The webonomic's guy
The digital money was a failure
Interview by Jorge Nascimento
The book, with the strange name of "Webonomics",
rapidly became a best seller in the booming literature
about digital economy in the 90's. According to Amazon.com,
the English edition (published by Broadway Books of
Bantan Doubleday, in New York) reached the first place
of the reader's preferences in those days.
Besides the nine principles of how
to manage business through his presence in the WWW,
Evan Schwartz breaks some myths, like the digital money,
moderates the fever in relation to the push technology
and says to the strategists and marketing men that the
reality is now different.
What is the difference between your concept of web economy
and digital economy launched some years ago by the canadian
Don Tapscott, among others?
EVAN SCHWARTZ - My concept of web economy is
about the business strategies that really work and about
those that do not really work in the WWW, and why. My
objective was writing a business book on purpose that
would seriously deflate the talk that goes around, and
that would attack the conventional thinking in these
subjects. There are many ideas that are totally wrong
and are prejudicial. That is why I preferred an approach
dictated by the common sense, which is based on the
concrete experiences of the companies and consumers
of the Web. No doubt that the web is the best example
of a working digital economy. However, Tapscott's pioneer
book - "The Digital Economy" - does not focus
in this specific area I refer.
With the web we are finally assisting to the dream
of a totally free market, as the fathers of capitalism
idealised it? Or is it just talk?
E.S. - In my opinion web is effectively very
near of the idea of a pure free market, more than any
other economic reality. Until now an economy of free
market was only a theoretical possibility, with the
web it is the first time a practical possibility, in
my opinion. But there have been some efforts of regulating
it, mainly in relation to the distribution without borders
of some products. But the web has resisted well to these
efforts. Globally speaking, the web continues to be
a market economy, with sellers and buyers. But if the
traditional economy is based on the idea that the offer
is scarce, in the economy of the web, as we see, the
offer of information and ideas is not scarce at all.
In fact, everybody reclaims the flood of information.
What is scarce, to respect the idea that economy is
the science of scarcity?
E.S. - The only scarce merchandise is the attention
of the people that use the Web, always busy and super
demanding. So, the rule was inverted - instead of scarcity
of offer, we have scarcity of demand. The real battle
in the web is the capacity of building and maintaining
that attention by part of the users. As a consequence,
the buyers and the sellers - the consumers and the producers
- should form more a partnership relation that a conflict
But if the Web is not a mass media, but a market of
niches and loyal users, where go the marketing strategies
that have been refined since the 60s?
E.S. - In reality, we realise that the companies are
spending loads of money and applying enormous effort
in sites that hope to be of enormous transit flux. They
are wrongly applying to this new media - the Web - the
same strategy that they designed for television and
(printed) press, trying to obtain the bigger number
of hits. The strategy has to be different: the marketing
men should not think that the web is the company site
to expose itself, but it is the place to obtain results.
The idea is transforming the attention you receive on
the web in something that can be measured: bigger sales,
lower costs, better service to the client, or a more
intimate relation with their consumers or readers, for
What do you mean by recommending that you should mainly
bet on a better navigation experience by the user's
part, more than in the control of statistics and the
number of visits to a given site?
E.S. - A better quality experience means this, in simple
terms: people have to have a good reason to go back
to a certain web site. People do not go back to their
favourite sites to entertain themselves, although that
visit experience should give entertainment. People go
back to the site to do things that otherwise they couldn't
do or that wouldn't be as easy and comfortable. That
is why I insist that the companies offer added value
services in the web, that is things that are only possible
to do well and that gain faithfulness on part of the
users. For example, see the case of Amazon.com that
is able to offer his clients personalised recommendations,
with base on the type of book acquisitions they made
in the past.
When we read your book, we get the idea that in the
case of products that are poor in content of information,
there will be no space for them in the web. Are they
condemned for eternity to stay out of digital market?
E.S. - In a certain sense, yes. The products and services
that sell best in the web are the ones that are rich
in information. Think about the cases of books, CDs,
funds in the financial area, electronic products of
consume, computers, software, cars, houses, and gifts
in general. Why? Because the people - the web users
- will pass time shopping for a kind of product that
makes them search, compare on line before the acquisition.
On the other hand, many poor products in information,
typical of supermarkets or big commercial spaces, do
not attract this attention.
Other statement of yours is that digital money is bullshit!
So, in the web, what kind of monetary system is emerging?
E.S. - I wrote and I repeat - digital money is pure
exaggeration, and it ended by failing. Cases like First
Virtual, or Cybercash or Digicash, were total flops.
People feel better buying in the web using their credit
cards, now that they understood that is even more safe
than using them in restaurants. I also tell you - I
develop this in my book - that is being created a new
type of money on line, that I called coin based on value,
something that fundaments itself in a concept similar
to the miles of frequent flyers in the airline companies
for example. People like going through the extracts
of these programs and using the points to shop on line.
This kind of coin puts the companies in the role of
governments, in the measure that they can regulate this
You recommend the web as the ideal place for strategies
of diversification of business. But don't you think
that that dynamic of creation of new conglomerates doesn't
bring the danger of deviating the companies of their
core competencies and their main businesses? Are Hamel
and Prahalad totally wrong?
E.S. - In my opinion, in the web, the brands are more
important than ever. And the companies are using their
brands to expand to new areas. Microsoft is selling
cars, theatre tickets and for concerts, and giving investment
services. Intuit, that launched the financial personal
software Quicken, is selling insurance policies online.
Yahoo, one of the more known search machines of the
web, is entering new businesses. That makes sense, in
my opinion, because the notion of core competencies
migrated, in many cases, of specifically industrial
criteria to wider attributes, like solutions of userbility,
excellent applications of self service or convenience.
Push technology has provoked a real fever, but you
advert for the danger that it may bring to the creators
of contents. Will they loose direct contact with the
end users? How do the producers of contents overcome
E.S. - The push technology was excessively "sold".
But it won't transform the way that web functions, as
it was expected one year ago. But it can be very useful
if used in a simple manner, especially with resort to
the old electronic mail. Look at the case of Wired magazine,
if you go to its site (www.wired.com), put your e-mail
and you will receive daily a newsletter with active
links. It is a simple and intelligent example of a push
strategy from a creator of contents.