IBM'S TOLLBOOTH FOR THE I-WAYWill its content clearinghouse spur electronic commerce?
Problem One: If you're a cybercruiser, you can search the vastness of the Internet, but you can't get into private databases such as Nexis. Problem Two: If you're an information provider, you can blast it everywhere using the World Wide Web--but getting paid for your ``content'' is another story. ``Until some of these issues are resolved, electronic commerce as it relates to intellectual property cannot blossom,'' says Ron Dunn, president of the Information Industry Assn., a trade group for information providers.
IBM believes it has a service that addresses these concerns. On Apr. 30, it opened infoMarket, an electronic-content clearinghouse that will also act as a tollbooth for the Information Superhighway. The computer giant will provide access to various databases--on the Internet and elsewhere--and offer the owners of the data the means to protect against pilfering as well as to collect money from paying customers. ``It's a way to see our data on the Internet and actually get paid,'' says David Hoppmann, president of Intell.X, a division of electronic-database provider DataTimes Corp.
PAY-PER-VIEW. So far, IBM has persuaded 30 companies including Eastman Kodak, Xerox, Reuters, America Online, and Yahoo! to use its technology or provide their content via the service. The big score is America Online, which will use IBM's technology as a pay-per-view mechanism for AOL customers using the Web. ``We've got the Big Mo behind us,'' crows Jeff Crigler, a former executive at Mead Data Central who was brought in to start up infoMarket. The computer giant will take from 30% to 40% of each transaction, depending on the information provider. Other online services or private electronic databases charge anywhere from 15% to 50% of sales.
Big Blue's infoMarket is more than a billing service. IBM is providing a radically different approach to electronic services. Today, most information bought over a network is paid for on a subscription basis. Customers can download information from a particular service, say Nexis or America Online, for fees based on the amount of connect time or a flat monthly charge.
On infoMarket, customers pay only for what they use--there is no service fee. The content providers control the information--running their own databases and setting their own prices. IBM provides an infrastructure, giving business researchers or consumers a way to search for information and handling all the billing. ``Charging only for what you want is a very attractive scheme,'' says Hoppmann of Intell.X.
COPY SHOCK. Publishers can use infoMarket to offer an infinite variety of pricing schemes--say, one fee to view the information and another to print it out. What's more, the service addresses a serious issue for information providers: capturing royalties when material is purchased and then freely distributed within an organization or to the public. With infoMarket, IBM promises to keep track of the information so each user will have to pay a fee to view the data.
That might come as a shock for millions of cybernauts who, with the click of a mouse, now make electronic copies the way they photocopy printed material. But that's not IBM's target. Rather, it's focusing on serious users of business information--people willing to pay for timely or hard-to-get information.
At the heart of infoMarket is an encryption technology IBM calls Cryptolope. Think of it as a secure envelope or package that contains the data and how much the information costs. Customers must register with the IBM clearinghouse to get an electronic key that will open their cryptolopes. Once the package is opened, the cryptolope fires off a message to the clearinghouse, which notifies the publisher and bills the customer. IBM is working with Xerox Corp. to develop software that lets the content owner control the cryptolope. For example, a cryptolope could be sent out that is time-sensitive or restricts viewing to only senior management. Or a customer's account could be credited, say if the data is passed to 10 other people who pay for it.
``It's a complete break from all other ways information has been published on the Net to date,'' says Art Hutchinson, a consultant with Northeast Consulting Resources Inc. in Boston. ``It turns pass-along from a business threat to a business opportunity.''
InfoMarket's other major technology is a powerful search capability that allows users to search the Internet as well as private databases with a single query. Today, if you want to search the Net, you're likely to tap into several directories or databases to make sure you've hit all available resources. ``One interface allowing customers to search multiple databases will be a popular feature,'' says Maureen Stevens, a director at Disclosure Inc. The Bethesda (Md.) database outfit, which compiles data on 12,000 companies, will offer a variety of free and fee-based services via the new IBM setup.
TRAFFIC JAMS? The technology is sure to be ripe for corporate intranets, too. These setups are used to link internal networks with outside ones, such as database services. Says Hutchinson: ``There is a huge need to mix and match internal and external data.''
IBM isn't the only company trying to find ways to charge for content on the I-way. Electronic Publishing Resources Inc., a six-year-old Sunnyvale (Calif.) company, is developing similar technology to protect digital rights and payments. Its approach: EPR will provide the software tools for other companies to build their own electronic-commerce setups. Robert Weber, an EPR senior vice-president, says IBM's central clearinghouse could turn out to be a bottleneck if traffic swells: ``InfoMarket has some serious challenges in terms of scalability.'' In tests involving 50,000 users and information providers, Crigler says infoMarket has had no capacity problems.
Crigler isn't forgetting the media mogul wannabes, either. After all, the Internet has built up critical mass largely because of the millions of people who used the Net for an alternate source of information. So he's starting a service for budding publishers. ``Just send us an article, and we'll package it in a cryptolope,'' says Crigler. If he has his way, there could be a cryptolope in every E-mail box.
By Ira Sager in New York
Updated June 14, 1997 by bwwebmaster
Copyright 1996, Bloomberg L.P.