| BUSINESSWEEK ONLINE : MARCH 15, 1999 ISSUE | ||||||||
| ||||||||
 | ||||||||
| BOOKS
Web Wisdom NET WORTH Shaping Markets When Customers Make the Rules By John Hagel III and Marc Singer Harvard Business School 311pp $24.95 At first take, what's appealing about the new book by McKinsey & Co. principal John Hagel III is that it's his second to have the word ''Net'' in the title. Automatically, you get a sense that, yes, there is continuity in how business is done on the Web! And that's exactly the argument that Hagel and co-author Marc Singer make in Net Worth. They focus on managing customer relationships in the Age of the Internet, building on the ideas of Hagel's first book, Net Gain, a best-seller about the power of virtual communities. Key to Net Worth is the ''infomediary.'' The word is getting a lot of play in digital circles nowadays and has a variety of meanings. But the authors' definition is precise: a new type of Web service that will emerge to act as an agent for consumers, using data about their buying habits and preferences. Consumers will give information agents, or infomediaries, permission to gather data digitally, compiling a valuable profile by noting each click of the mouse that is generated by a book purchase or an investigation of real estate sites. Hagel argues that the power of the Web isn't in the wealth of information published there. Rather, and building on his notion of virtual communities, he outlines how the gold to be mined is in connecting consumers and businesses efficiently. That notion's power lies in how customer profiles could benefit consumers, merchants, and infomediaries. The profiling would be simple, probably using software installed on a PC to collect the data. The infomediary could use that data to bargain over prices or sell tidbits about consumers to merchants. A music seller, say, would find a detailed profile of a consumer's CD-buying habits helpful in targeting individual messages about new releases. To reach a promising customer and avoid paying for ineffective marketing, the music vendor might be willing to offer customized discounts or pay to target a customer with ads. And customers would pay the agent to make it faster and cheaper to find a product or service. Hagel estimates that consumers could save an average of 15% per transaction, while the merchant saves in marketing costs. Hagel estimates that an infomediary could have $4 billion in sales by the 10th year of operation. Of course, this system is based on trust and scale. To protect the consumer, the infomediary would provide filtering services to block unwanted E-mail and prevent merchants from directly gathering information about consumers. And the information agent would also share data only with agreed-upon merchants. The biggest drawback to this vision is that not many infomediaries exist in the real world. There are some analogues, such as the American Association of Retired Persons, which provides a wide range of member services. And, of course, companies such as America Online Inc. and Amazon.com Inc. have built up huge bases of subscribers and buyers. But we're just beginning to see companies, such as startup PrivaSeek, get into the business of acting as infomediaries. That spells opportunity. After all, untried business models are the Web's stock-in-trade. BY HEATHER GREEN _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
|  |
 | |
RELATED ITEMS PHOTO: Cover, ''Net Worth'' BOOK EXCERPT: Chapter One of ''Net Worth'' INTERACT E-Mail to Business Week Online | |||
