PUTTING THE WEB TO WORK
A Business Week Online Interview with Dave Taylor

Transcript of an Aug. 17, 1995 chat with Business Week's John Verity

Copyright 1995 America Online, Inc. & The McGraw-Hill Companies, Inc.

Online Host:
Good evening and welcome to Business Week Online. Tonight's conference takes us out on the Internet -- putting the World Wide Web to work. What are the opportunities for business to profit on the Web? And what's the reality behind all the hype? Here to discuss this timely topic is Dave Taylor (D1 Taylor), Internet business consultant, author of Creating Cool Web Pages, and co-author of The Internet Business Guide

Dave Taylor runs the Internet Mall, the largest spot for shopping on the Net with more than 2,500 stores, and has designed a number of Web sites. A graduate of the University of California at San Diego (bachelors in computer science) and Purdue (masters with a focus on educational computing), he is the creator of the consulting firm Intuitive Systems.

The firm has become adept at interface design and at helping companies with their commercial use of the Internet, including Web pages. With Dave Taylor for this conference is John W. Verity (JVerityBW), information management editor of Business Week and author of the acclaimed Nov. 14, 1994, BW Cover Story, Doing Business on the Internet.

John Verity has been writing about computers since 1976, with a special interest in the social and cultural impact of computers and of technology in general. He claims that his most recent acquisition in the technology area was a Royal typewriter built in 1920.

The moderator tonight is Jack Dierdorff (JackBW), consulting editor of BW Online. And now on to your questions!

Jack Dierdorff:
Good evening, everyone. Welcome, Dave Taylor and John Verity.

Dave Taylor:
Good evening, everyone!

John Verity:
Hi, Jack. Welcome, everyone.

Dave Taylor:
Thanks, Jack. Glad to be able to share this with the AOL folks.
Is Business On the Net Taking Off?
Jack Dierdorff:
John, you get to ask Dave the opening question.

John Verity:
Dave, everyone is thinking "business on the Net." Is it really taking off the way you expected?

Dave Taylor:
I would say that it all depends on how you define "success" on the Internet. That is, there are lots of little firms that are delighted to see their business get national attention.

John Verity:
Well, is there much business actually being transacted? I hear numbers of maybe $200 million this year.

Dave Taylor:
I think there is some level of business, but most of the money is coming from middlemen.

John Verity:
Middlemen?

Dave Taylor:
The Internet access providers, service providers, Web design consultants, etc. Companies trying to sell their products online are finding it a bit tougher going. And security is a red herring in my book, not the real reason for the problems.

John Verity:
Well, is security a problem, is it holding back business?

Dave Taylor:
I think that the problem holding back business online is the reality of the demographics. There's been a lot of dreaming about who could be online, but it just isn't the same as who IS online today. It's mostly white guys with disposable income and computers.
Connection Speeds
Jack Dierdorff:
LBacc2456 has a technical question here. Question: Why does it still take a long time to load places on the Internet if I am connected at 57600 bps?

John Verity:
Well, it's probably because the Web server you're trying for is very busy -- overloaded. Wouldn't you say so, Dave?

Dave Taylor:
I think it's a question of the speed of all the pipes along the way.
Cost of Setting up a Web Site
Jack Dierdorff:
Sand43 has a basic question. Question: How much does it cost to set up a Web site?

Dave Taylor:
It depends on what you want to do. To have a single Web page and space for it, then it'll be circa $100 a month or perhaps even less. More complex, and fancy pages, can cost TONS more. Simple home-made pups can be quite inexpensive. I have space on a server that's about $10 a month.

Jack Dierdorff:
What about advertising, Dave? Question: Dave, do you think advertisers on the Web are there for the long haul, or just experimenting?

Dave Taylor:
I think that there is a definite potential for advertising online, but that it's just that: advertising, not selling, per se.
Best Small Business Connection?
Jack Dierdorff:
GarStephan sent this in ahead of time. Question: What's the best online connection for small business at present? Would they stay connected all day?

Jack Dierdorff:
He also wants to know if he could get a "commercial account."

Dave Taylor:
If you're going to have a presence online, you need to be online 24 hours a day. That's to offer information on your firm to the audience on the Internet, of course. To use the Net as a resource yourself, you only need to connect when you're using it interactively. Regarding a commercial account, most service providers now will let you use them commercially, so just ask your Internet Presence Provider (or similar) to O.K. it, and you'll be on your way!
Subscription Fees on the Web?
Jack Dierdorff:
How about this one, from BobA in New Jersey. Question: Dave, do you think that general-interest publications will ever do well charging subscription fees on the Web?

Dave Taylor:
Honestly? I think that's a bad idea, Bob. I think that a lot of people find it a pain to try and visit a site just to find they need an account and password, etc. On the other hand, down the road as the software gets better and more invisible, I think it could get more fun and interesting. Anyway, the Web is much better for browsing than for reading long articles anyway.

John Verity:
Why aren't prices -- for CDs and other commodity-like stuff -- better on the Web? You'd think that without usual retailing costs, prices could be lower, no?

Dave Taylor:
That's an interesting puzzle. I think that there are plenty of retail outlets that sell close to the bone, and when they go online, they can't necessarily chop that much off their price. Also, there are unquestionably costs involved with doing business online.
Buying Online and the Microsoft Network Connection
John Verity:
I'd like to know how the Microsoft Net will do vis-a-vis the Internet, as a retailing channel. Any thoughts?

Dave Taylor:
I think that even with Bill G. around, they'll face the same obstacles and hurdles of every online biz, including spreading the word, attracting BUYERS rather than BROWSERS, and offering unique and interesting merchandise at a good, competitive price. Can they do it? Absolutely. I can imagine MS offering copies of their latest software for half the retail-outlet price online, for example. The danger, of course, is alienating the retail channel that would have to compete. I've seen that very problem with book publishers.

Jack Dierdorff:
John has a follow-up.

John Verity:
Will Microsoft be able to solve some security problems, about credit cards, etc.? I've heard they'll have some way of securing transactions over the entire Net, not just their own.

Dave Taylor:
I think they can solve some security problems, sure, but I don't think lack of security is what's keeping business on the Internet from exploding, John.
Is the Net Just for Fun?
Jack Dierdorff:
This one has LiteSabur's name on it. Question: I believe that the Internet is not viewed as a benefit in advertising (especially the WWW) because people are using it for fun, not business. What do you think?

Dave Taylor:
Au contraire, LiteSabur. There are more "com" sites registered at the Internet Network Information center than any other type of domain, and more people are involved with business use of the Net than otherwise. Why do you think that's the case? From articles you've read or hearsay?

Jack Dierdorff:
Have there been any good studies of Net usage from this point of view?

Dave Taylor:
O'Reilly has recently done an interesting survey of Net usage, but other than some simple info, they are keeping things close to their proverbial chests. It suggests people like to browse, but not necessarily buy online.

Jack Dierdorff:
Ellsworth also has a question about Net demographics. Question: Dave, what about the Quarterman study with men:women being 3:1?

Jack Dierdorff:
Is that online, Net, computer use, or what?

Dave Taylor:
Hi, Jill! John Q's study is an interesting one, but the demographics are of users, not of USE.

John Verity:
I suppose the mix will change with the growing use of home computers -- in the home, not in the garage!
Who is making Money on the Net?
Jack Dierdorff:
Here's a question from DaydrmBlvr in Atlanta. Question: Who is making money on the Net these days? What kind of businesses? There are lots with presence, but who is actually turning a profit?

Dave Taylor:
Companies are making lots of money on the Net these days, actually, especially computer and tech-related firms -- hardware/software, RAM, books, albums, etc. It's also a matter of expectation. If you sell T-shirts and can sell 100 in a year off the Net, you've done a great, bang-up business. It might not be a big amount to J.C. Penney, but to you, it's wonderful!

Jack Dierdorff:
John, have anything to add?

John Verity:
Just that there is this sense that the Net-Web is a giant flea market, open to everyone.
Biggest Problem on the Web Today
Jack Dierdorff:
SFarris 82 asks this. Question: What would you say is the biggest problem on the Web today?

Dave Taylor:
Finding things. It's like a HUGE library without a very good card catalog, unfortunately.

John Verity:
Yes, the clutter of it all, oh the clutter -- to quote Marlon Brando.
Net Banking
Jack Dierdorff:
Now a question about Net banking. Question: What about this First Virtual bank account vendors are starting to set up?

John Verity:
I think First Virtual is a very interesting company to watch. They are up to some very interesting things.

Dave Taylor:
I think First Virtual is a cool idea, but I really believe that all the little firms experimenting with online commerce will vanish once we get the official choice of Visa, MasterCard, etc.
Is the Web a Mass Medium?
Jack Dierdorff:
Dave, try this. Question: Dave, do you see the Web as a mass medium yet? If not, when do you think it will become that?

Dave Taylor:
What defines a true mass medium? A wide and diverse demographic audience? A "big" audience? I think that you can reach hundreds of thousands of people -- potentially -- on the Web. You can definitely reach millions on the Net (with apologies to Sanda Bullock!). Is either a mass medium? I surmise they're getting to that point, but there is still too narrow a demographic.

John Verity:
What is the potential for the Web to become a utility, always connected to every program you have running in your PC? There seems to be a growing realization that the Web as we know it is just a beginning, that it is constantly reinventing itself -- as the Internet has always been. Any thoughts?

Dave Taylor:
Can you say big phone bill? I don't see that happening, and if it does, it won't be the Net. Also, the reinventions are taking it away from the sparkle of its invention and into the morass of too many engineers in the kitchen (e.g., Adobe PDF support, Macromind Director support, HTML 3, etc.).
How do you set up a business on the net?
Jack Dierdorff:
NFRace has a question that must be a staple of your business, Dave. Question: What should we do to set up a business on the Internet?

Jack Dierdorff:
Suggest reading your collected works, Dave?

Dave Taylor:
Oh! That's a good answer, Jack. Check out The Internet Business Guide (Resnick & Taylor, 1995) and make sure you get our NEW edition that just came out this week! Other than that, have realistic expectations. Understand how your firm can offer value to the greater online community and strive to be a member of the Internet, rather than a "user' of the Net (e.g., contribute to lists and Usenet groups, don't just slap up a Web billboard and walk away).

John Verity:
Yes, I would agree.
Businesses best suited to the Web
Jack Dierdorff:
Are some kinds of businesses more suited to the Net and/or the Web?

Dave Taylor:
Computer-related firms do the best. Fun, hip companies also do well. Examples: hot sauce, RAM chips, research firms, bookstores. What's not doing well, but lots of people visit? Adult-theme businesses.

Jack Dierdorff:
DDowdy206 wonders if you can name any companies specifically. Question: What companies are currently doing well marketing on the Net?

Dave Taylor:
The Internet Shopping Network is doing very well. Hot Hot Hot is doing well. Computer Literacy is doing very well. Antarctic souvenir shop (New Zealand). Some T-shirt companies. John, can you add some?

John Verity:
I would guess, don't know, that the big companies, like Sony and IBM and others, are doing well with the Web. Sun Microsystems, too. But these guys have been living in and around the Net for years. The companies that can promote their Web presences outside of the Net are bound to do well. This is the ultimate in collateral advertising.
The Web Made a Big Difference
Jack Dierdorff:
Here's another question -- how about a small biz where the Web made a big difference? Question: Dave, do you know of any true small business successes on the Web?

Jack Dierdorff:
Besides those you've named. A turnaround, or a big leap up?

Dave Taylor:
Netscape. :-)

Jack Dierdorff:
But maybe not for buyers of the IPO!

Dave Taylor:
Again, as I said earlier, success is relative. There are lots of small one-person businesses that are delighted with a dozen queries and three or four purchases each month. Is that a biz where the Web/Internet has made a big difference? Absolutely! John, your thoughts?

John Verity:
I understand there have been some consultants who've done well on the Web.

Jack Dierdorff:
Not to name any names!

John Verity:
But again, it's computer-oriented companies that have done best, because their audience is built in, so to speak.
Parallels between the Web and the 900 Biz
Jack Dierdorff:
This is from UncleMike. Question: I just got here, so the question may have been covered, but do you see the Web eventually reflecting the 900 biz -- that is, people making big bucks off inane subjects like telepsychics? And proliferating beyond belief?

John Verity:
I think gambling will be a big winner!

Dave Taylor:
I don't think that there'll be a parallel between 900 numbers and the Web because you can't set up a free 900 number, but you can set up a free Web page, so the nature of competition is entirely different.
Wrapping It Up
Jack Dierdorff:
Time has flown by -- and this has to be the last question, alas. Thanks, Dave Taylor, for being with us. And thanks for your help, John.

John Verity:
You're welcome. My pleasure.

Dave Taylor:
It's been a pleasure. Thanks for joining us!
Online Host:
Thanks to Internet consultant Dave Taylor, John Verity of Business Week, and all the BW Online team for this conference on putting the Web to work. And thanks to all of you on AOL -- with apologies to those whose questions we didn't have time for. If you'd like to continue the discussion, we invite you to move to the BW Online Chat Room or post comments and questions on the BW Online Message Boards (try Computers & Communications). Thanks again and goodnight!
Copyright 1995 by The McGraw-Hill Companies, Inc. All rights reserved.
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