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  • Taking E-Commerce Up a Notch

    By Leslie Walker
    Washington Post Staff Writer
    Thursday, December 30, 1999; Page E1

    In its early days, the Internet spawned virtual communities in which people banded together mostly for social purposes. Then the World Wide Web gave birth to electronic commerce, revolutionizing the way people buy and sell things of all kinds.

    Now the potential looms for those two forces to come together and take the Internet to another level, one in which people band together not just to buy things or hang out together, but to create things that have economic value. The Internet's next evolutionary step may well allow people to form all sorts of electronic communities for commercial purposes, including small e-businesses of their own.

    I see a number of trends looming that suggest next year could be big for business collaboration online, perhaps giving rise to a new class of online freelance workers:

    There are new markets for electronic collaborators. The ability of people to create valuable products by collaborating from afar was demonstrated by a few high-profile projects during the past year. One was Netscape's Open-Source directory, a Yahoo-like index to the Web maintained by volunteers around the world and licensed by Netscape to major portals. Another was the open-source Linux operating system, created by programmers working in different locations who post their code for all to see and anyone to improve. The widespread adoption of Linux and the rocket-rise of Red Hat Inc., one of its makers, in the stock market became a major technology story of 1999.

    Linux demonstrated how much economic value people can create by working independently and voluntarily from a distance. In the past six months, it has triggered a spate of online hubs (Collab.net, BeOpen.com, Cosource.com are just a few) that are attempting to create marketplaces in which software programmers can band together and bid for software projects needed by companies.

    The process starts when a company or potentially a consortium of companies that all need the same software post a request for software components. Programmers bid and work independently, sharing their code online.

    Next year, I suspect we will see similar collaborative marketplaces spring up in other industries besides software development. Software programmers are among the most technologically savvy, so working together electronically is easier for them. But as online collaboration tools mature and grow easier, other professions likely will follow the lead of software developers.

    Instant messaging will hit the workplace. One simple but powerful electronic collaboration tool is instant messaging. This year, instant messaging systems grew in popularity for personal communications, allowing people to send each other text messages that, unlike slower e-mail systems, flash immediately into small windows on the recipient's screen. Next year, instant messaging systems likely will infiltrate the workplace, changing the ways people communicate in business much as e-mail did. Instant messaging systems make it easier for people to collaborate on projects from afar by, in effect, shrinking distances, making people more quickly accessible to one another.

    Expect more cash for clicks. Affiliate marketing programs, in which Web sites pay other Web sites and individuals to help sell their goods and services, have become crucial building blocks of the Internet economy. Next year, expect a turbo-charging of affiliate programs, especially ones with multilevel commissions.

    Amazon has been a leader here, paying commissions to more than 350,000 "associate" Web sites for each sale they refer by linking to book and CD titles at Amazon.com. But thousands of other Web sites also pay for referrals. BeFree.com, an affiliate clearinghouse, says it has 2.4 million people signed up to participate.

    One reason affiliate marketing is so popular online is the Web's hyperlink structure. By allowing one-click cross-referencing of information, it allows editorial information at one site to be linked easily to products for sale at another. Stores suddenly have large remote sales forces; customers have new income sources.

    In addition to turning customers into sales agents, the global computer network is well-suited for calculating indirect referral commissions, those that increase, say, with the number of friends you and your friends refer to a particular site. Compounded commission systems are spreading fast on the Web. Already, a few dozen sites pay people for signing up friends to view targeted ads while surfing the Web.

    Many electronic rebate sites offer similar compounded compensation. Bizrate.com, for instance, credits people with rebates not only for what they purchase at participating Web stores, but also for all their friends' purchases if they join, too. Look for compounded fee structures to proliferate even more next year, creating an army of Dot.Commie foot soldiers who will sign up newbies.

    The combination of these forces makes me expect millions more people to start earning a living online, sometimes in collaboration with others. Call them e-lancers. Already, individual entrepreneurs are starting to exploit the small-business Internet commerce tools that have been released in the past two years, including the miniature shops at Yahoo and Amazon that allow smaller merchants to sell directly to the portals' big audiences.

    Many other electronic commerce tools have been released to help small businesses buy and sell online. These tools likely will be modified to include more collaboration features in their next generation, and other online commercial collaboration tools are in the works.

    Savvy Internet users are tapping the existing e-commerce tools to exploit the affiliate marketing programs that pay them to market goods. In addition to sites that pay referral fees, some Web businesses are paying customers for contributing original content, from stories to expert advice. I expect to see even more of cash-for-content programs appear online over the next two years, creating even more financial incentives for people to become e-lancers, working largely for themselves online.


    © 1999 The Washington Post Company

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