Internet Business

A paper introducing a broad categorisation of Internet-related business activities and discussing the economics of investment in those areas.

Copyright 1995, Tony Smith, Meme Media

The View From Australia, September 1995

The Internet phenomenon is spawning a complex web of business relationships. The purpose of this paper is to introduce a broad categorisation of Internet-related business activities and to discuss the economics of investment in those areas. At this early stage, there remains a significant degree of vertical integration, especially by major concerns in pursuit of a captive market. However such integration runs counter to the free wheeling nature of the Internet and better targeted businesses are rapidly becoming more prominent. Within the broad categories presented, a further level of specialisation is already starting to occur.
The accompanying chart suggests the flow of funds between these major categories, from the initial discretionary purchasing power of organisations and individuals through to that significant residual which flows out to telecommunications network providers and content owners.

During the few short weeks it has taken to prepare this paper, the rate of development of the Internet has been underlined by the realisation of several identified opportunities. In particular the entry of Access Providers into rural areas is well underway.

The recent introduction of a national dog registration system sponsored by a pet food company, in conjunction with Melbourne's main Lost Dogs Home, provides an exemplar of the 'latent demand' driving developments. People are finding that the Internet enables them to do things which they have always wanted to do, but for which they have not previously had the means. Compared to the desktop publishing revolution of the late '80s, the rate of development of applications of the Internet is variously estimated at between four and ten times higher.

A categorisation of common Internet Business activities

In Conclusion

There are many opportunities to connect a computer to the Internet and use it to provide a specific service to some subset of Net users. With the acceptance of new ways of processing financial transactions, many of these will produce reasonable returns on a relatively low cost of entry. It is expected that the best returns will be produced in areas requiring greater expertise to add extra value. Following the categorisation developed in this paper, three of the most productive areas are likely to be: Organisation/Work Group Services; Information Access; and Design and Prototyping. However it is also evident that any Internet service provider which clearly positions its business with respect to this or some other analysis will increase its prospects relative to a business which tries to be all things to all people. For those interested in taking some risk with the prospect of high return, there appear to be some excellent opportunities for the development of Internet-oriented software 'platforms'[1] or of remotely controlled video feeds[2].

[1] see Equipment and Software

[2] see Monitoring and Security