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From r..@ai.mit.edu (Robert S. Thau)
Subject Netscape watch...
Date Thu, 23 May 1996 23:38:18 GMT

This isn't exactly on-topic for this particular mailing list, but I
though most of you guys would be interested...  it seems that our
little green friend is developing some serious Big Brother potential.
>From today's Interactive Age Daily marketing report.  If you don't want
to plow through the whole thing, the key sentence is "Netscape wants
demographic information on individuals".



Netscape Exacts Database Toll

Netscape Communications Corp. has initiated discussions about
extracting an information toll as compensation for traffic delivered
by its site, Interactive Age has learned.

In conversations held over the last several weeks, Netscape has asked
several Web email and white-page database companies to make available
information about registered users in exchange for prime positioning
on a button listing databases on the Netscape site. The database
button, to be included in future editions of Netscape Navigator,
dramatically extends an existing Netscape strategy to collect fees in
exchange for prime positions on default browser buttons.

Earlier, Netscape reached cash and co-marketing agreements with the
likes of Yahoo! and Excite for prime positions on its NetSearch and
NetDirectory buttons. The difference in the database directory
discussions is that Netscape wants access to demographic information
about individuals, which some see as encroachment on those company's
customer relationships. Web directory executives and industry analysts
have expressed outrage over the proposal.

``We're entering into the dirty-pool era of the Internet,'' says David
Strom, publisher of Web Informant - an industry newsletter focused on
the implications of Web advertising and marketing.  ``These companies
would be out of their minds to hand over the keys to the kingdom. I'd
urge (the database companies) to act collectively. If none show up,
Netscape will have to rethink their business model.''

Under Netscape's proposal, Web databases, such as BigYellow, Four11,
Switchboard.com, BigFoot and BigBook would provide to Netscape
demographic information about users delivered to the site.  That data
could include user names, addresses and telephone numbers. Web
database directories generally provide extensive listings of email
addresses for individuals and businesses only as the result of a
query, and guarantee that collected information will not be used to
create mailing lists.

Denying data to Netscape may not be an option, according to some in
the Web database niche.  They point up that Netscape commands an
estimated 80 percent of the Web browser market, and records roughly 60
million hits daily on its Web site. A listing on Netscape's
just-launched "Destinations" area can significantly boost traffic for
a start-up Web database, and exclusion from a upcoming database
directory and browser default areas could break an
advertiser-supported venture. Several executives predicted that at
least a handful of the Web database companies will agree to hand over
data to Netscape.

Terming discussions with the directory companies exploratory, Netscape
spokesperson Jennifer O'Mahony confirmed that the company ``has talked
to (directories) about tracking users who voluntarily register'' on a
directory site after visiting the Netscape home page. Web databases
directories are currently listed in Netscape's just-launched
Destinations area for free, O'Mahony said.

Technically, Netscape can track people going to a Web database using
referrer codes, which show the destinations of users when they exit a
site. Similarly, Web database directories can identify people entering
their site using the same referrer technology.

The difference between basic Web traffic measurement using referrers
and the Netscape proposal is that such information would be merged
with information stored by the Web database directories and returned
to Netscape in exchange for traffic.

Netscape has proposed data be returned only after users voluntarily
agree to have their demographic information divulged to Netscape,
O'Mahony said. Information would be used by Netscape for internal
purposes only, she added.

Web Informant's Strom said such a move could spell disaster for
emerging Web directory databases. He said Netscape could potentially
use information collected from various Web directory databases to
develop its own master list. Over time, data could be sampled,
merged-and-purged and weighted to pinpoint the most exacting data
about individuals and businesses available.

O'Mahony said plans to build a master database are not behind the
Netscape proposal. She stressed that data would be used only to
``develop internal understanding'' of how Netscape's services are
used.

Web database experts said an information-sharing relationship with
Netscape would violate the sanctity of their relationship with
customers. Database directories often include disclaimer information
guaranteeing that information won't be divulged to build lists.
O'Mahony suggested that disclaimer information could be rewritten to
allow for the Netscape relationship.

Nynex BigYellow spokesman Phil Santoro had no direct knowledge of
Netscape's proposal, but added that data-sharing is problematic for
directories attempting to build trusted relationships with clients.

``I don't think we have any plans to ever turn over our data,'' said
Santoro. ``A user base is vital to this business. When you establish a
relationship with users, you have to understand and honor what both
parties have agreed to do. Protecting the privacy of users is
paramount to the success of this business.''

Describing the Netscape proposal as ``a slippery slope toward the
creation of electronic junk-mail lists,'' one database executive,
speaking on the condition of anonymity, compared the scenario to a
bank agreeing not to share financial information about customers,
except to one preferred direct-marketer. Privacy is an all or nothing
guarantee, he said.

O'Mahony said the data is key to Netscape's bid to further develop the
services on its site. Strom said the information-sharing proposal
raises the broader issue of whether Web businesses will generally
``let Netscape run content on the Web.''

In addition to its upcoming browser button, Netscape is also mulling
over requiring database information about registered users for future
exposure on its heavily trafficked corporate site, IA has learned.

--John Evan Frook


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