snap! doesn't
get lost even if the message of being an AOL-slayer is more attractive.

I understand Snap! very well. Either the concept is a novel one or my
girlfriend is a genius (or both!). Last fall, Laura described to me an
idea for a service that resolved the problem of "OK, I'm on the Internet
-- now what?!?!" I liked the idea a lot. We were going to call it
"Made You Look" -- only after doing some simple calculations, I
considered it was going to be a pretty expensive proposition. I talked
to a couple of venture capitalists about it; I even talked to AOL
Studios chief Ted Leonsis. He wasn't all that interested. Nobody was
interested in the kind of money I was talking about -- and I was talking
about less than what Halsey is actually spending (about $5.2 million so
far, largely financed by the sale of CNET's stake in the E! Online Web
service). Halsey Minor, though, has the cojones to give it a shot. And
I'm guessing that Ted "We Have More Viewers Than Larry King Live"
Leonsis is at least a little bit interested now.

I'm on the Internet, so what do I do now? Snap! Online attempts to
answer that question in a twofold way. First there's a CD-based,
multimedia-enriched tutorial on all aspects of how to use the Internet.
The second is a Web site categorized by channels that aims to steer you
to the best high-level information of the biggest "news" available
elsewhere on the Net. Integrated into the site also are features
including search, which lets a user search the entire Internet or
reviews done by Snap! in any of the channel categories.

Software downloads are done via CNET's download.com and its new download
manager (which works very much like AOL's download manager and offers
the same nice feature where, if you get bumped or decide you want to
finish a download later, you can restart downloading from the point you
left off rather than downloading from the beginning). Chat and
messaging are available via a customized version of the iChat software.
There are also some nice personalization touches that let you customize
sports scores (via ESPN's SportsZone) and stock quotes (via PC Quote).
Local weather (via AccuWeather) is provided based on ZIP code, and other
local information (news, jobs, movie listings, classifieds) is available
from the "Local" channel.

Even in its early stages, Snap! does a far better job of solving the
problem of "OK, I'm on the Internet, what do I do now?" than AOL does.
Minor is betting that on this front he'll continue to have the upper
hand on AOL simply because of the Web-based nature of Snap!

"AOL has some advantages in being a totally proprietary environment,"
Minor says. "They have much more control of all the pieces.

"I have to pull the pieces together," he says. "But, over time, those
pieces will be glued very tightly together with a consistent look and
feel and in many cases Microsoft will simply take the functionality (of
those pieces) and bundle them into the browser.

"So I don't have to worry about things like streaming audio and video
standards anymore," he says. "That's been done for me."

Minor suggests that AOL's advantage in having a proprietary environment
is also a disadvantage: "There aren't 50 companies out there trying to
make the AOL environment better. Only AOL (is doing that). Wh