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Making money online

Independent survey of online business reveals surprising
successes and rules of the game.

By William Kennedy, Jeanne Dietsch

September  1995
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"No one is making money online, except the greedy purveyors of the medium." That's the prevailing dictum promulgated by traditional news media (which just so happen to be competing for ad dollars) and by many industry analysts today. It's also wrong. ActivMedia, Inc., the authors' market research firm, ran the numbers and uncovered the rules that govern this marketplace. (6,000 words)

A sidebar discusses electronic commerce technologies. Another briefly surveys the products available to measure and verify Web site activity. Sun Microsystems' profit-making Web efforts are profiled in brief.

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How many brand new shops pull in $1 million in sales during their first year in existence? Few, very few -- no matter if you're online or on Main Street. Robert Olson, president of the online enterprise Virtual Vineyards, was well aware of the odds when he launched his Web site last November.

"Starting from scratch is very frightening, particularly when you're betting on a new medium", says Olson. The company did have a reasonable amount of investment capital -- around $600,000 -- for equipment and for building their marketing, distribution, and customer service structures. Even so, the risks were high. There were few online success stories as it was, let alone anyone starting a successful wine shop on the Internet.

Olson based Virtual Vineyards' marketing and sales strengths on the reputation of California wineries and an exclusive offering of product. He also understood the special needs of an online site: It must be interesting and ever-changing, containing lots of useful information and user interaction. For instance, the site features a wine glossary, Ask The Cork Dork, a place users can post their favorite recipes, and Food and Wine Pairings. Their What's New page has had a complete history of monthly news items since the January '95 launch. The language is sophisticated but not stuffy; the information is eclectic and interesting.

Virtual Vineyards sells California varietal wines at retail prices between $6 and $100; Olson sought to build customers and sales with value-based, rather than lowest price models, noting Nordstrom's retail customer service model as a benchmark. Since startup, Olson claims 20 percent monthly growth in sales. He now speaks of "getting into big numbers." He speaks true: The company's one-year anniversary will take place January 25, 1996, and they expect to pass the $1 million sales mark sometime before the celebration. One hundred percent of sales will have come from the Web site.

Virtual Vineyards is just one of the many companies that defy the common wisdom, "No one is making money online, except the greedy purveyors of the medium." And it is companies like Olson's which prompted our research firm, ActivMedia, to ask the simple question, "What are the numbers?"


The question makes perfect sense: When exploring new opportunities, sizing up the marketplace is one of the first and most fundamental things any reasonable business should do. Analyses derived from "the numbers" -- statistically significant results from one or more formal surveys -- reveal the standard rules and conditions that govern a marketplace. Those who know and play by the rules of the marketplace have a much better chance of winning; those who don't languish in failure. Even maverick businesses, the romantic (often arrogant) loners who are so appealing to the American psyche and the "holy grail" of the case study in the media, typically win big because of their keen knowledge, not ignorance, of market niches.

The caveat to formal market surveys is analogous to the Heisenberg Principle of Uncertainty: Analyzing the success or failure of a particular company doesn't tell you the rules, but group statistics and trend analyses rarely identify the potentially lucrative exception. Even so, smart businesses typically won't share their particular competitive advantage. But they will participate in formal market surveys to see how they compare with others in the marketplace. And they also must be assured absolute anonymity. Otherwise they won't play or play fair. A good market survey gives you the cold data from which to find the rules, not the exciting exceptions, and is typically a more reliable business guide than intuition or the opinion of pundits.

We were quite surprised, initially, by the utter lack of marketing numbers for commercial Internet enterprises, particularly given the size and caliber of companies "going online" and the intense scrutiny and hype given to the new medium by its traditional cousins. Clearly, back in early '95 the Internet was a crap shoot and everyone venturing to do business online was a gambler. Discontented with not knowing the rules, ActivMedia sought to turn the tables by conducting our own market study. Others, including O'Reilly and Associates, the Hermes Project at the University of Michigan, and Project 2000 conducted at Vanderbilt College, have since announced Internet business research projects, although data about Internet marketers themselves remain scarce.

The study was of businesses generating sales on the Internet. We identified -- online, of course -- businesses with active Web sites and selected a statistically significant and relevant research panel by including only those companies which products and services flowed through the Internet pipeline, and excluding those that only feed the pipeline or don't participate commercially. (See our methodology details for more information.)

The results of that first survey of business over the Internet were surprising and revealing:

                          Facts, not fantasies
         Opinions                                    Facts
Web businesses don't make money          Nearly one quarter are profitable now

Web purveyors are the ones               Website purveyors are excluded 
making the money                         from the survey

You can't make money online              39% of successful online marketers 
selling to consumers                     sell consumer products

No one dares use a credit card           Successful web marketers are more 
to buy online                            likely than unsuccessful ones to  
                                         accept credit card info

Traditional media advertising has        Online marketers plan to increase
nothing to fear from online ads          their online spending at the expense
                                         of traditional ads

The facts
The most interesting survey finding in the ActivMedia study is that back in the Spring of '95, many more companies were making money on the Internet than the analysts and pundits were willing to acknowledge. In fact, nearly a quarter of the ActivMedia panel, which was representative of the entire population of Internet businesses, reported that they had financially successful Internet sites. That's particularly surprising since many of them had been active on the Web for less than seven months! Business opportunities usually take years to mature. Another half of the panel said they expected to be financially rewarded within one to two years. Projecting the confidentially reported sales dollars and volume, ActivMedia was able to estimate a total sales over the Internet of $118 million for the year ending in August, 1995.

[Monthly Sales Generated from WWW Sites]

Probably the most interesting finding of the study, however, was that successful online marketers are less easy to characterize by what they sell than by the way they sell their products and services. During the time the survey was conducted, the leading online marketers sold software, production equipment, financial services, travel services, and books online. Do you see a coherent trend there? No? Join the club. You'd expect companies selling high-tech equipment and software to have a comfortable lead in online commerce, but they hardly dominated.

By contrast, the ActivMedia study found that what the successful online marketers did with their Internet sites mattered more than the products and services they sold -- a lot more. In fact, the difference between successful and not-so- or un-successful marketing are stark -- uncharacteristically so for a typical market survey. The clarity of the findings is even more surprising for an emerging marketplace like the Internet.

Steps to online success
A number of factors lead to online profits. Others you might expect to be influential are not. Successful online marketers:

Successful online marketers see the Internet as a commercial opportunity, not the business-phobic enclave of flame-throwing academicians it was just few years ago when the National Science Foundation's rules of Netiquette were vigorously enforced. In 1993, the upstart Commercial Internet Exchange (CIX) branch of the Internet heralded the beginning of the end to NSF Acceptable Use Protocols (AUP), at least as applied to business activity.

Today, nearly anything goes, except perhaps e-mail "spamming" (unsolicited e-mail advertising). Nonetheless, many companies are hesitant to aggressively market on the Internet, preferring to view the medium as an avenue for better consumer relations rather than a sales channel.

Successful Internet marketers, on the other hand, aren't timid about their online sales and marketing expectations. Working to be successful is a surprisingly simple distinction. Even more so considering the many who befuddle their goals or lack company support.

Surprising, too, are the things that don't appear to matter much toward online success. For instance, unlike the mass-market world of K- and Wal-marts, company size has little or no bearing on success on the Internet. How long a company has had an active Internet site also doesn't matter much. You might think the more experienced companies would have the advantage. In fact, some which have been connected for over two years tend to pull their marketing punches since their activities were conditioned in the AUP era of the Internet.

What do they really say about net marketing?
Marketing research has the unpleasant image of clipboard-armed college students acting like the Hari Krishnae of malldom. Besides, crunched numbers from multiple choice and yes/no questions are boring and never tell the whole story. Thoughtful market analysts always give their survey panelists the opportunity to "sound off" in the margins, anonymously of course. Some of the juiciest, most revealing marketing information came from thoughts and experiences shared with the ActivMedia researchers by online marketers.

[Marketing Information]

For instance, 25 percent of the survey's panelists also have private online service sites, such as with America Online, CompuServe, and Prodigy. While there was some grousing about the treatment they receive by the online service companies, surprisingly most said that their Internet sites were reaping about twice as many dollars as any single private online site. This may be because the online services provide a less level playing field than the Web. In the controlled hierarchy of a private online service, a few well-placed companies tend to dominate.

Another paper tiger that many of the online marketers sent up in flames was the relationship between selling products and expensive graphics. The "hot" sites attract lots of tire kickers who not only don't buy, but also interfere with real buyers' access and the company's ability to serve those buyers. In that vein, many survey respondents insist that success lies not in the mass market of the Internet, but from carefully exploited niches.

Another frequent comment -- and one not bound to please the sales departments of paperbound media -- is that successful respondents intend to move their advertising dollars to the Net. Also, they felt they had gained distinct advantages by being online and wanted to maintain those gains by being first to offer more, better, and faster.

This bandwagon may handle more like a patriot missile
There's a lot to know and do to be successful online. We've hit upon many of the higher hurdles in this article. Of course, the ActivMedia report, "Who's Succeeding on the Internet and How?," has many more points to make and goes into greater detail than this article.

Do carefully plan your online strategy. Before you launch an attack, make sure you know what your target market is and how far geographically you are you able to extend your physical reach. You can sell to Thailand, but you probably can't repair their broken TVs. (Parenthetically, we've found anecdotally that Europe and Asia are excellent Internet-reachable markets in these days of the weak dollar.)

Make sure you have a good grasp of and are adept with the intricate technologies of the Internet before you venture to sell online. Small and large companies also should take different online strategies.

One thing is certain, though: Companies that listen only to the self-serving deprecations of traditional media like The Wall Street Journal (remember its pooh-poohing the PC as a "fad" in the '80s?) could wake up tomorrow and find themselves plodding among the stegosaurs. The speed, accessibility, flexibility, and power of online marketing is revolutionizing the way the world does business. The more your company remains in the static world of paper and film, the more it risks extinction.

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Cash or Credit?

For all the talk about commerce on the Internet, there is a small, though growing, amount of money changing hands. While interactive marketing and advertising-supported media have come on strong as softer forms of online commerce, hard-core commercial transactions based on monetary exchange has lagged while technical security issues and the business infrastructure gears up to support online payment.

Now those pieces are set to rapidly fall into place. New secure software and systems are now available and in use to support credit card transactions on the World Wide Web. Financial industry support for servicing online transactions is also developing, though at a slower pace. And solutions for going beyond credit to digital cash are widely proposed.

While accepted standards for online transactions are not yet commonplace, it should come as no surprise that some of the biggest banks and financial firms, including Visa Corp., Wells Fargo Bank, and Bank of America, are already online and exploring unique and innovative solutions. Companies proposing more unusual cyber-solutions for digital money tend to be smaller, technology companies such as First Virtual, eCash, and DigiCash.

And in late August, a group of technology providers and 17 banks, dubbed the Financial Services Technology Consortium, agreed to test a prototype system allowing Internet users to pay merchants or other users with electronic checks.

Security dangers

Today, however, widespread fears of the safety on online financial transactions has slowed acceptance. Headline hacker cases continue to cast Net security in a bad light. Since the Internet is by its nature an open network -- complete with known and unknown trapdoors, shortcuts, and loopholes -- the opportunities for scam artists and other computer criminals to "sniff" commercial transactions as they fly past on the wire are manifest. In the view of some experts, broadcasting credit card numbers across the Net is simply asking for trouble.

And yet, it's worth considering that there are few cases of Internet-based credit card pilfering or fraud on record, even though hundreds of people send credit card information through electronic mail and Web transactions every day.

Bill Todd, co-owner of Todd & Holland Tea Merchants, a small Internet shop that encourages its customers to include credit card information with their online orders, argues that transaction security "really isn't an issue for smaller merchants like us: It's large corporations, banks and similar, that really have to worry about credit card security, not tea merchants."

Moreover, online merchants can bypass the whole issue by relying on existing authorization systems to establish an account, then use the Net for ongoing transactions

The Internet Shopping Network, for example, neatly side-steps the entire problem of online security by requiring credit card information to be faxed or telephoned in by customers before their first transaction. Once the information is received, customers are assigned unique id numbers they use for online transactions. All orders are shipped to the address on file to further minimize fraud.

So why the anxiety surrounding theft of Internet commerce? Nathaniel Borenstein, chief scientist of First Virtual, says the problem isn't that commerce needs to be completely foolproof, but rather that it's just too easy to intercept e-mail and Web transactions -- and copy important financial information -- today.

Partly, this is an issue of consumer confidence. None of us is likely to pass credit information over the Net if we think there is a measurable risk of theft or fraud. The bigger issue, however, is the confidence of the financial institutions that are most exposed. After all, if someone obtains and uses your credit card, in most cases you will not be held liable for the purchases. It is the credit card companies and issuing banks -- and to a small extent, the merchant who accepts the charge -- that cover the loss.

These financial institutions build in a percentage of the transaction fee to cover the risk of fraud. In theory, there is no difference in the risk associated with online transactions and those involved with mail-order, telephone, or in-store transactions. In practice, however, much less is known about the amounts and types of losses that might be encountered online, so institutions have taken a cautious approach to the new medium.

Technical fixes

Much of this problem is expected to go away as secure payment systems are implemented on the World Wide Web and elsewhere online. That is quickly happening today as software companies deliver server systems with built-in security features. Users simply enter their personal and financial information once, and it's stored, encrypted, until appropriate for an online transaction.

Under development at the University of Southern California, NetCheque will allow banks and their customers to send electronic checks over the Internet, complete with a digital signature that cannot be forged. If you maintain a positive balance, NetCheque acts like a checking account, and a negative balance turns it into a credit-card account. The system is currently under testing.

Checkfree, another electronic checking service, is participating in another system with Spyglass, Tandem Computer, and others that will permit secure transactions using standard http.

The best example of this approach is Netscape Communications, with its popular Netscape Navigator Web browser. Use the browser as-is off the net, and you've got a terrific way to travel the Web, but connect to a full Netscape secure server site and you'll find that suddenly you have a secure link between the application on your PC and the Web server, regardless of where it's located on the Internet. Netscape has also just released its Netsite transaction server software, which includes merchant authentication, credit card authorizations, and transaction settlement through one of the Netscape partner banks -- Bank of America and First Interstate. Netscape's system uses technology called SSL developed by the company.

Other industry players, including Web innovators Enterprise Integration Technologies, are promoting a more standard, cross-vendor secure http, or S-HTTP for short. EIT documents indicate that S-HTTP seeks to enable spontaneous commercial transactions, interoperability with existing clients and servers, and use of shared public keys. Expect this to become the standard, with support from CERN, NCSA, HP, Spyglass, and the Internet Engineering Task Force itself.

"Both Netscape and S-HTTP offer worthy solutions for Internet merchants and their online customers," says Rosalind Resnick, an Internet consultant and co-author of The Internet Business Guide. "No matter which one becomes the standard, the advent of secure payment systems is good news for any company doing business on the Net."

Aside from two conflicting browser standard proposals for conducting secure transactions, US export restrictions on products that include cryptography may hamstring US firms' efforts in Web-mediated commerce. Recently, an informal group of users interested in cryptography decrypted a secure Netscape transaction encoded in a weakened version of its SSL protocol, which Netscape employs in its overseas products. Netscape downplays the importance of this event, saying the compute-time cost to decrypt a single message (eight days using 120 workstations) is too high to worry about for consumer credit-card transactions.


With these solutions already available or waiting in the wings, the technical side of the equation for online commerce is essentially solved. Coming somewhat slower is the banking infrastructure -- the clearinghouses and back-end processing -- to support widespread online payment.

For now, the major credit card companies and many banks are establishing the relationships and developing the systems that will enable them to easily accept and process online transactions. But most of their activities amount to prototype systems and demonstration projects.

At last count, more than 60 banks have some sort of presence on the World Wide Web alone, including CitiBank, Chemical Bank, Wells Fargo, Bank of Boston, Bank of Montreal, Chase Manhattan, First Interstate, and the Royal Bank of Canada. Credit card companies also have their foot in the Internet data stream. MasterCard, Visa, American Express, and Discover are all registered with the Network Information Center.

Most of these banks and credit card companies are working as partners in larger commerce projects. Bank of America is one of the most aggressive financial institutions online, opting to join Silicon Valley-based CommerceNet as a starting point for online banking.

David Coulter, vice chairman of Bank of America, explains that BofA joined CommerceNet "to advance an electronic strategy that we believe is increasingly crucial to the future success of American business." Simultaneously, BofA also advertises on its Web site that it can offer on-line merchants a single source for electronically processing Visa, MasterCard, Diners, Carte Blanche, American Express, Discover, and ATM cards.

As a consortium of more than high-tech companies interested in online commerce, CommerceNet, with seed funding from the U.S. government, is the hub of much of the commercial activity on the Internet. Members include American Express, Bank of America, Bank One, CitiCorp, CyberCash, First Interstate, and MasterCard. Wells Fargo is also a busy member of CommerceNet, and indicates it is planning additional Internet-based banking options later this year: offering Wells customers the choice of doing personal and business transactions on the Internet directly.

Lest you think it's all banks and credit card merchants, online commerce encompasses quite a variety of different possible transactions. Both credit reporting agency Equifax and the U.S. Social Security Administration are both online and members of CommerceNet. Hardware vendors are also doing well with online financial services.

Unix server vendor Sun Microsystems, for example, in a recent press release states that financial services are its fastest growing hardware market, accounting for 10 percent of the company's 1994 revenues. Sun also has recently agreed to provide electronic bill-paying and transaction delivery for Interactive Transaction Processing, a joint venture of EDS, France Telecom, and US West. Sun is also finalizing similar deals with both Visa and MasterCard.

Beyond credit

Hard on the heels of credit card transactions comes the related subject of digital cash. Numerous companies are working on solutions. These will enable low-price transactions and anonymity, serving the same role as currency in the real world.

One of the hardest choices to make when building a new environment is whether to aim for a totally new vision of the future or to model the existing system as closely as possible. While some of the largest financial institutions perceive online banking as business as usual, a few entrepreneurial firms are traveling a very different path towards secure online digital commerce.

Four companies stand out as innovators, trying different strategies to build a secure Internet. First Virtual, DigiCash, eCash, and CyberCash are all creating systems based on the premise that secure PCs can establish secure communications paths and protect merchants and users -- automatically -- from the danger of misappropriation of credit information.

Digital money has several advantages over credit-card or checking transactions. First, it is appropriate for the many low-cost transactions that experts expect to predominate on the Net. If you are buying articles or bits of information that might be priced at pennies per item, the processing costs associated with a credit-card transaction are prohibitive. Some form of electronic currency that can be passed from buyer to seller with no back-end processing is preferable.

Also, digital money --like its real-world counterpart --has the attraction of being anonymous. There is no way to monitor who is spending it and for what purchases. Of course, this raises issues for law enforcement and tax collectors, but these problems are being addressed.

First Virtual's system is up and working today. Online author Stu Sjouwerman, reports that he's selling his new book, Make Money On The 'Net... The Right Way, electronically through First Virtual and sold 300 copies at $9.95 each during the first four months. The FV cut is just below 10 percent. He said, "FV has actually an up and running guaranteed safe way of using credit card payments on the net. They are fully operational and I like the idea of integrating an 800-line and plugging in your credit card over the phone just once."

Another slick thing about First Virtual: It's the only system available today for secure commerce through e-mail and FTP transactions, in addition to the more widespread secure Web/http systems being designed and tested.

Here's how First Virtual works:

  1. Buyer browses and finds something they want to purchase.

  2. The seller receives the requested purchase order electronically, then validates the buyer account either in real-time or through e-mail.

  3. If the seller honors the order and the information is sent to the buyer, a transaction record is also sent to First Virtual directly by the vendor.

  4. First Virtual then sends a "transfer of funds token" to the buyer electronically, either via e-mail or the direct network.

  5. The buyer, who at this point has presumably already received their ordered goods, can then agree to pay, refuse to pay, or cry "fraud!" which immediately shuts down their account.

In this scheme, the seller bears the risk of non-payment, but buyers who say "no" too often (who receive the goods but do not to pay) are dropped by First Virtual.

By contrast, customers establish a balance with DigiCash prior to their first transaction, either by directly paying them money or registering a bank credit card, then when they want to buy something the buyer sends a token to DigiCash intended for the DigiCash-subscribing vendor. That vendor then receives an acknowledgment of transaction -- payment -- and delivers the ordered goods, services, or merchandise. eCash works in essentially the same manner, though there are differences in the two online interfaces.

CyberCash is another unusual venture, but with a different model: They propose to offer credit transaction verification servers online, and vendors can confirm credit cards and close the transaction in real-time. The founders of CyberCash are best known for their development of the Veriphone, the little box that cashiers swipe your credit card with and then punch in the amount of the purchase. A few seconds later a verification number is returned and you're authorized for the specific purchase. CyberCash is working with both Wells Fargo and BankOne.

Travelin' down the road

Internet consultant and visionary Ryan Scott offers his insight into the future of online commerce, stating that he sees a near-term future where we'll be able to do all our normal banking transactions directly on-line. His vision isn't without a warning, however: "I think that unless the entire money on the net concept is thoroughly thought out we could be in for a major crisis as more and more transactions become nothing but ones and zeros on this enormous public network. While many current transactions are done electronically, they take place on secure private networks between skilled firms with technical teams, not Joe Consumer booting his new 486 PC for the first time and firing up First Union's Checks On-Line Software without reading the docs."

Other nagging questions remain:

Whichever of the systems moves into the forefront for online commerce, one bet's a sure thing: most online consumers will stick with their existing credit cards and financial payment system, seeking instead a secure way to use the Internet to purchase products, services, and information. --Dave Taylor ( is author of the upcoming How to Write Cool Web Pages and co-author of The Internet Business Guide.

For more about electronic commerce, see Making money online, a SunWorld Online feature story discussing the common themes found on profitable Web sites.

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`14 million people have read this page!'
Or have they?

Commercial Web ventures hope to make money by selling advertisers on the popularity of their pages. Advertisers are attracted to high-volume sites, but want rich demographics about Web site visitors instead of the simple "hit" tallys typically publicized. Looking to service both Web publishers and advertisers, three firms rush to offer auditing software and services that at minimum make sense of log file data and in some cases add value by cross-referencing log information with statistical profiles of domain names and users.

Internet Profiles Corp. (I/Pro) (San Francisco) provides three products/services -- I/Count, I/Audit, and I/Code.

I/Count, which shipped in May, enables Web sites to analyze Web use and users, including the identity of organizations assigned the IP addresses that access the Web site. By tracking IP addresses and matching them against a pre-compiled database, I/Count attempts to provide additional market intelligence. That includes a usage report extrapolating variables such as company size and geographic location.

The report must be extrapolated due to the inherent problem posed by dynamically assigned IP addresses. Major on-line services and national Internet access providers continually reuse a large block of IP addresses, and there is no information that can be automatically grabbed to provide more detail. I/Pro's I/Count brackets these users, creates a baseline profile of all other users accessing the site, and then applies the number of visits from the on-line services according to the established baseline.

Additional service from I/Pro, I/Audit, will analyze usage statistics for a Web site, and attest to the accuracy of the numbers. The well-known Yahoo site is an early I/Audit customer. Started as the hobby of two Stanford University graduate students, Yahoo is now a commercial venture that plans to generate revenue by selling advertising.

According to Tim Brady, Yahoo's director of marketing, advertisers are not yet demanding audited numbers, but he expects they will soon. Yahoo's strategy was to get out in front of the demand and elevate its credibility.

Web Reporter

Open Market (Cambridge, MA) is in the midst of beta testing its Web Reporter software, which is scheduled to ship in production form before the end of September. This package is designed to make it easier to extract information from Web log files. Unlike I/Pro's I/Count, Open Market does not claim to add information that cannot be obtained from a thorough sifting of server logs combined with common add-on patches.

However, Web Reporter does provide a variety way to manipulate server log data. For instance, Web sites can group pages by user-defined characteristics and then look at global access numbers by category.

Web Reporter understands Open Market's extended log format, says Pierre Bouchard, vice president of Open Market's server products group. Open Market's Webserver replaces the CERN, NCSA, or Netscape server software, and captures additional logging information.

Web Reporter also makes it convenient to concatenate incremental reports into larger data sets, without having to regenerate all new reports.

"Web reporter lets us easily get a very high-level view of what is going on with the Web site. Rather than giving page-by-page traffic reports, we can define a set of pages that are our core product catalog and get statistics for that set of pages," says Dave Mackie, manager of on-line technologies for Books That Work, a CD-ROM producer.

Moreover, says Mackie, he can track the percentage of users accessing those pages with a Netscape browser, and determine whether or not they should make use of Netscape browser extensions.

Answering such questions was pretty difficult with any product other than Web Reporter, Mackie says. So Web Reporter not only provides usage information, it also helps him make intelligent decisions about the design and operation of the Web site.

You can find an interactive demo of Web Reporter on Open Market's Web site.


A third entry into the Web analysis market is expected from WebTrack (New York). Its WebStat product/service is also in beta, and is due in production form some time in October.

WebStat will track the total number of times each page is accessed, the number of unique sessions in which a page is accessed, or the total number of sessions for the site. It is designed to track domain types and referring URLs. It will also provide an analysis of average session behavior, such as the number of links in an average session, session duration, and common pathways -- the order in which links are selected.

Register once, read many

I/Pro's I/Code service is a substantial departure from usage tracking and auditing. It is an attempt to develop a central database of Web users that contains far more detailed demographic data than most Web sites dare to request.

The hook for Web sites is they can get a much clearer profile of who accesses their site -- sex, age, education, income, children, etc. The benefit to Web surfers is two-fold. To the extent that a lot of Web sites license the service, then users can register once and keep the same user ID and password at all subscribing sites. A second benefit is that I/Pro pledges to keep personal contact information private, and release only anonymous demographic profile data, unless the user grants explicit permission.

The success of this service is a bit of a chicken and egg problem. The users have to like it to make companies license it and enough companies have to license it to make consumers want to use it. To get past that hurdle, I/Pro got a huge boost from the Internet division of CompuServe, which is requiring I/Code registration to play its $1,000,000 Internet Hunt.

According to Joy Tucci, CompuServe's retail promotions manager, the promotion topped 20,000 registered users in five weeks. I/Pro hopes to have one million users registered with I/Code by year's end. Eventually, says Tucci, the demographic data collected from I/Code will be used to establish the rate base CompuServe will charge advertisers.

(As we closed this issue, we learned of two other Web server measurement products recently announced: Digital Planet and Group Cortex.)

-- Barry D. Bowen ( is an industry analyst and writer with the Bowen Group Inc., based in Bellingham, WA.

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How Sun makes money on the Web

According to the Web marketers at Sun Microsystems, the Web is more than just another market for Sun to sell SPARCservers. While Sun won't disclose any numbers, it reports the following URLs make money for the Mountain View-based company.

  • SunExpress
    Sun's mail-order business does not accept orders over the 'net, though officials say it will when standards emerge. In the meantime, buyers can browse SunExpress's catalog online.

  • SunSoft's Try-N-Buy
    Users can download and use SunSoft's WorkShop developer tools with a free, 30-day license. Put in place this summer, SunSoft reports generating sales from this new channel.

  • Catalyst Interlink
    Sun's Catalyst program promotes hardware and software that operate with Sun products. Catalyst generates its funds by charging fees to the participating vendors.

  • SunService's SunSolve
    Sun's service organization figures it's saved Sun millions of dollars by putting Solaris patches up on a free ftp server. SunService has also placed its support database available on the Web for a fee, allowing paying customers to serve themselves quickly at a lower cost to Sun.

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    About the author
    William Kennedy, formerly a senior editor with SunWorld and Advanced Systems Magazines, is president of ActivMedia, Inc. Jeanne Dietsch is a veteran market researcher and analyst with more than 15 years experience following high-tech market trends. She currently is vice president and director of research with ActivMedia, Inc., a company specializing in online marketing research and development.