Dull = good

[Steve]

Users Are Choosing Information Over Entertainment on the Web

Jared Sandberg
The Wall Street Journal 7/20/98


>From the moment the World Wide Web began to emerge as the first new
mass medium in a generation, legions of companies started spending
millions of dollars trying to turn it into the premier entertainment
stage for the next century.

Soon, computer screens were serving up a crude version of the
"interactive television" that media mavens had been promising for a
decade: on-line news and sports, on-line soap operas and TV guides,
on-line interviews with prime-time stars, Webzines on pop culture
and music. The major broadcast networks set up their own sites as
outposts for promotion and news. Microsoft Corp. divvied up its
on-line fare into "channels" containing "shows" -- usually with
little more than text, still pictures and a bit of sound.

Most of these efforts have been a costly and vexing flop, mainly
because the industry's vision for the medium has outraced
technological capabilities. Personal computers remain too poky at
downloading even still images from the Web, much less the
full-motion video and sound that consumers expect. Profits have been
nonexistent, and "viewers" have been scarce relative to other
entertainment media.

That has many Web veterans wondering whether they got it wrong:
Maybe the medium isn't about entertainment. Maybe it is less like the
television and more like the telephone: a convenient means for
communicating and for retrieving information.

With the ubiquitous exception of pornography, which exploits the
medium's advantages of ready access and privacy, the Web has proved
most useful to consumers for practical uses such as free e-mail
services, on-line Yellow Pages, used-car price guides, maps with
driving directions and the like. Some of these dull-data sites are
even achieving that rarity on the Web: profits.

"It's a mistake to treat the Internet as an entertainment medium,"
says Ed Bennett, who was president of the VH-1 cable channel for
five years and became president of Prodigy Inc. in 1995, hoping to
add TV savvy to the on-line service.

It soon became clear that downloading video and music on the Web was
like "pulling an elephant through a straw," he says. He invested
$800,000 early on in Stim, an edgy pop-culture Webzine that included
articles such as "Caught Up: The Tragedy of Bungee Jumping in a
Thong." But Prodigy executives weren't convinced that even this
largely text-based effort would work, and the company sold Stim back
to its creators for a dollar early last year. It hasn't put out an
issue in nearly a year.

Hip Isn't Enough

Even simple, text-based entertainment outlets that don't require
speedy connections have had a hard time. Turner Network Television's
Spiv went defunct, and in recent months, well-regarded sites Word
and Charged have been forced to seek financial rescue. Text-based
soaps have faltered, too, such as the East Village, a site sponsored
by Time Warner Inc. that delved into the lives of tattooed,
self-absorbed "twentysomethings." Other sites that manage to draw
people, such as multiplayer game sites, do so by letting users
communicate with each other, rather than simply entertain themselves.

The Web, which first appeared in 1993 as a graphics-and-pictures
overlay of the Internet, is far too young for its entertainment
potential to be dismissed outright. In the next few years, consumers
could get speedier hookups to the Web via souped-up phone lines,
wireless and satellite links and superfast modems hooked to cable-TV
wires. Such improvements might enable the redistribution of
traditional forms of entertainment on the Web.

Even now, faith in the Web's entertainment potential springs
skyward: On Friday, an initial public offering of shares of
Broadcast.com Inc., a Dallas-based outfit that uses the Web to
transmit video and radio coverage of sports events and speeches,
began trading at $18 and then soared to close at $62.75.

Many experts, however, say it could be five to 10 years before the
delivery system catches up to the entertainment hype. "Until the
technical limitations change, it's never going to be an
entertainment medium," says James Docherty, the new-media president
at Hachette Filipacchi Magazines, a unit of Paris-based Lagardere
SCA.

Until then, utility is in. Need to book a flight or find a stock
quote? One of the Internet's strengths is its ability to help
consumers find the right needle in a digital haystack of data. News,
stock quotes and sports scores are among the most popular categories
of on-line content.

The Big Hurdle

Just one drawback: So far, consumers can perform an array of
convenience tasks without paying a cent. For now, most dull-data Web
sites rely on revenue from display ads as customers grab the
information they want, or they count on intangible financial returns
in the form of cost savings. But for some, that still may not be
enough, and persuading consumers to pay for the privilege of using
their on-line services remains a challenge.

The Weather Channel's Web site isn't exactly a trove of fast-paced
action and suspense. But it tells you whether you should carry an
umbrella today -- and it draws more traffic than CBS's "cbs.com" and
ABC's "abc.com" sites combined. Its traffic has more than doubled in
each of the past two years, and now nearly four million people visit
each month, according to Relevant Knowledge Inc., Atlanta, which
tracks Web traffic. The Weather Channel's numbers place it among the
30 most-popular outposts in a sea of roughly 10 million Web sites
and counting. (All references to site visitor numbers and rankings in
this article come from Relevant Knowledge.)

The Web also is an ideal medium for comparison shopping by allowing
users to sift through far-flung data that can be instantly combined
at the click of a mouse. Jerry Kaplan, chief executive of on-line
auction house Onsale Inc., went tire-kicking on-line for new cars
recently and bought two. "In a matter of 30 minutes, we were able to
do research that would have taken us several weeks," he says. "For
me, the computer is a tool, not a toy."

Some businesses simply are better suited to the on-line environment.
Scanning classified ads in the newspaper can rob a person of
valuable time; on the Web, classified advertising is a natural,
allowing people to speedily reach beyond their local markets to check
out cars, collectibles, even jobs. Junglee Corp., a closely held
start-up in Sunnyvale, Calif., creates databases that combine the
content of myriad rival sites touting, say, job listings, to let
people scan multiple data sources without having to visit each
individual destination.

This easy pinpointing of data drives the traffic swamping the Web
site of Kelley Blue Book Co. The closely held Irvine, Calif.,
company operates one of the most graphically monotonous sites on the
Internet: Used-car pricing information. The Blue Book site, which
went up in early 1996, is one of the fastest-growing on the Web,
tripling its audience in the past year to 1.5 million users.

Kelley says the site already is turning a profit, even though it
spent less than $5 million on the service. It takes in revenue by
selling ads, selling customer referrals to marketers such as
Microsoft and NationsBank, and renting out the company's used-car
data to sites run by Ameritech Corp., Knight-Ridder Inc. and others.

A Reason to Visit

The average Internet user "would have little or no interest in going
to our site," says Kelley's director of marketing, Stephen Henson.
"But when it's time to put your car up for sale or buy a new one,
we're indispensable." Mr. Henson uses on-line resources himself to
arrange the two or three trips he takes a month. On the Internet, he
finds information on air fares and hotel rates that wasn't readily
available to him before.

"All of that previously had to be done over the phone in a very
tedious way," says Terrell Jones, chief information officer of Sabre
Group, majority-owned by AMR Corp.

Sabre's travel-booking site, Travelocity, gets roughly two million
visitors a month. Users are drawn to features that aren't easily
available off-line. For instance, Travelocity will send users a
pager message if their flight is delayed. Even more popular, airlines
and travel sites send e-mail notification when fare discounts kick in
for a specified destination. "You couldn't do that in the physical
world," Mr. Jones says. "You couldn't say, call me when the fare
changes."

Travelocity says it racked up more than $100 million in gross ticket
sales last year, making it the 51st-largest travel agency in the
U.S., among 30,000, after just two years of business. It expects to
double sales this year as it adds 250,000 new customers a month to
the site's three million registered users, which is run with just 80
employees. The Web service still faces a long journey before
becoming profitable, though. Only 5% to 10% of its visitors buy a
ticket through the site; the rest plow through flight times and pick
up the telephone.

Custom-Made and Free

Travelocity earns fees from ticket sales, but most other sites make
their wares available without charging consumers a dime. The
Mapquest site, run by GeoSystems Global Corp., ranks as the 17th
most-visited site on the Web, welcoming more people than Walt Disney
Co.'s, which recently ranked a respectable 35th. Mapquest and its 35
employees lure more than five million people a month; enter the
departure and destination data, and the service draws a custom-made
map ready for printing. But while people readily pay for a map at the
gas station, Mapquest fears they won't do so on the Web.

"I'm not sure what the consumer tolerance would be for paying for
this type of service at this time," says Mapquest's chief operating
officer, James Thomas.

Mapquest takes in money by licensing its mapping services to other
Web sites and selling advertising on its own site. It is considering
whether to charge for additional trip-planning features, which would
be aimed at business users rather than consumers.

A few companies are trying to charge their customers directly, with
some signs of success. Dun & Bradstreet Corp. runs a Web site for
credit reports on businesses, charging users up to $85 for a report
or a monthly subscription fee of $25 for unlimited access. The
information company has barely advertised the service but now sells
100,000 reports a month, and the number is growing 30% a month. That
puts the Web effort "several million dollars" in the black, says
Barbara McCoy, an assistant vice president at D&B.

Consumer Reports magazine began offering on-line subscribers access
to its ratings of appliances and other products this year, charging
them $2.95 a month, or up to $24 for annual subscriptions. More than
100,000 paying customers have signed up in just seven months.

Still, the likelihood that consumers will balk at paying leads many
Web watchers to say the real returns from sleep-inducing data
services lie in efficiency. In the near term, "cost savings is where
all the immediate return on investment is. Revenue generation is the
after-the-fact gravy," says Mike James, a vice president at Federal
Express Corp.

FedEx now runs one of the more popular -- and dullest -- sites on
the Web, receiving 1.7 million package-tracking requests a month. The
company figures 40% of that traffic would have dialed an 800 number
to do the same thing, and consultants say handling each call
typically costs about a dollar. The Web site saves FedEx up to $8
million a year in customer-support costs.

Likewise, Cisco Systems Inc. uses its corporate Intranet to buy
everything from landscaping services to hand tools and paper clips.
The system has "no sex appeal," concedes Carolyn DePalmo,
procurement automation manager at Cisco. But it cost only about $5
million to set up, and Cisco can save that sum within a year by
cutting the cost of each procurement from $150 off-line to just $10
on-line.

The Phone Book Is Hot

Even some executives at entertainment companies are taking note. At
Time Warner's Pathfinder site, the "bread and butter" is information
that changes fast, like stock quotes and sports scores, says Daniel
Okrent, new-media editor at Time Inc. "News for us has been growing
much faster than what you'd call entertainment," he says. "The
telephone book is a lot more popular than any John Grisham
bestseller."

Indeed, phone books become easy-to-read search engines when they are
put on-line, serving up a hard-to-find number in seconds. Four11
Corp., a unit of Yahoo! Inc., routinely draws more viewers than Web
outposts from major media companies such as the CNN news channel and
ESPN's Sportszone. Four11 offers phone numbers, e-mail addresses and
free e-mail accounts to almost five million visitors a month. What's
so cool about that?

"It's not cool, it's just frigging useful," says Jeff Mallett,
Yahoo's chief operating officer. "Period. End of story. God bless
it."

Copyright c 1998 Dow Jones & Company, Inc.
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