Securing the User Relationship



Last year when I spoke at this conference, I made a comment about the blind leading the blind which I meant to be tongue-in-cheek. It was a lesson to me of what can happen when you start a talk with a joke. The quote was in about the third paragraph of the New York Times story wrapping up the conference. So this year, I won't make the same mistake by trying to start with a joke. What struck me most walking around the trade-show floor briefly last night was how much we have all learned in the last year and how much more varied and sophisticated the vendor offerings have become. On the other hand, I at least feel like I still have a pretty dim view of where we are heading. But here are some thoughts, anyway.

The business assumption of Newshare Corp. is about how newspaper publishers will dominate into the next century as the premier quality information provider to the average consumer.

Presently, newspapers serve that function in a hard-copy sense. They "aggregate" wire reports from all over the world into a package which is edited for the least-common-denominator of their particular geographic-specific demographic. But in the next c entury, that's won't be good enough. Because all of the folks in their geographic-specific demographic will have the ability through search engines and personalization services more sophisticated than we now imagine to find information themselves more sui ted to their interests than the digital edition of their daily newspaper. We think newspaper web sites -- whether by pull, push or what we call "pre-order" technology -- have to become the consumer's single source for information products. The newspaper publisher has to BECOME -- at least in the consumer's mind -- the search service, the personalization service and the library reference desk, without abandoning a traditional role as an agenda-setter, voice and conscience of a region. Without this one-st op, one-to-one relationship newspapers will find themselves outflanked by the looming been deploying at Newshare Corp. with our Clickshare affiliate can give newspaper sites the ability to refer users to a wide array of information -- and receive some com mission or other form of payment for doing so.

That's Newshare's view of the challenge. I'll talk about how we approach it in a few minutes. But first, I'd like to outline briefly where interactive newspapers have been in 1996, where we seem to be heading in 1997 and how we meet the challenge of b uilding online consumer relationships. Then I'd like to talk about the topic of this break-out -- and what we see a the difference between the "wired" intranet that most people are thinking of and the "virtual" intranet which will result from distributed user-management technology like the Clickshare System.

It's about relationships

Turning the Internet into a mature business environment requires building relationships -- relationships among advertisers and among two kinds of users -- the traditional local user and a second class of user not previously available to newspapers -- t he non-local, topic-focused "vicarious" user -- what we might think of as the "single-copy sale" consumer where newsstand and the information buyer could be thousands of miles apart and still close a sale.

In 1996 -- which really was Year No. 1 for Internet businesses, we made a lot of progress on the advertiser relationship. Competitive logging and analysis tools for single sites are available. Multi-site networks such those operated by Real Media offer even relatively low-traffic sites the chance to get a slice of the national ad pie. The CASIE principles have established at least benchmarks for discourse about auditing and counting of advertising viewership. And there has been general and rapid accept ance of standard pixel sizes for banner-type ads.

There is work to be done on other aspects of the advertising relationship. Are page views or clickthroughs going to be the dominant billing currency? What about the measurement of advertising effectiveness, which is so much more possible in the digital environment than in print? If we don't provide advertisers with the accountabililty they know is technical feasible, won't they spend their ad dollars with someone who will? Finally, as personalization ramps up, what standards will emerge for how to prec isely target customer groups?

That was Internet Year No. One. What about Year No. 2 -- 1997?

In general, the focus seems now to be properly shifting to user service. Hardly a week goes by without another announcement of a personalization service. A consensus seems to be emerging that merely allowing a consumer to "pull" information from your w eb is too interactive for many couch potatoes and you need to "push" information as well. We think it's time to define a new term here, which we are calling "pre-order" technology. It's a subset of "push" without the implication that something is being fo rce-fed to the user. An elegant example of what we mean is the NewCast Sendit technology, which allows a consumer to schedule a download of a most-favored web site in the middle-of-the-night for fast, off-line browsing at the breakfast table.

The second focus of 1997 is user tracking. The advertising industry is demanding it to gather usage demographics and they want it uniformly available across many websites. Tracking data can also be used to improve personalization facilities and -- in t he Newshare/Clickshare model -- to facilitate transactions. "Cookies" are one effort to handle this requirement. But cookies are intrusive and sometimes unwanted by consumers; they can be blocked by PGP Privacy's "cookie cutter" and they are not initiate d by the consumer. Clickshare's "digital calling card" approach works in reverse -- the user establishes an anonymous yet permanent identity and decides which web sites to provide with that identity. And that identity is authenticated by a central facilit y.

Focusing on the user relationship

Now let's zero in a bit more closely on the user relationship. Marketeer Don Peppers, in his book, "The One to One Future" says that maintaining a one-to-one relationship with consumers is the most vital function of any business and its most valuable a sset. But who owns the consumer in cyberspace now? AOL, Microsoft, Compserve, maybe WebTV and, soon, the major telcos and cable giants. Why? Because they own the billing relationship. As publishers, we need to focus on how to attain and maintain a financi al relationship with users.

But how?

By unbundling content and access and selling them separately. Even AOL has got this right. The have split their operating units into pieces, separating content services from access services. AOL's goal is the same goal we should all have -- to build a content-focused relationship with consumers which can leverage transactions. Why transactions? Because all the experts are now realizing that national advertising alone will only support the web sites with the highest traffic and the lowest operating cost s. And right now, that leaves out just about everybody except the search engines.

So how do you attract users with content? The first answer is to build that one-to-one relationship by inviting your user to tell you what they want, and then customizing what you give them. This ability to personalize allows you to ratchet up the val ue of packages and individual pieces of information. It makes subscription and per-click a much more attractive potential revenue stream.

Everyone says news is a commodity, you can't make people pay for it. To a large degree, this is correct. But custom news is not a commodity, especially if a component of that custom pakage is non-commodity, timely local news. The webmasters at the San Antonio Express News and the San Jose Mercury are on the front lines testing this assumption. If you think of business news as "local" in the sense of being topic-specific, the Wall Street Journal is doing so as well. We think their patience will ultimat ely pay off and will be copied. Successful web publishing is not a hit-count numbers game. Like any business, it should be judged by the bottom line.

I don't know that AOL has the bottom line figured out. But they are pretty smart people and they are trying everything. And so before I finish with a little explanation of what we mean by the virtual intranet, I'd like to read you something that AOL's Ted Leonsis said almost two years ago on a panel in New York. With hindsight, and a look at Digital Cities, you can see he has kept his eye on the ball. He said:

"I look at newspapers and I say why their franchise could be at risk in the new medium has nothing to do with us. It's that the big franchise for newspapers is the local community aspect of a newspapers. But every newspaper wants to be the national voi ce. And in this new world, you can get national voices everywhere. And so you have to look and say for a newspaper, local content is king. That's the next big wave in content -- building local communities. And the newspapers have that franchise right in f ront of them."

The wired intranet vs. the virtual intranet

When I think about the words internet and intranet my first instinct is to compare the concepts to the U.S. interstate highway system. There is a sort of geographic sense to the words which I think doesn't translate well to the reality of digital comm erce. In the wired world, your physical location doesn't matter and, anyway, it can be easily spoofed. So I think the idea of the "wired" intranet -- linked users who are inside organizations or behind a common firewall -- is quaintly outmoded. The coming of distributed user management systems like Clickshare allows users with a common purpose or bond to be located anywhere both physically and logically. Thus the intranet becomes "virtual." Now the relationship springs not from a wired connection but fro m a content connection.

So the new need is for portable relationships which are not dependent upon wires -- connectivity such as a common firewall or a common ISP dial up -- and not dependent on similar hardware -- the old PC/Mac/Network Computer debate -- and not limited by propriety protocols -- Java/ActiveX -- but based instead upon communities of interest and brand identity. The need is for a relationship which the user carries with her and which she can invoke from any platform at any time -- a relationship with a single most-trusted provider of information.

What does this mean to newspapers? It means you need to become the user's "home base." You need to help them navigate to useful, personalized information. And you need to be able to charge them for unique, targeted information. But like a retail store, the information you sell need not all have to be manufacturered by you. You can be the distributor of other people's product -- and get paid for doing so. They key, is that when the consumer comes to the checkout, she pays her money to you and remembers your brand for the service it has provided. Another person who was on that same panel with Ted Leonsis in February 1995 was Scott Kurnit. He was then at Prodigy and moved from there to the short-lived MCI/News Corp. joint venture. This week, Scott resurf aced with a new venture called The Mining Company. His idea is to brand other people's content with The Mining Company and make it easy for users to find information. He's doing what the newspaper industry should be doing.

The idea of Newshare, and frankly, Peter Winter's early vision for the New Century Network, was that papers should band together to profitably refer their own users to each other's unique content -- sharing users and content in a way which profits both the remote information provider and the user owner. In the Newshare/Clickshare model, the user owner is the Clickshare Service Provider and the information provider is the Clickshare Publishing Member. This is not theoretical model but a working prototy pe. But frankly, we are behind schedule at putting the affiliates together because the marketplace still doesn't have enough self-confidence to charge for valuable information. And much valuable information isn't on the web yet because there is no multi-s ite micropayment facility for charging for it. With $45 billion a year in information sold in all media, that leaves a lot of prospects for Internet information sales.

In the last 15 minutes I've talked about advertising as the focus of 1996 and personalization and tracking as key topics in 1997. I've talked about the critical need to build a relationship with online users and how that relationship needs to include a financial component. I've made the case for publishers becoming the one-stop retailer for information and described how "virtual intranet" technology like Clickshare makes this possible. I haven't spent too much time on the specifics of Clickshare becau se you can get that at our website. As we help the market mature, we invite strategic and content partners.

The goal: No reason to affiliate elsewhere

The final goal of web publishing is to give consumers no reason to have more than one information-service business relationship. That's what newspapers enjoy now to some degree. And getting it back will be very expensive if they lose it. So let's stop worring about cannibalization. This is not a new business or perhaps even so much a new media as it is merely a new form of distribution which challenges the economics of centralized printing presses. If you don't eat your own young, somebody else is goin g to have you for lunch. It happened to a lot of railroads and streetcar companies.



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