THE FOUNDATION OF WEBONOMICS

New sites on the World Wide Web have been cropping up at the rate of one per minute. As it expands at this astounding pace, it's clear that the Web's colorful entanglement of words, pictures, sound, and motion is briskly becoming more than just the most important new communication medium since television. The Web is more like a parallel universe that mirrors the physical world in some ways but exhibits entirely unique properties in others. And if you hang out there long enough, you will slowly discover that there's nothing less than an entirely new economy taking shape on this digital terrain--and a new way of looking at how this marketplace of information and ideas works. Call it Webonomics.

Many of the businesses now piling onto the Web may totally misunderstand what this new medium is all about. They may end up losing millions of dollars and eventually decide that the Web isn't living up to its hype. Other businesses may totally ignore the Web and get left behind. Their competitors, meanwhile, will use the Web as a tool to literally steal their best customers away. Averting such scenarios will only come with a keen understanding of Webonomics.

Traditional economics is based on the notion of scarcity--that human desires will always exceed available resources such as food, clothing, and shelter. It was Thomas Malthus, the English economist, who first postulated that populations will always increase faster than the food supply. This pessimistic focus on the allocation of scarce resources is what earned economics the reputation as "the dismal science."

Webonomics is anything but dismal. On the Web, precisely the reverse is true. Since the Web is a fast-growing world of intellectual property that can be copied and downloaded ad infinitum, its supply of resources will continue to soar past human demand for these resources. Instead of a scarcity of supply, the Web economy exhibits a scarcity of demand. Indeed, one of the main complaints about the Web is that it's "mind-boggling" and "too overloaded" with information. On the Web, the main commodity in limited supply is the attention of the busy people using it. The underlying battle in the Web economy is the ability to command and sustain that attention.

As such, growth of the Web economy has everything to do with the quality of the information there--how interesting and engaging it is, how it is presented, and how it takes advantage of the unique attributes of the medium. As more and more people continue to enjoy the Web, as they find it worthy of their attention, the Web will continue to grow at its frenetic pace. Unlike a national economy with limited resources, there are no physical limits on this growth. Unlike real estate, steel, or even paper, computing power and computer storage is cheap and getting cheaper. There's an infinite number of bits in the universe and a virtually bottomless hunger for valuable information and knowledge.

The Web is also a world without borders in which the physical location of a company doing business there is of little importance. Despite efforts to do so, the Web economy will resist efforts by national governments to control or regulate it. It will be up to each citizen of the world to choose what they see and do. In this sense, a totally free-market economy had been considered to be only theoretically possible in the past; the Web makes it practically possible for the first time.

The nature of this beast is both good and bad. Because of the abundant choices available, the combat among companies is, in the words of Sun Microsystems CEO Scott McNealy, one of "fierce Darwinism." To succeed, businesses on the Web must invent new ways to market themselves, new ways to learn what customers want, new ways to forge lasting relationships with them.

The opportunities for creating entirely new businesses are vast. But the fear of losing your existing business should also be a prime motivator. It's kind of like the story of the two guys camping out in the jungle who suddenly see a tiger approaching them. One of the guys quickly puts on his running shoes. The other guy asks, "Do you really think those shoes will make you run faster than that tiger?"

"I don't have to outrun the tiger," comes the reply. "I just have to outrun you."

In industry after industry, the Web is the pair of running shoes that can keep you ahead of the ferocious forces of change.

To put the principles of Webonomics into use, you have to first understand the motivations behind the four main groups settling the world's first large-scale, bit-based landscape:

* The consumers. Tens of millions of people worldwide are surfing the Web in search of surprises, cheap thrills, knowledge and entertainment, time-saving services, plus information on products that they hope will enhance their lives. They expect to make the Web a place of their own, a place of customized information and relationships. The consumers are in the driver's seat. Able to search for the best deals in an instant, they will obtain a product or service over the Web only if it is the best, cheapest, and most convenient alternative from a source they trust.

* The content creators. Hundreds of major publishing companies, television networks, movie studios, and new, hybrid media outlets are now colonizing the Web by creating perpetually updated Web pages meant to inform and amuse those who visit. They not only want to enhance their brand image among the demographically desirable Web surfers, but they are also desperately seeking a way to somehow make their Web sites profitable ventures.

* The marketers. Thousands of companies are promoting and selling products ranging from food and beverages to cars and trucks to information and financial services. Some will advertise, market, and sell their products on the Web using outmoded thinking from traditional, one-way media, and thereby fail. Others will embrace the principles of Webonomics and succeed.

* The infrastructure companies. Computer companies are selling Web server machines. Software companies are selling Web browser programs and tools for building elaborate Web sites. Developers of Web search engines are locked in fierce battle, as are scores of Internet access providers offering gateways to the Web. Meanwhile, advertising agencies and thousands of consultants have set up practices to create custom Web sites for clients. In this digital gold rush, these companies are selling the picks and shovels. But long term, they won't succeed unless the other three groups do.

Things happen differently on the Web. First, the very behavior of consumers changes dramatically once they enter Web space. Just as your expectations differ when you are in a fine French restaurant as opposed to a Taco Bell, consumers have different expectations when interacting with a company on the Web. Customers entering a Web site will come to expect customized products and services. They will expect full access to their own account information. They will expect their experience to be fun and entertaining. They will expect not just to read an advertisement but to interact with it and place orders for the advertised product.

Understanding how to forge lasting relationships with these demanding consumers is the key. One way to do that is to create what amounts to a new monetary system. In the traditional economy, national governments can control supply and demand of resources by tightening or loosening the value of money. On the Web, that power is distributed among thousands of companies. A simple example comes from the airline companies, which already issue frequent flier points that have real value. To command the attention of consumers, an auto company's Web site could offer to pay 100 Web bucks to any person willing to spend an hour learning about the company's new cars and answering a few questions. Those 100 points could be credited to the consumer's "digital cash" account, redeemable for a CD player if they choose to buy a car. Such a system of currency will help determine customer loyalty--something that will become more and more important in the Web economy.

In short, Webonomics amounts to new economic rules, new forms of currency, and new consumer behavior. The process of putting these changes into perspective all begins with a look at where the Web came from.

THE VISION OF A UNIVERSAL LIBRARY

A hundred years from now, historians and anthropologists sifting through the artifacts of premillennial culture will come upon the strange symbols--http, www, URL--that suddenly began appearing in nearly every periodical and broadcast of the time. They will wonder why cyber-speak seeped so rapidly into, some would say warped, the speech and writing of that era. "W--as in WWW--seems suddenly to have become the most commonly encountered consonant in the English language," notes Neil Rudenstine, president of Harvard University. "And E--as in e-mail, e-prints, e-journals, e-groups, and e-lectronic everything else--seems to have emerged as our all-purpose, ever-present vowel."

As the future historians comb through our primitive newspapers, they'll see articles about the Web appearing with equal stature alongside accounts of the day's political conflicts, wars, natural disasters, and acts of violence. They won't be perplexed as to what this Web is, as they will be using a successor to this information retrieval technology to perform their research in the first place. But these historians and anthropologists may be scratching their heads as to why all this discussion of the Web happened so abruptly, so instantaneously, in the mid-1990s.

In fact, something like the World Wide Web had long been the stuff of dreams among a few visionaries. In the summer of 1945, as American bombers were preparing to end a world wide war, an electrical engineer named Vannevar Bush was busy laying out a vision for a world wide web of all human knowledge. A vice president of the Massachusetts Institute of Technology, Bush had been selected by Franklin D. Roosevelt to head the Wartime Office of Scientific Research and Development, a coalition of 6,000 scientists dedicated to applying scientific breakthroughs to modern warfare.

With the surrender of Germany in hand, and with the war appearing to be screeching to a halt in Japan, Bush turned his attention away from global combat and toward global sharing of information. In an article entitled "As We May Think," published that summer in the Atlantic Monthly, Bush wrote: "Instruments are at hand which, if properly developed, will give man access to and command over the inherited knowledge of the ages."

He went on to gripe about the problem of information overload and to articulate an overwhelming need for something that gives people control over all that information. "The summation of human experience is being expanded at a prodigious rate," he complained. "But the means we use for threading through the consequent maze to the momentarily important item is the same as was used in the days of square-rigged ships."

At the time Vannevar Bush wrote those words, computers as large as warehouses but less powerful than one of today's pocket calculators were just being invented. Bush's idea, however, transcended the current notion of the computer itself. He envisioned the ability to create information "trails" that linked related texts and illustrations. These trails could then be stored and used for future reference, he wrote. Bush believed this way of organizing and gathering information to be similar to the way the human mind worked, constantly associating one idea with another. He called this easy-to-use, searchable, personal storehouse of knowledge "the Memex."

Bush himself was not able to build the Memex. But he inspired others to work toward his vision.

One of those followers was Ted Nelson, a rebellious kid from Greenwich Village who became determined to create a "nonsequential writing system" during his freshman year at Harvard. A few years later, in a paper presented at an Association for Computer Machinery conference in 1965, Nelson called this concept "hypertext," drawing on a definition of the prefix meaning "in a space of more than three dimensions." Nelson wrote about documents that could contain built-in sets of tiny programs for taking you to another document located on some other far-off computer. If one document made a reference to Charles Dickens, you should be able to link instantly to the complete texts of Dickens for further research and then return back to where you were.

Nelson spent the better part of the next three decades trying to build this system out of software, the lines of computer code that perform the magic on the screen. He called this massive program Xanadu, a name taken from the poem "Kubla Khan," by Samuel T. Coleridge. In the 1797 poem, Xanadu is "the magic place of literary memory where nothing is forgotten." And so it would be with Nelson's universal hypertext system. Nelson believed that providing all people with the ability to get all information would wipe out ignorance, political misunderstandings, miscommunication, and ancient hatreds. In short, hypertext would save the world.

"The future of humanity is at the interactive computer screen," Nelson wrote in that 1965 paper, "The new writing and movies will be interactive and interlinked. It will be united by bridges of transclusion, and we need a worldwide network to deliver it with royalty."

But like Bush's Memex, Xanadu was not to be--at least not yet. Unfortunately, Nelson was beset with an acute case of attention deficit disorder. Ideas swirled around in his head at such a furious pace that he had trouble focusing on anything for more than a short instant. As such, he couldn't seem to get anything done in a reasonable amount of time. Instead of finishing what he began, his project expanded until the sheer weight of his ambition led to its inevitable collapse.

John Walker, the founder of the successful Silicon Valley software company Autodesk, saw what was happening. He believed in Nelson's dream, acquired Nelson's technology in 1988, and sank about $5 million into its development. But the work at Autodesk was abandoned four years later when it became known that programmers at the Switzerland-based European Particle Physics Laboratory (best known by its French acronym CERN), had already released something remarkably similar.

In 1989, while working at CERN, Tim Berners-Lee, an Oxford-trained physicist in his mid-thirties, proposed a global hypertext system that he named "WorldWideWeb." His goal was not only to create a universally accessible "information space" for all the world's citizens but also to enable groups of far-flung people to work together on large problems. By December 1990, he made his software for creating, searching, and retrieving hypertext documents available to the small community of CERN scientists.

Specifically, Berners-Lee invented three things: First, he defined the HyperText Transfer Protocol. Now represented by the ubiquitous "HTTP" symbol, the protocol is a standard format enabling all computers to look up documents. Second, he created the Uniform Resource Locator (URL). This is simply a standard for finding a document by typing in an address--such as www.website.com/document--much the way people address letters in a standard postal format. Third, he devised the HyperText Markup Language (HTML). A standard design for word processor-like functions, HTML enables people to add special codes to text. One piece of code would mark a sentence as a large-type headline, for instance, while another piece of code would mark a series of words as a link to another document.

The World Wide Web that Berners-Lee envisioned needed all three elements: HTML for creating and formatting documents, URL addressing for finding documents, and HTTP for transferring documents among different types of computers and networks.

In the summer of 1991, Berners-Lee put his trio of programs on the Internet. An energetic man who speaks quickly but coherently, Berners-Lee became all-consumed with driving the Web to new technological heights. He has compared the early work of conceiving, designing, and promoting the World Wide Web to jump-starting a bobsled by pushing it from the top of a mountain. When interest in the Web surged in the mid-1990s, he says that felt as if he were jumping into that bobsled, frantically trying to steer it as it careered downhill at accelerating speeds. His steering mechanism had been the World Wide Web Consortium, a group he established at MIT to promote technical and ethical standards for the Web.

Like Vannevar Bush and Ted Nelson before him, Berners-Lee was driven by a sense of idealism. In inventing the Web, he aimed to create a global hypertext library that would do nothing less than bring the people of the world closer together. In 1995, at an MIT symposium commemorating the fiftieth anniversary of Bush's seminal paper, Berners-Lee paid tribute not only to that work's technical foresight but also to its strong sense of morality. "Anyone who reads the Atlantic Monthly article today will be struck with the distance and accuracy of Bush's vision," Berners-Lee said. "To a large part, we have Memexes on our desks today."

But the centerpiece of Berners-Lee's talk was a challenge to those who are putting his technology to use:

We have access to information, but have we been solving problems? Well, there are many things it is much easier for individuals to do today than five years ago. But personally, I don't feel that the Web has made great strides in helping us work as a global team. I still have a dream that the Web could be less of a television and more of an interactive sea of shared knowledge. I imagine it immersing us in a warm, friendly environment made of the things we and our friends have seen, heard, believe, or have figured out. I would like it to bring our friends and colleagues closer, in that by working on this knowledge together, we can come to better understandings. If misunderstandings are the cause of many of the world's woes, then can we not work them out in cyber

space? THE BATTLE FOR ATTENTION

The phenomenal growth of the Web clearly has been driven more by the roar of opportunism than by the whisper of idealism. The hopes and aspirations of Bush, Nelson, and Berners-Lee may indeed be guiding the Web in a subtle way. But for better or worse, ours is a world dominated by capitalism, commercialism, and consumerism. And the Web represents the next phase for all three of those forces.

The Web has already passed by the scientists who dreamed about it and made it happen. In the same way that Bell couldn't imagine all the uses of the telephone and Edison didn't foresee the rise of the music industry when he created sound recording, Berners-Lee cannot possibly dictate or even predict the many different ways the Web will change the world. It's now largely in the hands of the democratic masses of business people and consumers who hopelessly outnumber the population of idealistic scientists.

One business opportunity in particular set the Web afire. The opportunity arose due to the fact that Tim Berners-Lee purposely omitted a key element when he invented the Web. He left open the choice for individual computer owners to use any kind of "browser" program they liked. Browsers are necessary to view all the documents on the Web and jump from one page to another with ease. But Berners-Lee believed that people would want a choice of many different browsers, so long as they were compatible with his standards. So, he left the creation of browsers up to any programmer who so desired to design one.

Anyone who knows something about the technology will tell you that writing a basic Web browser is not all that momentous, as far as programming goes. The Dilbert comic strip had an amusing take on this phenomenon. One day, Dilbert instructs his colleague Ratbert to dance on his computer keyboard--in order to deliberately introduce bugs into a program he was writing. When Ratbert is done dancing, Dilbert glances at the screen and says: "I think you just authored a Web browser."

A programmer named Marc Andreessen was among the first to see the opportunity here. Andreessen didn't create just any old browser. A twenty-three-year old recent graduate of the University of Illinois who was working at the school's renowned supercomputer center in Champagne-Urbana, Andreessen completed a graphically elegant and fun-to-use version of a browser program that enabled users to call up Web documents by pointing and clicking the mouse--the way Microsoft Windows and the Apple Macintosh worked. While this first version of the software only ran on scientific computers that were powered by the Unix operating system, the program immediately developed a cult following upon its release in January 1993. Andreessen called the software Mosaic and made it available free to anyone who wanted to download it over the Internet.

From that point on, Web users and Web sites began proliferating like pachysandra. At the time Mosaic appeared, there were only fifty computers in the world that hosted and served up Web documents. In August, Andreessen released free versions of Mosaic for the Macintosh and Windows. By October, there were more than 500 Web servers. By June 1994, there were 1,500. Within a year after that, tens of thousands of such computers were hosting an even larger number of individual Web sites created by companies, newspapers, magazines, universities, and government agencies. Then, in the blink of an eye, there were hundreds of thousands of Web sites.

Compared to today's software, the Mosaic browser didn't do all that much. In this respect, it was like Microsoft's MS-DOS in the early 1980s. The main point was establishing it as the presumptive industry standard as quickly as possible. Then, programmers could "add functionality" later on.

The story of how former Silicon Graphics Chairman Jim Clark recruited Andreessen and a team of his colleagues at the supercomputer center, then parlayed their free browser program into the fastest rising start-up company ever is now part of computer industry legend. In March 1994, Clark flew to Illinois, rented a suite at a hotel near the university, and invited the members of the Mosaic programming team over for interviews. He hired them all and relocated the team to Silicon Valley within a matter of weeks. Now, instead of paying a $100,000 license fee plus royalties to the university and reselling Mosaic--like other software companies were doing already--Clark and his whiz kids could write an entirely new program from scratch without infringing on any copyrights.

The team went into overdrive to build a better browser, calling their creation and their new company Netscape. In the summer of 1995, the World Wide Web suddenly pierced mass consciousness when Netscape Communications Corp. went public in one of Wall Street history's most stratospheric stock offerings--despite the fact that the company was months away from reporting any profits. By the end of the year, Netscape's market value had soared to around $4 billion, about the same level as established corporations such as Delta Air Lines and Dow Jones.

Most people assumed that Netscape's stock took on such elephantine proportions because the company had a clear shot at monopolizing a crucial software market. The theory was that Netscape would do for the Internet what Microsoft's MS-DOS and Windows did for IBM-compatible PCs. The company would be at the center of a booming new industry for easy-to-use Internet programs.

But that was only a part of the reason for the surge. The other, more subtle reason had to do with the fact that anytime people logged onto the Web using the Netscape Navigator program, their eyes were first taken to Netscape's site on the Web. At the site, people can download the latest version of Netscape's growing list of software products, read about how the company was doing financially, view paid advertisements for other Web sites and services, even embark on searches of all the other content on the Web. By obtaining this captive audience, Netscape promised to do much more than monopolize a new market for software. Netscape was promising to monopolize the computer-using public's attention.

Sensing this, the world's richest man and the world's biggest software company made it priority number one to cut into Netscape's party. Beginning in 1995, Bill Gates and Microsoft began releasing new versions of its Internet Explorer browser in rapid succession. Microsoft's browser, of course, pointed consumers directly to its own Web site and its own Web content.

By the summer of 1996, product reviewers were impressed enough with version 3.0 of Microsoft's program to declare it at least the technological equal of the Netscape Navigator. By then, Netscape had succeeded in seeding the market with tens of millions of copies of its free program, capturing more than 80 percent of the market. And so, Clark decided it was time to charge customers $49 each for new versions. Microsoft, meanwhile, was gaining market share by giving away millions of copies and convincing many computer makers to bundle it on hard drives at no cost.

Suddenly, the two companies were locked in a colossal battle for the attention of consumers. At Netscape's urging, the U.S. Department of Justice began investigating whether Microsoft was using its monopoly in PC operating systems to gain the upper hand in what has come to be known as "the browser wars."

True, the browser wars grew so fierce so fast because an important new software market was at stake. But the reason why this market became so important has everything to do with the fact that whoever supplies the browser has the inside edge on the consumer's attention span. This battle for attention cuts right to the heart of Webonomics.

WHO SURFS THE WEB AND WHY

In retrospect, it shouldn't have come as a shock that the Web would quickly become the most widely embraced part of the Internet. After it was established by the Defense Department in the late 1960s, the Internet became the domain of techies, students, and academic researchers. It was composed of many separate and hard-to-use databases with such names as Gopher, WAIS, FTP, and others, each requiring a different set of commands. Whereas the Internet required a mastery of arcane instructions and esoteric computer concepts, the Web required little more than pointing and clicking the mouse.

Instead of all those incompatible databases, the Web pieced together all kinds of information for you--placing words, photos, sounds, and video snippets together on one electronic page. The page metaphor enabled people to publish not just plain text and numbers but beautifully illustrated layouts. That's why Web page design has become the newest pop art. And the Web itself has been called the biggest public art project in the history of the world. This relative ease of use and aesthetic appeal goes a long way toward explaining why the Web came to be known as the Internet's chief multimedia business district and entertainment zone.

But what got people paying attention to the Web in the first place? In the very beginning, the Web was like ham radio, the domain of hobbyists. In this case, it was hard-core software jocks, scientists, university students, librarians, and underground communities of artists who were designing and viewing Web pages. People weren't creating Web pages to make money, but rather to impress and amuse one another. Some of the earliest sites were dedicated to interactive frog dissection, comic book sagas, unpublished fiction, scientific drawings, and independent music samples.

In those days, 94 percent of Web users were male and 56 percent were between the ages of twenty-one and thirty, according to the first semiannual survey of Web users by the Georgia Institute of Technology. The Web was clearly dominated by techies back then: That January 1994 survey also showed 88 percent of the Web's users had computers that ran the hard-to-use Unix operating system.

Then, the Web went corporate. For many corporate employees, habitual surfing can be traced to a phenomenon known as "the watercooler effect." Starting in 1994, techno-savvy office workers began populating the Web. Managers at companies with high-speed networks were reading about it or hearing about it through colleagues. High-profile sites like Hotwired and the White House home page started springing up and garnering press attention. Business people were simply curious to see what all the early hype was about. They were itching to type in some of the strange Web addresses that were beginning to appear in newspapers and magazines.

So they began browsing the Web during times they would normally be taking a break. They were doing it for the same reason that they would occasionally emerge from their office, hang around the water cooler, and find someone with whom to exchange gossip or shoot the breeze. As a popular communications medium, the Web started out as a diversion, as a way to see for yourself what was going on out there in the world. Instead of spending time chatting around the old water cooler, office workers began wandering down paths and byways in a new global information village. In many offices, a personal computer operated by someone who knew his way around the Web became the new water cooler--and without the messy pile of used cups.

The water-cooler effect was dutifully tracked by the so-called Webmasters who created and ran these early Web sites. The Webmasters had evidence that corporate employees were logging on in larger and larger numbers because their Web server computers kept "log files" that showed that visitors with Internet addresses at AT&T, Digital Equipment, Kodak, Hewlett-Packard, Microsoft, IBM, and other high-tech companies were the heaviest users. Even Playboy magazine reported that the heaviest usage of its new site was not late at night or during the weekend, as one might expect, but smack dab in the middle of the day. Demand for the Web began surging at 12:00 p.m. and again at 3:00 p.m. during business hours--precisely lunchtime on the East and West coasts of the United States. By the end of 1994, the overloaded network would slow to a crawl during those hours.

The April 1995 survey conducted by Georgia Tech reflected this shift away from techies and toward business users. The average age of users rose to thirty-five, while the proportion of males online dropped to 82 percent. Meanwhile, new data showed that Web surfers were unmistakably upscale, with an average income of $69,000.

After the influx of business people came the hoards of at-home users. In 1995, the three largest commercial online services, CompuServe, America Online, and Prodigy, all began offering their millions of members access to the World Wide Web. In the second half of 1995 alone, at-home use of the Web doubled, to nearly eight million U.S. households, according to Odyssey, a San Francisco research firm. In 1996, the number of households with Web connections doubled once again, to sixteen million.

As a result, the population of Web users began to resemble the population at large. The April 1996 survey by Georgia Tech showed the average income dropping to $59,000, and the percentage of males falling to 68.5 percent. The vast majority were nontechnical people who owned PCs running Windows. In addition, more than 25 percent of Web surfers came from outside the United States, with that percentage expected to grow rapidly in coming years.

Overall, the rate of growth of Web usage was beginning to look like the proliferation of television sets in the late 1940s. The phenomenon even got the attention of the A. C. Nielsen Company, which released a study projecting that more than 35 percent of the U.S. population will be using the Web by 1998.

Actually, the Web has begun to act as a source of competition to television. A Coopers & Lybrand survey of Internet users found that 58 percent of people surveyed were cutting back on television viewership to go online. This cutback was most pronounced among people surfing the Web. Subscribers to commercial services such as America Online reported spending five to seven hours per month online, while those with direct access to the Web though a corporate network, university, or an Internet service provider reported spending forty to forty-five hours per month. (Incidentally, this survey only showed Web time coming out of the time spent watching TV, with no drop-off in usage of newspapers or other media.)

If this trend holds, the Web may reverse some of TV's well-documented effects on society. The Web, in a sense, is the opposite of television. TV programs and Web content are indeed both delivered to electronic devices that shoot electrons at the back of a display screen. But television is a passive experience. You watch it at a distance, mostly in a semiconscious state, sprawled out on a couch. Often, you're not fully aware of all the advertising and entertainment seeping into your brain. But you are drawn to your favorite shows time after time.

When surfing the Web, you sit up close to the screen. You're alert. You are in an active, information-seeking mode. The clicker is yours and yours alone. In a report titled "The Interactive Consumer," Saatchi & Saatchi researchers call this entering a "flow state" in which users become totally absorbed, relaxed, and exhilarated in the experience. Often, the journey is the reward; browsing itself is often more important than actually reaching any specific destination. That's why, in these early days of the Web, it has been difficult to draw people to the same sites over and over. The authors of the study also compare entering this flow state to doing a hobby or other pleasant tasks that require concentration. This difference in mode helps explain why people respond differently and want fundamentally different things from their PCs as opposed to their TVs.

That people often get lost in the alleys and byways of the Web is not all that surprising. We all know that there's mountains of material on the Web. If you spent ten hours per day browsing Web pages and only spent a minute per page, it would take you more than four years--an entire college career!--to explore a million Web pages. And during that time, parents would have wasted good money on tuition.

Just how big can the Web get? Roy Williams, a researcher at the California Institute of Technology's Center for Advanced Computing Research, estimates that all the information from all of human history stored on paper in the world today amounts to about 200 petabytes. A byte roughly equals a printed character. So, a petabyte is about one quadrillion (or a thousand trillion) characters. That figure includes all the paper in all corporate filing cabinets, all government archives, all homes, all schools, universities, and libraries.

By the year 2000, Williams estimates, the amount of online information that will have accumulated in just the few decades leading up to the new millennium will be about two and a half times that amount now on paper. Much of that information will be on the Web. It's enough to make your head explode.

Most of the Web's massive array of content appeals to narrow niche audiences. Unlike radio, television, newspapers, and magazines, the Web is not a mass medium. Rather, it's the first interactive one. The interactive features of the Web enable people to personalize their experience by choosing for themselves among its huge array of content. In this sense, the Web is the ultimate Rorschach test--it reveals whatever you decide to see in it.

How personal does the experience get? One of the first things many people do when they first log on the Web is go to a search engine and type in their name, or their hometown, or their college, or their employer. Those who find themselves mentioned somewhere on the Web feel a sense of validation, not unlike Steve Martin in The Jerk when he exclaimed, "The new phone books are here!" This is why millions of people are creating their own personal Web pages. In the future, everyone will be the subject of a Web reference or his or her own Web site. Andy Warhol got it almost right: It's fifteen megabytes of fame.

Still, most newcomers to the Web feel overwhelmed. As a newbie, you might not immediately know how you should be using this deceptively simple but very powerful tool. After following a trail of links into some obscure Web site, you will start scratching your head. Like a digital David Byrne, you may ask yourself: "Well, how did I get here?" And you may ask yourself: "How do I work this?"

Such puzzlement is exacerbated by the traditional media. Every day, people hear about how the Web is the central component in the "digital revolution" that's sweeping the planet. The press dutifully reports all the new and improved Web sites, while marketers are all putting their cryptic Web addresses at the bottom of every print ad, at the end of every TV commercial, even on billboards. The fact that no individual, corporation, or government owns or controls this medium makes it all the more mysterious. It's kind of like NATO: Most people realize it's important, but they don't know why. They don't know whether they should be visiting all the sites they hear about. They don't know how to harness the Web's true power.

This is especially true for companies that have created Web sites to promote their products and their brand image. Promotion is only the tip of the iceberg. At its most powerful, the Web is about customer service, selling products directly, establishing a dialogue with consumers, and expanding the geographic base of a business. A Gartner Group study found that 90 percent of first-generation Web sites were created without asking existing customers what they wanted. The next generation of Web sites now under development don't have that luxury. Customers are voting every day on which are the most useful Web sites. And their tolerance for glorified electronic brochures is fading fast.

Most of the early marketing sites on the Net have temporarily drawn an audience for the same reason that people like to watch a baby learning to eat solid foods. These sites have garnered attention not because they are done well, but because they are being done at all. After a while, you'd like to see the kid actually get the food into her mouth. Once you've seen a few of these sites, you're ready to watch the medium grow up.

As the Web matures, its inhabitants are becoming more and more selective as to how they pay out their precious attention. This is where the principles of Webonomics come in. Consumers are returning again and again to quality Web sites that offer a real value proposition, ignoring ones they have no use for. They are looking to buy products and interact with companies, not just absorb the same brand positioning they see on TV. They are coming to expect rewards for disclosing data about themselves. They are shopping online in the global marketspace, but only for "information-rich," or high-involvement, products. They cherish self-service. They are accumulating and spending new digital currencies. They are aligning themselves with brand names that they can trust. They expect Web sites to quickly adapt to market changes. These are the principles for growing your business on the Web.

The story of how companies are implementing the principles of Webonomics is a story not just about the Web itself but about life in the Information Age. It's a story about new types of relationships, about the rise of new communities, about living in a technology-mediated society, about what it means to be personal and what it means to be private, about the next phase of capitalism and the new role of government, about accelerating change, about the relentless future.