Valid with regards to AMZN?
View From TheStreet.com
Jun 16, 1998
Andy Kessler: Don't Believe the Hype
By Andy Kessler
Special to TheStreet.com
I don't know about you, but I'm believing less and less of what's on the Net. I'm talking not about content like TSC, but things like user surveys or page-impression statistics.
Here's why. In the late '70s, there was an online game called multitrek, which stood for multiuser star trek. This was a popular character-based game that worked on CRTs, the old, dumb terminals that were hooked to mainframes and minicomputers. A 10-by-10 matrix of dots would appear on your screend: * were stars, B were bases, K were Klingons, etc. If you played it alone, you roamed around the galaxy killing Klingons, but multitrek also allowed you to kill other people logged on to some machine, usually a university minicomputer. Early Apple computers were around, as were Tandy TRS-80s (trash-80's).
I worked with a programmer one summer who had a Tandy box and was an avid multitrek player. He was good, but he found that he could write a simple program on his PC that would figure out where all the other players were, aim his weapon, rapid-fire and kill everyone before they knew he was even there. Neat stuff. Eventually other players complained, so they changed the rules to make them stricter and to slow the input of keystrokes, but this guy figured out other ways to beat the thing.
I thought of this when I read the Forbes and the New York Times articles about Jeff Citron and the boys at Datek. Similar to that programmers approach to multitrek, they found a high-stakes game called Nasdaq, figured out the rules and then wrote programs that could instantly execute trades or strategies faster than anyone typing by hand. Perfectly legal but they pissed everyone off, so the rules got stricter. But never underestimate the power of someone writing code to beat a system set up for human key-presses or mouse clicks.
Which brings us to the Web. People magazine's Web site ran a poll for the 50 most beautiful people. It allowed write-in votes and some wiseguy Howard Stern fan wrote in Hank the Angry Drunken Dwarf, a frequent guest on the radio show. OK, that's funny, but over the next few days, angry Hank's 200,000-plus votes were easily beating Leonardo DiCaprio's 7,500, and the poll turned into a sham. Now, I don't know this for a fact, but I can almost guarantee that some clever programmer executed a script that constantly hit the site and voted for Hank.
The Wall Street Journal ran a piece on a Time magazine online poll asking whether the U.S. should support China or India in the nuclear race. China started winning and then out of nowhere India caught up and passed China in the poll. Grassroots movement -- or maybe some clever Indian programmer writing a quick piece of code that fixed that poll for good.
There's a whole class of Internet stocks whose valuations are based on revenue generated from Internet advertising. That advertising is based on hits and page views and large volumes of traffic. My view is these statistics are potentially suspect and increasingly may not be meaningful. Now, I am certainly not accusing anyone of doctoring numbers, but it's so easy to do.
Transactions like online sales or customers redirected to an advertiser's site are the only ones that count. The Web is not a billboard, although it certainly seems like one. The Web is a medium to conduct commerce, just as 800 numbers are a medium to conduct commerce. Be suspicious of companies that base their fortunes on a billboard business. Page impressions that generate transactions are what counts. The rest may just be angry, drunken programmers having fun.
DD |
