With me in the studio tonight I have two pretty amazing guests. It was hard for me to figure out exactly who I wanted to bring on for this particular topic, which has to do with business online. And the reason it was a hard choice is because there are so many people who claim to be experts and there are so few that really genuinely know what they're talking about. So it required spending a lot of time with people and sort of weeding through and finding out who would be the best to bring on. Especially when it comes to books. And in the back half of the show we're going to talk with a gentleman by the name of Vince Emery who has by far written the best book I've ever read about business on the Internet, and it's called How to Grow Your Business on the Internet.
But I want to start first with a gentleman by the name of Jim Griffin who is the director of technology for Geffen Records. Jim, what are some of Geffen's most popular artists?
JIM GRIFFIN: Oh, I'd say Peter Gabriel, Guns and Roses, Hole, Nirvana.
EASTON: Hole? Is that the one with Courtney Love?
GRIFFIN: Exactly.
EASTON: Didn't they just recently get kicked off America Online?
GRIFFIN: Yeah, for a few hours.
EASTON: For a few hours? They're back?
GRIFFIN: But then AOL relented. They put them right back on.
EASTON: Did you have anything to do with that?
GRIFFIN: Oh, no. Nothing. A big profit motive probably had something to do with it.
EASTON: The reason that I wanted Jim with us is because Geffen Records was the first record company to have--actually, the first record company on the Internet. Warner Brothers Records was probably the first online, 'cause they were on CompuServe and America Online. But Geffen was the first one to actually be on the Internet in the form of a Web site, which has actually become one of the most popular areas on the Internet. Do you want to explain "Slash's Snakepit"? That would be a good example for people.
GRIFFIN: Sure. Using the Internet, you can send graphics, sounds, all kinds of things to people all over the world. Slash and I were talking a little bit about this record of his that was going to come out, and he said, "Well, what could you do that would help distinguish my work from everything else that's in the marketplace?" I said, "Well, you know, we could put live pictures of your snake on the Internet." Now, Slash loves snakes. He's got over three hundred of them.
EASTON: Why?
GRIFFIN: A personal thing, you know. He was on the cover of Reptile magazine recently.
EASTON: He won't do the cover of Rolling Stone, but he'll do the cover of Reptile.
GRIFFIN: He'd probably do both, but at any rate, he really likes snakes, and it seems like that would be a good glimpse. I think the key to using any new technology is to enable you to do things you could never do before. And if it doesn't do that, it really doesn't pass my smell test. It's not worth doing. And as a result, this was something we couldn't do any other way. There's no other way to give people a live 24-hour-a-day update as to what Slash's snakes are doing.
EASTON: Actually, I could think of a couple of cable channels that probably we could have gotten rid of for the occasion, but you're right.
GRIFFIN: Yes. So he thought, well, it would be neat if he could check in on the snakes wherever he was, and everybody else could do the same. It might be capable of cutting through the clutter of the marketplace and distinguishing his record.
EASTON: And it's been really popular.
GRIFFIN: That's right. And so we've done it and people seem to enjoy it.
EASTON: Geffen Records has been nominated by the Smithsonian Institute for an award because of your online stuff. What is the award?
GRIFFIN: Well, we're one of the finalists for this award on information technology from the Smithsonian, and we really hadn't even realized that there were awards and things that would come our way for this, but at some point last year--I think it was June--we were kicking around these issues inhouse at Geffen. And people were saying to me, "Well, you know, Jim, when are we going to be able to release an entire album and have people listen to it online? Or take an entire song and put it out?" And I said, "The technology is there to do it today." They said, "Really? Well, let's prove it to people." And I said, "You've got to start with content. Without content, the form is meaningless, so let's get something that people want to listen to." And they went and talked to a number of Geffen's bands. One of them, Aerosmith, really liked the idea. And they had a song that they hadn't released in any other way, and that was one of our criteria. We don't want to take a song that's already been released. We want to take something that you can't get any other way. And so what we did was, we took this song, "Headfirst" from Aerosmith, digitized the song, optimized it, compressed the song as much as we could--so that there would be a balance between fidelity and the ability of the listener to download it--and worked out a deal with CompuServe where they agreed to do it entirely for free, so that there would be no online charges, no connect charges and people could listen all they wanted. So that's what happened. We put out the song. Tens of thousands of people downloaded it, and it was the first time that a full-length entertainment product had ever been released.
EASTON: You were at a seminar, "Hollywood and Cyberspace," about a month ago. I thought your viewpoint was really refreshing. I want to challenge you, though, on a couple of the points that you made.
GRIFFIN: Sure.
EASTON: One of them, you said you feel that it's important for a company to have an Internet presence. It's just as important that that company brings the Internet to the desks of its employees.
GRIFFIN: Yes, that's right.
EASTON: Do you agree with that for any company--I'm not talking about entertainment, now--but even Wonder Bread.
GRIFFIN: For almost any company, there are great benefits to putting their employees online.
EASTON: Which are? I'm talking about beyond email, though.
GRIFFIN: Right. I can accept that there are some people for whom the Internet does not assist them at all, but at that particular seminar we were talking to the entertainment business. And I would say it's equally true for many other businesses, that I think it's wrong to view the Internet and cyberspace and online services as a one-way street. It's not a pool of people to whom you should be marketing, although that's true. That's not the end of it. It should also be true that if the Internet and online services and cyberspace are worth looking at, it's also worth having your employees use it in their everyday work.
EASTON: Give me an example.
GRIFFIN: There are great benefits to that. For example, at our own company. A one-way street would be us saying, "People out there buy records. Let's show them the records, and then they can buy, and leave it at that." But we look at it as a two-way street. From their desktops at Geffen, our employees have access, for example, to lists of every club in the world through the World Wide Internet Live Music Archive. They can listen to unsigned bands on IUMA, the Internet Underground Music Archive. Their Pollstar is online. It has complete tour schedules. Now, for example, we must distribute hundreds of pages every week to employees with tour schedules, club venues and all of this very same information. And we spend a great deal of money keeping it up-to-date. And now, employees, from their desktops, can seamlessly go out on the Internet, access and bring back tour schedules, lists of clubs, the very same information that we used to spend a great deal of money distributing on paper.
EASTON: Since you brought the Internet to the desks of Geffen employees, what has surprised you in how people are using computers in the workplace? What are they doing that you never thought they would do?
GRIFFIN: Well, it surprised me how much they do it. And it surprised me how many ideas they've come up with themselves for how to use the Internet to promote their products.
EASTON: Are you saying that you have no problem if you walk by and your assistant is hanging out in the Melrose Place Usenet group?
GRIFFIN: Oh, definitely not.
EASTON: Why is that? I would probably have a problem with that.
GRIFFIN: It wouldn't bother me if they were playing games, because--
EASTON: You're going to get a lot of resumes!
GRIFFIN: The point is, is that when you're playing a game or you're looking at the Melrose Place, whatever it is that attracts you to do this, you learn from. And if people like doing it, they learn very much about the screen that they're working with, the various interface elements, how to save a file, how to call up a file. Those skills are very transferable. And so we want them to be familiar with the interface. We want them to learn how to use their computer.
EASTON: But eight months later, they've learned all that and they're still spending an hour a day in the Melrose Place Usenet group.
GRIFFIN: I don't find that to be true. I think they grow with it. I think they learn a great deal from it. And let's face it, they've got a telephone there. They can make long distance telephone calls. They have books. They have magazines. There are plenty of ways that people can waste their time, and I'm honored that they choose to spend their time wisely, learning how to use this very productive tool that they have there. Hell, we're in the entertainment business. Why not have them entertaining themselves and finding out new ways to entertain people? It makes a great deal of sense.
EASTON: Can you give an example of one of the good ideas that has come up because you have put your employees online?
GRIFFIN: Employees in any of a number of departments have said, "You know, by using this, I've found that we could put job ads online, so that we could attract better employees." They say, "Now I see how we could use this to promote this new product that we're coming out with." And increasingly, for example, they've come up with great ideas for building our own internal Web site. For those of you who spend much time thinking about client/server databases or how to distribute information within a company, which is a very cumbersome and expensive process that does not always work well, it's refreshing to see that a very inexpensive approach that's used worldwide can be used to replace that technology.
EASTON: So you're saying that you have a private Web site? Obviously, it wouldn't be worldwide, it would be Geffen-wide.
GRIFFIN: Yes. An internal Geffen Web site. An internal company Web site can be a very good way to distribute information. Far less expensive and far more productive.
EASTON: And a whole lot more fun--pictures!
GRIFFIN: That's right. You can distribute pictures. You can distribute sounds. You can distribute videos. And people are still trying to figure out up at Microsoft and Novell and any number of companies how to do this with an internal client/server system. But if they simply deploy the Web internally, they can do much of the same thing and they get the advantages of economies of scale.
EASTON: Everyone always refers to Geffen as "the model Internet citizen." Why do you think that is?
GRIFFIN: Well, I guess it's true because we avoid the temptation to purely profiteer--to exploit the Net. I think for so many companies that temptation is great. We try to avoid it as much as we can, and I don't think we've ever engaged in any kind of exploitation or profiteering on the Net. We want it to be a two-way street. Our employees surf the Net. They use it regularly in their work. So they're very respectful of it. They get a number of email messages. They know how rotten it would be if they were flooded from email messages from companies trying to sell them things. So, by being citizens on the Net themselves, they learn very much what the right kind of behavior is. We also work very hard to provide people with entertaining content.
EASTON: We're going to start talking with Vince Emery. Vince is the author of a book called How to Grow Your Business on the Internet. And I just want to preface this by saying that because of this show, I get sent literally every single book that's ever published about online computing, and I consider it part of my job to go through and evaluate each one so I know which ones to recommend, and inevitably I always end up asking the authors of these better books to be on. Mostly because so few of these books are any good. I always seem to have space for the really good authors. Vince, your book is just outstanding. Thank you for writing it, because now I can just hand this to people and then have them come to me with questions.
VINCE EMERY: Well, thank you for the kind words.
EASTON: Jim has just been making some interesting points. When business is on the Internet, in my opinion, they're either there as a marketing tool, such as Geffen Records, or they're there as more of an advertising vehicle. As you know, I'm writing a book right now about commerce online. Betty's Brownies in Poughkeepsie is about selling brownies. It is advertising. Kind of interactive advertising, but that's what it is. Is there anything that Jim said so far that you'd like to comment on before I start pelting you with questions?
EMERY: Well, no. He actually seems to have a good grip on things. There are some businesses that have real qualms about giving all of their employees Internet access. Some of them just give limited email access, so that way people have less access to games, and there are companies that have other issues about the Net, especially security. But in the entertainment business it certainly makes a lot of sense for people to get on the Net in a big way.
EASTON: The first quote in your book--in the front of your introduction--Byron Abels-Smit says "The Internet is like a gold rush. Most people are picking up nuggets. We're looking for a vein." It made me think of a quote somebody said to me the other day: "The Internet is like a gold rush, and the only people who are making money are the people selling tickets to get out to California." Do you agree with that?
EMERY: It's true that the service providers are making a lot of money, but in researching my book and in my own experience consulting with companies and being marketing manager for a company that's been doing business on the Internet for years, I know that there are a number of companies--how many nobody knows--but there are a number of companies making more than a million dollars a year. Quite a few, actually, make more than five million a year.
EASTON: Examples! Examples!
EMERY: The biggest money-maker I've found in actually selling things across the Net is Digital Equipment Corporation, which last year sold over twenty million dollars. There was a survey done on the World Wide Web on people's buying habits, and they found out (not too surprisingly) that the hottest selling things were computer hardware and software. Obviously, you have to have a computer to get on the Internet.
EASTON: That's like the biggest-selling thing in a restaurant being food.
EMERY: The interesting thing is that books are a really strong-selling category. There are several different companies selling more than a million dollars worth of books a year online.
EASTON: I want to go through some of the chapters real quick and get some answers from you. You have a chapter in which you discuss "Twelve Reasons Why Internet Projects Fail." What do you consider the most important two or three?
EMERY: Well, I would think certainly one of the biggest reasons for failures recently has been what I call the "If You Build It, They Will Come" Fallacy. You can't just put up a page on the Web and expect that people are going to beat a path to your door and buy things. It's like if you have an 800 number, you've got to promote that 800 number. Or if you put together a printed catalog, you've got to get that catalog to people.
EASTON: Jim, when you were speaking at that seminar, you said to this audience, "Put up your Web site and they will come." And I want you to give the cake analogy that you gave.
GRIFFIN: Sure. We really did no promotion. None at all. And the day that we turned the Web server on, there were well over a thousand hits. Somehow people knew it was there and they went to it. I live in a highrise, and you go out on the fourteenth story of the highrise, and you put a piece of cake on the balcony, and all of a sudden it's covered with ants, and you think, "How did this happen? How did these ants know that this cake was here? How did they get so many of them here so quick?" Really, it was very much the same experience for us. We turned it on, and all of a sudden it was full of people.
EASTON: But you were saying to this audience, "Just turn it on and they will come." How do you feel about that, Vince?
EMERY: Well, I think in Geffen's case, it was pretty easy to do that. As you know, word of anything cool or good spreads rapidly on the Internet, and Geffen had Peter Gabriel, Nirvana, Veruca Salt and all these great names.
EASTON: But they did no promotion or publicity.
EMERY: Any Internet site that had Peter Gabriel on it, I'm sure would pull like crazy. But somebody who runs a normal business that is not a household word, is going to have to get its name out there and get what it is out there and let people know.
EASTON: That's my point though. People will hear something like what Jim said out of context and apply it to their brownie business or whatever other small business they may have, and I think that's one of your points.
GRIFFIN: But doesn't it really fit in anyone's context? The moral of this story isn't that some businesses do and some businesses don't. It's that any business can if it makes its site interesting.
EASTON: What do you say to that, Vince?
GRIFFIN: I mean, we're lucky to have Peter Gabriel, but that doesn't mean that almost any site can't think of some very, very interesting hook that will draw people in.
EMERY: I would think that a well-promoted site will certainly draw more people in and sell more products than an unpromoted site. You've got a lot of shysters out there hooking people into a one-year contract on cybermalls and not telling people anything about that. In researching my book, one of the companies I ran across was a CD music vendor. It had sites on two different Internet malls, and one of the malls really promoted itself and built traffic, and the business was doing great on that one. Because the owner thought, "Well, they'll all do well," he opened another site on another mall, but a mall that didn't promote itself. Nobody came to buy CDs. It died. This was the same company, basically the same Web pages, in two different places and the only difference was that one was being promoted. There are a lot of these cybermalls out there signing people into one-year leases. Nobody comes, and people are just locked in.
EASTON: One of the questions I get asked often, probably more than "How are you?", is "How much should my Web site cost?" We're talking about a small business, the cost to have a page designed and then a reasonable monthly server fee.
EMERY: The range is enormous. Big companies have spent hundreds of thousands of dollars on Web sites. Actually, you came up with the cheapest one I'd ever heard of, the mustard company that got one for free.
EASTON: Yeah, through the Electronic Gourmet Guide site.
EMERY: If they farm everything out (which is one of the real keys to success: don't put it on your own computer, put it on your service provider's computer; don't build everything yourself; buy everything or hire people to have it done), most small businesses can usually do something for between a thousand and six thousand dollars. There are actually a lot of small businesses that have done stuff for under a thousand dollars. There's an Ad Law site by a Washington, DC, legal firm called Arent Fox that has generated tens and tens of thousands of dollars of business. They tried to keep everything small and watched things, and so they put up their original Web page for under a thousand dollars, and it got international attention.
GRIFFIN: I think there're ways to do it inexpensively, and you're right, it can be done cheaply, but I think that thinking about the cost of everything and the value of nothing really gets those people into a bind. We gained a great deal of experience at Geffen doing it ourselves. For example, having our own server means that we get great statistics constantly on who's doing what and what they find attractive. Having our own server means that we know how to talk to Internet service providers and other people who work on the Web. I think that you really sell yourself short if you don't go out and get your own server and learn how to do it, if at all possible.
EASTON: Even a very small business?
GRIFFIN: Even a small business. I think they would be smart to get an inexpensive computer--very inexpensive.
EASTON: Like a Pentium 60?
GRIFFIN: A castoff. A 486 or even a 386. To get an inexpensive leased line, or to figure out how they can do ISDN or even a 14.4 modem to the Net. Find some person who wants to put up a Web server but doesn't have the resources themselves. Bring them in to do it. I guarantee that they can do it for under five thousand dollars. Our initial budget for our Web site was well under five thousand dollars. We just took a castoff computer. One of the people who worked for me said, "You know, I'd really love to do a Web site, but I've just never been able to do one myself." Bring them all together and get it going, because you'll learn an enormous amount. Remember, right now, doing business on the Net isn't about making money. Sure, you'll make money in the long run, but what you need to do now is get an education. You need to learn how to do this well. And I think you deny yourself that education if you turn the whole thing over to somebody else and just be a passive participant in it all. And I think you'll be disappointed with the sales and with the way the whole thing goes. That doesn't mean some people don't do it well. It just means that if it's at all possible, I think you should dive in and try to get it done yourself, or hang around and really watch closely and spend a lot of time with whoever does it for you.
EMERY: My point of view on that would be diametrically opposed for most small businesses--
EASTON: Good. Fight, fight!
EMERY: --who don't have somebody to dedicate to the project. If your business is something like bottled hot sauce--There's a wonderful site on the Net called HOT HOT HOT--
EASTON: One of my advertisers.
EMERY: This is a retail store. Their business is hot sauce. Their business is not computers.
[Mr. Emery was going to explain that for most businesses, especially small businesses, one of the biggest problems is concentrating on core business issues and avoiding distractions. Unless your business can afford dedicated staff to build and maintain your Internet site, Internet activities can be time vampires that suck your attention away from more crucial matters. The end of the program cut off further remarks.]