ARTS & FARCES internet

Prepared for the Members of the Jobs, Energy and Community Development Subcommittee on Telecommunications and Technology and Members of the Judiciary Subcommittee on Data Privacy and Information Policy.

Security, growing up spending every summer of my youth in Shoreham, Minnesota, meant a butter knife wedged in the front door jam. It wasn’t there to keep anyone out, but rather so a storm wouldn’t blow the door open and soak the cottage with wind-driven rain. Both doors had skeleton key locks, the keys for which were lost long before I can remember. Grandpa never locked his Buick’s doors—even when he ventured to the city. he said there was never anything in the car anyway and he didn’t want thieves breaking the windows to find that out.

When Grandpa died, Grandma got new locks and keys for all the doors.

Hold on to your virtual wallets, secure electronic commerce on the Internet—long promised but never quite delivered—is suddenly a lot closer to being real. IBM, MasterCard, Microsoft, and Visa have formed an alliance to support a new standard for providing secure transactions over the Internet. The new standard, Secure Electronic Transactions (SET), is based on public-key cryptography and digitally signed electronic certificates issued by credit card companies and banks. Customers will send these certificates to merchants who will use them to authorize the transaction with the credit card company or bank. Microsoft, lately quick on the trigger, has announced that it will build digital signature technology into its MS-Windows operating system.

Most of us think nothing of handing a credit card over to a merchant in the physical world, but hesitate to do the same in the virtual world. This is something I’ve never quite understood, and I’ve chalked it up mostly to the resistance of commercialization inherent in the Internet culture. Another part of the problem is related to the difficulty Net-based businesses experience in dealing with credit card companies and banks to obtain a merchant account. Add to the mix the historical lack of support for new electronic commerce technology by merchants, credit card companies, and the banks and it’s no surprise why Internet-based commerce has been mostly ignored.

According to a Forrester Research study of Web site economics released in mid-June 1996, Web-based content publishers shouldn’t expect to turn a profit until 2000. Content publishers are restricted to three basic revenue streams: advertising, subscriptions, and transactions, which so far have proved to be more of a trickle than a stream. Don’t expect for that to change in the near future, Forrester warns.

Forrester’s research indicates that an “average” Web site generates 1996 revenues of about US$170,000 but must meet expenses of US$1.37 million for the year. The costs associated with providing content on the Web will account for more than 75 percent of operating costs through 2000, according to the Forrester report.

The report maintains that over the next three years, content publishers can expect to see subscription revenue grow from US$60,000 in 1996 to US$210,000 in 2000. Similarly, transaction-based revenue will likely grow from US$10,000 in 1996 to US$60,000 in 2000. Unfortunately, costs will also continue to escalate, reaching US$1.88 million in 2000.

Finally. An HTML book worth buying. If you write or design for the Web you’ll quickly find this book the only paper-based guide to HTML worth keeping. Written by Chuck Musciano and Bill Kennedy, the style and tone of the work is refreshingly crisp and painstakingly accurate.

O’Reilly & Associates is one of the few computer book publishers that doesn’t get caught up in sacrificing quality for bulk in its titles. At almost 400 pages, HTML: The Definitive Guide isn’t a lightweight, but there is absolutely no fluff or coverage of tangential issues in this work. The book is an authoritative treatment of the HTML markup language; you won’t find general Internet or Web information here. Readers of other O’Reilly titles will find the book’s interior design and layout familiar; HTML: The Definitive Guide is easily navigated and best treated as a reference guide.

Forrester Research, Inc. has released a new report, entitled “What Web Sites Cost,” that finds the cost of Web development rising sharply. Citing the costs associated with new technologies like Java, Shockwave, and RealAudio, Forrester indicates that corporate Web site budgets will rise between 52 percent and 231 percent in the next two years. The study claims corporate Web budgets today range from US$304,000 (for relatively content-free promotional sites) to US$3.4 million (for content-rich sites that support transactions). Those budgets will grow to between US$681,000 and US$4.2 million respectively by the end of 1997.

By far the largest single expense—up to US$1 million per year—is associated with acquiring rights for content that was developed externally.