HA 102

12.3.97

P: Well, hello. We are at what you might think is the last day of the course, and perhaps for you it is, but it's actually only the penultimate day. If you can make it tomorrow, somewhat short notice, I realize, but there's been ...(inaudible) in negotiations to our guest, but tomorrow, from 4:10 to 6:10, we are looking to hold the session that we squirelled away into the bank I think the second or third week of class at the very beginning. And we can't use this room, the room will be determined -- the registrar's office is part of the tripartite commission settling the terms of this class, but as soon as I know anything I will e-mail it, probably tomorrow morning at some point. Their last bid was Austin North, which is a cavernous. It'll make me feel like we just don't have anybody attending the class.

Our guest then will be Jaime Boyle, who is a professor, a graduate of this school, I believe, a professor at AU, wonderful guy. He's the guy that wrote the book "Shamans, Software and Spleens." If you go to his personal website, James-Boyle.com, you will find there a whole bunch of stuff about him, including a very windswept photo, but also links to two articles of interest, one called ...(inaudible) and Cyber Space, Surveillance, Sovereignty and Hardware Sensors." He's very much into sets of three. And also his article, which was just a brief Op-Ed in The New York Times, entitled "Sold Out." These are basically some views on property control and content control on the net, and it's actually a nice way of putting together a lot of the stuff we had.

I think also Larry Russell will be here to kind of provide a nice counterpoint. It'll be one of those things where we'll try to see who agrees more with the other, but we'll do what we can to incite the vision between them and have it be of interest.

So that is tomorrow. Any questions about that? No, OK.

I'm still plowing through the one- to two-page issue papers, and with luck we'll have those to hand back tomorrow. If I don't, there'll be some lugubrious system by which they'll be available and you can pick them up or something, but with luck I'll have them tomorrow.

Other things. We have here the Internet Society Total Quality Management project. Please help future generations of seminar students. You know, when you go to like one of those weird seminars or something and at the end they ask you to rate every minute of the event? Like, what did you think of the coffee? This isn't actually down to that level of granularity, no pun intended, it's basically a chance to weigh in particularly on each of the sessions, and get a sense for what you liked and what you didn't. This one will not only be helpful if we do another iteration of the class next year, but also for the spring, if we're looking to do basically a forum of sorts, not necessarily for credit, but basically a similar format, bringing together people and guests of interest.

It actually asks for one of those crass numerical rating schemes. Do what you will with that, without taking it too seriously. We might as well get these going around.

I know there's been some curiosity after I sort of dangled this thing about John Postell and Iana (?), and I just today got, in classic Postell fashion, in Post Script format, which I just finally figured out how to print, no doubt a sort of security measure taken to ensure that only people somewhat in the know could actually read it, which is his latest, and I'd love to tell sort of a brief story to at least fill you in somewhat on what's going on with that.

And after that, we will proceed to talking a little bit about business models on the net. Stig (?) has graciously volunteered to put up the flagpole his business model, for which it's not merely academic to him, this is actually money in his pocket if it works and, no doubt, money out of his pocket if it doesn't. So any advice or thoughts you may have to share with him on that will no doubt be appreciated.

With whatever we have, we'll also cover some other business models on the net, and actually slide this right into the problem with SPAM, ...(inaudible) at the last minute, after leading us along for days. I do have the guy's home number, I've been calling him every night with various offers of things at two in the morning, and I'm keeping them in reserve. He's a very interesting fellow, it's too bad he actually couldn't make it.

We also actually got in touch with Lance Hoffman, a wonderful professor of computer science at GW, who, after Sanford Wallace also bagged on computers, freedom and privacy, the conference held annually, he also bagged at the last minute a panel discussion about SPAM for them. So they actually got Lance Hoffman to be Sanford Wallace, and, in somewhat questionable academic form, did not actually announce the switch to the crowd, so afterwards there were plenty of people like really harassing Lance, thinking he was Sanford Wallace. As he gleefully sat up at the panel, about every two seconds he would just interrupt and say, You know, while they've been arguing about things, I just made another $3000 on -- he's the most smug guy you could ever expect to see.

So anyway, he too expressed interest in coming, but we thought, so long as we disclosed the switcheroo, it may not be the best use of our time. We may yet see him, though, for whatever forum we do next term.

Also, given the dwindling time we have left, and the fact that with both Larry and Jaime here tomorrow we may have very little time to actually talk about paper topics, I would love to leave some time for that. Is it sensible now to just get a straw poll if this is of use to people? Are people -- the rumblings I've heard one-on-one is that people really want to talk about stuff. This may be kind of a somewhat daunting venue in which to present ideas, but ultimately a helpful one. Are there people who would love to share something or other, sort of new business on the agenda? Oh, come on. Meg?

Meg: If anybody's interested, there's a great survey in Wired this month of users of the Web. It's supposedly the first really scientific, whatever that means, survey that looks for some kind of profile of people who are more connected as opposed to less.

P: And are there any surprises to it?

Meg: Well, it was a little interesting, given Andrew Shapiro's discussion, because what the survey indicated, and I was unfortunately only able to skim it because I ...(inaudible) computer anymore, but the basic message seemed to be that, in fact, citizens of the Web are much more politically active than the average citizen rather than less, and they are much less isolated than your average citizen, that a lot of the sort of discussion that's gone on about how the Web is going to create these islands that people will live on without any kind of human contact is completely the opposite, if anything.

P: There's always a sort of very distinct kind of souffle falling, a wonderfully elegant theory falls victim to a few hard facts. It's like, Oh, it would have worked if only it'd been true.

__: The survey looks kind of flawed in ways. It doesn't look like it corrects for wealth, and it's kind of blatantly --

P: Is the survey on line?

Meg: I don't know, because I don't --

P: You don't have a machine. Is the survey on line?

__: It should be.

P: We could spend about a year, actually, hunting around for it.

Meg: Isn't that Web version Hot wire?

P: It sure is, but --

__: It's -- I don't think the put the ...(inaudible) online.

P: This gets into business model. Look at our used goods.

__: They give you highlights. Like, they send you a point cast that you can jump over and see.

P: They should print the articles but just leave out the vowels, so you have some kind of way of making you want to get the print run, but -- Well, we're still, of course, waiting for a reply from Hot Wire, so we'll leave that.

A couple of things on domain names. As I mentioned before, I actually was giving a presentation at the Kennedy School, which some of you actually attended, on domain names, borrowing generously, and with acknowledgements, from Dave Clark (?), and whenever anything came up for which it sounded like I was wrong, I said, Well, that's what Dave Clark said. But it was actually a very interesting time.

And in preparation for that, I was thinking, you know what? I mean, the true scholar, or at least journalist, isn't just going to go on hearsay, it's time to call John Postell and basically just ask him, Do you really love the internet?

So I did that, I called him up, had a great chat with him. Basically everything Clark told us is true. Postell went to some pains to try to describe the relationships, particularly between him and network solutions and internick, and it was pretty much as vague and as bizarre as was described. And the nature of that relationship will be tested quite soon.

The one thing he did correct that was somewhat of a misimpression, or maybe it's not an exact description from Dave -- Remember, we found out that at some point there's the root zone, there's the root server, and this is the server that will tell you where dot.biz can be found and where all the names filed under dot.biz can be found, and right now, of course, they can't be found anywhere because there is no dot.biz. There are only seven, or if you count it strangely, eight top level domains that are generic, plus the 160 some that represent the individual countries.

Another interesting thing that actually happened was, with the fall of Zaire and the change of its name to the Democratic Republic of the Congo, all of the .zr addresses became .cd addresses, and people have already reserved jazz.cd and cheap.cd, and otherwise taking advantage of the new country code that somehow reminds them of something else. This, of course, is ...(inaudible) or his progeny will not return, and we name it Zaire, in which case it's jazz.cr. So that was actually quite interesting, what's going on there.

And actually Postell's comment on the whole thing was, yeah, boy, when we were trying to figure out these country codes, somebody said, You know, I think there's an ISO about this, International Standards Organization, I think they just publish a list of countries and handy two-letter abbreviations, let's just incorporate that by reference. And that's what he did, and said, Boy, is that a relief, because now I don't have to do foreign policy. It doesn't say Zaire until ISO says it says Zaire. And that's how he knows it's time to change the two-digit code, and nobody can blame him for politicking or favoring one of the freedom fighters over ...(inaudible).

So, anyway, that all being the case, we have this root zone, which is actually quite small, it just has the country codes and each of the top level domains, the busiest of which are all run by NSI. Now, to hear John tell it, John says IANA, i.e. I, am responsible for the root zone, I'm the guy that tells, who says what goes in there.

Now the thing that Clark had said was that physical custody of the root server was with IANA. As it turns out, because it was sort of inconvenient to keep a computer up 24x7 with this, John a while ago asked NSI to actually sort of husband the root server, which they do to this day, and under the possession it's nine-tenths of the law sort of theory, it's now actually unclear -- I mean, if somebody wanted to create .biz, NSI could do it, they're the ones that have the machine that the other machines listen to right now.

Now, John says the understanding, though, is any time he wants to add something new, if he calls them up and tells them to, the relationship has it, that they'll do it. Now if they say no, it's unclear whom he can go crying to. But that's the idea.

And as some of the proposals can emerge, one from NSI about what to do with the domain ing problem. NSI's solution surprisingly favors NSI as a way of maintaining domain names, and actually, in the fine print, calls for the abolishment of IANA, an organization that has served its purpose and can be banked and dispatched now.

IANA has now come up with a proposal as well, which, you can imagine, would not look that good to NSI, and the proposal emerging from that Geneva conference, the GTLDMOU, also doesn't look so good for NSI. And the way Postell tells it, the real conflict is going to happen when the people behind this 'MOU say, all right, we have enough signatories, we have critical mass, it's time to implement it.

And what that means is, these extra top level domains that the MOU calls for, like .nom for banding name addresses, and some other ones like, I think, .art and .rec, things like that, it's time to make it happen. And at that point they'll call Postell and say, OK, make it happen, Postell will make a decision and then call NSI and say, Make it happen, and at that point NSI will actually decide whether they want to rebel or listen to Postell and go ahead and add these top level domains, even as they will not be the executive agent for filling the top level domains.

Does this make any sense? Questions on that much, or thoughts, comments?

__: What is NSI's proposal?

P: NSI's proposal is basically free market all the way, let's have a lot of people registering names, but unlike the MOU proposal, which calls for lots of people registering names, they say each person will get an exclusive, each registrar will get to do all the registrations under a given top level domain.

So if we create .biz through some lottery or some other process, we will pick -- Molly is going to be .biz person and everybody in the world that wants .biz has to go to her, and, under free market terms, negotiate terms with her for .biz. And, of course, all existing domains will be grandfathered to current people who run them. Which is to say that NSI continues to run .com, .org., .net., .edu, all the domains that everybody seems to like right now and that seem to have some precedence in the network, particularly .com. As we saw, you can type the thing in the Netscape, not bracket it for WWW.com, and it takes you to the .com site. So it basically gives NSI a wonderful head start at the names.

And, you imagine, once you have an investment in your domain name, and you've only leased it for a year, if NSI decides to triple its rates, you still may think a lot about switching it elsewhere, because suddenly it's like rebranding your entire thing. IT's like 1.800.flowers suddenly finding that the people who go on 1.800 numbers are charging too much, so they're going to change it to 1.775.flowers. I mean, that could be a huge burden to them to do that.

And in terms, also, of signing people up like a lease, rather than you buy the name and you've got it, NSI, actually, when you buy the name from them, they charge you upfront for two years' worth of the name, despite the fact that we know that their contract expires in March, several months from now, and that NSF, the science foundation, which is on the other end of the contract, for reasons that still aren't entirely clear, says they don't want to renew it.

So it's actually a wonderful legal case to imagine this organization actually saying, No, no, you can't just pay through March and have us turn on your name, we want the entire two years upfront, in our kitty, before we will actually release the name for you. And that seems like a wonderful class action lawsuit waiting to happen, as they are sitting on a pile of money to the tune of one million registered domains at a hundred bucks for two years, $100 million paid upfront for services that will lapse in March under the current contract.

So this is, I think, part of what Dave meant when he said people are running for cover right now. It's a very sort of vivid metaphor. Yes?

__: What do they do with the money, though? ...(inaudible) Is it expended for ...(inaudible)

P: I believe they sort of save it for a rainy day. They throw conferences, they have nice offices, and they're going public, if they can. The idea is to actually make it a publicly held company for which, I suppose, that will be part of the capitalization of the company.

__: Who owns the company?

P: The company is a sub-set of SAIC, Science Applications International Corporation, headquartered in suburban Virginia, and they do a lot of consulting and otherwise stick their noses into people's business.

__: So it becomes a private enterprise.

P: It's already a private enterprise, it would become a publicly held private enterprise instead of just a privately held private enterprise. Gene?

Gene: ...(inaudible) said about this. Like they use 3o percent of ...(inaudible)

P: Let's see actually if Hot Wired has even answered us now. Hot Wired actually wants us to take a survey. Let's just tell them we want the site instead.

__: Is there a reason it's not up there?

P: We turned Mirrorene (?) off, but let me turn it back on. And it's probably still not very visible. We can set the lights appropriately. The hazy logic of a toke fest. Interesting. Now, finding this survey might be quite hard, right? Maybe there's somebody else who wants to care to look for it while we keep plowing ahead. We have a winner. Why don't you try to track down the survey. Meantime, we'll put the lights back up and keep going.

So John's next step -- I mean, John is facing a wonderful dilemma right now, John Postell. Here he is, he's been kind of the man for the longest time, hasn't been seeking a lot of money out of it, but IANA has sort of been at the intersection of a lot of these issues, and many of the current proposals floating around out there countenance IANA's non-existence. And IANA has also been told, for what meager funds it does get from the government to basically run the Xerox machine and fill up the toner, those funds are going to go away.

So John is coming up with a plan to have a self-sufficient, non-profit IANA, incorporated as a 501-C3, or maybe a trade association or something, under the Federal IRS code, and incorporated in California, around Los Angeles. And he's been playing around with different proposals as to how to make that work.

One of his proposals just had to have been written by a letter. You plow through it and there's like various committees and boards and councils and they all sort of come together in a great ...(inaudible) fest fuzz. But the general idea would be, there'd be a steering committee of engineers who run the thing, people who know the ins and outs of the net, the usual suspects, who keep changing their name every so often, the way Dave Clark tells us: the internet engineering steering group, the IESG, the task force, and the ISOC, and all these groups will somehow have a piece of this action and be on it and support it.

And the companies will be asked to pay a yearly affiliation fee and somehow be a part of this new IANA. And when they pay their fee what they get in return is unclear. An early iteration had that what they would get in return is the ability to nominate but not actually select, merely nominate the people on the board of IANA, and once they nominate the people on the board, the engineers get to elect among them.

I said, what if they only nominate one person for each slot? He said, Well, they wouldn't do that. So, there's some new language in there, actually, saying that they shall nominate at least three people for each slot.

But another thought was, well, maybe they shouldn't be nominating people for slots at all, and then you have to figure out, all right, well, what else do you give them? One thought was, well, maybe we should have a big party once a year, like the kind of IANA conference, and if you want to kind of network with the real people of the network this is the place to me, and you kind of get a special table at the front of the room if you have paid for IANA.

And Postell, of course, is shaking his head at this kind of nonsense, saying, like, this is not what I'm here to do, and at the same time is really trying to balance between a need to get money from the private industry and a need to hold himself out and be a kind of non-partisan, neutral, non-profit organization.

So I will again seek permission from him to circulate this draft. In fact, given the interest we've had over that one class I'll try to walk in tomorrow with just a stack of Xeroxed IANA plans, if I can get Postell to part with it, and maybe even see it as a chance to give feedback back. I mean, this is like a guy who -- you think somebody should be changing the document, he'll change it. I mean, it's not like a heavily bureaucratic process. So this really is a chance, for those who are thinking, I know how to solve this problem, to actually get it into the mix.

__: This is the December 3rd issue, but it doesn't have it in where it would be. So I'm looking in the archive, but I don't think it's going to be in there.

P: OK. Well at least we have a different kind of witness to the survey, so they don't think --

__: I didn't make it up, I promise.

P: Exactly.

__: I wondering, did he mention to you anything about reservations he had about the new system that was being ...(inaudible)

P: He wasn't that upset with the MOU, he's not wanting to affiliate with it so much so that if it goes down he goes down with it. So he's still staying distinct from this MOU that came out of the Geneva thing. But basically, he likes it. The MOU contemplates somewhat business as usual at a few more domains. If you look at the composition of the, I think it's called the COR, Council of Registrars, basicially the group that will start running, take over control of the top level domain. IANA has four seats on it or something. ...(inaudible) is one person, how can you take four seats? It just has four votes.

But there's every reason for him to be fairly pleased with the MOU and want to see that happen, and for NSI not to want to see it happen.

__: Did he mention his reservations on ...(inaudible)

P: No. Basically political ones. NSI wants to take him out, and the way he sees it, it would just be an unfair monopoly to hold private interests, rather than to the internet at large. It wouldn't be ...(inaudible) to show for public interest, it would be a bunch of business people.

And note that the MOU still has lots of registrars, but they don't get an exclusive on each top level domain. Any registrar can register new name.com so long as no one has already registered it. There's some central repository, maintained by the IANA-like council, that actually keeps track of who has what, not just the top level domain assignments.

So I guess that's the latest scoop on domain names. I've actually got lots of extra time next week, if people want to come by or otherwise talk about papers and topics and things, so it's probably a good idea actually to call ahead or e-mail or something ...(inaudible) the time, but I should be around, there should be plenty of time to be had.

So that being the case -- Tim, you posted something on the nucleo site about domain names. Do you remember what it was?

Tim: I just remember I was reading about a new proposal but I didn't have a new proposal, so -- sorry.

P: That's OK.

Tim: John Postell has a new -- There's a big article by John Postell on the new proposal. I thought you had the new proposal.

P: Yeah, so I hear. Yes, I do, I have the new proposal.

__: There's a cover story on Interactive.

P: Is that right? If you could actually post the URL to our site, that would be great.

__: This is a magazine, I think. I'll bring it in.

P: That would be great. One other administrative note. There was some interest among us in basically some people doing version 2 of our nucleo site. The president, or I should say, the former president of ...(inaudible) Levin Productions Inc., which made Nucleo, and was since eaten whole by Dream Media U.S. Web, he will be in town next Tuesday and wanting to talk about what to do with this site, and I would love to organize a meeting with him or with anybody from this class who wants to talk about the site and what they did or didn't get out of it, or what they think of it. And if you haven't used it too much, it's not too late, in a week's time, to actually go and play with it and get a sense for why you didn't use it all along. It would be great to have you available to meet with him. Maybe that would make sense as a lunch meeting.

__: Could we e-mail any comments? I have an exam Tuesday and an exam Wednesday.

P: Sure. You could also e-mail, or even better, post them in Nucleo, post them right in our room. And as long as some ...(inaudible) doesn't mysteriously happen to disappear, we could all read them there. Can I just get a straw poll, how many would be interested actually in having lunch with the guy who did our Nucleo site and could do our next one, next Tuesday?

__: Did you say Tuesday or Wednesday?

P: Tuesday. Class. Exams. It's going to be me and him, in Austin North. If you have a chance -- I'm trying to be as sensitive about exams as possible, particularly -- you might have noticed rather light reading assignments recently. This has been intentional, not just like ...(inaudible), this has been ...(inaudible) to give you a break, and also to give you all that extra time with papers.

With all that said, Stig -- you've got the URL, right, you're ready to show some stuff off, correct?

Stig: Sort of.

P: Let's turn the show over to you. Do you want to start just by talking or do you want to get on the machine and show and tell?

Stig: Both. I'm going to do a quickie. Let me make sure I can get it up, because I've actually never accessed this site from a Macintosh.

P: I was able to get to it from mine.

Stig: You got it?

P: It should come with a better password than just a bunch of bullet signs.

(laughter)

Now this is not live, right, this is just basically the site under construction?

Stig: No, it's done, it's just not published yet, for reasons I'll explain.

P: Wonderful. Let's dim the lights just a little more.

Stig: I quit my job last summer and started a company called E Mitch Incorporated -- put the lights back on, Jack, because I'm going to draw a picture of this thing first. So what I'm going to do very quickly is tell you what the business is, and then tell you what -- I'm going to draw you a picture of what goes on in the background of this site and several others that we're building like it.

The mission of the company is to launch sites dedicated to niche collector markets on the internet, so these are the people who collect stamps, coins, comic books, sport cards, model trains, knives, the works. These are traditionally very inefficient markets. I don't know if there are any collectors in here, but you end up going to trade shows and specialty retail stores. Buyers can't find sellers and vice-versa.

So the business concept is to set up market making transaction facilitating sites for these niche markets, and also community building sites, where buyers and sellers can interact, and to do a whole bunch of them. They all have very similar dynamics.

And this is the first of a series of sites in that business for collectors of vinyl records and hard-to-find CDs, and I'm going to show you the site, but what you see, any time you look at a commerce site, is just the tip of the iceberg. So I actually drew a picture, over lunch, of what goes on in the background, so I'm going to draw that up there, because that's really the interesting part.

There is a bunch of sites. Right now, you're looking at one of them, you're looking at this one, which is an HTML front end that customers can interact with. They come in off the Web to look at a site like this. In the background of these sites, there's a database that runs, which is in this case a Sequel Server database. It could be an Oracle database, but it's a large database somewhere in the background.

When collectors come into a site like this, you'll see, I'll talk you through these, they can post ads, they can run auctions, they can search and query, they do a whole bunch of things.

But there's a bunch of functionality that goes beyond this and interacts with an application in the background. So they can post, they can edit, they can search, they can bid, and they can register.

All of that happens through a program called Confusion, which is a database integration software that lets something like this, which is just HTML, actually submit forms and interact with the database in the background.

Now, when something gets bought online, either because someone orders it or because someone wins and auction, there is a sort of transaction facilitating process that begins.

So if there's an order that goes on, a whole bunch of things happen, the first of which is the credit card clearing function -- I'm not going to draw this because I'm out of space -- but basically, the buyer's credit card will get charged, and that gets done through, in this case, Cyber Cash, which is one of several on-line point of sale credit card processes. And they then talk to Bank of Boston, and money gets deposited in the company's account over there.

Simultaneously, an e-mail will go out to the seller of the item, the person who actually holds this, to ship something like this to -- let me just catch up. There's the credit card and banking function here that's automated. And then there's a shipping function. The seller gets notified to ship, and he ships this to E Mitch's warehouse, this is my warehouse, over in Brighten. The product comes into me and I send it to the customer, with an invoice and a refund policy. They have a finite set of days to return this thing if they don't like it. Assuming that refund period lapses and they're happy with the product they get, that payment gets forwarded to the seller less an 8 to 15 percent transaction fee.

What's happening here is, it's what a lot of Websites now will call escrow services. Basically, when market-making sites buy and sell stuff they hold the money in escrow until the customer is happy. In my case, I also facilitate shipping, the product actually comes in through me. That's because there are real fraud issues in this market and I have to manage fulfillment really tightly, because with stamps and coins and all this schlock, there's a lot of fraud in the market, and there are unsophisticated buyers and sellers also. But there are sites out there where this shipping will happen directly from buyer to seller, and the intermediary firm will just monitor it through UPS or FedEx. I don't do that.

And then the last arrows is, if there's an advertising function here to drive these collectors into the site, and that's mostly online marketing and use net groups and Websites and so on, and this is where the real investment needs in this business are. There's a sales function here to go out and talk to the leading retailer and dealers in collectibles and to set up data-sharing relationships with them.

So in a case like this, you all might have noticed that there are vinyl dealers up and down Mass. Ave, and the trick is to go in with these guys and explain to them that I can market them on the Web, and then actually upload their data once a week, and that literally means going out to them with a sales rep. and holding their hand and then getting their data from them once a week.

So that's what happens in the background of this, is basically this is the whole market mediation transaction facilitating credit card clearing infrastructure here.

And these systems here, there's no technology risk in them. All this can be done, but it is an integration effort, because there's a database application here, there's Web technology here, there's a lot of EDI and Cyber cash stuff over here, and there's automated e-mails, and so on.

So engineering-wise, it gets pretty complicated because to do this right I need each of these sites to get north of a million entries on them, because then I reach a certain critical mass and become the definitive product exchange, and there's all sorts of strategic value in that.

And so if you start to run multiple sites in one of these databases, it becomes an enormous mass of data that you're handling.

So that's pretty much it, that's the background. So what you're looking at here, then, is this first site, and I don't know how much you guys can see. Basically, the features are described down the left hand side here, for music collector. I probably won't take you guys in too far to this because it gets cumbersome, but on the for sale ad side, if you are a large vendor and you have an inventory of 30,000 records, my sales reps have talked to you, and that data's uploaded there. But if you're an individual and you want to actually post ads of stuff that want to sell -- if you have a collection of 10,000 vinyl records and you want to get rid of them, you can go in there and you can describe them, and if it makes sense I can take you guys through that. But you basically log in, you register, and then you manage an inventory account, where if you have an Elvis record from the sixties, you'd describe the artist, the price, the title and all that, and the label and condition, a bunch of data fields that you enter about these records.

And they are then searchable by the people who traffic the site, and when they find what they like they can order it, and this whole process gets triggered.

Want ads -- this is not transaction enabled, it's just an opportunity for people who've been searching for, like, the late seventies release of the Go-Gos or something and this is something they need to complete their collection. They can express an interest in that, and have sellers contact them.

By the way, these guys, folks, these collectors, there's about 150,000 serious collectors in this country of vinyl records, they spend $2000 a year on this stuff, they have collections worth about 50 grand -- I mean, they're truly fanatics. They read trade magazines, that's normally what -- they subscribe to stuff like Gold Mine and Discoveries, and that's how they get their information. These are 100-page trade magazines that come out every two weeks. And this repeats in stamps and coins. Go ahead.

__: If someone places a want ad, someone who has that -- someone's reading the want ad and they say, Oh, ...(inaudible), they can just e-mail them directly?

Stig: Exactly.

__: You don't make any ...(inaudible) from that, right?

Stig: No.

__: That's just --

Stig; That's a referral service. All the money's really made on the for sale ads. These auctions here -- I don't know how many of you guys have tinkered with E Bay or On Sale or any of the on-line auction houses, but the technology is there now. We built this system ourselves, where you can now buy it on the shelf, where I can get on line and describe an item and set a minimum bid, set a starting and closing date and the whole nine yards, and this system will then pop the auction up on the start date, it will accept bids by e-mail. It then sends confirmation via e-mail to people who bid, it notifies people when they've been outbid, it notifies a seller when the auction closes, it tells them where to ship -- the whole thing. It just runs. And it's highly automated. It's pretty remarkable.

And that, too, is a transaction model, and once the auction closes I manage that whole process.

The newsgroups here, they're basically newsgroups. With volume, I would run chat rooms also, but these guys love to talk to each other. Places to go: In here will be interactive smaller databases of conventions, retail stores and weblinks, so that if you had that store on Mass. Ave, you can describe it here and people can find you. Same is true with people who manage conventions. I don't know if you guys have ever been at vinyl conventions, but they run every weekend in Boston, and it's like at the Ramada Inn, and you go in there and there are guys with bins of vinyl records. And there are people who manage these things and advertise them, and same with Websites. And again, there's no money in this, it's just meeting the full sort of community and information needs of these guys.

That's it. The challenge here, to make a business like this work, is to reach critical mass on the transaction side. Because it's a highly inefficient market right now, even on the Web. There are hundreds of Websites out there, mostly retail stores who are up and running, and there are even some firms trying to be market-making entities in all of these niches. But there's an investment requirement to go out basically here and get these vendors on board, and then to reach critical mass. But if that happens, you have a great deal of staying power, because buyers and sellers will flock to something like this, like they do a stock exchange or an airline reservation system.

There's also synergies of running a bunch of them together on a single technology shipping platform, because this is mostly a fixed investment.

These five niches -- this is big business, guys, it's really remarkable. These five alone, if you just look at the people who read trade magazines, is multi billion dollars in the U.S. And the guys who collect stamps, it's like a billion dollar market, it's enormous.

__: Is there money ...(inaudible) putting ads up on this?

Stig: Could they put ads?

__: I mean, are you --

Stig: No, everything is free here. It's a fully --

__: I mean, you said you use critical mass, would you advertise for related products? I mean, new CDs, for example, or something like that?

Stig: I couldn't begin to do that. I wouldn't rely on that. I would sell banner ads, but it's very hard to make money on those things. And I can layer in all sorts of ancillary products, like selling price guides.

__: How about selling new data, selling your data?

Stig: To?

__: Whomever.

Stig: I will have a great deal of customer information. When people register here, I track -- there's an administrative side to this site, which I can draw in, which is a chance for me to sort of manage access to this site and data on the database, and a chance for me to do customer service call center stuff, when people call in they have it. So all this data is accessible and manageable, and I track a great deal of it. So by user ID, I will have every artist and title they posted, if they want to sell, every one they requested, all their auctions, I know what auctions they bid on.

__: Can you show some screens on that?

Stig: Sure. Let me actually take you through -- I can show you the administrative side of this, that might be interesting. Let me just finish that sentence. I will track all of the activity on this site, including what they bid on, what they searched for, what they post, what newsgroups they participated in, not to mention the stuff I gather during registration, like their preferences and where they live and so on. And that information itself I could sell, but it also breeds opportunities for Asian (?) technology, either really sort of high-end sophisticated stuff like Firefly, where there's intelligent agents that match buyers and sellers and so on, but even just hardwired stuff. Like when someone posts an auction for an Elvis album, I've got a script that finds every user who's requested one in the want ad section, and then they get an e-mail. It's really simple stuff to do. But there's a great deal of leverage in that. And there's real audio possibilities here also, down the pike, which would be in like version 2 of this.

But this is an admin. section of it. This gets real ugly because this is nothing that anyone would ever see, except the need for running it. But I can locate users here, I can look at their registration information, and then I can manage all the sections and sites, so I can delete wholesale ads filed on a certain date or by a certain user, I can change auctions around, I can really manage access to the whole thing. And I can also upload bulk ads from these retailers here.

And this is managed -- I don't know -- this is sort of what the guy on the phone looks at. There's a shipping part of this, too, where they can tell when somebody's bought, sold, where in transit the thing is. I don't know if any of this interests you guys, what you want to look at, but if I wanted to find a user, for example, I can just search for them. And here are the people who are registered on the site right now. And then I can go in, and I have their user IDs, and then I can use that information to search for what they've done. So, my mother's in here somewhere. There's my mom.

P: You're making lots of money, it's just all from your family.

Stig: No, this is all just sort of test drivers of this thing.

But I think, standing back from this, folks, this is a transaction -- back to the business model question -- this is a business set-up to make money on transactions. I won't make money on advertising, I don't plan on it, or on subscriptions. It's to be a market maker on the Web. And that's different.

I mean, if you think about the way people make money on the Web, there are people who are market makers out there. Some of them do transactions fees. Most of the models you see, which are just direct sales models, like Amazon, they make money because they can dis-intermediate the market and take middlemen out, so a lot of people are doing that. The airlines do that, the stock exchange sites do that: they dis-intermediate the traditional supply chain for this stuff, and then they just sell the regular product.

This is a market making transaction model. There's the advertising model.

P: I'd say time out, right now. Let's say you all are on the board of a venture capital firm, and you came into work late, so you're not sure exactly what's going on, but you came into the conference room and you got the first five minutes. Now, of course, poor Stig didn't intend this necessarily to be the high venture sales thing, but right now you're thinking, My god, let's start investing in this thing, if we can get some equity in this, this could be good.

__: I have a question about repeat players. It seems like the people in the newsgroups who are talking to each other all the time are going to get some level of credibility with one another, and therefore they're not going to need the verification stuff that you're offering.

How are going to avoid losing people as they get to know each other through your site?

Stig: I can't really prevent that, but there's a couple of reasons why I'm not worried about it. First of all, I can -- if I took you into these data -- these transaction sites here, right now, you can see who you're buying from. I can eliminate that and blind the buyers and sellers. I don't need to do that, for a couple of reasons. One is, they get a great deal of benefit out of using this site, because I can enforce a uniform refund policy and their refund rights and all of the managed shipping that comes with this. And they don't buy from each other very often, because these are highly dispersed inventories, there's thousands of retailers and dealers out there, and hundreds of thousands of individual collectors.

So if you're collecting girl punk bands or something like that, you transaction 40 times a year, and very rarely the same person, number one. And then secondly, the added shipping that I have here is not that expensive. The bulk value of this stuff is low. It's a light product that's very valuable, so it's sort of well-fit for shipping, and the fact that it has to come into me and then go back out doesn't really matter that much. It's not like shipping furniture, antiques, or something like that. Most of this stuff goes for about thirty bucks, but some of it's up to like 50 grand. I wouldn't see any of that, but there are early Dylan albums and stuff like that.

__: Because you're dealing with used goods that have a certain deterioration ability to them, especially like stamps, not necessarily so much in records and coins, although records as well -- I mean, how are you going to verify like quality? I assume all these buyers are really concerned with the quality of the album they find, or the CD.

Stig: That's very true. And there are rating schemes that have grown up. Mint Mine is very good. There's a whole vocabulary about describing the condition and the format of this stuff, EP versus LP. Even the label matters: that it was really produced in the early facility of the Blue Note record label, not the later one.

So there's a great deal of information that has to go --

(end of side A, tape 1)

Stig: But that's why they're well-suited for the Web, because disseminating that information is really easy. They do transact, remotely, through trade magazines. Seventy-five percent of these guys do that, they have to, because they can't find it locally.

P: Would you take steps to actually verify that it's a, you know, a minus recording, or a plus one?

Stig: No. But what I have done is I take out any incentive to cheat, because every conflict is resolved in favor of the buyer, always. And so there's no real incentive for the seller to cheat. If the buyer doesn't like it, he just gets it right back.

But I don't want to get in the business of -- no, I don't. But I just have a uniform conflict resolution policy, and that helps them a bunch.

__: In the same vein as that, though, where you're dealing with, say, stamps, or something that's really highly valuable, like $100 ...(inaudible), and it comes to your warehouse and you send it out to the client and the client sends it back, are you going to have to insure yourself that the buyer doesn't, say, damage the product before saying, this is damaged, send it back to you?

Stig: There will be some problems with that, definitely. So it's sort of like a bad debt line in any business, there's no question about that, and it'll be some fraction of the cases. I can reflect it in the pricing, fortunately. I can bill back to that seller the actual shipping costs, and so on.

There are going to be some problems there, they're manageable, I think. It's just something I have to manage. But definitely, there will be some fraud types out there.

This is when you search for these ads. You can search by artist, title, format, genre, all that stuff, and then this is what you get back. There's a list of -- these are just sample things that are in there. I think I put something in by ...(inaudible) actually, hold on a sec.

P: See if that's in there.

Stig: There you go. (laughter). It's a really rare album by ...(inaudible).

P: It's not that rare.

Stig: And so then, you can get the full information this thing.

P: Did you do that just for today's class?

Stig: I did that this morning.

P: Oh, good. OK.

Stig: Every time I meet with an inventor I put something like that in there. And then, you can read all about, your question of the label, format, conditions, and all the shipping conditions and all that.

And then, for reasons I won't go into, it's set up right now so you e-mail the person selling it, but that's because I was thinking of launching sort of a baby version of this. But in practice it's going to be an order. It'll say order here, and then you enter your credit card.

__: I have ...(inaudible) question for you. One is, ...(inaudible) the same problem with shipping back. What's to stop me from saying I want an early Dylan album, ordering from you, either exchanging it for the old copy I have that's scratched up, or taping it and sending it back?

__: It's the cost of doing business, and ...(inaudible) kick them off the site.

__: The other question is, what happens when you get an illegal album posted? Are you doing a don't ask, don't tell, I don't know anything about it?

Stig: I have an overt -- like I don't traffic in bootleg, but it's up there, it'll happen, and I'm going to police that pretty carefully because they're starting to crack down on that.

__: So you are going to be actively policing that, you're not going to take the ISP ...(inaudible) traffic coming through your --

Stig: No. I take that in other legal issues. I claim here not to own any of this stuff and just to be an agent ...(inaudible) buy and sell, so I don't have any warranties associated with this stuff. I don't do sales tax at all, that's up to the buyer and the seller to figure out, and their contract issues, and so on. But at least my ...(inaudible).

__: How ...(inaudible) keeping this thing going? I mean, how many people do you have working for you now?

Stig: Right now, I'm basically -- I had four people working for me this summer but I let them all go, I decided not to launch this thing. I need to -- I've talked to a bunch of inventors, so I need to find a partner, an engineer, to start this with, because that system is a big challenge, and if I can get an engineer on board, then I can raise money.

Now, when you rig something like this up, the engineering staff, there's like six people working there. And there's some people on the sales stuff, that staff is variable. But the economics of a business like this are ridiculous because there're almost no variable costs at all. You invest money in building a system like that, and you have a bunch of variable costs on the sales side. The advertising stuff's mostly free, because it's digital. And then you just have a bunch of servers running. I don't even own the hardware. I lease the servers.

And I can just tell you that the economics of something like this are unprecedented. You talk about margins in the business. The free cash flow margin on an individual niche like this is like half of your revenue, once it gets ramped up.

__: So, what's the ...(inaudible) number.

Stig: I want to raise between one to three million dollars for the first twelve months, and then get a third round after that. I borrowed money to get this far, from my family. But I can modulate that, depending on how many sites I launch. But none of that's going to happen until -- the money's there, the trouble with this business is finding an engineer and getting the management put together. So if anybody knows somebody at MIT, in the media lab, who's about to graduate and has a good risk profile, let me know.

P: So, basically, you started this yourself, you have a great idea, and you started mapping out how the thing would actually work, and then you went ahead and you had the site built, right? So you basically found some people to build the site for you. How did you find them?

Stig: Word of mouth. I found three guys out of BU that started it up. And actually put my legal training to work there. I wrote my first contract. And they were late and all this stuff, but they got it done. And they were cheap. And I had plenty of time to work with them, so I worked eight hours a day with them. And it was a great learning experience.

P: So there was a real design process, that you were totally over their shoulders.

Stig: Yeah. I drew out -- there's 150 pages here and I mapped every one of them, and wrote the text. That's what takes the time. You can get a digit-head to sit down and program this stuff if you have to check it out in a week.

P: I think propeller-head is the right term.

Stig: The hard part is figuring out how the navigation scheme works and how everything fits together.

P: Gene, you had a question, didn't you?

Gene: It seems to me that you have a lot of reliance in people sending this stuff. If people start deciding, why do I want to send this for $100 after all, and just don't mail it to you, you're going to have a lot of problems with kind of good will or whatever. So what kind of relation do you have ...(inaudible) when they propose a sell out on your site? Do you contract ...(inaudible) send it to you?

Stig: There's two different levels of obligation. If you just post an ad, if you're a retailer collector with some ...(inaudible), there's no penalty for not shipping, you just don't get your money, and I can kick you off. And then I apologize to the buyer. There's some stock out problem. Keep in mind, though, it's far less than what they're used to. When they call a guy up on the phone they've never met, and they send them a check, they wait for the check to clear, and then they never see their thing. So they're used to a great deal of hassle.

On the auction side, because it's such an involved process, the people who want to sell stuff in the auction, to actually give me their credit cards up front, and I have that, and there are penalties. If, then, when they auction closes, and I process the credit card to the buyer, they fail to ship, then there are penalties there. This is where the contract clauses come up, because whether I had the legal right to charge so much credit card ...(inaudible).

But to answer your question, no, there's no contract on the for sale side, but there is on the auction side, for non-shipment.

P: And your instinct here is that basically first to market is pretty much everything, that whoever gets there first and manages to get it working reasonably, and achieves critical mass, could be the market maker, and then that's where people go when they just want to find the site to look for the rare album.

And in fact, if you get a nice database and framework working, you can start cookie-cutting it to another site, you could be really rolling along.

Stig: Correct. There is a platform effect on the community side, too. Some people are saying this is less intuitive, but when newsgroups and all the member content that's on a site like this gets to a certain level, it's very hard for people to leave, because you're talking to 20 people in the newsgroup, and even if you're dissatisfied with a stamp collector, you can't take your 19 buddies with you.

That's why there's all this buzz about community-based e-commerce, is because there's switching costs when members develop relationships in a site. They can't ...(inaudible). I don't know, people disagree with that, but certainly on the transaction side, once you reach a certain level, the thing should snowball.

So it's very hard to go out -- you know, you have that in other businesses too, like ...(inaudible) and Amazon, those places where once, you have to get a certain level of transaction opportunities together, and then that becomes ...(inaudible)

P: Is one of your worries that these trade magazines that are 100 pages thick, and probably put in digital form before they publish it, are somehow thinking the same thing, and going to go live before you do?

Stig: They are thinking it. They have three problems. The biggest one is cannibalizing their revenue. They make money on subscriptions and ads, and this doesn't. They make all their money by people faxing in their ads, and then they just pay a great deal to advertise and subscribe to this stuff.

So when they migrate -- they're going to have a cannibalizing problem if they go to a transaction model like this. That's problem number one. And the other one is that they're lazy, old organizations, mostly, and they just don't understand the Web, and they have these sort of line organizations built around trade magazines. And then there's some techie in like a staff position somewhere, beating up on everybody. But no one's listening. Because, if you think about it, they get $800 from an advertiser twice a month, and then if they get them on the Web, there's a much smaller cost base in a business like this. They could do this business better than me, but the trouble is, what happens to their printing presses and their delivery trucks and all that, when they start to migrate their revenue onto business ...(inaudible).

__: Maybe this is a bias, but these people who are vinyl collectors, do they really like computers? Are they internet people? On the one hand, they're using this way out data format.

Stig: The answer is yes, especially in the case of music collectors. The early use net groups boon for stuff like this, there's like seven big ones. In these five niches, stamps, coins, records, sports cards and music, the access ranges from 25 to 32%, so it's a little higher than the average, and they're like 98 percent (male).

__: You said there's 150,000 collectors, ...(inaudible) have people on line, right?

Stig: No, correct. Those are core collectors, those are the serious ones. And some fraction on the --

(simultaneous voices)

__: I was just wondering why you don't have comic books up there.

Stig: Well, comics is meant to be up there. The five big ones here are in this order: coins, sport cards, stamps, comics, and vinyl records, in that order.

P: Cards, not sport cars.

Stig: Sport memorabilia, the majority of that is sport cards. Did I say sport cars?

P: Maybe the first time but definitely not the second.

Stig: And then the mamma of collector markets are classic cars and antiques, but they're not really fit for this kind of business model, because you can't ship them.

__: But you can do parts.

Stig: Yes, it's true, you can do mufflers.

__: Somebody in my family is a ...(inaudible) He goes to like places every Saturday, looking for them.

Stig: It's very true. It's ...(inaudible)

__: These people are strange.

Tim: I've heard people criticize these markets as being sort of fake markets. Like they publish these trade magazines, saying you can sell your ...(inaudible) for $800, but when you try and sell it you actually can't get anyone to buy it at that rate. I've heard those kind of criticisms in business magazines, like all these trade magazines have highly inflated prices. Are you worried about that kind of thing, that the market might be a lot smaller?

Stig: I didn't size the market on the basis of that. Prices in these markets are self-published, so it's the sellers that set the prices on this site. I don't have anything to do with the pricing. You post your own price. They do transact this way. It's almost their only option, besides going to the store and the trade show.

__: Are there like blue book equivalents for this thing?

Stig: Yeah, there are price guides of all sorts in all the markets.

__: Can you put those up on line?

Stig: What I would do is probably license the content for one of them and put it up there, and then let people buy it, and have referrals to buy the actual hard cover from them. I would do that, definitely. And then eventually I can get intelligent about how they would sell, and add value that way with the information. But that's definitely, I think, that would go up in version 2.

__: I was thinking of newsgroups up there. Have you done a survey of the use nets newsgroups to see that if maybe there are collector -- I'm sure there are collector groups out there that track these things, and see what kind of traffic they have?

Stig: I don't have the number in my head about how many people are in it, but for vinyl there's five that matter, five ...(inaudible) collectors guide ...(inaudible)

__: Are they very active in this group right now, and what's your strategy for coopting them and ...(inaudible) some of their --

Stig: Well, just, within the boundaries of ...(inaudible), I would be in there advertising, just announce myself. Most of what goes on in those newsgroups is bartered anyway, and this is a more effective way to do it. And then there's about 150 Websites that matter, and a couple of really big ones. Most of the Websites are retailers, group set up their own site.

Meg: Are you going to do like the equivalent of America Online, getting ...(inaudible) one of those chat rooms and talk to the world? Get whoever's big in vinyl to get into a newsgroup and have some conferences just to bring people in. Basically, how are you going to do this advertising that's going to bring these people in, other than just the conventions?

Stig: On line, the advertising is simply banner ads, announcements and newsgroups, banner ads on Websites. There are a lot of user specific search engines you can go to, and they list servers. You just get your name out there and you say, come here for transaction.

And I can also go to trade shows and conventions, that's more expensive, though, than direct mail.

If I want to advertise myself as a community, with editorial content, then I have to back that up. And what I would do for each one of these sites is hire an expert, either someone who's worked for a trade magazine or -- there's a lot of experts out there, the trouble is finding one that doesn't throw up on the carpet every half hour --

P: Is that a metaphor?

Stig: That's a metaphor. I interviewed a bunch of these guys and they're just hard to get along with. So when I find the right guy, who knows a bunch about vinyl records --

P: They're all Andy Rooney, basically.

Stig: -- and he becomes the editor of the site, and he manages the newsgroups and he responds to e-mail, and he puts together editorial content, and he does all that, which I can't do, because I don't know --

__: Can't you go kidnap whoever's in the newsgroups in the internet and say, Listen, I'll actually pay you for what you're doing for free?

Stig: But all of those are customers, and I want them in there, in the newsgroup. But it turns out, hiring somebody for the company to become the publisher, the editor of the site, that's a little bit more tricky, because they have to have other things besides.

P: Of course, part of what Meg might be saying is you could have an intermediate -- instead of saying there's going to be buyers, and then the sellers are all going to be under a traditional model, you pay them for a service -- I don't mean sellers of records, I mean sellers of your site, people who produce content on the site, and Meg says, well you can imagine organizing the people who produce the content, even among the buyers, as, I don't know, give some of them a badge that says, I'm a section leader, or I'm a site maven, or something. No throwing up. Something that makes them an appealing character and doesn't actually cost you a lot of money. As soon as you start paying them, it ruins the whole community aspect of --

Stig: Actually, what you do is you get the leading retailers who have relationships anyway, you tell ...(inaudible) and he gets to publish a column in the magazine, in the ...(inaudible) magazine once a month. And they love that. You put their picture up there, and they can then write about why what happened in '65, when the LPs overtook the EPs, and why that's the biggest thing that every happened.

__: Well, beyond that, though, whoever's in use net already, talking up a storm, and has credibility, is a person who has enough credibility to pull the people who read him already, or her already, in here. It just seems to make a lot of sense to get the people who already have a following, because that following will follow them.

Stig: Yes, absolutely. And the people who manage those newsgroups, like John used to do for the operating system, whatever -- So I need the Johnathans of the use net groups for all these things, and I will call them up and I'll tell them what I'm up to, and then get them to speak, no question, ...(inaudible).

__: This is a little bit ...(inaudible) Doesn't it seem to you that it might be advantageous to use junk e-mail, would you do it?

(simultaneous voices)

P: No one can stop at just one.

Stig: I have no ethical problems with e-mail. I'll tell you what constrains me, that's losing good will and disillusioning the members of the site. There are 35 automated e-mail scripts on the site. You get one when you post an ad, you get one when you post an auction, you get one when you register, when you get out a bid. They're all value-added. The ones that are shady are the ones where the user hasn't been a user event, but I send them an e-mail saying, get back on the site, I haven't seen you in a month, or get back on the site because we have something you might like.

But I'm telling you, it's very self-regulated, because if I irritate them, they go away. So --

__: What if you use ...(inaudible) news or something, and you found everyone who's ever posted at this five big sites, and you e-mail them about this new site. You wouldn't do that?

Stig: No. I have a friend who runs a business for laser disks on the Web, and the guy's business almost went under in three days because he got flamed so bad in the newgroups for laser disks. It spreads like wildfire. The last thing I would want to do is to take anybody off, seriously. Because they can hurt you. They can go into these newsgroups, and then these debates start to rage, and it can happen, it can spread really fast.

P: Probably stone him or burn him.

__: So what's an old Bob Dylan --

Stig: I saw "Blood on the Tracks" for like 25 grand, one of the first printings.

__: ...(inaudible) good will store.

Stig: These are unopened, unplayed, they still have the plastic on them.

P: When it ...(inaudible) to the price of actually paying Bob Dylan to come sing.

__: I was going to ask whether you can manage to keep a straight face when you were talking to ...(inaudible)

Stig: Yeah, I do. I mean, I spend a bunch of time at trade shows and all that. I show up in a suit because it causes such a stir, and I set up my computer and they come look at this thing. ...(inaudible) when I describe them. But they're just really ...(inaudible).

And these guys are ...(inaudible). The stamp guys are like ...(inaudible), and the comic folks are either really young or old. I do ...(inaudible) I'd say half the people in here collected one of these things, at some point.

__: Did you collect one of these things, is that what got you into this?

Stig: No. I was on my way to work for a record label last summer, and I was doing some research on this, and I started reading these trade magazines, and I was taking a class in business school, so that's how it started. And I used to work for a company that bought and sold trade magazines, and so that's how it started. I'm not a collector. I'm a music fan, but not a vinyl collector.

__: I wanted to ask about the ...(inaudible) First of all, are you at all concerned that people will sort of be upset that you're tracking them, for lack of a better term ...(inaudible). And secondly, and perhaps more importantly, are you at all concerned that in an auction type situation, where there's just ...(inaudible)

Stig: Yes and no. I mean, I do notify them, with the hidden agenda of getting them to bid more. That's good for the seller and it's good for me. But I assume people wouldn't bid unless they thought it was worth it.

On the about e-mailing, they register -- I can show you this -- I take them through a registration process, and they're well aware that I know who they are. They don't know that I track everything they do on the site, but they do know that I have their address and that I have their e-mail address and all that. And I'm very polite. I think I'm fairly conservative about using it.

There's a trick that we don't do on these auctions, which is that at a lot of these auction sites, what you do is you bid -- if there's a price of $100, that's the high price now, you can enter a bid of $102, and then also tell the site what you're ceiling is. You can say, I'm going to bid $102 in the hope that no one bids again, but if they do I'm willing to go up to $115. And then the computer will automatically rebid for you until you hit your ceiling.

And if you think that through, that means there's never ever anybody who hasn't hit their ceiling, except the last bidder. Because otherwise ...(inaudible)

P: And there's a lot of trust relationship, on their part with you, that you don't actually end up closing the deal higher that it could close, right?

Stig: I don't get it.

(simultaneous voices)

Stig: I would never bit, that's right. We do let sellers bid in their own auctions, which is a little tricky. A lot of sites don't do that. I do that because there are a lot of retailers who've got to ...(inaudible) who end up paying $150 for it, but he's auctioning it on my site.

P: And the seller who does bid on their own auction, do you still consummate the deal? They've actually got to eat it. They've got to ...(inaudible) credit card and pay you a commission.

Stig: ...(inaudible) so there's a disincentive there.

__: Do you have these policies -- I mean, the rules, the data policies, the ...(inaudible)

Stig: I can show you guys. Let's see.

P: It's not easily accessible from the main menu.

Stig: No, it's because I have to log back out, and it can't know who I am, and then it's going to ask me -- it'll take me like three minutes to find. When you go in to log an auction, there's thirteen boxes you have to check, and they are the rules that cover don't lie, promise to ship, here's what I'll do to you if you don't, and all those boxes. And they check every one of them, and then they submit the agreement.

__: ...(inaudible)

Stig: I say that I will correspond with bidders and sellers throughout the auction, and they know about that, that there are automated e-mails. They do agree to that, the people who run auctions. I could have you guys read it. This is what I'm trying to write the paper on, how close to the line I get here, because there is like the last, the 13th box they check, which is like disclaimers, and that's when I say I don't own it, I don't collect sales tax, if there's a problem with yours ...(inaudible), if the computer breaks it's not my problem. All that. All these warranties, all those disclaimers.

__: Do you have an ADR thing on there?

(simultaneous voices)

Stig: No, I don't. I mean, at some point -- it's because I scare people off. When they go to log an auction they think they're all set, but they've got to go check 13 boxes. I mean, I only put the boxes in there that I think I absolutely have to have.

But, the beauty of this is I can change, I can iterate, if things start to go south, I can change the product really fast, and get more disclaimers if I need them, or fewer.

__: Are you like kind of working from the ground up, ...(inaudible) that major book somewhere which tells you how to rate these contracts? Or are you kind of like going to the option, first option, on sale.com, and kind of checking out how they do things and kind of going off that?

Stig: Well, most of this stuff I drafted myself because it has to do with this process right here. Like, you'll be notified at the time of the first bid in your auction, bid above a minimum bid. At that point, you can't sell this thing to anybody else, because you're guaranteed to close the auction. So that's like rule #1.

So it's stuff I had to draft myself. The warranty stuff, which is really short, that's just boilerplate language, like no -- I actually have some in there, but I don't have any warranty or merchantability. I don't even know what that means.

P: Actually, nobody else does, either.

Stig: I'm an agent, but I never too agency law.

P: I was teaching ...(inaudible) this morning, and contribution of indemnity, I don't know what the difference is.

__: Suppose your feedback ...(inaudible) from these collectors and you show them these sites. I mean, do you hear, like, Wow, I'd really like to have the record in my hands and look at it before I buy it. Do you hear, Well, quality is a subjective thing, and he's going to rate it good and I'm going to rate it below average?

Stig: There's a lot of that. Those are really common concerns, though, and they overcome those issues when they deal with people who they've never met, who they meet in trade magazines or mailing lists. So I just presume that there's, if anything, less of an issue here, because there's a third party involved.

The big question is whether I can get the vendors on board, and I've talked to a bunch of them. They're very skeptical. They have a hard time believing when I tell then that I'm not going to charge you anything, I don't make any money until you make money, I don't compete with you, I don't want to buy and sell your records, any of that stuff.

And they're not used to sort of working with the people that ...(inaudible), so it takes a while to get them on board. But it makes sense for them, because they can't build technology like this, and they can't market it. So it's an opportunity for them to deal on the Web without having to invest.

P: So I think now, actually, cover two more pieces of ground. One piece of ground is, all right, here, everyone's law-oriented here, what are the liabilities you see? Now, this, of course, is not to give Stig nightmares for weeks, but what jumps out, anything? Is this --

__: I honestly don't see any real intense liability, because he's dealing with these small -- it seems to me that he's going to be dealing a lot with these small players, and they're going to have to jump through a lot of hoops to come to any --

P: So this is Molly's problem, coming around to help you.

__: Exactly, coming around to helping. Small, $50 maximum. Maybe on the $50,000 thing, they'll just take extra care on that stuff, and the little transaction, who's going to go file a complaint? I mean, perhaps a law student with a lot of free time on their hands -- for $40.

__: One of the things he was talking about, having control of the bootleg albums. It seems to set him up in the Prodigy kind of a thing, where he will incur liability for the content of the site because he's going to put himself out as someone who keeps control over the content of a site like that.

Whereas, if you didn't do that, ...(inaudible) CompuServe cases, then you wouldn't have that same sort of problem.

P: You also might imagine, if he were willing to share the info as to who sold him, or sold through him, the album, that's the fish whoever the authorities are might want to go after, and in exchange for his information, they may well leave him alone or something.

__: That's true. But if he's a successful business, and they're just this teenager in Harvard Square who happens to have a bootleg album, they're going to want to get somebody, and it likely is going to be him.

P: Yes. Of course, then too, imagine what are the damages, ...(inaudible) damages on the $30 album.

Meg; Do you offer people the opportunity not to be known to the ...(inaudible) party? So if a buyer says, I don't want this person to know who I am, this is my arch enemy, and I'm trying to buy the golden album, or whatever, from him. Or the seller says, I don't want to be bugged from this buyer three weeks from now, I want something else.

Stig: It comes up -- I don't. It comes up really clearly in newsgroups because people are used to communicating with tags, and I said I decided not to, and people are now known in my newsgroups by the user, and that's because I don't -- because people aren't willing to stand by what they say. There're so many shady characters that I'm OK with ...(inaudible)

P: And your verification of their names is only when they actually have a credit card and a purchase is made. So I can still log on the site as Joe Schmoe and --

__: Even without -- I guess the name isn't the real issue, it's the e-mail address. Is there a way to protect your e-mail addresses, as a buyer or seller, from the opposite party? So that you would have it but the other party wouldn't necessarily get it.

Stig: Yes, there is. Right now, the only reason you saw the e-mail up there is because I had this contact seller option up there, instead of ...(inaudible). But when you order something right now, you'll know who they are, but you wouldn't have the e-mail. As a register, you do have to have a value. These are the disclaimers that I don't know ...(inaudible). Responsible ...(inaudible) sales tax as an agent, and the auctioneer does not ...(inaudible) responsibility ...(inaudible). I don't know it, and title shifts directly between buyer and seller, and I'm a broker. Technical errors of interruptions, so anything can happen. No investigation of warranty. I do not investigate the ...(inaudible) seller subscription and auction ...(inaudible) accordingly, beyond the return of refund policy described above, which is like ...(inaudible). Music collector ...(inaudible) there's no warranties implied or expressed ...(inaudible).

And then amendment, I may amend -- this is the one I think is way out of bounds -- I may amend this ...(inaudible) at my discretion. In the event of an amendment, music collector will provide sellers with the effective notice of an amendment through e-mail on line ...(inaudible). So this is what auctioneers agree to.

__: Do you have a ...(inaudible) clause?

P: In the event that the rest of this agreement is held unenforceable -- including the title and subject heading, shall remain in force. (laughter).

__: This is a comment on the copyright issue. I don't think you have a serious copyright -- there's really big fish to fry out there, I can't imagine them trying to chase down your one bootleg on the million records. I mean, there's people with illegal copies of records, MP3 files, selling illegal CDs, I don't really hear of them.

But just on that, on another line, I guess, you're -- ...(inaudible) the risk of loss and if you just lose it in your warehouse somewhere, or someone steps on it or breaks it, that's your risk right now, right?

Stig: Primarily, yes. I always said that it costs a little bit, in the case of the auction, where there's a penalty if the guy -- if it's returned here, if a recording's legitimately returned by the winning bidder, you'll be charged $6 refund penalty to cover my extra shipment cost. But by the time you factor in all the labor and the phone calls involved, it's a losing proposition ...(inaudible) offset the cost bid. It's most my risk.

But I can iterate on that. It starts to become a big problem ...(inaudible) penalty. It's just something you learn about over time.

__: Would you be able to insure for that pretty easily, too? I mean, ...(inaudible)

Stig: If they're really valuable, then I'll insure the shipment, correct. That piece can be insured. I'm not sure what else could be.

__: How do you collect your data? I imagine that's probably the most valuable asset to this whole set up.

Stig: How do I store it or physically protect it?

__: Physically protect it from -- like, either there's somebody breaking in or maybe there's a big surge and you have the whole list out there and cut and paste. I mean, do you have any protection against that?

Stig: A couple of things. I can't protect against somebody writing a Pearl (?) script and going through my site and yanking off all the people in my newsgroup and stuff like that ...(inaudible). That's what ...(inaudible) originally did with E Bay -- I don't know if you heard about this, there was all kinds of flak about that.

The data stored was backed-up, so that's safe. If people want to get into my database, they have to get into a firewall, and I don't know the details of that, but it's a reputable -- Digix is the people who ...(inaudible) they know what they're doing. But I don't know the details of it, I just assume they can't break into it.

P: What it might raise is that - maybe liabilities isn't the right word for it, but as to legal issues he may have to be thinking about a little bit, a lot of them aren't as between him and the customers or him and the authorities, but rather him and all the other parties and consultants and employees and everybody else he's bringing in to leverage one guy's great idea, and some investment into a huge functioning site; so that the BU students, if you have a contract with them that says, this is work for hire, you own all right, entitled to the results and everything, so that when he cookie-cutters it and makes six more stamp, coin and card sites, they can't say, Well, wait, I want a piece of that. So there's sort of intellectual property things with this idea.

Stig: That's clear. I mean, in the contract with them, they don't own any of it. They ...(inaudible) compilers that takes care of the sequel ...(inaudible) or something. But this is all -- They do own a little black box, but it's a real small one, I had some people check it out.

There's one other thing. I had another thought, I forgot.

P: But you can imagine the arrangement with Digix. One thing is yeah, they're reputable, they're not out to somehow get your data, they're out to keep it reliably. You can imagine wanting, maybe, some term in a contract with them that says, Digix shall maintain the data stored on behalf of the client in the strictest of confidence, and shall not kneel to any subpoena to look at it, except where the law absolutely requires it, etc.

Stig: Yeah. I do, on this issue, tell them -- I sort of -- one of the policies is that I won't resell names or addresses, because I don't see, in the near term, that being profitable to do, and the repercussions of that are so severe I would never sell --

P: Won't do it until you do.

Stig: I can't honestly ever imagine it. I could-- You know, if I've got 50,000 music collectors on there, that's a valuable thing to have a trade magazine or anybody else do. But I'm telling you, if I do it, the business is dead. They'll flip out. And they're very finicky.

P: At least that they know.

Stig: But they will, because then they'll get the e-mail on the ...(inaudible) and all that. But I could sell it to people who sell packaging for CDs, or any number of things. Auction houses. There's a lot of people that would love that data. I can't imagine ever selling it. But I'll use it myself as much as I can, to get incremental revenue ...(inaudible) but I don't think I'll ever sell it.

__: ...(inaudible)

Stig: Yes, I could, I don't think I'd have a problem doing that. I mean, if I had reliable data, sort of large population data on what the value of these things are, I could sell it ...(inaudible) my own. And I don't know that anyone would have a problem with that.

__: ...(inaudible) or if there was an unusual transaction ...(inaudible)

__: Instead of -- it seems to me, instead of ...(inaudible) one, saying I'll never do this, it seems to me that you would want to make ...(inaudible) the clause in there, but it seems that you would want to make more slippage and say, I'll be the trusted ...(inaudible), I'll be the trusted collector and disseminator of information. There are potentials if I think something is interesting that you guys may want to see, I'll sell the information in the aggregate form -- this is what Firefly does -- and you may want to even just go directly to their site and look at their disclaimer, pull what you think is best off there, because that way you'll be able to do that. And you'll say, if I think that 50,000 people at this packaging people might ...(inaudible) 50,000 people, I'll have them send it to me and I'll give it to you, because I'm your trusted ...(inaudible).

Stig: That's actually a great idea. I'll look at that and see what they do to keep giving themselves flexibility. They don't have any right now.

P: The other thing you can imagine is actually giving the membership term, even though it's a free membership, and you don't necessarily have to cancel at the end of the term, but if there's a term stated up front, the contract binds for a certain period of time, and then at the moment you have, now, an excuse to junk e-mail, you've just renewed there. You're a member of the emerald club yet again.

__: That's a good point.

P: That's a chance to actually incorporate all ...(inaudible) terms in, because --

__: That's essentially ...(inaudible).

P: I was going to say they don't teach you that in law school, but apparently they do.

__: I think the Firefly thing, that made me a little queasy when I read it, because I think that if you're worried about people looking at you, you're worried about even that, I think ...(inaudible) aggregate. So there's a difference between ...(inaudible) ever. I prefer the membership thing. It's less likely to make people queasy, if their membership runs out at three years.

P: There's one other host of legal issues that may arise, which is he's got the wonderful advantage of being a one-man show so far, right? You've got 100 percent of the backing ...(inaudible) shared with the family, and that being the case, as soon as, perhaps, he discoveries the perfect non-throwing up engineer to come --

(end of tape 1)

P: And then you say, Well, wait, how do we protect ourselves against liability? ...(inaudible) the corporate forum. And suddenly you find yourself in all sorts of -- even as between the most agreeable parties -- issues about negotiating rights and liabilities forward that can really bedevil you.

Stig: Yeah, that's really interesting. Right now, this is in Escort, and it'll flip to an LLC if I ever get professional investors involved, and it'll get diluted through layer stages of finding all that stuff. And then there's all those earn back clauses and bonuses and buy back rights --

P: Where did you get all that?

Stig: ...(inaudible) That I didn't do. They have a thing where, for $1000, if they like the concept, they'll incorporate you and you get x amount of hours for like a ...(inaudible) corporate. And then they do this a lot, and then they're hoping that one in a hundred will actually get venture funding or go public, and then they get real clients out of it. I got a great deal there.

P: People are like, what's that name again?

(simultaneous voices)

__: They do that in California, but some places, ...(inaudible) equity in the company ...(inaudible)

Stig: He gave me the pamphlet. I checked out all these boxes, I told him how many stocks I wanted, what the name was.

P: Now, another set of questions, aside from the legal issues and liabilities, is basically that of business models. I mean, here we've seen a very well-presented -- I mean, here you've got somebody who's really honed his business model, and he's got answers. When papule say, well, what about this, what about that, you don't get the sense that Stig hasn't thought of that question before, necessarily, for most of the business questions that are being tossed at him. But it's amazing to see, as the net is booming, huge companies bedeviled by, all right, how are we supposed to make money here, or was that our point when we made a Website to begin with? And actually, a whole bunch of ancillary companies being formed.

I actually just met with a company called Net Response: four people kind of crowded in, like, hi, we're Net Response, and what we do is we clean up after you make a mess. That's right, your company tasks you with coming up with a company Website and it's a disaster, isn't it? Well, Net Response is the swat team for you. That's the phrase they use, we're a swat team. We will come in, we'll send in three associates. They will come to your city and live and breathe with you for three days. I said, Well, can't you ...(inaudible) Yes, I can pay for a hotel.

__: Is this for Nucleo (laughter).

P: No. They're going to ambush that ...(inaudible) when he comes in -- the swat team. No, no, it's not for Nucleo. Just research. But it's amazing. I mean, their business model was exploiting the fact that nobody has a business model, and talking about cannibalism, this is wonderful way of actually making some money off the net. Let us tell you how to make some money off the net. And they will come in and at least try to make a functioning, technically feasible site precisely out of the arms of the executive who has been tasked with it, realizes that, Wow, I'm in over my head, and this company will come in, and for the modest fee of -- for instance, within three or four weeks they will produce a document, a paper document, that will tell you where you need to take what you have. Their typical charge for that is twenty to thirty thousand dollars. How many customers they have is unclear to me. They could afford to fly up, at least.

And then, from there, they'll actually try to take the business of executing the document. Once they put it in front of you, of course, all you have to do is sign it, and really what you've done is paid they twenty to thirty thousand dollars to do an RFP, I mean, to give you a proposal for work that they'll then charge you more to do. I mean, it's a brilliant plan, but in a way illustrative of the fact that the models we've see touted about -- I mean, what they have in volume they have in parallel in their simplicity and kind of naivete.

You have the advertising model: Yeah, let's pretend it's TB, we've got a set of eyeballs, we'll just have banner ads, which is spreading really thin. Now we see community, if only we could sell community, boy would that be great. And transactional stuff. Either selling information, as part of micro transactions, or here, actually letting a very difficult, non-fluent market in the real world, because of the fact that it's you identifying, hey, the net is perfect for this and I can be the trusted middle man. So it actually sounds likes a wonderful model.

__: I was going to say, what site did you have that they wanted to rescue?

P: This is one of those meetings -- sometimes, in my capacity of running the Center for Internet and Society, I find meetings appear on my calendar, and I guess it's part of the problems of having a networked phone pile, it's not clear where it comes from. So sometimes, out of curiosity, I'll go, and this was one of them. So it was unclear to whom the net was responding when Net Response came.

__: But ...(inaudible) save you, right?

P: Not for myself. It may have been actually over the conference site, the site for the Second International Harvard University Conference on Internet and Society, next May, which is somewhat behind schedule, not the conference but the site of the conference. It may have been about that, but I had to leave before I could find out.

Any other thoughts or questions on this, or questions in general about business models on the net? I mean, you can read tons of white papers about it, and what you find is, there's either a complete surfeit of data but not analysis that actually makes any sense out of it, or there's a lot of theories that are really forceful and loud, but don't necessarily amount to a whole lot of income.

__: In doing your research to find out how businesses are doing on the net, and whether similar businesses or whatever --

Stig: Yeah. Not direct research. Most of my research has to do with market ...(inaudible), but I read everything I can. I've taken a bunch of classes in business school to really find out the ...(inaudible) I'm job interviewing in cases ...(inaudible) that sort of thing. So I haven't done any real research.

But, for example, there is, I think, the only subscription-based business model that's making money is The Wall Street Journal. I think they might even think about discontinuing it. Nobody's making money in subscriptions. Eighty percent of the advertising on the Web, they aren't ...(inaudible) I think a third of it goes to the three largest search engines. So basically there's nobody making money off the internet.

P: A lot of the swaps.

Stig: Probably the most profitable business on the Web right now is a company called On Sale, and I don't know how many people have heard of On Sale, but they're the guys that pioneered auctions for resell computer equipment. They went public. ...(inaudible) Perkins is the venture capital firm behind them. They do $32 million a quarter right now, and it's all transacted ...(inaudible).

__: So they're finding ...(inaudible)

Stig: They go out for people who have odd lots of computer equipment, they auction the stuff off for them, and then MIS managers buy them. It's another sort of non ...(inaudible) market. There's a business like this for semi-conductor chips and all of the obsolete inventory of manufacturers of ...(inaudible) boards and computers, because all those little components are the same, but when you have a whole bunch of them you can't get rid of them.

So there are people starting to make money like this. But there's not a lot of people making any money at all, other than the technology people, but in terms of pure commerce, there are very few people making money.

P: Of course, there's also the people who are working to help Stig. Cyber Cash, for example, he's got to give them a few pennies on every transaction that happens. They don't -- maybe it's more than a few pennies. But they don't actually have to invest anything with him until he's making money, and so long as they've just got a routine where once they've got their system, it's set, and everything else is gravy, they're just processing the Visa and MasterCard transaction. You can imagine establishing a standard there could be quite a money-making --

__: So you're telling me that it's a lot of instinct.

Stig: It's the wild west. I mean, the whole thing is only eighteen months old. So the book's getting written. There are people who will sell auction systems now off the shelf, people who run classified systems for folks, there are people who sell you the database tools, there are people who will do agent stuff for you, there are all these technology service companies that are producing off-the-shelf software components for people to plug together to do ...(inaudible)

P: All you have to do is actually cash the check, and they just put all the components together.

Stig: Right. Well, they're still being built. And even if I was designing the site now, eight months later, I never would have built an auction system, I would have bought it from ...(inaudible) It just wasn't there.

P: Any other thoughts before we move on?

__: Again, my ...(inaudible) just for you, and also a bit of the insanity, I got a notice yesterday from an IPO for something calling shopping.com. The company's five months old, they spent $30,000 and a couple of stock options to a guy that used to be in Cyber Cash, to buy shopping.com, which he had registered a long time ago. They have sold $56,ooo worth of product, they've lost $740,000, and their IPO's for $35 million. They're five months old. So, hey.

P: I'm trying to figure what the morale of that story is. FCC regulations do prohibit you from selling up all of your shares after the IPO.

__: Six months.

__: What do they do? They're like amazon. com.

__: No. They're like an on sale.com. They're another on-line warehousing/auction.

P: Stig, thank you so much --

(applause)

I can...(inaudible) a series of e-mails from people wanting to be your partner.

Stig: But you have to be able to program.

P: You didn't say you had to program well. Basically, in the ten minutes remaining, because I'd like to leave the last ten minutes of class -- does everyone have the little survey forms that were passed out? And also the BSA forms to be filled out. But in the ten minutes left, it would actually might be nice to give some tip of the hat to the missing Sanford Wallace. Gene Page had actually thrown together some URLs and sites that show you about ...(inaudible). The things that might be most interesting actually to look at, and Gene, if you want to demo them, that would be great, the bookmarks may be in here ready to roll, are some of the SPAM tool sites, basically three sites you had found that are, if you don't happen to be of Stig's persuasion and you want to be sending out lots of junk e-mails, some of the tools that are available to do it.

__: There's one in the bookmark, there was one in the back view ...(inaudible)

P: Do we need to dim it anymore or is it basically readable?

__: Jonathan, I have a SPAM-related legal question, while we wait, that my brother sent me today. It had come up on the newsgroup that he's on. Someone's response to SPAM is they send back a note: I enjoyed using your SPAM. I have a SPAM proofreading service and I'm happy to read your SPAM for $250 an hour, 2 hour minimum. By sending me further SPAM, you will accept this, the bill will be forthcoming.

And someone had responded that if they actually went through with that and sent the bill, which I don't know if that person has any intention of doing, that they can sued for fraud, because there really was no contract there.

P: Private contract has been thought of as one way to solve the SPAM problem, and I know some people who've actually gone so far as to send out a note like that. And they actually don't even make it sound like subterfuge, as in SPAM proofreading, because then you don't even have to actually show the product. And there are many typos in SPAM, so you actually really have to -- it'd take you more than two hours to do ...(inaudible)

But you could say basically a processing fee for use of my time and my server, and offer an acceptance, acceptance by performance, by sending the thing, you have performed, and then I got to bill you, etc. Maybe. It sounds a little bit too cute by half, doesn't it?

__: ...(inaudible) checks, though. If you're -- there was a case --

P: Which also seems too cute by half, doesn't it?

__: -- where this guy was at a Comp USA or something, and he was buying computer equipment. He said, I don't like junk mail, do you promise, to the cashier, do you promise not to send me any junk mail? And they said, Yes. And he wrote on the back of the check: By cashing this check, you are acknowledging that I --

P: And you will be switching your long distance for Staples.

__: I mean, it worked, and he sued them when he kept getting junk mail, and he won. So, I mean --

P: What were his damages?

__: It wasn't much, but it was enough to stop --

P: Was there a liquidated damages clause? It must be a huge check.

__: They sent him three notices.

__: Once he did the check and they sent him junk mail, he sent it back in the same envelope, with a note saying, I don't want this, I told you I didn't want this, you sent me a contract saying you wouldn't mail it to me.

P: It's a novel theory of contracting. A novel theory of agency as well, that you've got the kind of -- the cashier scratching the head and saying, Well, I can't abide by B but we'll take A. It's not clear that it's really --

__: That's essentially what these people did. They said, like, sent this letter -- They said you could send us the letter for saying that we'll take ten bucks from now whenever you send it to us. They claim this thing down at the bottom here, private citizen has been doing this for telemarketers, and reported that ...(inaudible) $54,000 by telling telemarketers that if they called them again they'd have to pay. So, I guess it works in some areas.

P: Is this a non-profit group?

__: Private citizen. That's just the junk mail ...(inaudible) actually.

P: There's sort of a market is strongly worded letters.

__: Cease and desist letters.

__: This is a SPAM company, you can see they do all kinds of stuff for you, multi-legal support, bulk e-mail services, Web pages design, just basically if you want to send a bunch of stuff to different people through them, they're willing to work for you. And they have a whole list of who's working for them. Their hosting department, their financial people, everyone's going to go --

__: Are there e-mails in there?

__: It doesn't look like it.

P: It's amazing, the names they choose for the products, and one of the more famous products is called Floodgates.

__: They have a contact us thing. They probably won't give you their real e-mail names there. And there's Webmaster. They have e-mails, I guess.

__: Go to the bomb thing.

__: Where's the bomb thing? Ah. So it kind of warns you now to go and -- we'll return the favor.

P: And that's actually referring to literal (bombs).

__: I don't think so.

__: Has anyone ever been held liable ...(inaudible)

__: How do you catch them?

P: Sure. Denial of service attack or something.

__: I mean ...(inaudible) so-called prosecuted for that?

P: Oh, yeah.

__: ...(inaudible)

__: The story of the green card buyers is in the archive of all urban stories, or all urban ...(inaudible)

__: People apparently hack cyber promotions Web page, so it says all kinds of embarrassing things instead of what it's supposed to say.

__: Actually, cyber promotions Web page is gone now.

__: There are all different ones.

__: It's because they got caught off from their server, they don't have any ...(inaudible) anymore.

P: It's unclear.

__: This is the extractor pro bulk e-mail. If you want to just go kind of do this yourself, rather than paying someone else to do your bulk e-mailing for you. It's HTM, not HTML, that's the problem. It's the most advanced bulk e-mail software on the planet, and I think it deals with things like taking care of people that are going to flame you back when you send out stuff. I'm not sure exactly how it does that.

__: ...(inaudible)

__: That's what it can do for you.

__: All these advanced features ...(inaudible) spell check.

P: It might even let you, if somebody replies with remove, you actually can remove them from the list. And the rumor going around is that as soon you type remove, they really know they've got a live one, who actually took the time to respond, so they double the flow.

Now, even as a local issue, I guess people here, third year students will remember that there was some controversy at the law school over the use of bulk e-mail lists here. Is that right? Is there chuckles about that?

__: Last year.

P: Last year.

__: Yeah.

P: Including some spoofing behavior that went on.

__: If you just do a basic percentage of -- I sent out the first e-mail in that fiasco, and the responses that came back, say, out of 500 people, I would say, well, 1500 people, there were three, just psychopaths, and four people who just said, remove my name from your e-mail list.

P: And two who actually wanted to buy the record you were selling.

__: No, it wasn't anything like that. But everybody that needed to get reached got reached. Most everybody just deleted it, ignored it, two people were absolutely psycho, and four people were just like, remove me from the e-mail list. I think there might be a little bit more of -- it might be a bigger issue just because of the people who it bothers yell really loud, but they're actually a much smaller percentage of the general population.

__: Maybe after the 15th round, you ...(inaudible) a lot more people are pissed-off.

__: Yeah. That thing went nuts. I mean, everybody -- you would go log-on, you would have like 60 e-mails. It was insane.

P: Let's check out of the code of ethics there.

__: Do you have one?

P: It'll probably go to Disney or something (laughter). Wonderful demo. End it right there. That's a wonderful demo. Thank you very much. All right. So that being said, how are we on tomorrow? Can most people make it tomorrow, wherever it may be? Who cannot? Great. That's actually most people can. This is good.

Why don't I distribute these as well, and if you can hand back in the survey forms today, that would be -- I'll also be soliciting volunteered basically for -- we'll basically call it the Internet Forum, next spring, for a committee to get invites and set up a program, and try to run it basically bi-weekly throughout the spring. So anybody who wants to help with that, I would very much welcome --

What's the code? Know the code. It is 9636. If you could give your surveys to Molly. I would normally give closing thoughts or something, but seeing as we're meeting tomorrow it would be anticlimactic to do so, so I will save them for tomorrow.

(end of class)