Rob S.
As you well know, you are preaching to the converted!
Here's a 2 week old article which makes your point from WSJ and another from NYT just for the fun of it.
September 3, 1998
Internet's Robot Shoppers
Are Unable to Roam Free
By REBECCA QUICK
Staff Reporter of THE WALL STREET JOURNAL
Shopping "robots" -- computer programs that scan the Internet for
bargains -- are supposed to transform cyberspace into a consumer
paradise.
But don't try telling that to Jason Olim, founder of CDNow Inc., one of the
hottest music retailers on the Web.
Mr. Olim doesn't like the invasive "bots," and he routinely blocks them
from the CDNow Web site to prevent them from taking his prices and
stacking them up against his competitors.
Windows Shopping
On-line shopping guides are often incomplete. A search on Compaq computer's
Junglee shopping guide for the book 'The Perfect Storm' did not reveal several
on-line sites that carried the book.
Among those left out:
All Book Web
Bargain Book Warehouse
Barnes & Noble
Bolen Books (based in Canada)
The Book Pl@ce (based in the U.K.)
Books-A-Million
Powell's Books
"We're simply not interested in working with the bots," says Mr. Olim. "It's
too expensive to try and serve a customer who's only going to shop with us
one out of every three times because of a 50-cent savings."
'Frictionless Capitalism'
Internet pundits and venture capitalists have long claimed that
comparison-shopping programs will help turn the Web into a nirvana of
"frictionless capitalism," where middlemen are obsolete, markups are pared
to the bone and consumers rule. With the aid of the bots, the theory goes,
a shopper could find the cheapest price for everything from books to
flowers to spark plugs, with just a few clicks of the mouse.
Trouble is, the bots are only as good as the information they collect, and
there are plenty of ways for uncooperative Web stores to thwart and
confuse the digital comparison shoppers. Some bots charge merchants for
listing their products, thereby excluding those who refuse to pay. There is
even the specter that on-line merchants themselves may operate shopping
bots that avoid competitors' products.
Why are retailers balking? Some worry that shopping robots will turn the
Internet into a virtual wholesale warehouse, where the lowest price wins,
and other expensive features they have built into their sites will be
devalued. CDNow, for example, offers not only hundreds of thousands of
albums but also dishes out music reviews and commentary from critics and
fans, as well as recommendations based on a customer's past purchases.
Some retailers also claim the bots can clog their Web sites by requesting
page after page of data as they gather prices.
No Blockage
Catalog-sales giant Lands' End Inc. in Dodgeville, Wis., doesn't block
bots. And Thane Ryland, a spokesman for the company, acknowledges
that the comparison-shopping they offer is convenient. Still, he says that is
only part of what customers want. The Lands' End Web site, for instance,
offers essays on rural life, clothing-care tips and a folksy newsletter in
addition to the retailer's full catalog.
The shopping bots blow by all that window dressing. They are
programmed to home in on specific bits of information, such as model
numbers and prices. The bots know how most Web pages are designed,
and can sift out the needed data from the jumble of software coding and
fancy graphics.
Here's how they work: Say you want to buy a videotape of "North by
Northwest," the classic Alfred Hitchcock thriller starring Cary Grant. You
could go to the Webmarket site (www.webmarket.com), select the
"movies and videos" section and type in the movie title. In seconds, back
comes a list of a half-dozen Web stores offering the tape for prices ranging
from $14.64 to $19.49.
Some Web sites simply slam the door on shopping bots, refusing to answer
requests for Web pages that come from known bot sites. (Web retailers
can see the address of a visitor.) Or they try to confuse the robots by
changing the Web site's format or appearance, so the bot doesn't know
where to look for pricing information. Another trick that can foil the bots is
to lower a product's base price, but then raise hidden costs such as
shipping and handling.
"It's easy to break the legs of the virtual shopper at the virtual door," says
John Sviokla, a partner at Diamond Technology Partners, a Chicago
technology consulting firm. And Web retailers should be afraid, Mr.
Sviokla warns, because well-informed shopping bots could spark a
cutthroat pricing war in cyberspace.
Hot Technology
Despite these concerns, shopping robots are a hot technology, and Web
giants are clamoring to offer them to attract visitors. Search site Excite Inc.
offers a comparison-shopping guide called Jango. Last month, competitor
Infoseek Corp. shelled out $17 million for Quando Inc., which makes a
shopping robot scheduled to debut later this year.
That deal came just after Internet book seller Amazon.com Inc. paid $180
million for Junglee Corp., operator of one of the Web's biggest
bargain-hunting sites. And just this week, Inktomi Corp., a maker of
search-engine technology, agreed to acquire C2B Technologies, a maker
of comparison-shopping software, for stock valued at $92.7 million.
In addition to charging merchants, shopping bot sites can earn money by
selling advertising space. Some also enter partnerships by providing their
search software to other companies' Web sites. A Junglee "shopping
guide," for example, appears on a site run by Compaq Computer Corp. It
offers users information on apparel, books and electronics, but not
personal computers.
The first shopping bot to gain widespread notice was BargainFinder, which
was built by Andersen Consulting back in 1995 as a research project to
persuade its retailing clients to prepare for electronic commerce.
BargainFinder, which still exists, allows consumers to search a half-dozen
on-line music stores and returns with a list of titles arranged by price.
But from the very start, the technology was mangled by suspicious retailers
that refused to cooperate.
"A lot of the sites saw our robots coming in and refused them entry. Other
sites asked us not to send the robots in," says Glover Ferguson, director of
the electronic commerce program at Anderson.
Why would the retailers balk at being included in a project that could drive
traffic to their sites? "If you spent a gazillion dollars coming up with a great
site, then [the shopping robot] is just not attractive to you," says Mr.
Ferguson. "Nobody wants to be reduced to a commodity."
The shopping bot sites are quick to point out that they are driving traffic to
retailers, and that the benefits to them outweigh the risks. "There are
people who are afraid not to be included," says Kirstin Hoefer, product
manager for Jango. And even if some retailers won't cooperate now, they
will eventually bow to the bots, say the comparison-shopping concerns.
"As consumers start moving to a medium, you have to follow them if you're
a retailer," says Venky Harinarayan, a vice president at Junglee.
Undermined by Owners
The Web retailers, though, may not be the only impediment to comparison
shopping in cyberspace: Some of the shopping bots may be undermined
even by their owners. The acquisition of Junglee by Amazon.com, for
example, will give the book seller control of one of the most well-known
shopping bots. That worries critics, who note that it isn't in the best
interests of Amazon.com to have traffic driven to competitors should
Amazon.com fail to have the lowest prices.
A book search using Junglee on the Compaq Web site missed a number of
on-line vendors that offer the title, including Barnes & Noble Inc. Junglee,
which lists only vendors that have paid it a fee, says that it doesn't currently
have a relationship with Barnes & Noble, but it is in discussions with it and
other booksellers.
Amazon has pledged that Junglee won't play favorites and will make as
much information as possible available to consumers. Nonetheless, Junglee
is now playing down the idea that cheaper prices are the main reason to
use a shopping bot.
"You don't buy based on price alone. There are multiple aspects, like the
convenience of having everything in one place," says Mr. Harinarayan.
"That's the way we've started looking at this-as one-stop shopping."
interactive.wsj.com
From this past week, MOn Sept 7 NYT
archives.nytimes.com
September 7, 1998, Monday
Section: Business/Financial Desk
Looking to Doonesbury as an Economic Indicator
By REED ABELSON
Has Doonesbury, the political comic strip by Garry Trudeau, become the latest sell signal?
The most recent story line, which began on Aug. 24, features Mike Doonesbury and his fledgling Internet company, Mikim Inc. Like
most of its peers, it is losing money -- lots of it. But, as Mike explains to his daughter, Internet companies are supposed to lose
money. That's why they go public.
As easy as Internet companies are to lampoon, the sight of them in the comics may be the clearest indication yet that their stocks have
reached a top. Since peaking in July, when valuations were the most elevated, these stocks have dropped sharply. Yahoo is down 27
percent, for example, and Amazon.com has fallen 41 percent.
''When the mainstream press and humorists start to pick up on something, it does send something of a message,'' said Edward J.
Mathias, managing director at the Carlyle Group in Washington, who has spent more than 15 years collecting various clippings,
including editorial cartoons, on business and the stock market in the popular press.
Cartoonists and others ''are very topical about what they do,'' Mr. Mathias said. While they may not be a leading indicator, they affirm
that a particular topic has penetrated the public consciousness. And whenever something becomes that well known, an investor should
assume that its popularity is reflected in the price of any assets, he said.
What makes many Internet companies easy targets, for Mr. Trudeau's satire or for worried investors wondering what to unload from
their portfolios, is their lack of profits. While investors typically value public companies by some multiple of what they earn, many of
Internet companies are measured by anything but.
''I'm interested in future profits,'' said Paul T. Cook, who manages the Munder Netnet Fund. He argues that Internet companies need
to spend today to build market share tomorrow.
''A lot of these companies could be profitable today if they were satisfied with their current station,'' he said.
But some investors' willingness to ignore profits creates an atmosphere ripe for ridicule. As a result, Mike Doonesbury is proud of his
company's burn rate, the amount of money he spends over whatever he takes in as revenues. His daughter scolds him for being
''braggy'' when she overhears him tell someone the company could lose $2 million this year -- easy. The same atmosphere was the
subject of Michael Wolff's ''Burn Rate,'' a tongue-in-cheek look at Mr. Wolff's own Internet company.
Many investors seem to have dispensed with even the pretense of profitability. How else do you explain the ability of Broadcast.com
Inc., which went public in July, to report increasing quarterly losses and still see its stock jump by nearly 7 percent the same day?
This overreliance on growth in revenue and market share at the expense of profitability, a cornerstone of any successful business,
makes other investors scornful.
''I think it's the silliest thing I've ever heard,'' Susan M. Byrne, the president of Westwood Management, said. While she is enthusiastic
about the vast potential of the Internet, calling it ''the rails of the new millennium,'' she remains convinced that a company must have a
business plan if it is to profit from the Internet's popularity. Market share does no good if the business model does not make clear how
a company can make money.
The problem, said Michael Murphy, a money manager and technology stock analyst who recommends selling short some of the
Internet stocks, is ''a good chunk of the Internet companies will never be profitable.''
Alas, Mike Doonesbury may now be too late. With the overall market, and especially small stocks, down, the opportunity to win a
favorable reception from investors is shrinking. ''In markets like this, people get religion,'' said John E. Fitzgibbon Jr., the editor of The
IPO Reporter, a weekly newsletter in New York.
By the end of last week, newspaper readers knew that Doonesbury's Mikim was faced with the abrupt withdrawal of its principal
financial backer. But Mike himself still wanted to press ahead with a stock sale, in the hope that gullible investors would believe the
appearance of success is the real thing.
''A luxury car might help,'' Mike ventured.
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