1	Power of the Internet in Creating Communities and in Re-enforcing Existing Communities XIV Congreso de Estudios Vascos Infomazioaren gizartea Pais Vasco November 26, 1997 Presentation by Vince Giuliano The Electronic Publishing Group
2	Main Topics Special properties of internet affecting community Explosion of Internet Development of business, commerce and work in the community and Internet Social, cultural and family development in communities and Internet
3	Special properties of internet affecting community
4	Special properties of internet affecting community Obviously It is multi-media, and support writing, voice, small videos It can communicates instantaneously any place around the world It can interconnect millions of people and businesses It is an interactive medium, allowing all users to communicate with each other and select what they vet
5	Special properties of internet affecting community But it has some very remarkable properties that never before existed, some of these are economic Once you pay a small monthly subscription fee ($20 in the US) there is no charge for use Unlike telephone calls or regular mail, where you pay for each call or letter sent You can send and get 1,000 e-mail messages a day and it costs you no more You can browse the web all day, and it costs you no more
6	Special properties of internet affecting community But it has some very remarkable properties that never before existed, some of these are economic Once you pay a small monthly subscription fee ($20 in the US) there is no charge for use Unlike telephone calls or regular mail, where you pay for each call or letter sent You can send and get 1,000 e-mail messages a day and it costs you no more You can browse the web all day, and it costs you no more
7	Special properties of internet affecting community It is both an individual-to-individual medium and a broadcast medium It costs no more and is just as easy to send out 1,000 versions of the same e-mail message as it is to send one. Websites can be seen by anybody on Internet anywhere It is really not a mass medium like radio, TV or newspapers. It is a communications medium that can also be used for mass distribution
8	Special properties of internet affecting community Cost of communication does not depend on distance. Costs the same to communicate 6 feet or 10,000 miles, to anywhere It is incredibly inexpensive The $20 a month fee allows an individual to communicate as many copies as he wants and get information all day and night long every day over any distance in the world for a month Nothing like this has every existed before in the history of humanity
9	Special properties of internet affecting community There is unlimited space on the Internet for everybody and for an unlimited amount of materials It is a democratic medium, owned and controlled by nobody, even defying government efforts to control it
10	Special properties of internet affecting community These properties make Internet ideal as a one-to-one communications vehicle a publishing vehicle a vehicle for conducting commerce, and a vehicle for facilitating business connections And these same properties create significant new opportunities for existing and new communities
11	Explosion of internet
12	Explosion of Internet Intelliquest estimates that there were approximately 47 million adults online in the United States at the end of 1996. A Cyber Census March/April 1977 survey stated that the number of World Wide Web users has nearly doubled to 40 million people from a year ago. Forrester Research predicts that 135 million people in the US will be using e-mail by 2001, which will be approximately 50% of the US population.
13	Explosion of Internet (continued) 40 years ago TV was the "new media", 15 years ago cable TV was. Today it is Internet From 1995 to 1996 web ad spending quintipled (5x) or 500% According to a report recently released by Jupiter, online ad revenues for 1997 are expected to reach a value of $3 billion. It took TV 13 years to get 50 million users, radio 38 years to get 50 million. It will take the net 5 years to get 50 million users.
14	Explosion of Internet (continued) International Data Corp (IDC) estimated that the number of commercial sites on the World Wide Web is doubling every six months and came to more than 45,000 in 1996 IDC says Internet/Intranet expenditure is growing at almost five times the rate of the information technology market as a whole IDC says Internet will replace the PC as the motor behind the industry's growth in coming years.
15	Explosion of Internet(continued) According to Jupiter Communications, personal computers will remain the premier platform for Internet access in 47 million households by the year 2002 Internet will also reach non-computer households. According to Jupiter, 15.3 million households will access the net from WebTV and other non-PC devices by 2002.
16	Explosion of Internet (continued) Computer Intelligence 1997 Consumer Technology Index (CICTI) study stated that more than 40 million U.S. households now own PCs. In addition, more than 50 percent of households with children have PCs. (CICTI) PC ownership remains closely linked to education and income. PC ownership continues to be strongest among baby boomers: (CICTI) More than 50 percent of U.S. households headed by someone 30 to 49 years old own a PC.
17	Explosion of Internet - Women - CommerceNet/Nielsen found that 42 percent of Internet users are women, compared to 34 percent in the fall of 1995. Forrester predicts that by Year 2000 there will be 18 million women using the Internet. Jupiter Communications predicted that by the year 2000, 46.5 percent of the online population will be women.
18	Explosion of Internet - Women in commerce A recent survey by IBM reveals: 23 percent of businesses owned by women have a homepage compared to 16 percent of businesses owned by men. 47 percent of female- owned business owners subscribe to an online service compared to 41 percent of male owned businesses.
19	Explosion of Internet - Third-Agers According to Excite, 14% of internet users are Third Agers (People over 50) 83 percent of third agers log on at least once a day and spend over eight hours a week online The typical Third Ager is educated with 86 percent having been to college. 65 percent earn salaries more than USD $40,000 The fastest growing segment of US Internet users is people over 65
20	Explosion of Internet - CHILDREN Jupiter Communications predicts that the number of children using the Web from the classroom will increase from 1.5 million in 1996 to 20.2 million in 2002 Jupiter Communications Digital Kids Report predicted that the growth in the number of kids with access to the Web from the classroom is expected to increase from 1.5 million in 1996 to 20.2 million in 2002
21	Explosion of Internet - CHILDREN Jupiter Communications Digital Kids Report predicted that revenue from the children online market will grow from just over $306 million at year-end 1996 to nearly $1.8 billion by year-end 2002. A USA Today poll showed that 98 percent of all teenagers in the US have used a computer and they spend an average 4.4 hours per week on a PC at home or at school.
22	Explosion of Internet - NEWSPAPERS 4000 newspaper web sites in the world by the end of this year 700 U.S. community weeklies now publish online, compared to 152 one year ago 43% of online newspapers are now based outside the U.S. - up from 29% one year ago
23	Internet Technical Developments are making it available to everyone Microsoft and Netscape are making Internet sites part of the normal desktop in homes. Rapid expansion of broadband cable modems and satellite Internet services, are making Internet into an effective multi-media medium. Internet push services are proliferating for people who don’t want to browse WebTV and similar developments are expected to bring Internet into most homes without computers, and make Internet available in more rooms in homes that already have it.
24	Advertising, business, and commerce - going to Internet Zona Research predicts that the Internet/Intranet market will be worth $100 billion in year 2000. A CommerceNet/Nielsen Media Research survey found that the number of users who have gone to the Web looking for information about products has doubled, from 19 percent in the fall of 1995 to 39 percent now ActivMedia estimated that Net sales in 1997 will exceed $13.3 billion
25	"According to a report recently..." According to a report recently released by Jupiter, online ad revenues for 1997 are expected to reach a value of $3 billion. (including the values of ad trades) It's expected that by 2002, "intermercials" and sponsors of content areas will comprise half of online ad spending local ad spending, mostly classifieds, will account for 54 percent of spending This year banner ads will comprise 80 percent of all online ad spending. (Jupiter)
26	Advertising, business, and commerce - going to Internet according to a survey by @d:tech, over 10 million people will use the Web regularly to make purchasing decisions by the year 2000. According to a Killen & Associates report, Internet-based auto loan transactions will account for 20-30 percent of the market by 2001 Chrysler stated that within 4 years, 25 percent of its sales will be online, up from 1.5 percent in 1996.
27	Advertising, business, and commerce - going to Internet A research study by Cowles/SimbaNet indicated that Intranet/Internet information sales would represent 20 percent or $5.4 billion of all business/professional online information sales by 2000 Internet growth is affecting all patterns of commerce changing balances among media
28	Internet, Commerce, Business and Community
29	In every area, commerce is going to the Internet Ticket sales. Forrester Research says USD$8 billion worth of entertainment and travel tickets will be bought online in 2001. Jupiter Communications expects USD4.7 billion by 2000. Online stock trading. Investment banking firm Piper Jaffray predicts the industry will mushroom eight-fold by 2001, and account for 60 percent of the discount brokerage industry within four years. Computer hardware. Dell Computer Corp. reports selling USD2 million worth of computers products a day over the Internet.
30	In every area, commerce is going to the Internet Books Amazon.com sold USD27.9 million in books during the second quarter of this year -- up 74 percent from the first quarter. Music Jupiter Communications Net predictssales of music will totalUSD1.6 billion -- 7.5 percent of the overall music market -- by 2002. Groceries. Andersen Consulting predicts over the next10 years the online grocery shopping market will grow to USD60 billion, and account for roughly 12 percent of the entire consumer package-goods business
31	In every area, commerce is going to the Internet - Microsoft and classified ads Microsoft is developing advertising and transaction-based Web sites for each of the main areas of classified ads: automobiles, housing and employment. Microsoft's CarPoint site is generating $10 million in car sales each week. The software giant is planning a real estate listings site for the second quarter of '98. "Microsoft represents an immediate threat to newspapers and their classified ad revenue," says a VP of Arlen Communications Inc.
32	Cybercommerce and community Internet allows large and even very small businesses to function in the international marketplace. Example: Amazon.com Bookselling was basically a local business until 18 months ago Now Amazon.com and others have radically changed the picture Amazon.com is the world’s largest bookstore, a virtual bookstore with over 2.5 million titles, selling all over the world 2 years ago, somebody in Urguay or Karachi or Palermo wanting a special book had to place a special order, probably wait for it for 6 weeks and pay at least 3 times the New York street price. Now the same person can order the same book from Amazon.com via Internet and get it in 2-4 days at New York street prices, even paying for shipping. Suddenly, the world has got a lot smaller as far as buying books is concerned
33	Cybercommerce and community Doing cybercommerce on the Internet A tiny French company that sells truffles Local specialty wine stores Candy stores Movie theatres Auto parts dealers Banks, big and little Specialty publishers Music companies and stores Software companies, of course ** services delivered directly over the Internet Their communities of customers are now International
34	But even this is stil just at the surface Looking deeper at Internet, commerce and work We ask What does it take today to succeed in business?
35	Traditional industrial companies Appeal to mass markets Make standard products that did not change Have rigid hierarchical organizations Focus on manufacturing Work on a production line basis Think in terms of their products instead of the needs their products meet Changed very slowly - are reactive rather than proactive Rarely examine themselves or what they were doing Do not fully empower their employees
36	Traditional industrial companies Focus on cost reduction Tend to appealed to older users Are loosing market share to competition See their competition as coming from traditional competitors, when it is really coming from new forms of competition that meet the customer needs. For example: Internet services are competing with newspapers Internet services are competing with retail stores Virtual corporations on the Internet are competing with traditional ones
37	During the last 10 years, large and small companies, to be competitive, have renewed themselves: Have adopted techniques such as Total Quality Management, Process Re-Engineering, Enterprise Integration, and Knowledge Management. Are knowledge-focused Are aimed at specialized and changing markets Focus on providing services and information as well as physical products Make customer-specific products Make small products lots or customize each one for a customer’s desires Listen very carefully to their customers
38	Renewed companies: Have flatter organizational structures that empower employees and are flexible Are accustomed and welcome rapid change Have flexible production organizations Use the latest technologies Are constantly in a process of examining themselves, learning, improving, evolving Are highly competitive and making money Are proactive, and often create their own markets
39	Renewed companies: Carefully track social and societal changes Focused on adding value instead of cost reduction Appealed to younger affluent users Are highly successful Work on the basis of multiple alliances, even with competitors See their competition as coming from other developments, not in their own industries Are highly competitive and making money This is all today, not just tomorrow - and they make many uses of Internet
40	The shift in industrial organizations - worldwide Long production runs Standard uniform physical products built to market forcasts Passive workers Highly centralized control Local or national scope Corporations Weak use of information technology Short or custom production Highly differentiated service/physical products Built to customer needs Motivated and empowered workers Widely distributed authority International markets Alliances Very strong use of information technology
41	Example of industrial transformation - Shoes
42	Example of industrial transformation - Shoes Old Paradigm Tennis shoes, sneakers Low cost commodity products Typical price $12 Success factor - low- cost manufacturing US shoe makers stopped being able to compete in the 1960s New Paradigm Sports and leisure foot comfort and power High price targeted products Typical price $50-$100 Succcss factor - marketing, meeting people’s lifestyle hopes US companies highly successful - Rebock, Addidas,
43	Example of industrial transformation - Shoes Old Paradigm Tennis shoes, sneakers With the flight of manufacturing in the 1950s, Boston stopped being the shoe capital of the US New Paradigm Sports and leisure foot comfort and power Making of shoes is outsourced to Asia Shoe companies are information companies Value added: shoes costing $2.50 are sold for $55. Boston is back as the leisure foot comfort capital again
44	Role of Internet in industrial transformation Short or custom production Highly differentiated service/physical/information products Built to customer needs Electronic mail and dedicated networks can allow constant monitoring of customer needs Internet research facilitates rapidly changing markets
45	Role of Internet in industrial transformation Short or custom production Highly differentiated service/physical/information products Built to customer needs Extranets can link producers, suppliers and customers, so a common information system can enable customized production Extranets can directly control production machinery Many new products are information products and can be delivered directly over the Internet
46	Role of Internet in industrial transformation Motivated and empowered workers Widely distributed authority E-mail offers a many-to-many communication channel facilitating team communications E-mail and voice conferencing facilitate operations of small decentralized work units
47	Role of Internet in industrial transformation International markets Alliances Very strong use of information technology Distance-independence of Internet communication facilitates international communications Internet facilitates operations of virtual corporations, based on multi-party temporary alliances
48	Role of Internet in industrial transformation - Extranets Extranets are private networks on Internet that extend beyond a single company to multiple organizations that must collaborate, communicate and exchange information, documents, and transactions in order to achieve joint goals. Companies now investing in Extranets include Caterpillar, National Semiconductor, John Deere, Olivetti, Sun Microsystems, Mobile Oil, McDonnell Douglas's, Marshall Industries, Lockheed Martin, as examples. Extranets make possible new industrial communities of companies worldwide
49	Role of Internet in industrial transformation - Extranets Many extranets are operated by third parties and involve hundreds or thousands of industrial members and users. Ex: Enterprise Integration Network - microelectronics & computers Dow Jones PowerHub, real time electricity trading systems linking power utilities Powerag, linking makers and users of fertilizers, pesticides and agricultural chemicals Partnernet - affecting thousands of wholesalers and retailers and changing patterns of wholesale distribution Virtual Emporium - uses an extranet to maintain a very large virtual mall on the Internet VHA Extranet - an alliance of 1,400 health care organizations, doing $8 billion in commerce a year
50	Role of Internet in industry and commerce - Summary Internet is empowering businesses large and small to develop their own communities of users internationally Thousands of new communities of industrial companies, retailers, and small businesses are already in existence and relying heavily on the Internet These are not things “the future will bring.” They are real now and affecting the business communities in the Basque Nation right now
51	Social, cultural and family development in communities and Internet
52	Social, cultural and family development in communities and Internet - some personal examples All kinds of detailed communications and information webs are being developed for local communities - e.g. for Wayland Massachusetts A town of about 5,000 where I live near Boston Many local stores, restaurants, real estate agents, auto repair garages, artists, and just plain people have webs The local community newspaper Several webs describe the history and geography of the town, with many photos, and show paintings made by local artists
53	"Wayland," Wayland, Massachusetts (continued) The web for the town government has very great details on all aspects - e.g. teachers in the schools and programs and schedules for each school and many individual programs School lunch menus Information on all town offices and departments Hours, people, responsibilities, and schedules you can see a picture of the man who runs the town dump and read his messages on the importance of recycling
54	"The Wayland web has highly..." The Wayland web has highly specific and local information that reinforces local community. It also has important national and international extensions. Actual example: A house across the street from where I lived is used to house executives and their families from Latin America by the Gillette company, rotating every two years - from Costa Rica, Brazil, Argentina, Venezuela, etc. Newly coming executives now learn all about what Wayland will be like for their families while they are still in Caracas or Sao Paulo
55	"The local community now extends..." The local community now extends internationally via Internet. Another example: El Universal of Caracas, our client, has long been Venezuela’s leading newspaper but they were strictly local, only sending a dozen copies out of the country to libraries Now, the newspaper on Internet has 50,000 daily readers most are outside Venezuela, and consist of students and Venezuelans abroad, and business people who what to keep track of what is happening in Venezuela. The community of Venezuela is now much more open to the world
56	"The local community now extends..." The local community now extends internationally via Internet. Thousands of examples can be found, many of which are very tiny. E.g., another personal one: Last year, my 16 year old son had to do a school homework assignment on Sigmund Freud He found the best information on Intenet sites in Vienna, Berlin, London and Washington This information from international sources helped him in his local community role as a student in Wayland High School
57	Social, cultural and family development in communities and Internet - some personal examples The local community now extends internationally via Internet. E.g., a final example Many years ago, I inherited a sculpture from my grandmother signed by a distant uncle, an Italian artist called Augusto Rivalta. It is about 100 years old. I could never find out anything about Rivalta, libraries and books on sculpture do not list him, even the great art libraries of the world. I could only remember vague things my grandmother told me about Rivalta.
58	Social, cultural and family development in communities and Internet - some personal examples (about my sculpture, continued) Two weeks ago, I searched for Agusto Rivalta’s name on the Web and found out from Italian city community webs that several small Italian towns have his sculptures in their town squares, and so does Detroit Michigan. I found biographic information on him, and pictures of his other sculptures The web and its international extensions have given me a better sense of my Italian heritage and who my uncle was, and something I can pass on to my children
59	What about Internet and the community of Euskadi? Two years ago, I found: A great deal of activity in the US, England, France, Germany, etc. Web search on the word “Basque” revealed 260 cite references Basque students in the US often include Basque links There is much available social, cultural, educational Basque information available Many Web pages are in the Basque language Now there is perhaps ten times as much Some of the 2-year old page images follow
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