Looking for net profit: entrepreneurs are now cruising the Internet

Abstract:

Many firms are exploring the commercial possibilities of doing business on the Internet. Although, veteran Internet users are trying to keep commercial interests off the computer network, corporations now comprise more than 50% of users.

Full Text:

Jerry Tucker, proprietor of Seaside Book and Stamp in Halifax, is on the technological cutting edge of commerce, not that the edge is immediately obvious. Seaside is a comfortable storefront operation on Spring Garden Road in Halifax, where customers can drop in for the latest offering from new wave science-fiction author William Gibson or a friendly chat about stamp collecting. There are rows of bookshelves, stamps pinned to the wall, and a few plants–for Tucker’s real dream was to have a combination greenhouse and bookstore. Only a computer terminal on a cluttered desk hints at Seaside’s technological secret, which is found out on the byways of the information highway. Tucker is one of a growing, but still small, number of Canadian business people, often motivated as much by dreams of future profits as present earnings, who have taken their companies onto the Internet, the global web of computer networks. “I really do believe that this is the way of the future,” he says.

Unfortunately for Tucker, the future is also where any profits of cyberspace lie. His presence on the Net brings him about $100 a week of business, against $300 a month in direct costs. His outpost on the information highway is a spot on the so-called Cybermall, a listing of commercial services put together by NSTN Inc. of Dartmouth, N.S., one of Canada’s largest providers of Internet service. So, while Tucker still calls his Net experiment “a very good opportunity,” he may eventually have to bail out if sales do not improve.

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The problem, one that he shares with other Net retailers, is that direct advertising is banned on the Internet–a holdover from its origins as a communications tool for university professors and American defence researchers. Anyone placing a blatant appeal for business on the infobahn risks being immediately flamed–that is, bombarded by countless messages from irate users bluntly pointing out the breach of protocol. That means that Seaside’s commercial postings–like those of anyone trying to attract customers–have to be subtly worded to sound like information, not commerce. What is more, retailers cannot even post anything in the system to point the millions of Net browsers towards their entry among countless available pieces of information. And, unlike commercial computer services such as Compuserve or America Online, the Net, for the most part, does not greet users with opening menus to guide them to their destination of choice–NSTN’s Cybermall, perhaps–which makes it hit-and-miss whether anyone will ever stumble across it. But there is one way open to drum up business. Tucker cruises the Net’s news groups–places where people can leave messages about particular topics–set up for science-fiction fans. He leaves messages on these bulletin boards, all ending with a note explaining what his store is about and where in cyberspace it is located. But even these modest commercial postings have to be handled with discretion because Net veterans hate the idea that cyberspace is becoming commercialized. “The fear of many who use the Internet is that business/commercial interests will ruin the Internet for the rest of us by charging and making the service profitable for the few and expensive for the many,” says David Mattison, one of the organizers of the community-based Victoria Free-Net.

The purists fighting to preserve the counterculture aspect of the Net, however, are clearly losing, drowned in a deluge of business interest, with companies now making up more than half of new Internet connections. But if the Net is a market waiting to be exploited, it is also a market in its infancy, making it an attractive but dangerous place. Cathy Munn and partner John Boyce of Vancouver have calculated the risks and decided to take them with a start-up they call the Electric Mail Co. It is based on an idea that allows small and medium-sized companies without a computer services department the possibility of Internet e-mail with few of the technical hassles. So far, Munn and Boyce have a good idea, one test site, and no paying customers. “There’s a real risk in coming in too early,” says Munn.

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It is not just start-ups and small companies that are breaking business ground on the Net. Canadian Airlines has set up a pilot project that allows people to look at a picture of Vancouver, aircraft statistics, and arrival and departure information updated every 30 minutes. With the right software, users can also examine the airline’s schedule. But Grant Fengstad, the project director, says it will be some time yet, years perhaps, before customers can buy their tickets on the Net. The problem is money–how to securely send credit card information over the Net without the data falling into the wrong hands. “There is no guarantee of security on the Internet,” Fengstad says. But for all the Net’s shortcomings as a marketplace, companies are still signing up. What drives them is simple, says NSTN’s Lana Wood. “It’s the fear factor. If you’re not on, your competitor might be.”

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