IP: WWW SHAKEOUT AS SITES GO BROKE [healthy I believe --

[Dave Farber <farber () central cis upenn edu>]

 ============================
 ONLINE BUSINESS TODAY(TM)
 NEWSLETTER: 9511 1-20 (#15)
 MORNING FINAL
 MONDAY, NOVEMBER 20, 1995
 OBT () HPP COM
 ============================
 IN THIS ISSUE:
 
 WWW SHAKEOUT AS SITES GO BROKE
 
 More WWW sites are shutting down than starting up.
 So says a panel of Intenet marketing experts at a conference
 on marketing on the Internet, at COMDEX FALL 95.
 
 The shocking assertion about recent WWW activity came
 out at the end of the conference, "THE INTERNET
 MARKETPLACE: WHAT CAN YOU SELL?"
 A source very close to senior panelist Ms. Becki Walker
 said that "more WWW sites are now going bust than
 are new sites coming online." Ms. Walker would not
 reveal her source but indicated it was highly reliable
 and that she would be investigating the claims immediately.
 
 OBT can only conclude that a shakeout has already
 begun as WWW sites with marginal presentation or
 marginal content are now leaving the Web.
 
 Conference speakers included Joanna Tamer, President
 S.O.S. Inc. Marina del Rey, California and Becki Walker,
 President of Walker Associates, Venice, California. Ms. Tamer's
 work specializes in business development strategies and clients
 include Time-Life, Blockbuster and Apple among others. Ms.
 Walker heads a marketing firm specializing in product
 positioning, market intelligence and competitive analysis.
 She has an extensive background working with leading
 companies analyzing market trends.
 
 That Internet commercialization is new, and that reliable
 data is just now emerging to guide corporate executives and
 marketing professionals in their efforts to understand and
 exploit the growing opportunities of Internet-based business
 was a key lesson of "WHAT CAN YOU SELL." Although
 the media have very much hyped the Internet, the
 opportunity is real and "you just have to be there" noted Ms.
 Walker.
 
 Research has shown several important statistics and trends for
 online business. For example, 90 percent of users "browse for
 fun". Thus, there is a definite recreational value to users of the
 WWW. Another 55 percent use the World Wide Web to search
 for products and services and 60 percent have searched for
 company information. "The Web is not just a consumer
 business opportunity but for business-to-business too" noted
 Ms. Walker.
 
 So who is buying and what are they buying from the WWW?
 New research indicates that 13 percent of those polled have
 purchased products or services on the WWW and have taken
 delivery over the WWW. This is an important (survey) distinction
 because it excludes all manner of goods shipped to buyers for
 fulfillment. So if you can both sell and deliver your products or
 services on the WWW, you have a definite advantage over
 other forms of online business. The 13 percent represents fully
 2.5 million buyers.
 
 Who is on the Internet? Research shows that 8 percent of the
 U.S. and Canadian population have used the Net in the past
 three months which equals 18 million people. Of these millions,
 53 percent of users are between 16 and 34-years-old, two-thirds
 are male and represent 77 percent of the time spent on the Internet.
 Users now average 5 hours 28 minutes per week online.
 
 The affect of this usage has already caused waves of concern in
 companies competing for consumer time. "There has been an
 affect on premium cable services where subscriptions started to
 drop away as Internet numbers went up and scared a lot of
 people", said Ms. Walker. Further, this level of user online
 weekly use "has already exceeded pre-recorded video use" and is
 obviously a critical trend to notice.
 
 So online usage is up, online buying is up and companies
 competing for limited consumer attention are already feeling
 some market slippage. The Internet is dominated by North
 Americans at 72 percent of online users, followed by Europe
 at 23 percent, Australia at 4 percent and 1 percent for the
 rest of the world combined.
 
 Two-thirds of Internet users are men "but the one-third women
 is significant because this number is higher than previously
 reported and may represent a trend," noted the panel. If women
 are your target market, it was suggested that good comparisons
 for tracking usage and trends would be catalog sales. Further,
 women are "different" in that they use the Net to "find, solve and
 buy" and are significantly lighter on research than are men.
 However, with today's available research "gender-age specificity
 is not yet understood."
 
 Internet users compete as the most sophisticated market segment
 in the world marketplace with 64 percent having at least some
 college education while 25 percent are earning over $80,000
 per year. "This figure is highly significant considering the age
 of online users" added Ms. Tamer. The online market
 is "technically astute" and the panel strongly suggested
 that online business tailor their WWW sites, goods and
 services for sale to specifically target these demographics.
 
 Additionally, a growing usage by children has been identified
 and the near future may see more online business activity
 directing their presentations to children with online access.
 No further detailed data was available about this market but the
 trend as seen by the panel experts made them feel this was a
 serious online business opportunity for the (very) near future.
 
 So what exactly is working in online business to make money
 today? Why are many sites failing? "Interactive advertising
 business models and direct selling business models" are doing
 the best according to the panel. Although counting "hits" is
 still a problem, companies like Nielsen are coming in
 (see previous OBT issues) to document all aspects of online
 usage and activity, which will help business better direct its
 online investments.
 
 COST OF HOME PAGES AND ESTABLISHING A WEBSITE
 
 Perhaps the cost of setting up and maintaining a web site can
 be attributed to the reported spate of failures: the typical business
 failure reason, lack of capital. "But you just can't put up a Home
 Page and expect to make money online. It's critical to set up
 links and it's not unusual to pay around $800 per month for good
 ones," noted Ms. Walker.
 
 Many WWW sites have dozens or even as many as a hundred links.
 In addition, costs to establish and run a WWW site can become
 very significant. The panel felt a "large" site could cost $6 million
 over two years, a medium site $2 million over two years and $500,000
 for a small site. These numbers include many costs for site and product
 promotion and content upkeep which were uncommon as recently as
 a few months ago.
 
 [OBT spoke with many vendors on the convention floor and found
 numerous attractive alternatives to the high costs expressed by the
 panel. One company, for example, provided complete Web site
 creation software, secure transaction capabilities built in, semi-
 automated order taking, 10 Mbytes of WWW storage and one full
 year of WWW exposure at their site for $1,795.]
 
 Publisher's Note:
 Draw you own conclusions, but OBT remains highly excited
 about online business in every way. Who can surprised by a shakeout
 of WWW sites? Yes it seems a little soon, but we've all seen the
 marginal content and sometimes utter uselessness of many WWW
 Home Pages. Quality will not only survive, but thrive on the WWW
 and at an accelerating pace. Heeding the lessons of the successful and
 watching the incoming data from research will guide the serious
 online business professional to a rewarding (global) business presence
 on the Internet.
 
 [NOTE: ONLINE BUSINESS CONSULTANT (OBC) will cover the
 most recent information and facts on this subject in an upcoming
 newsletter report]
 
 EDITORIAL
 
 It is the fourth day of FALL COMDEX 95 and all is quite. It's not
 that the record attendance of more than 205,000 visitors has
 suddenly dropped because so many people have decided to escape
 Las Vegas before the stampede to exit on the last day. It's not
 that there are so many foreign visitors that people can't talk to one
 another. You just have to swing by the like of Texas Instruments
 and pick up fancy digital signal processing chip and some nifty
 software will handle the translation. The reason, according to most,
 is people have lost the ability to speak. Many of the exhibitors and
 conference speakers have gone hoarse. Thank Goodness
 COMDEX did not schedule any more speakers for Friday.
 
 For the Internet and online business, COMDEX puts the
 cap on a record year of innovation and invention. It is
 also the year of the new so-called network society. "It's
 not going to be like some recent movie," said Novell's CEO
 and Chairman, Bob Frankenberg. But he added a few words
 of warning:
 
 "The Internet is an exciting place to play. It's full of promise.
 But it doesn't have the security, guaranteed performance or
 manageability that you can bet your business on. Nor does it
 have the capability to easily integrate with your local area network,
 yet. That's not because the technology does not exist. It's going
 to take great collaboration, and a resounding affirmation that
 open standards are essential.
 
 Frankenberg took a Novell typical swipe at Microsoft. "It's not possible
 for one company to own cyberspace. Too many kinds of computers
 now populate this world . . . do you really want your car controlled
 by Windows. General Protection Faults and rebooting would take on
 a whole new meaning.
 
 He later added that Novell with its support of over 50 million users
 (connected with NetWare) would serve the basis for serving 500
 million users, and a billion intelligent device connections
 in the year 2,000. . . . . I'll see you on the Net."
 
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 PUBLISHER: Karl Slatner, karls () hpp com
 EDITOR-IN-CHIEF: Jeffrey R. Shapiro,
 jeffs () hpp com
 
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