Where can I get news about the Internet, surveys, and reports?

Keeping up with net happenings is a full-time job. Here are some sites that provide information about Internet events. Nua Internet Surveys. This email newsletter gives concise summary of most surveys and market research results. To subscribe to free, weekly reports, send an email to: surveys-request@nua.ie with the word "subscribe" in the body of the message. Check also its Surveys webpage. Forrester Research Internet News by Cowles/Simba (Merklermedia) Jupiter Communications

Why is the Internet different from other computer and network technologies?

Computers and networks are nothing new. They have existed and business applications such as LAN and EDI are well established long before the World Wide Web took over. Then, why the sudden talk of the Digital Age and the advance of electronic commerce? Two things make the Internet quite different from any other existing communications media. Unlike broadcasting media, the Internet allows two-way communications and is built around open standards. A two-way communication means targeting audience and the possibility of feedback. Broadcasting sends out messages to no one in particular and without knowing quite who has gotten the message. (What do Nielson and a horde of market research firms do for their living?) An open standard (e.g. TCP/IP) means interoperability and the advantage of a large market and the possibility of integrating one product or process with another. Both of these characteristics are being challenged. To the WebTV generation, the digital future looks like another version of the passive one-way broadcasting. The new media sums up how publishers and media companies view the digital medium. We are so accustomed to receiving random messages that we often forget the fact that broadcasting was a 20th century phenomenon. Even interactive television envisioned by today's media is a way of providing a more lively entertainment, offering more information related to existing contents (e.g. detailed information about characters, plots, and commercials shown on TV). Multichannel, digital TV broadcasting may very well be a model for future entertainment, but it needs to be remembered that it is only one application of the digital communications network. The commercialization of the Internet is forcing businesses to differentiate their products from others by making products incompatible. Unlike the public Internet where standards were open, firms attempt to capture and dominate the market with their proprietary products. In such an environment, TCP/IP would have had a very slim chance of becoming a standard and opening up the digital, networked economy. Whether markets driven by private interests can bring about a better result (e.g., more efficient, technologically superior, etc. system) is still a concern left for arguments. Perhaps telephone networks are quite similar to the Internet (and indeed most Internet traffic goes through telephone networks). But unlike telephones, the Internet's user interface (computers) is much more sophisticated and flexible. Because of its beginning as a public research network, the Internet has no pricing regime of telephone companies. The worldwide connection, then, may be considered to have been an accident. When usage-based, long-distance charges are implemented, the Internet may look quite similar to the telephone network.

Do we have a truly worldwide network?

The ultimate goal of a global network like Teledesic is to make the globe into your home base. Currently, local ISPs provide subscribers with local access telephone numbers for dial-up. This means that you have to pay for long distance calls when you are checking your email from different cities. Roaming services often offer Internet access at cheaper prices than long distance calls. A few service providers have point of presence (POP) in many cities. Smaller ISPs can join an alliance so as to cover a larger number of POPs worldwide. For example, iPass Alliance covers over 1,000 POPs in 150 countries. Any ISP allied with iPass will offer its own pricing schedule. (E.g. HomeGate). AimQuest is another collection of about 80 ISPs including Netcom which has its own 1,500 POP in 70 countries. Find out whether your ISP offers roaming service and if so get 800 numbers before you head out. Also in the work is Cencert Internet Dial Roaming Service, a joint venture by MCI, BT and Japan's NTT Data Corp.

What choices do I have to connect to the Internet locally?

The way our computers connect to the global network varies greatly. At work, computers are commonly hard-wired maintaining constant connection (i.e., through local area networks using Ethernet). Dial-ups establish temporary connections, typically through modems and via some telecommunications networks. These include the plain old telephone system, coaxial cables used for cable TV, wireless and cellular networks and satellite networks. Any of these connections may be constant if the line is dedicated to that purpose. The physical link from your home to trunk lines (where the traffic coming out of individual users is aggregated and carried by high-capacity coaxial and fiber optic cables) is referred to as the last mile. The sheer number of individual users and the complex switching equipment required to manage traffic make the last mile relatively costly (representing between a quarter and a third of the total networking costs). At the same time, various telecommunications players are converging into this market. This will intensify competition among last-mile players. Will this competition lead to cheaper and better networking options for consumers?

Is the Internet secure?

The proper question will be: Is the Internet secure enough, enough for commercial uses? Despite the reliable encryption and other technologies, which are sometimes superior to telephone and other communications networks, non-digital media are full of hypercritical view of the Internet security. While it is unwise to play down known security risks, it is also unnecessary to imagine a doomsday scenario for every occasion. Does the Internet need to provide more security than physical markets? Probably so because the electronic marketplace lacks some elemental safeguards available in physical markets. For example, buyers have certain assurance about a seller with a retail store although that seller might be operating a bogus shop that particular moment. But bogus operations are more difficult to recognize on the Internet. Indeed, any online trading partner cannot be sure about the identity of the other person. Technologies and legal frameworks are needed to address such problems, e.g. nation-wide digital IDs.

How do I start selling online?

From cheap and simple to expensive and complex, there's a wide range of products designed to get your eCommerce site up and selling in a matter of days or weeks. Small businesses may not have to look beyond their local Internet service providers for a bare-bones solution. For example, Brooklyn-based Forman Interactive offers Internet Creator for less than $150. The software uses a series of wizards to help you create secure pages for selling your product. Plus, if your pages reside on Forman's servers, the company handles electronic payments via CheckFree. If you're ready to step up, you can use Yahoo's Yahoo Store, which lets you create a transactional business Web site from your browser. Yahoo hosts the site, and the cost is based on number of items--$100 per month for a store selling 50 items and $300 per month for up to 1,000 items. However, most eCommerce development tools targeted at small and midsize businesses cost $5,000 to $10,000. They generally include templates for online catalogs and databases, so it's easy to change items and prices. Dynamic database searches can serve different information when an item is out of stock or on special, and they can be hooked up to existing back-end systems for order fulfillment and a range of automatic payment options. Companies that have a high volume of sales--especially those that deliver soft goods such as articles, reports, software, or music over the Net--require industrial-strength solutions costing anywhere from $10,000 to $100,000 or more. See the More Resources column at right for examples of tools from all price ranges. Of course, the software sticker price is only a small fraction of what it costs to run an eCommerce site. Many high-end eCommerce products are used by third-party companies to provide services for individual merchants. Most companies take advantage of eCommerce hosting services run by the likes of AT&T, MCI, and GTE's BBN Planet. "This is a low-risk, low-cost way of finding out how to do it," says Karl Lewis, vice president of production at Proxicom. Proxicom is a Web consulting company that recently set up an eCommerce site for Day-Timer and an extranet for Mobil Oil and its distributors.

What is intranet? Extranet?

Intranets and extranets have become en vogue. Intranets and extranets share the common protocol (TCP/IP) and Web technologies with the Internet. Intranet is a closed, business-wide network, but it uses open standards such as TCP/IP instead of proprietary protocols traditionally used for LANs (local area networks, usually hard-wired) and WANs (wide area networks, usually LANs connected by cable, telephone and wireless networks). Extranet is a private WAN running on public protocols. That is, an extranet is a virtual private network among private parties based on open network and protocols. To assure security and privacy, an extranet relies on secured channel using tunneling protocols and digital ID. In a way, extranet is a private street built on public land (although costs may be borne by private parties).

What’s the difference between physical stores and Web stores?

Web storefronts integrate various functions such as physical presence as a store, sales representatives, ordering and payment functions (combined cash register, credit card reader, etc.), backoffice supports and various data interchanges (for inventorying, supply ordering, etc.)

Should Web pages be jazzy or content-oriented?

Those accustomed to the old text-based Internet seem to favor simple, information-driven Web sites with not much fancy graphics. New generations of Web designers prefer graphic-rich, jazzy layouts. This is not surprising since they come predominantly from graphics professionals, and newspaper and magazine layout artists. In fact, most fancy Web sites decidedly look a lot like a magazine or a front page of a newspaper. As both these print media and screen-restricted Web page have the same spatial limitation and the need to grab eyeballs, this jazzy approach seems to make a lot of sense. Furthermore, popular sites tend to have jazzy graphics. However, are jazzy sites drawing more visitors, or do (already) popular sites tend to employ a lot of graphics? That is, New York Times Online does have the definite advantage of being well known so that even if its Web site is text-oriented, easy to navigate, and well classified for organization, it might still draw heavy traffic. Greater emphasis on contents than on appearance will reduce congestion and unnecessary delay. Too much emphasis on graphics and multimedia (although that may be interesting and act as a drawing factor) but not enough contents will ultimately convince us that the Internet is indeed as shallow as the media we have known all along is.

Should websites sell advertisements?

The balance between advertising revenues and subscription fees are puzzling content sellers on the Internet. In the end, the choice between the two is a moot issue because both ad-based and subscription-based selling is viable options. The question is which method is good for what products. Our experience with broadcast and print media will not help to answer that question because broadcast and print media are fundamentally different from the digital medium. For example, commercial-ridden television came about because there was no sure way of charging audience for what was being broadcast randomly over the air with no one targeted in particular. Printed newspapers and magazines are constrained by the economics of mass production in pricing, in content selection and in distribution. These factors are non-existent on the Internet. Simply abstracting from traditional media will lead to wrong conclusions. Innovations will make things more complex. For example, commercials and advertising are indeed information goods so that there are some who are willing to pay to receive them. Why not charge for advertisements. That is indeed what CyberGold and other pioneers are attempting to experiment. The electronic marketplace presents a unique opportunity to improve the way we disseminate product information (i.e. advertisements), charge consumers (and ultimately integrating the process into market research, product development and the next stage of marketing in a seamless process). The problem with spam is not only that they are distributed randomly but also that they have no market prices (or ways to transact). If there is a way, some spam receivers may be paid to receive advertisements; others may be willing to pay to receive them. The legacy of the broadcast and print media has been that of artificially coupling advertisements with contents because of inability to charge or the economics of physical market. An efficient market will allow prices of these two different products to be determined separately.

What questions should I ask when selecting a web designer?

You don't really want a college student who has just learned HTML. You need a website design firm that will take time to understand your business, and has previous experience. Here are some important questions: What are the names and phone numbers of other small business clients you have served? You'll learn a lot by asking these references, "Would you hire this person to work for you on another project?" What are the URLs of some websites you have designed? Then ask your web-savvy friends to evaluate the sites with you. What kind of website do I really need to accomplish my objectives as a business? Unless the designer knows how to accomplish business purposes with a website, she is of no use to you. Do you have a contract that outlines our agreement? Get it in writing. What will this cost, how long will it take, and at what points will various payments be due? Define what will be accomplished before each payment is made. Will you register the site with search engines and perform any other marketing tasks? If this isn't included in their services, learn to do it yourself or find where to outsource it. A website without marketing is like a car without gasoline - nice to admire, but of no use at all.

What is a cookie and how does it help an e-business?

A cookie is a small amount of information that is stored on your computer when you visit a website, see a banner, purchase something at an online store, etc. Cookies help the e-business identify you the next time you come to the site so it can greet you by name, show you a banner you haven't seen yet, remember your username and password, etc. Cookies can also track how a visitor got to your website, so when he makes a purchase you can pay a commission to the affiliate who sent him. Some people see cookies as an insidious breach of privacy - and it can be when connected with databases like DoubleClick's whose information collection spans many thousands of websites. Cookies smooth eCommerce for both the customer and the business. Now if they could just perfect a way of e-mailing me a chocolate chip cookie for every site I visit, I would be really happy.

What is the electronic marketplace?

Electronic markets ordinarily refer to online trading and auction, for example, online stock trading markets, online auction for computers and other goods. The electronic marketplace refers to the emerging market economy where producers, intermediaries and consumers interact electronically or digitally in some way. The electronic marketplace is a virtual representative of physical markets. The economic activities undertaken by this electronic marketplace collectively represent the digital economy. Electronic commerce, broadly defined, is concerned with the electronic marketplace. The electronic marketplace resembles physical markets (the one we know) in many aspects. As in physical markets, components of the digital economy include: players (market agents such as firms, suppliers, brokers, shops and consumers) products (goods and services;) and processes (supply, production, marketing, competition, distribution, consumption, etc.). The difference is that, in the electronic marketplace, at least some of these components are electronic, digital, virtual or online (whichever term you may prefer). For example, a digital player is someone with an email or a Web page. Purely "physical" sellers may be selling a digital product, e.g. digital CD-ROM. One that sells physical products at a physical store may offer product information online (thereby allowing consumers to "search online"), while production, ordering, payment and delivery are done conventionally. Currently, the emphasis is on the core of the electronic marketplace where everything (i.e. all value chains or business activities) is online. But, if any aspect of your business or consumption dwells upon the digital process, you are already part of the electronic marketplace. That is, almost all of us are already players in the electronic marketplace!

How is the electronic marketplace different from physical markets?

Answer: The answers to this question provide us with a preview to what we try to achieve in this FAQ: comparing the digital economy with the physical economy, and coming up with a better understanding of the new market. Business strategies must be based on a sound understanding of the market dynamics, for which we rely on standard economics. More in-depth discussion is presented in our book, "The Economics of Electronic Commerce". Is the electronic marketplace a perfect, frictionless market? Will transaction costs become zero? Will the market be perfectly competitive, yielding lowest possible prices? Should the market be left alone to march toward those predictions? On the surface, the electronic marketplace appears to be something of a perfect market, where there are numerous, worldwide sellers and buyers, who in turn have bountiful information about the market and products, and where no intermediaries are necessary. Such a market is very competitive and efficient (with no need to regulate or intervene arbitrarily). However, closer looks indicate that consumer searches are not very efficient (due to the cost of having a complete, easily searchable database, and because sellers may not provide all information necessary). Although wholesalers and retail outlets may not be needed, other types of intermediaries appear to be essential for the electronic market to function adequately (e.g. certification authorities, electronic malls who guarantee product quality, mediators for bargaining and conflict resolution, etc.). All these brokers add transaction costs. Will prices be lower? Digital products are highly customizable due to its transmutability, i.e. easy to revise, reorganize and edit. With information about consumer tastes, products will be differentiated (or customized, e.g. custom news). The number of potential sellers may be low, or even only one, in a highly differentiated and segmented market, and the price will tend to approach the maximum price the buyer is willing to pay. (In economic terms, sellers practice first degree or perfect price discrimination, which is exact opposite to the result we get in a perfectly competitive market.) How about the often heard zero marginal cost argument that digital products will be priced at zero (given out free) because their reproduction costs will be minimal? The price will approach zero only if (1) the marginal cost is really approaching zero and (2) there is effective competition among sellers. We will discuss the microeconomics of digital products in Section D1 in detail. In short, the marginal cost of a digital product may be substantial. Even when it is close to zero, prices in a non-competitive market will be determined more by demand (or the buyer's willingness to pay) than by marginal cost. Unless we think all information and digital products are of no value, they will never be priced at zero by sellers with market power. (Giving out free products today does not mean that sellers are doing it because the costs are zero nor that they will continue to do so when they monopolize the market.)

How do I choose keywords and summaries that will get my site more hits?

On every webpage you can place META tags in which you specify keywords and descriptions that some search engines use to index and display your webpage. (We're talking about HTML tags here, so if your eyes glaze over, I understand.) While there's a whole science to optimizing pages for search engines, here are some simple steps. First, try to determine the words that your potential customers are likely to use to find your kind of business in search engine. Make a list of 10 or 20 of the top such words or phrases. Second, make sure your TITLE tag is descriptive AND includes as many of the keywords as are appropriate. Not "Acme Manufacturing" but "Acme Manufacturing - bicycle seats, handlebars, and safety reflectors". Should be between 5 and 20 words. Third, list the keywords in your keyword META tag, separating words and phrases with commas. Example: Use plural instead of singular, and don't repeat the same word twice in a row. Keyword spamming may get you removed from the search engine. Fourth, compose a description that uses as many of your keywords as possible, while eliminating throw-away words that will never be searched on, such as "the, and, that." You don't need to repeat the words in the title, but it won't hurt. Example: About 25 words is a good length. Some search engines display this description if you've included it on your page. Not all search engines consider keyword and description META tags, but if you consistently take these steps with each page, you WILL place higher on search engines and receive more targeted traffic.

I am searching for government grant money to finance a new business, a non-profit group or business enterprise. How do I go about finding available grants?

A good place to start for grant information is: Catalog of Federal Domestic Assistance (http://www.gsa.gov/fdac). The Catalog of Federal Domestic Assistance (CFDA) is a government-wide compendium of federal programs, projects, services, and activities, which provide assistance or benefits to the American public. It contains financial and non-financial assistance programs administered by departments and establishments of the federal government.

All these electronic payment systems, are they any different?

There are dozens of electronic payment systems proposed or already in practice. But they can be grouped into three based on what information is being transferred online. The first type uses a trusted third party that maintains all sensitive information (such as bank account and credit card numbers) for its clients, which include both buyers and sellers. When there is a transaction, order information is transmitted along with information about payment confirmation and clearing, all of which do not include sensitive information. In effect, no real financial transaction is done online. The primary example of this type is First Virtual. In this type of system, the information need not be encrypted since financial transactions are done completely off-line. The second type is an extension of the conventional notational fund transfer. In credit card or check transactions, sensitive information is being exchanged. For example, you give your credit card to a merchant, who sends the card number through phone line and receives confirmation. Banks meanwhile receive the same information and adjust buyer and merchant's accounts accordingly. The information being transmitted online in this case is encrypted for security. The primary example is the use of digital credit cards (e.g. CyberCash and VISA/Mastercard's SET-based transactions). This type is becoming the mainstay of online payment methods because consumers are familiar with this system and current players have vested interest in extending that system to the Internet. The problem with transactional security has been overly played on the traditional media, but with proper caution and encryption, the Internet may be more secure than phone lines for this same old payment methods. (Can you encrypt your voice when you give your credit card number over the phone? Can you be sure who the other person is?) The third type includes variations of digital cash, electronic money and coins. What distinguishes these systems from the other two is not simply the anonymity they afford, but the fact that what is being transferred is value or money itself. With the second type described above, some one can commit fraud by lifting your message (credit card number) by running up the charge on your account. With digital currency, intercepting a message is an outright theft of your property, not just information.

What's the deal with digital currency? Do we need them?

Digital money, currency or coins are but an encrypted serial number representing money, but money in all sense since they are convertible to real money (e.g. U.S. dollar) if desired. (Just as U.S. dollar bill is only a paper with funny graphics.) It took hundreds of years before people accepted paper money (and checks) as payment. Digital currency will become dominant when paper-based economy finally turns into the digital economy. In the short run, digital money is just a convenient form of existing money since digital money is created against existing money. However, in the long run, digital money may be created on its own if users accept it on its face value, which will be determined by how dependable its issuers are. All monies are only as good as their issuers. Why do we need digital currency? Not because it is the ultimate in anonymous money. Rather, digital money is necessary if we are to operate fully in the digital marketplace. Non-currency electronic payment systems will be sufficient for some transactions; for others, digital currency will be more efficient, e.g. microtransactions as well as anonymous trades. Furthermore, digital currency is very flexible since it can be made to behave like electronic checks or anonymous cash as situation warrants. Electronic checks or digital credit cards become useless if their sensitive payment information is erased, or become costly if that information is hidden and calls for an elaborate process of verification.

Smart cards, what are they good for?

The smart card will emerge as the ultimate interface device for the mobile digital economy. It will hold your cash, ID information, house and office keys, subway tokens, all types of preference files (for house temperature setting, driver seat setting, etc.) and other information. You will exchange these information and digital products with other people, transact business, present to police officers, check into a hotel or a sports arena, and all other things yet to be imagined.

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