Cover Story: SPECIAL REPORT
A WAY OUT OF THE WEB MAZE
It's called Webcasting, and it promises to deliver the info you want, straight to your PC
Since the World Wide Web burst into the mainstream two years ago, it has seized the popular imagination with a vengeance. The number of Web sites has exploded as companies and individuals have jumped eagerly into cyberspace. Today, hundreds of thousands of sites offer everything from government documents to financial data to pure whimsy. Internet terminology--Web page, hyperlink, anything.com--are part of the everyday lexicon. And being wired has become a measure of status among Gen-Xers and business leaders alike.
The Web is hip. The Web is way cool. And increasingly, the Web is way frustrating.
The Web, it seems, is a victim of its success. The volume of information on it is staggering, and search engines and other devices bring little order to the chaos. "It's a little like taking a farm boy from the Midwest, putting him in the middle of Manhattan, and telling him to go have the time of his life," says Ariel Sella, an Internet software entrepreneur. Then there are those endless waits to see Web pages. These days, when you log on, don't forget to bring a book.
The noise and congestion is making it hard for Web sites to attract visitors--and keep them coming back. Without steady traffic, Web sites have a hard time selling advertising, which, despite meager sales today, remains the most promising way to make money. As reality sets in, dozens of sites are scaling back or shutting down. At this rate, the Web could collapse under its own weight.
Even the Web's biggest promoters are sounding the alarm. "The Net for the first time is causing information overload," says Marc Andreessen, who helped write the Navigator browser at Netscape Communications Corp. Adds Eric Schmidt, chief technologist at Sun Microsystems Inc.: "Manually searching the Web is not a sustainable model, long term."
So, software entrepreneurs are borrowing from another medium--TV--to take the work out of the Web. "People want their computers to be as easy as their television," says Kim Polese, former Java product manager at Sun and now chief executive of Marimba Inc., a Palo Alto (Calif.) software startup. "They want just a few channels that they can turn to."
Computers won't get as simple as TVs anytime soon. But a new crop of programs will cut through Web clutter for you by using the same principle as broadcasting. Instead of having to spend hours scouring the Web, news, entertainment, and other Web fare is delivered automatically to your desktop. These new software programs also can deliver rich visual images and animation that approach TV quality.
Internet-style broadcasting has some unique advantages, too. TV features one-size-fits-millions programming. On the Net, digital programming can be targeted to a particular group or individual. It can even be delivered to your pager or cell phone. That ability to "narrowcast" is transforming the Net into a personal broadcast system. "The combination of broadcast and personalization is really a new world," says Schmidt.
And it comes with a whole new lexicon. Companies such as Marimba call their programs "tuners" and "transmitters." Information is organized into "channels," and "push delivery" gets it out to "viewers." Such familiar concepts promise to tame the Web, enhance corporate communication, spur digital commerce, and provide one more jolt to the software Establishment.
Welcome to the world of Webcasting. "Just as the browser opened the door to the Internet, `push' will bring another fundamental way of communicating to the Net," says Christopher R. Hassett, chief executive of Webcasting pioneer PointCast Inc. Adds J. Neil Weintraut, a partner with 21st Century Venture Partners: "It makes the Web relevant to the masses."
The new Net software is not just for couch potatoes, either. Companies such as Amoco and Fruit of the Loom are pushing industry news and other data to employees' desktops. They're also setting up in-house channels on their own networks, or intranets, to make sure employees get the latest announcements and corporate communiques. And because any digital information can be Webcast, the new approach is a natural for distributing software programs, applets, and updates--saving time and money. "This kind of push technology is going to be a big thing," says William Stewart, co-chairman of the Chicago Board of Trade's Internet Advisory Committee, which is looking at push delivery to reach its 4,000 members.
HOT BUTTONS. As with any new technological shift, Webcasting is creating fresh opportunities for software and media entrepreneurs. The ferment has already produced dozens of PointCast challengers, from Marimba to BackWeb Technologies to IFusion Com. They're all taking different tacks. But one of them could hit on the right formula and become the next Internet powerhouse.
Or maybe not. Both Microsoft Corp. and Netscape are scurrying to bring out later this year their own software to display Webcasting information on your desktop. When they do, your PC screen might consist of half a dozen channel buttons: one for news, one for company information, one or two for entertainment, and--someday--a "productivity" channel that you'll switch to when you need spreadsheets and word processing programs. "It fundamentally changes the whole concept of software," says Weintraut. The line between software programs and content begins to blur.
For such a fundamental innovation, Webcasting is almost deceptively simple. In most cases, it works like this: When you register for a service, you specify the channels you want and the specific topics you're interested in. You also choose how often you would like updates, which can arrive continuously and seamlessly on corporate networks.
Behind the scenes, Webcasting is more complex. Software programs diligently monitor Web sites and other information sources on your behalf. Upon finding news of interest to you, most will send an alert that pops up on your screen or scrolls across a ticker. When you click for more details, you might be launched to the Web site.
Other Webcasting programs, including PointCast, take the liberty of sending full articles, Web pages, and animations to your PC. You may not realize it, but when you pause to look at a Web page, which leaves the line free, these Webcasting programs grab the line and start downloading files onto your hard drive. When you click on a sports score for more detail, there's no World Wide Wait: The full story and a video clip can appear on your screen instantly.
Push delivery is as old as E-mail. But PointCast took things one step further. Hassett and his brother, Greg, launched their first product in 1992. Journalist, a custom news service for CompuServe Inc. and Prodigy Services Co. members, was difficult to use, though, and never caught on. By early 1995, when the Web took off, the brothers tried again. This time, they would pump out continuously updated information and, in a novel twist, display it on a screen saver when a PC was idle. Flying toasters gave way to scrolling news headlines, stock quotes, and weather updates.
"DIFFERENT." PointCast released a test version of its software last February and a finished version in May. By early fall, a million people had downloaded it. Today, PointCast has more than 1 million regular viewers--mostly within businesses--and some 15,000 people register for the service each day. At 30 million to 50 million viewer hours a month, the PointCast Network is comparable to a midsize TV network. "I see push creating almost a second Internet," says Halsey Minor, CEO of CNET Inc., a Web news service. "The model is really different."
Indeed, Webcasting offers the best hope yet to build a business on the Net through advertising and delivering customized content that people might finally pay for. "We're huge believers," says Time Inc. New Media General Manager Bruce Judson. The Internet is already a direct-marketer's dream. Now, instead of waiting for Web surfers to stumble onto their sites and banner ads, marketers can send animated ads directly to the desktops of target customers. Retailers such as Lands' End Inc. and Virtual Vineyards are dabbling with such in-your-face methods to notify subscribers of promotions and even send them order forms. Merchants can approach live sales prospects and not just couch potatoes. "It's not about cost per thousand, but cost per lead," says J.G. Sandom, director of Ogilvy & Mather Worldwide Inc.'s Interactive business.
How do they identify leads? Webcasters have a unique ability to track viewers' actions. They do that two ways. First, when you sign up for a Web service, you're asked to give some basic demographic information along with your interests. Then, once the receiver software is downloaded onto your PC, Webcasters can track when you tune in and what you click on for more detail. That provides a level of accountability that TV and print can't touch.
PointCast offers still more: access to the corporate market. "It's the first medium to ever reach people at work in a meaningful way," says John Nardone, director of media and research services at Modem Media, an interactive ad agency in Westport, Conn. "You can literally say, `We had 3,000 people from Microsoft looking at your ad yesterday,"' crows Nardone.
MISSTEPS. For these reasons, Webcasting could quickly grab a sizable chunk of the Internet economy. By 2000, Webcasting and related push technology will generate a third of the $14 billion in Net advertising, subscriptions, and retail revenues, projects Yankee Group Inc.
If Webcasters aren't careful, though, they could spark a backlash. "There's a fine line between adding value and the consumer feeling that you're being intrusive," warns Evan Neufeld, an analyst with market researcher Jupiter Communications Inc. People are already inundated with junk mail and now junk E-mail. Webcasting, if misused, could become one more avenue for unwanted solicitations and irrelevant material. "It's bad enough to pull garbage, but you don't want it pushed," says Joe Firmage, CEO of USWeb Corp., a Web-site builder.
There are potentially more serious problems. Webcasting programs can tie up networks and load up hard drives. Most of the programs do regular garbage collection, deleting ads and files from your PC after a certain amount of time has elapsed. But dangers still lurk. A lot of programs, including PointCast, automatically download the latest versions of their software; when you're ready to update, it's already on your PC. That saves you time, but there's a downside: "If it's buggy, you've just hosed a million people," says Sun's Schmidt.
These concerns resonate with corporate managers. PointCast's early missteps don't help assuage their fears. When the PointCast software came out last February, it quickly spread throughout corporations. Before long, some sites had thousands of people running PointCast--and soaking up as much as 30% of network capacity. Companies began banning it.
Last November, PointCast came out with a fix. With a new program called I-Server, companies can have PointCast content sent once, then rebroadcast it to employees. That cuts down on Net traffic going through the corporate security firewall. Another plus: Companies can set up their own channels to broadcast internal news. So far, Hassett says, more than 1,000 orders have been placed for the $1,000 package.
Still, companies remain wary. Hewlett-Packard Co., for one, discourages the use of PointCast, although it isn't banned outright. Robert R. Walker, HP's chief information officer, says push programs can help cut through information clutter, but for now, the benefits don't outweigh the risks. "We don't view this as a panacea," he says.
Potential problems are eclipsed for now by an all-too-familiar burst of Netmania, with startups galore. At this early stage, there is plenty of opportunity--and money. "The venture-capital community is fully engaged and fully lathered," says Andreessen. Some $80 million in venture funding has been lined up by just five startups, according to Venture-One Corp. Some investors can't wait to harvest some profits.
The startups are all over the map, both in terms of technology and business model. PointCast provides a collection of brand-name channels in a one-stop service--sort of a Webcast version of America Online. PointCast reformats the content, and the company's giant broadcast center handles the transmission. Unlike AOL, the PointCast Network is free. It makes its money by selling ads on its network, which has four dozen advertisers, and shares ad revenues from its partners' channels. So far, the PointCast Network is delivering. After Pfizer Inc. started promoting an allergy site and its Zyrtec drug on PointCast last August, "traffic on our site increased tenfold," says Mark L. Linver, an information technology director at Pfizer.
A number of upstarts spot a chink in PointCast's model. They figure that, just as with Web sites, companies are going to want to offer their content directly to customers. BackWeb Technologies, IFusion, Marimba, and others offer software tools that let any company create its own channel. They also offer more flexibility than PointCast. Marimba's Castanet software, for example, allows software programs to be linked to content. That makes it possible for subscribers to play a game on an entertainment channel or analyze a stock portfolio on a financial channel. And IFusion has an edge in delivering sophisticated multimedia.
Companies are embracing the idea of do-it-yourself channels. General Motors and ZDNet have BackWeb channels. And The Wall Street Journal Interactive Edition is testing one for subscribers to its Personal Edition. When news stories are updated, a tiny front page containing headlines will appear on their screen. "It's kind of like being paged," says Tom Baker, business director for the Interactive Edition, which has increased its paying subscriber base to 70,000 from 30,000.
In Korea, Samsung Group's New Media Group is preparing to launch a series of information and entertainment channels for the Korean market, using software from IFusion. And The Weather Channel is experimenting with Webcasting software from IFusion, BackWeb, and NETdelivery. "Push technology allows us to be more proactive," explains Kathleen Daly, director of new business development for The Weather Channel.
Weather, sports, and news are all obvious applications for Webcasting. The less obvious possibilities are only starting to open up. Rent Net's Web site provides constantly updated apartment-rental listings and relocation help for 1,000 cities. IFusion's ArrIve software will run a new Rent Net channel that will alert people to listings that meet their specific criteria. Subscribers can then look at floor plans and do 3-D virtual walk-throughs. "It brings the information right to you," says Rent Net Vice-President Jed Katz.
For all the activity, the hottest market right now for push programs is not Web sites but corporate intranets. It makes sense. Business professionals rely on up-to-date information, and they typically have high-speed, full-time connections to the Net. "It helps raise the corporate I.Q.," says Patrick Flynn, vice-president for systems development at Fruit of the Loom, which has PointCast installed on 250 employees' desks.
FOCUS. After spending last year putting up intranets, corporations are finding that they are becoming as cluttered as the public Web. By setting up their own channels, they can make sure that important company news and announcements get out to employees. NationsBank, for example, is developing a system it calls NationsCast, using software from Wayfarer Communications. It will broadcast corporate news, product information, and the bank's stock price (a keen interest since the bank recently granted employee stock options) to 23,000 headquarters staff. Mitch Hadley, vice-president of NationsBank's Strategic Technology Group, says someday such technology could even be used to push information to customers at kiosks or ATMs.
What's more, these systems can be tied to corporate databases and programmed to Webcast alerts automatically. Ben & Jerry's Homemade Inc. is evaluating Wayfarer's software for a system that would alert managers when the company's perishable inventories drop below a certain level. Companies are just beginning to explore the possibilities. "We're drinking from a fire hose," says Kelsey Selander, vice-president for marketing at BackWeb.
The consumer market may be slower to develop. But that isn't stopping companies from targeting news and entertainment junkies. Berkeley Systems has turned its famous flying toaster screen saver into a PointCast-like service called After Dark Online. It culls information from such sources as Sports Illustrated and The Wall Street Journal Interactive (for paid subscribers) and displays it on the screen saver. Cambridge (Mass.)-based My Way Inc. has launched a service that will deliver personalized Web fare and Web site reviews to home users it figures are too busy to surf.
This spring, Paul Allen's Starwave Corp. will begin testing a PointCast competitor called Starwave Direct. It will pull together content from various Web sites the company has set up, including ESPNET SportsZone and Mr. Showbiz, along with personal-finance information and news, probably from ABC.
BATTLE ROYAL. The competition is jolting established players into action. This spring, AOL's 8 million members will get their first taste of Webcasting. AOL plans to add a feature called Driveway that will periodically go out and fetch AOL content, Web pages, and E-mail based on members' preferences and download it onto their PCs. By letting members view information offline, AOL could ease the network jams that have plagued its service.
AOL, PointCast, Starwave, Microsoft--any one could become a media powerhouse of the emerging Internet broadcast medium. And they'll have plenty of competition as the distinctions between traditional media disappear in this digital melting pot. "What matters is having viewers' eyeballs," says Weintraut.
Ultimately, this is a battle for the desktop, and the two companies with the most to lose--Microsoft and Netscape--are quickly trying to rope it all in. As Webcasting transforms the way we consume business and entertainment information and even software, controlling the delivery platform will be even more critical. So in the coming year, the two rivals will each try to define what the desktop of the future will look like.
Netscape will be first out. This spring, the company will introduce Constellation, a software interface written in Sun's Java language and designed to run on top of any desktop operating system. Netscape hopes Constellation will become the main way people view information, whether it is stored on their PC, on a Web site, or Webcast to their screen.
Microsoft will make its move this summer, with a version of Windows that folds in the Internet Explorer browser and will display Webcast information in windows. Microsoft's name for the technology, Active Desktop, says a lot about the shape of things to come: The new Windows will be organized into half a dozen or more channels--including one for Microsoft's MSN and others featuring brand names such as PointCast.
The two giants have similar visions for how the Net will merge with the desktop, but their agendas diverge sharply. Microsoft wants to pull the Web into Windows and all of its software. Netscape is trying to break its rival's hammerlock by creating software that will work on any PC or gadget. To do so, it's enlisting the help of Marimba. The company's Castanet software will be included in Constellation so it will be able to store Java applets. That could help accelerate the move toward software components delivered off the Net--and it could put Microsoft at a disadvantage. Companies such as Lotus Development Corp. and Corel Corp. are creating software applets that could be distributed that way.
There's nothing to stop Microsoft from doing the same. But for now, its big sellers, such as Microsoft Office, are way too big for that kind of delivery. And the Net is moving so fast that both companies are scrambling. "You're catching us right in the eye of the tornado. A lot of this hasn't been decided yet," says Brad Chase, a vice-president in Microsoft's Application & Internet Client Group. Either way, the battle promises to keep viewers riveted to their seats. So don't touch that mouse.By AMY CORTESE With Robert D. Hof in San Mateo, Calif., and bureau reportsReturn to top