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A Tangled Web

Members of Congress are the latest group to surf the Internet. But maybe they missed the wave. Some telecommunications gurus say the Internet was overhyped as an electronic marketplace because consumers won't pay for what they're getting for free.



he Web Review, an electronic magazine, debuted on the Internet in September 1995 to wild fanfare. Reviewers praised the magazine's content and the snappy way its designers incorporated the multimedia capabilities of that corner of the Internet known as the World Wide Web.

The on-line magazine investigated scandals in the computer industry, analyzed White House technology policies and reported the progress of the Net's anything-goes culture with wry insight.

Nine months later, it folded. Most of the estimated 40 million home pages, or sites, on the Web offer information free of charge, and Web Review was no different. But the magazine required ``a dedicated staff of editorial, design, production and technical resources [and it] is expensive to produce. In the end, we cannot keep giving it away,'' publisher Dale Dougherty wrote in a May letter to readers in the magazine's last electronic incarnation.

Web Review's speedy demise is the latest in a series of misfortunes that have plagued the Internet community recently. Two of the four major commercial on-line services have changed hands since January, several high-profile Internet-related stocks are selling far below their original prices and a leading Net pioneer has predicted that technical difficulties will cause the Internet to collapse by the end of December.

But at the same time that technology gurus are predicting the ``death of the Net,'' Congress has suddenly begun to swoon over cyberspace like a teenager in the throes of a summer romance. Two bills on Internet issues are the subject of intense debate in both the House and Senate, three additional Internet- related bills have been introduced since mid-June, and the number of Members who have electronic mail and Web sites is at an all- time high. Even 93-year-old Sen. Strom Thurmond, R-S.C., introduced a reelection campaign site on the Internet in July.

What gives? Does Congress know something that the technical experts out there in computerland don't? Or is this yet another example of Capitol Hill catching up with the wave long after the private sector has moved on?

Maybe a little of both. ``My own view is that the Internet will have an immense personal effect on most Americans. But the jury is still out,'' said Rep. Rick A. White, R-Wash., who co-founded the Congressional Internet Caucus this spring in an effort to lead his nontechnical colleagues on the Hill into the Information Age. ``What we should be doing here in Congress is not trying to prejudice things one way or the other. We shouldn't be trying to kill the goose that's laid the golden egg.''

Internet Dollars

The economic value of that egg is a matter of much debate. Last year advertisers spent $32 billion to hawk their products on television, $22.5 billion to do the same in newspapers and $1.9 billion for radio spots. In comparison, companies spent a mere $43 million for advertising on the Web in 1995.

Morgan Stanley & Co., the New York City-based investment banking firm, recently predicted that the number of Internet users worldwide would grow from an estimated 10 million today to 170 million by 2000. Tempting as such a vast potential market may be, however, Madison Avenue isn't likely to embrace the Net right away because the sort of simplified ``brainwashing'' that works well on television and in print falls flat in cyberspace, Mark Stahlman, president of New Media Associates Inc., a media research company in New York City, argues.

TV and newspaper ads are ``psychologically manipulative. [Consumers are] supposed to buy something for essentially irrational reasons,'' Stahlman wrote in a recent on-line debate on the subject on Hotwired, the Web site of Wired magazine. Advertising on the Internet ``has to be information, not manipulation. This is because the medium doesn't permit the psychological games that `impact' a modern audience.''

Most of the information available on the Web also isn't unique or compelling enough to command a fee, Stahlman added in an interview. It's a matter of faith among market researchers that computer users won't buy subscriptions to Web sites because Internet information has traditionally been free. ``But what the market researchers don't add is that people also don't want to pay for that stuff because most of it's not worth paying for,'' he said.

A year ago, when the information superhighway was the hottest idea in town, only the foolhardy would have suggested that the chitchat on the Internet and the content of the Web might be less than awe-inspiring. But lately Net skeptics have become increasingly visible.

Washington Post reporter Richard Leiby's recent essay, headlined ``Farewell, Web Heads: I Used to Be One of You. Then I Took Out the Internet Trash and Found There Wasn't Much Left,'' is a case in point. ``After a few years of covering what I haughtily used to call `cyberculture,' I have come to believe that the Internet is little more than a glorified post office, copying machine and water cooler,'' Leiby, a member of the Post's Style section, wrote in early June. ``So far, much of the Web's offerings merely duplicate the crass commercialism and self- indulgent dross available in other mass media.''

Net skepticism also surfaced on July 9, when the John R. and Mary Markle Foundation and Crossover Technologies, both based in New York City, held a press conference on Capitol Hill to present a ``balanced budget bill'' created by computer users who had played an Internet game called Reinventing America.

Over the course of six months the game--financed by the foundation and designed by Crossover--presented players with detailed information on most major federal government programs and asked them to decide whether to cut or boost money for the programs during fiscal 1996. As players worked their way through the game, clicking a computer mouse to designate a choice in each category, the federal budget total would change accordingly.

AllPolitics, the politics-oriented Web site operated by CNN and Time magazine, hosted the game for the Markle Foundation. In May AllPolitics totaled the votes, and foundation staff members drafted a federal budget proposal based on recommendations from the 75,000-100,000 Net users who Crossover executive producer Eric Goldberg estimated played the game.

Had it been for real, the result would have knocked Congress on its ear. While the Reinventing America players devised a fiscal '96 budget that saved $172 billion more than the budget proposed by the Clinton Administration, they voted to legalize all recreational drugs, dismantle the Veterans Affairs Department and abolish foreign aid. Other proposals included canceling all federal poverty programs except food stamps, cutting defense spending by 27 per cent, slashing U.S. troop strength overseas in half and returning the District of Columbia to the state of Maryland.

Most of the policy experts who appeared on a panel at the press conference praised the game. American Civil Liberties Union executive director Nadine Strossen said it demonstrated ``the great potential of cyber-communications between individuals [for] developing an informed and involved citizenry.'' But a few experts weren't so sure. The demographics of Internet users are changing, but for the most part they are still primarily educated, young, white, technically proficient males who are either libertarians or independents, said Martha Phillips, executive director of the Concord Coalition, the anti-deficit advocacy group founded by former Sens. Paul E. Tsongas, D-Mass., and Warren Rudman, R-N.H. ``It's easy for this group to come to agreement. But add a bunch of disabled veterans to the mix and I bet you'd never hear anything about closing the VA hospitals,'' Phillips said.

``The Net is not yet ready to put Congress out of business,'' added Thomas E. Mann, director of governmental studies at the Brookings Institution who has started a campaign finance forum on the Internet. ``The danger in something like this is that it is simply an intellectual exercise. People are talking, not listening. But in a democracy you can't have an intellectual exercise. You're dealing with citizens' lives.''

Internet Legislation

The Internet-related bills piling up in the congressional hopper are certainly not intellectual exercises. Conflict between so-called content providers--artists, writers, publishers, movie companies and the like--and on-line companies such as CompuServe and Internet service providers--such as Erol's and AT&T Corp.-- over provisions of a bill to apply copyright laws to the Net has reached such levels of acrimony, for example, that the House Judiciary Committee's Subcommittee on Courts and Intellectual Property has postponed hearings on the measure three times.

One of the main areas of contention is a provision that would make on-line companies and Internet service providers liable for any copyright violations that occur through the use of their services. Book publishers, moviemakers and songwriters are determined to protect what they have created by keeping the provision in the bill. But providers on the electronic highway want to shield themselves from copyright liability. As a result, the bill is effectively ``dead for the year,'' said a knowledgeable lobbyist who asked not to be named.

Another major Internet-related bill, to loosen federal restrictions on the export of computer programs that encode data, is gathering public attention as well as political steam. The Senate Commerce, Science and Transportation Subcommittee on Science, Technology and Space held two hearings this summer on the bill, sponsored by Sens. Conrad Burns, R-Mont., and Patrick J. Leahy, D-Vt., that were broadcast live via the Internet.

In early July, Commerce Committee chairman Larry Pressler, R-S.D., Democratic Reps. Anna G. Eshoo and Zoe Lofgren, plus Republican Rep. Tom Campbell, all of California--as well as Burns and Leahy--participated in an industry forum on the bill held in San Francisco that also drew heavy public response when it was ``cybercast'' over the Net. (See NJ, 7/13/96, p. 1541.)

In mid-July the White House, which until then had steadfastly refused to comment on the bill, released a statement in which Vice President Albert Gore Jr. said that the Administration ``will continue discussions'' about computer encryption with Congress. Lobbyists say momentum within the Senate Commerce Committee in favor of the legislation is so strong that the bill may be reported to the Senate floor soon.

In the meantime, several new Internet-related bills have appeared in quick succession. Rep. White has introduced the 1996 Internet Election Information Act, which would allow on-line and service providers to offer free Internet access to all federal candidates without violating Federal Election Commission rules. Later he introduced a resolution calling for House committees to make reports, rule changes, roll-call votes, expense accounts, amendments, oversight plans and the final drafts of legislation commonly called ``chairman's marks'' available to the public electronically at the same time they are officially filed.

Edward J. Markey, D-Mass., ranking member of the House Commerce Subcommittee on Telecommunications and Finance, also introduced a bill in late June that would instruct the Federal Communications Commission and the Federal Trade Commission to begin investigating the use of secret software programs called ``cookies'' that automatically track the movements of computer users on the Internet. Information companies can use these programs to compile detailed and highly personal profiles of Net users' hobbies, buying habits and financial and health information, and to record the names of people with whom they converse electronically, when they do so and for how long.

``The same libertarian quality that has stimulated such rapid growth of the Internet gravely threatens to cripple its promise,'' Markey said at a press conference when he introduced the bill. The Net ``has spawned an exponential increase in commercial voyeurism that is tearing privacy rights asunder. . . . At risk is consumer confidence in the medium. When consumer confidence plummets, so will economic activity on the Internet.''

Losing Interest

Consumer confidence in the Net already appears to be wearing thin from other causes, however. On-line commerce is developing so slowly that by the end of this year 20 per cent of the Fortune 500 companies that maintain sites on the Web will either stop keeping them up to date or, as in the case of Web Review, close them, International Data Corp., a Framingham (Mass.)-based Internet market research company, reported in a recent study.

More than half the small and medium-sized firms in a survey of more than 1,000 U.S. companies have no Internet connection and no plans to develop one, O'Reilly & Associates' Online Research Group, a unit of Sebastopol (Calif.)-based O'Reilly & Associates Inc., a major publisher of Internet books and on-line information, stated in another recent study. That percentage is ``surprisingly high,'' the O'Reilly group concluded in a press release.

Technical experts also warn that consumers are likely to be much less enthusiastic about the Internet when network access providers start raising their prices to cover the costs of the high-speed computer links the Web demands.

So far, the telephone companies that build and maintain the wires on which the Net runs have simply swallowed the cost of new software to upgrade their systems to tempt reluctant consumers on line with low monthly access fees, Robert H. Schellman, an Arlington (Va.)-based telecommunications industry consultant, said. But ``the cost of developing the software [for these systems] has risen rapidly, and now it usually exceeds the cost of the hardware,'' he added. ``It cost Microsoft hundreds of millions of dollars to build Windows 95. Some day soon, there's going to be a recognition of that kind of software cost, and prices [for Net access] will have to reflect that.''

In addition, the Internet has been experiencing an increasing number of ``brownouts,'' or serious delays in data transmission caused by too many people trying to use too few connections. Computer pioneer Robert M. Metcalfe is so concerned about the number of Net brownouts in the past year that he's predicting a network ``collapse.'' Metcalfe, the inventor of Ethernet, the local-area networking technology that connects more than 50 million computers, has even called the Net ``a fad'' that will soon be over.

Don't try to convince Congress that the Net's a fad, however. Since March, for example, 40 Members of Congress have introduced Web sites, bringing the total number of congressional sites to a high of 214, according to figures compiled by Highway 1, a nonprofit organization in Washington formed by such major computer hardware and software makers as Apple Computer Inc. and Microsoft Corp.

Congress's interest in the Internet shows no sign of stopping. When the Congressional Internet Caucus hosted an Internet demonstration on June 25 at Highway 1, more than 200 Members and their aides showed up, Highway 1 executive director Kimberley Jenkins said. Sen. Charles S. Robb, D-Va., became so engrossed in a ``virtual reality chat room,'' where Netizens use animated characters to interact visually and aurally with each other, that ``he stayed a long time,'' Jenkins added.

Some Members of Congress are baffled by predictions that the Net is near collapse. ``We are definitely on the threshold of a new millennium. The Internet is a new and better way for our citizens to be informed,'' said Rep. Eshoo, who in late June introduced a two-way, interactive system on her congressional Web site that allows her to correspond with her constituents via electronic mail.

``Yes, maybe questions of profitability will creep in, and maybe Americans will start to demand other kinds of uses and information from the Internet,'' added Eshoo, who represents a district in California's Silicon Valley. ``But it's far too premature for a trial to be called, a jury to be selected and a verdict to be rendered.''

At any rate, Congress is rarely a leading indicator when it comes to technology advancements, cautioned Mann of the Brookings Institution. ``These developments tend to run ahead in the private sector. If there's a rethinking going on [about the Internet], there's bound to be a lag before those ideas get to Congress,'' he said.

No matter whether the Internet eventually expands or withers, it has made a difference in the way Capitol Hill conducts business simply by introducing E-mail and cybercasting, and by making a wide range of information available at the click of a computer mouse, Mann and other experts say. Changes such as these, small as they are, expand the lines of communication between Congress and the voters.