Reviewed by Michael J. Gallagher, michael@mail.mc.net

There is a lot of interest these days in "Making Money on the Internet." There is even more interest in how non- "Internet entrepreneurs" can or should take advantage of this new communications system -- to grow our own business, for instance, or to serve our customers better.

And there seems to be a lot of misinformation, or lack of information, at least in this writer's view -- which we might characterize in terms of exhortations to get involved -- do something -- because "It feels good."

If you are looking for more substantial advice, then you might check out this book. Not for a minute because it answers the big question completely, but because it does make an honest attempt to move the discussion in a con- structive direction.

The authors (McKinsey consultants) admit at the outset that their "Business model(s)" are incomplete. No one, in their view, has as yet figured out the optimal mix of resources, or the best way to employ them. The authors do not, for instance, suggest that the Internet is the whole answer. Rather, the "Net" they envision involves, or may ultimately involve conventional telephones, faxes, teleconferencing or video conferencing...whatever turns out to work.

Thus, getting yourself a Web Page is NOT what it is all about. What they propose that taking advantage of the "Net" (loosely defined) IS all about, is creating community of customers (or users) who interact not only with the host, but with EACH OTHER.

In a nutshell, that is the book's "Big idea." And the book develops it in several directions, some theoretical, some more practical. First of all, the Internet news groups and chat rooms provide working examples of members of groups interacting with each other -- as does the telephone network itself, for that matter, as long as you know everyone's phone number.

The authors suggest that any-to-any interconnection provides increasing returns to scale, in place of the diminishing returns of conventional economics. One way of explaining this is in terms of the growth of fax technology in the business world. When there is only one fax machine, the value of the "network" is about zero -- there is no one to fax to, no one to get faxes from. However, every machine added to the network opens up a potential path to each of the existing members, and a path from each of the existing members to the new member. Thus, as the network increases in size, the value of each "membership" increases, by an increasing amount. This is why the growth of faxing, to point to only one example, has been so rapid.

The increase, of course, may only be in potential. And it is here that the host comes in, of course. The job of our "Internet entrepreneur," call her what you will, becomes one of adding value not only to members' interactions with the host, but providing ways for members to provide value to each other. It should be clear that even if the amount of value in each inter-member connection is small, the multiplicative effect can, in theory, be vastly larger than that which the host alone can provide. And why the growth of such a network could be similarly, exponentially rapid.

In theory. As a practical matter, the authors are short on examples. One of the few they offer is that of a dialog between two customers in a chat room, comparing the benefits, etc. of the host's product as compared to competitors. Perhaps not a bad example, as far as it goes. For instance, it points up the importance of hosts' providing their guests more than just the host's point of view. (Think, for a moment, about the typical corporate "Home Page.")

I suppose what we are proposing here is violating one of the canons of advertising. But the authors contend, rightly, that customers inevitably know there are competing offerings, and their purchasing decisions inevitably involve such comparisons. Our (actual, by the way) discussion provides value both to the participants, and to the host, to the extent he can observe it. What better way, after all, to get customer feedback than from an objective discussion of this kind? Of course there are privacy issues! But I never said that the authors tied up all the loose ends, did I?

(There are, for the record, less controversial ways to expand customer value. One which is fairly well- established, in fact, is offering complementary products. For instance, an airline's home page might offer not only on-line reservations for air travel, but also for hotels and auto rental. A software company's page might include information on third-party add-ons or enhancements. But this is about as far as current thinking has gone.)

The high growth potential is one reason the authors suggest managers' attention to the emerging technologies is warranted. Once someone figures out how to do things right, in terms of his own goals or those of the company, things could happen fast.

And the classic "Switching costs" issue should also be noted. Once the "Virtual presence" of the successful provider is well-established, her customers will be bound not only to the host but to each other, and less likely to leave than they would if it were simply a question of one host or another. The flip side of this is that the power of customers to make, or break the host's marketing initiative is vastly increased. If another provider has established a satisfactory relationship with a prospective customer, that customer is not likely to be pried loose.

But in the end the book is relatively short on the "How to" side, focusing on the emerging "What." One area left to the reader to discover, is the authors' idea of ways in which separate networks may coalesce into larger and more powerful marketing engines. Sooner rather than later, of course. Despite its shortcomings, I find some real value here for marketing people, and anyone else responsible for the growth and survival of their business. The computer/ telecommunications revolution, by any name, is real; and even though most of us are, shall we say, not likely to become the next Microsoft, using these new tools is something most of us ought to know something about.