© Michael Woodhouse. This article was written in 2002, so it predates Web 2 and the return to communication and information as primary values of the internet. Some of its comments have been superseded by new developments which have made business websites valuable and even essential. Nevertheless it is an interesting historical perspective on why Web 1 (the dot com web) failed. We can use is to contrast the very different values and success of Web 2 (the social web).

They converted the net into a shopping mall. I already had access to shopping malls. I was optioned, but not empowered. And empowerment is the essence of revolution.

The essence of revolution is empowerment. Revolution breaks barriers and allows new choices.

Steve Jobs announced the coming revolution when he promised graduate recruits to Apple that they would change the world.

And we were empowered.

"Desktop publishing" (on a Macintosh) literally empowered Yeltsin to bring the USSR and the cold war to an end. Worldwide, individuals and groups took up the power of publishing.

Companies were empowered to speed product development, track their clients and operate more easily on a trans-global scale. Many of our daily products exist and are better because of computers.

Scientists were empowered to explore on a scale not previously possible.

This was a revolution driven by late baby boomers. An optimistic revolution, with a significant streak of idealism that might be traced back to the wild euphoria of the sixties.

Then came generation.com and the hijacking of the internet.

Hijacked

The internet should have been the crowning glory of the revolution Steve Jobs foretold. It should have empowered us to communicate person to person, to share information and build a global community that would break down political barriers and hostilities.

But generation.com was interested only in sales.

I'm all for sales. The objective of my business is to help people improve their sales. But sales are not all of life. And they are not all of the internet.

Generation.com sold the internet to the boardrooms of the world on just one promise: reduce costs by removing people from the sales process.

The blinding lure of gold

It was a timely message, in a business environment focused on cost cutting and down sizing. So welcome a message, in fact, that corporate leaders wilfully ignored all they knew about business models, price to earnings ratios and the mechanics of making a sale to a human being.

The dot.com charge was led by those who hate customers the most (bankers) and they helped fund anyone who believed with them.

Back to the revolution.

Generation.com converted the net into a shopping mall. But I already had access to several shopping malls. They offered me a few more. My range of options increased, but I was not empowered with any new abilities. I couldn't do anything previously impossible.

The element of empowerment was removed from the internet. And empowerment is the essence of revolution.

Empowerment succeeds

Some 95% to 99% of dot.coms failed. As a believer in both free enterprise and consumer rights, I am gratified by this. Advancement of the best depends on the death of the worst.

The few dot.coms which have succeeded are based, to varying degrees, on empowerment.

Without an eBay style internet service, can consumers across a nation be brought together to auction stuff to each other? No.

Without an internet platform, can businesses track the progress of orders from suppliers while the materials are still in manufacture, and tie this information to production schedules, saving billions in costs (as the US car manufacturers did)? No.

The most conspicuous department-store.com "success" (if billion dollar share-value losses can be called success) is Amazon.com. Yet Amazon has built customer loyalty by providing services which conventional bookshops do not.

At Amazon, I can quickly find and review a million books. Not in a bookstore. More importantly, I can read reviews by other readers and learn what other readers with the same tastes as me are buying, which I am not. And this, I believe (as a reader and a customer) is the core of their success. It is this internet-only service which I value, because it helps me find what I enjoy. Other Amazon customers value it too, judging from the backlash to Amazon's short-lived plan to sell reviews.

(Bookstores could do some of the things Amazon does, but they don't, so the empowerment Amazon offers remains a net exclusive.)

Do what cannot be done any other way

Internet success comes from doing things which cannot be done any other way. If there is another way of doing what you offer, then you are not empowering your customers and – at least in the current phase of internet development – you will probably fail, if the internet is most of your business model. (More likely to succeed is a more modest aim of adding another option to a conventional stores model, rather similar to a mail order department.)

But if you enable me to do something – worthwhile – which I could not do before, then you have empowered me.

At the beginning of the 21st century clients regularly asked me if they should have an internet site. Websites were hot. Mostly my clients hoped a website will bring increased sales, though they didn't know how. They weren't proposing to offer something which was not possible any other way, and in the early years of 1999 to 2002 mostly I advised them not to bother.

Some clients did not like this advice and ignored it: to my knowledge all of them lost money.

If I'm sounding smug, that's only human after enduring all those dinosaur barbs from stellar young billionaires who scorned anyone unable to understand what they were saying.

There was nothing to understand. Flashy words and concepts in startling juxtaposition, but no meaning.

Service: the real key

As societies get richer they need more things to spend money on. The slow flow of desirable new things means they also need existing things to be more valuable.

Hence we have value adding, now absolutely central to competitive marketing success.

Brand is value adding. Warranty is value adding. Options are value adding.

But the most fundamental added value is service.

Service is the main value-add used by market sellers from Bangladesh to Brisbane and high-fashion jewellers from Paris to New York. Each is selling products similar to those of their competitors, in similar surroundings.

And service (for human customers anyway) mostly means service by humans. People who will acknowledge you, flatter you, listen to you, discern the needs you perhaps cannot even express, remember you, flirt with you, compensate for the social contact your job-commitment has destroyed, agree with you, inform you, excite you – and close the sale.

The single clear principle of the dot.com model was the elimination of people from the sales process.

Eliminating people from the sales process is value minusing. Take a highly respected industry (as banking once was), remove the people and instantly you have everyone's pet hate.

Interestingly, there is a sub-industry of dot.com devoted to the phenomena of shopping cart abandonment. They focus on the slightest nuance of operational difficulty in the websites interface (presumed to lead to micro-second frustration and abandonment), and do a remarkably poor job of it.

More than a quarter of a century ago a 70+ year old salesman who saw I needed help told me; "If you don't close the bastards, they walk out."

A website cannot close. Shopping trolley abandonment is a walk out.

Service and the website

One of the accepted measures of website success is how few service calls you get.

Many websites make it near impossible to contact them. They hide their phone number and bury their email address. If you find it, they demand to know your registration number or such before they will answer. Too bad if it's a sales call. What they really want you to do is go to the "help" section of their website.

Just as the advertising industry has redefined "exciting" to mean "typical", so the computer industry has redefined "help" to mean "brush off".

This is not an extreme aberration, it's the norm. Think about the software you use every day. How do you feel about the company which makes it? When you visit their website, does that make you feel better about them? Do you visit their website because you like to, or because the company has closed off other options?

Wouldn't you rather talk with a person?

When dot.coms decide they should improve their service, what advice are they offered? Easy, open contact, via email, fax and phone. And, the current ultimate, live online help, via the keyboard, with a human operator who tells you his or her name, just a mouse click away.

Why is this so rare? Because the internet model which generation.com sold us is anti-service. Its one clear goal is to ensure you don't get to talk to a person.

What web users actually want

The most common reason for using the internet is to communicate.

The next most common reason is to find information. Media attention on dot.coms has helped us forget what we could have guessed from our own behaviour: we want the web to be vast, instant library.

How generation.com hijacked information

The dot.coms noticed that people were turning to the net for information. They worked out that if you offered people information, they would come to your site. While they were there, you could flash ads at them and maybe they would buy something.

Thus was the greatest blow to the internet, when we were trained to expect that net information should be free and low quality.

Of course it was low quality, because it was presented with an ulterior motive and subject to pressure to minimise the cost of gathering it. The commitment was to getting you to visit a site – not to filling your information needs.

The web should by now have been peppered with thousands of specialist suppliers of high quality information. Sites where you would pay for information that was otherwise hard to access, or because it saved you time.

Being paid for the information gathered is the proper, honest business model, where the site owner is rewarded directly for filling the customer need.

And web-info sites could serve millions at cents a page. (For an inkling of how this might work, take a look at the Fairfax site http://newsstore.f2.com.au).

Now, thanks to generation.com, there is a barrier of expectation and attitude between potential information suppliers and the empowerment they could give us. We have to overcome this before we can get back to the start.

The aftermath

Over the past 18 months I've written five business plans for information based internet businesses seeking venture capital or parent company approval. All of them enabled uses of information not previously possible, targeted international markets and included a community component. Each was superior to any one of a hundred "new economy" (no business model) dot.coms that got funded in the preceding 18 months.

None of them got up. The problem, one of them told me, was that charging for information was considered "unproven".

It seems that boardrooms have recovered the financial circumspection they abandoned in the first dot.com wave. Generation.com hijacked the corporate spirit of adventure as well as the internet.