New? Old? It's still the economy, stupid!
I'll start with two stories we've been covering this week, one dealing with some not-so-free "free" PCs, and the other, the Federal Trade Commission warning that B2Bs need to mind their Ps and Qs.
Five airlines getting together to compete with online travel sites? Why would they think they could do that? Would we let them open jointly owned travel agencies in the real world?
Promising a "free PC" -- after a rebate you can expect to receive in a month or two (if you remember to ask for it) for people stupid enough to sign a three-year ISP contact? That seems edgy just on the face of it.
My favorite variation on this something-for-nothing theme is MSN's offer of a $400 rebate on anything in the store to Radio Shack customers willing to make a lifetime commitment to Microsoft Corp. as their ISP. Sure, everyone needs an ISP, but a three-year deal in exchange for a cheesy PC or $400 isn't the way to choose one.
I keep reading press releases and hearing rumors about erstwhile competitors getting together to set up B2B sites -- and wondering how cozy a relationship between vendors is actually legal. Even if legal, how much closeness will customers put up with?
(Disclosure: My employer, PennNET, is in the B2B e-commerce business and would potentially compete with some of these behemoths, so I can be accused of some bias here. But I come by it honestly -- why would customers want a captive marketplace when they could have an independent one?)
People keep talking about the "new" economy. I keep wondering what happened to the old one. It seems to be perfectly healthy to me. Online commerce isn't revolutionary; it's evolutionary. It's still the same economy, stupid!
Sometimes e-commerce offers improved convenience; in others, it's more economically efficient, and sometimes it's a bust. As a consumer, e-commerce doesn't save me money, though it has saved lots of time (which can translate into money). But often as not I get only marginal customer service from companies that way over promise and under deliver. That's the treatment I enjoy in person at Fry's -- and I save the shipping charges.
From a business-to-business view, e-commerce is like grease on the skids, but it's grease that companies seem to be applying most cautiously. It will be a long time before companies are really comfortable making major purchases entirely online, giving the click-and-mortars credibility as customer-friendly, "have it your way" vendors as purchasing models change.
Of course, sometimes the new economy proponents win one even if they don't deserve to. That we aren't (yet) collecting sales tax on Internet purchases is a case in point. People who don't get it -- generally because they have a vested interest in not getting it -- have really confused the Internet-taxation issue.
I think we can agree the Internet shouldn't be subjected to oppressive special taxation, such as a federal value-added tax on Internet commerce only.
But can't we also agree the Internet shouldn't be exempt from taxes every other business has to pay? Like state and local sales taxes, the backbone of community services in much of the country?
If the "new" economy is so fragile it can't play by well-established rules, then I have to wonder if we aren't in much worse shape than anyone imagines.
My belief is we don't have a new economy to protect, just the old one, evolving as needs and opportunities change. But one thing hasn't changed: the need for a level playing field for everyone, businesses and consumers alike.
Industry analyst David Coursey is vice president of news for PennNET Inc., a Silicon Valley B2B start-up. He responds to readers on his site at www.coursey.com.