Ben Sawyer, based in Portland, Maine, is an independent developer and writer primarily affiliated with The Coriolis Group, of Scottsdale, AZ. Sawyer is currently at work on "The Ultimate Game Developers Sourcebook," set to be published this winter and, is also involved in some unnamed software and internet developement projects. In addition, he writes about the Gaming industry for Interactive Update and is an Assistant sysop for Compuserve's Game Developers forum.

Major Sections

I. Introduction - The Web is a Mess!
II. State of the On-Line World
III. The Goal: From "You Will" to "You Can"
IV. Exploring the On-Line Business Model: Selling Space? Or Selling Time?

• Problems with Space and Time
• An Alternative Model: Transactions

1. Online/Offline
2. Speed & Access
3. Using the Technology
4. Tommorow's Technology
5. Staying Fresh with Mail
6. Staying Fresh with Original Content

Having spent a considerable amount of time this summer roaming the World Wide Web researching information for some upcoming books, I have encountered numerous Web Pages, Indexes and tons of glitches. I've been around the world and back so many times my modem now has more frequent flyer miles than I do. I've logged on to every major on-line service, and roamed their counterpart web entities as well.

Overall, what did I see? One Big Mess!

Clifford Stoll, the eccentric if not goofy computer scientist who successfully tracked down and caught a rogue group of German computer spies has recently been hitting the book circuit promoting his view that the Internet, the World Wide Web and such is the snake oil of the 20th century. That's a bit much for me, but looking to the other end, we find people like the editorial board of Wired who seem to think that the World Wide Web holds the cure for all of our ills.

What we haven't seen much talk about is the practical implementation of a company's on-line existence -- which after a few hours in cyberspace is obvious. So many sites seem to be making mistakes unaware of the facilities that the Web and On-Line services offer.

The bulk of the conscious on-line world is centered around the big five entities: the four major companies (America-On-Line, CompuServe, Prodigy, and the Microsoft Network) and the World Wide Web. The on-line population is difficult to size, as there are so many users who may have access through work and college to e-mail and web browsers. We estimate that there are about 100 thousand sites on the Web, a number of which contain multiple home pages used mostly by end users paying the site a rental fee for hosting. There are a total of about 6 million major company on-line subscriptions, but a significant number of those overlap. A reasonable number to work from for the summer of '95 might be about 10 million unduplicated users and subscribers.

Somewhere over the horizon lies the on-line shangri-la of a world of total digital content with integrated three-dimensional browsers offering real-time feedback, direct video feeds and much more. George Gilder and Nichola Negroponte are over there smiling. Glimpses of this world are best seen in AT&T's infamous "You Will " spots portraying some magical coexistence of people and technology. The gap between "You Will" and "You Are", however, is so wide it's not even funny.

What we need is a "You Can" campaign. There is so much "You Can" do today in the on-line world that the failure of so many companies to exploit that capability is disheartening if not discouraging and depressing! My two conclusions are:

• The basic business model for much of the on-line world today is so flawed that I'm not sure it's a model at all.
• Companies searching for the Holy Grail on the horizon can't even grasp and exploit the technology they have available now.

The basic model behind many sites seems to be advertising. The premise here is that the on-line world is most analogous to broadcasting; the model for revenue in a broadcasting medium is advertising; so our on-line sites should sell space on our web screens. This is especially attractive in principle because the demographics of the on-line community skews heavily toward white males with high incomes, the crown jewel for lots of big ad spenders.

On the other side, however, are those who view the business model as that of a telecommunications provider -- CompuServe, America-On-Line and various Internet providers see the on-line world with a business model like that of a telco. They are selling time at $3 to $5 per hour -- which, as evidenced by the millions of dollars of monthly revenue these companies generate -- is the most successful model in the on-line community so far. In fact, this approach has worked out so well for them that content providers have shunned advertising on their forums in exchange for their share of time based billings.

It is, however, the most primitive form of business being conducted on the web. And so far, it has been made possible with the blessing of the giant of telecommunications sitting on the sidelines. AT&T could become the major Internet provider in the world simply by sheer size ... and recent announcements seem to indicate it may be moving this direction.

1. Problems with Space and Time: Time based revenue from a content provider doesn't work on the Web. The only people making money on time sales are the connection providers, not the content providers at all -- which is why the on-line services have some line of defense against the Web. If you log onto BusinessWeek's web site (should it have one) instead of America-on-Line's Businessweek icon, no one makes any money!

That's why the advertising model keeps coming up again and again. A time based business is dangerously close to being irrelevant for 99 percent of content providers unless they abandon the web. While the advertising model shows promise on the web, there are several things working against it -- most importantly, some way of guaging impact.

Advertising is based on the confidence of an advertiser that it's having an impact on a large number of people in a meaningful way. And so far advertising hasn't exactly been a booming business on the web. Most of what you see there is self promotion: not so much one company paying another for an ad, but advertising one's own products and services -- Time-Warner advertising it's CD-ROM's on its own Website, for example.

Despite the number of "hit counters" and an upcoming attempt by Nielsen Media Research to do for Websites what it does for TV and Radio (which apparently involves a diary system that everyone is buying into but no one believes!), the ability to judge what people are consuming on a website is almost impossible to guage. That means that pricing and utility will be mismatched in principle, and advertisers may drift off toward other media.

Moreover, if anyone can setup their own website, why do advertisers even need to advertise? The reason an advertiser like Ford would buy time on television is because it couldn't start the Ford channel and make it compete. However, they do have that opportunity on-line. While TV struggles to give us 500 channels, the on-line world has over 100 thousand, each as easily accessible as the next!

A second problem with the advertising or space oriented model is that most of the costs are related to time. The goal of a consumer when on-line isn't so much what to consume as it is to reduce the amount of time they spend consuming whatever it is they may want. They aren't exactly looking to budget time to experience consumer advertising material. So while advertising holds some promise of generating revenues for web oriented content providers, it doesn't inherently or perfectly match the consumer's process of being on-line. This is one of those ideas that's in the gap between

2. An Alternative Model: Transactions If the most promising model for wide ranging on-line revenue generation is not advertising or time-based sales, what would it be? A clue can best be seen in how Microsoft has structured it's MSN offering. One thing that Microsoft had the luxury of being able to do was to build from a totally clean slate, unlike the big three on-line providers. MSN is based on new technology and the knowledge gained from watching the on-line world up until now. Looking at the Microsoft model, we see that the poeple in Redmond have decided that the revenue model they think is most promising is a Transaction Based Model.

In this model, people pay a one-time fee for downloading files, to visit a webiste, participate in conferences, etc. However long the visitor is there, however many bytes they may download, they pay once. It's like an admission ticket on a per site basis.

If this is the most likely candidate for on-line revenue generation, then there are some implications to be considered. For example, unless the Web can offer a collection system that works on an "on-demand" basis, content providers may abandon it in favor of an alternative with a more secure transaction system. This is Microsoft's strategy for beating the Web.

Most on-line sites are little more than digital versions of publications. The adventurous ones are showing some interactive ads. And that's really about it. So while content providers are casting about looking for the best revenue model, their offerings are suffering and interest in what they've got to say is slacking off. There are some specific opportunities being overlooked and some mistakes that could be corrected -- and if they were, content providers might see what the potential of their sites really could be!

There are six top opportunities areas on my list from what I saw this summer and they are listed below. My notes on each of them is in a separate paragraph.

1. Online/Offline -- making the best of today's bandwidth
2. Speed and Access -- designing for quick display
3. Using the Technology -- making the most of today's browsers
4. Tomorrow's Technology -- getting reading for early '96
5. Staying Fresh With Mail -- the key to repeat visits
6. Staying Fresh With Original Content -- sort of an obvious point

1. Online/Offline: One of the most annoying aspects of the web is that it's meant to be consumed on-line, and yet we all know that high speed links to the Web are at best 2 years off -- and won't be wide spread for many years after that. Surprisingly though, companies seem to be trying to integrate as much of their content to be devoured in an on-line fashion -- rather than offline.

Creating downloadable offline products is rare on the Web (but common on time based services like Compuserve). Instead of using a download option, web content providers chop up content and force people to spend time on-line. Web pages are chopped up for speed and organization, too, but all that does is require people to spend more time on-line.

One thing that most on-line developers might want to try is to create offline readers. With this capability, one might connect to the Businessweek site for a onetime fee; download a copy of the most recent issue of Businessweek in the background, with its text, tables, graphics and pictures; and do other things while still on line in another window. Using advanced e-mail servers, this file could be subscribed to and delivered directly to the in-boxes of all requesters.

This works as a subscription service. It works even better in a transaction based environment!

2. Speed and Access: The biggest problem for the on-line world is speed and access. Most observers seem to be looking at this as a consumer problem -- that is, the consumer is the problem! This is an odd perspective. The fact is that even if I had an extremely fast connection, the majority of on-line services and web sites are exactly broadcasting as their fastest possible speeds. And a number of web sites are connected to the web at low speeds, speeds so low that they are the bottleneck, not the end user.

For web providers (as opposed to on-line services offerings), many sites are constructed in ways that make them very slow to load, with too many graphics that are not necessarily part of the message and with inadequate use of the HTML extenstions. The disparity between the speed of some sites is so much that it becomes obvious to users which companies are designing the fast sites -- and which are not.

The point is that many companies are viewing end user speed as the detriment to the expansion of their online content -- yet at many sites, other factors on the outgoing end are at least as much of a problem. End user speeds will increase -- but much can be done now to deliver more interesting content faster with the bandwidths we have today.

3. Using Today's Technology: Many companies aren't creating websites using the full HTML+/3.0 specifications as implemented by Netscape, the browser used by 70 percent of web surfers. In addition to the aesthetic flexibility of these commands, when used properly they can also speed web page consumption by users.

In addition, products like the Real Audio server, message boards, chat rooms, and more are not being implemented nearly as fast -- even though the technology to do so has been available for a while.

For companies looking to be on the web, it's important now to start making the most of these new technologies, expecially in creating web sites. Brand images are formed early on in the on-line world. For a glimpse of what I'm talking about, check out Sierra On-Line's web site (http://www.sierra.com) which implements the latest in web technology plus extensive CGI programs to create a truly involving and updating site.

4. Getting Ready For Tomorrow's Technology: In addition to all the technology few seem able to implement right now, there will be in the near future many exciting new techniques that can revolutionize on-line presentations. The integration of Macromedia's "Director" in the Netscape Browser is scheduled for early next year -- and that's only 4 months away!

A footnote to all of this: although current web site construction requires very little software production braintrust -- many would say this is the web's inherent strength -- many of the emerging web & on-line technologies will require persons with computer science/software production backgrounds. It is essential for companies looking to establish web developement staffs to consider this aspect.

The "HotJava" concept from SUN Microsystems is one of the most exciting web concepts and developers are scrambling for information on how to develop "applets" using this new technique. An upcoming conference in Manhattan organized by Sun for HotJava developers was completely booked 6 weeks ahead of time! HotJava will add dimensionality, motion and interactivity to the web.

Another point here is that static sites need to be rethought. In addition, sites that are being planned need to be thought out with these truely near term developments in mind.

5. Staying Fresh With Mail: This is the key to on-line success -- and it's also the biggest single problem I have had with web sites and on-line sites. Most are incredibly static. Web surfers and on-line users are constantly searching for new information and web sites that do not provide new material quickly get bypassed.

It is crucial to a web site content provider to constantly update and offer new material. And if you have new material on the site, then why not use existing available mail servers to let registered visitors now that there is new material available? Or why not let registered users request periodic updates on an automated basis to their e-mail accounts? Staying fresh and using mail are related, powerful techniques that keep users returning."

6. Staying Fresh With Original Content: A subscriber to a magazine does not want to enter a magazine's web site only to find that there is nothing new in addition to the magazine they already get by snail mail. Conversely, it makes no sense to give away subscriptions by making the site identical to the current newsstand product.

Obvious, you say? Then check out the many web sites that are simply replays of existing content, product brochures, magazines and so on. The idea of original content for a web site may seem easy, but it's certainly not prevalent! For example, a car company might create a web based multiplayer driving game that features their cars -- not static images of the dashboard from existing brochures.

And here's the point: while the novelty of the web will let less original product survive for a while, sites that exploit existing technology and the new technologies that are just months away will soon have major competitive advantages. Original is better now. Original will be essential then.

The promise of the emerging on-line universe is too incredible to pass up. However, in the rush to sing its praises, many are not taking time to be a little practical. What can we do now? How far can we take this? And what kind of model makes business sense for us? These are the kinds of issues companies rushing full steam ahead might want to take some time to think about!

It's great to dream of a time of high-speed video delivered over super bandwidth lines to millions of set top boxes integrating video on demand with the Web with on-line services. But let's wake up! Many -- dare I say "most"? -- on-line services and content providers are asleep at the wheel.