Originally published in New Media Magazine
While businesses have been smitten with the idea of plying their trade on the Internet, the Net's wide-open, smoke-'em-if-you-got-'em environment has frightened companies from using online links for much more than high-tech public relations. Recently, however, savvy entrepreneurs have begun developing business-to-business networking systems designed to facilitate electronic commerce.
These virtual networks provide businesses with online forums, enabling users to exchange ideas and products in a secure environment managed by a provider who is responsible for maintaining software compatibility, secure Internet connectivity and reliability.
In the past, only the largest corporations found it cost effective to share proprietary online networks. Security concerns and lack of standards prevented most businesses from bringing their corporate communications onto more public networks. But now costs associated with connectivity, security and electronic data interchange (EDI) functions are dropping and will soon become affordable
for even the smallest companies.
The most prominent of the virtual network efforts is CommerceNet (415/617-8790), a consortium of public and private players intent upon hastening the arrival of tomorrow's digital agora. CommerceNet operates as a kind of virtual hub for the vast grassroots Silicon Valley network ofentrepreneurs and venture capitalists. The goal is to facilitate interactions between companies,
customers, suppliers and development partners, making inter-company networking as easy as internal networking today.
Launched by BARRNet, Stanford University and Enterprise Integration Technologies, CommerceNet is a nonprofit corporation with a matching fund grant from the U.S. government. Its 80-plus corporate participants include Apple Computer, Bank of America, Citibank, Dun & Bradstreet, Intel, Hewlett-Packard, Lockheed, National Semiconductor and Pacific Bell.
CommerceNet is based on 128Kbps ISDN lines provided by Pacific Bell, which have enough bandwidth for sharing multimedia product demos and parts databases. The network also offers online bidding for vendor contracts and realtime collaboration between partners and vendors in remote sites.
"These 80 companies are hoping to provide the technology, banking services and directory services and the like that will allow everyone else to do business in a secure and easy way [on the Internet]," explained Jay M. Tennenbaum, CEO of Enterprise Integration Technologies, a key member of CommerceNet and the principal architect of Secure HTTP (Hypertext Transfer Protocol), the
leading public-key encryption standard for World Wide Web browsers.
A key element missing from electronic networks such as CommerceNet is an environment for secure online transactions. CommerceNet is now experimenting with a system from CyberCash (703/620-1222), a company that is also developing a credit authorization system for Wells Fargo Bank.
Based on RSA public key encryption, the CyberCash system's transaction servers handle operations between vendors and customers on the Internet. The system uses encrypted electronic invoices and credit forms as well as tokens to symbolize digital cash.
Alternative digital cash systems are emerging from a number of sources. A Dutch company called DigiCash owns key patents in the area and is pushing an anonymous "e-money" solution that reserves privacy. Meanwhile, Microsoft is working with Visa International on an electronic credit authorization system, and BankAmerica Corp. and First Data Corp. are working on a system based on
a transactional server from Netscape Communications (former Mosaic). Netscape is also working on a system for MasterCard International.
While lending institutions huddle with computer companies to finesse online transactions, other business networks are concentrating on carrying actual products. The raw materials of the media industry, for example, are increasingly digital, and therefore can be networked. Both Pacific Bell and
Sprint are attempting to create networks for moviemakers, videographers, advertising designers, recording artists and multimedia developers anxious to reduce costs and improve communications with clients and suppliers.
Pacific Bell's Media Park network (510/823-6868), now in a six-month test phase in California, links Paramount Productions, ad agency BBDO, Apple Computer, Colossal Pictures, CD-ROM developer IoN and others. MediaPark is, in essence, one large virtual production studio linking Hollywood with Silicon Valley via ISDN lines, T1 (1.544Mbps) or T3 (45Mbps) connections. All MediaPark users enjoy file transfer options, screen sharing, e-mail, an online news service and software updates.
"Virtual studios allow for creation and storage of digitized graphics, sound or video files in electronic shelf space on demand," explains Geoff Workman, of Sausalito Digital Partners, a California-based "angel" fund that provides seed money for new-media entrepreneurs. "A multimedia developer can gain access to a $500,000 rendering suite without having to make an investment in that equipment."
Participants can tap online resources like Kodak Picture Exchange's database of over 100,000 images, and MZ Media Group's Agora Digital Marketplace, which contains listings and portfolios of illustrators, animators, multimedia experts and programmers. Village Labs, of Phoenix, rents time on super-fast computers that render files at least five times faster than a PC, and also offers MPEG compression services online. Village Labs can send digital output in formats like Alias, Wavefront, Electric Image, Softimage or 3D Studio directly over the network or ship files overnight. Other participants offer movie and video stock clips, music and sound effect files, video post-production
services and online storage and retrieval.
"MediaPark gives media professionals faster, more affordable access to resources," said Michelle Fisher, director of new media for Pacific Bell's Data Communications Group. "It also makes collaboration among creative, production and service communities easy."
For power users who want global interconnectivity, Sprint has introduced a new service called Drums (415/390-5255), developed jointly with Silicon Graphics. Users at 40 sites connect to the service via SGI workstations equipped with SprintLink Plus and a T1 line--enough bandwidth to download a 30-second advertising spot in about four minutes. Users can also use a T3 ATM option at 45Mbps. As with CommerceNet and Media Park, the Drums network offers direct access to the Internet.
"The Drums network is exciting in that it allows us instantaneous communication and feedback with clients," says John Hughes, president of Rhythm and Hues, a Hollywood live-action/effects studio. "Rather than waiting several days for comments from an ad agency on a commercial we're producing, we can send the work in progress over the network to the client in a matter of minutes, reviewing it together online."
Drums enables full-frame 30fps videoconferencing, live shared video from an analog source, and frame grab for full-resolution 24-bit images. Users can interactively annotate online documents via a shared whiteboard.
"You can have the VCR controls and both people can shuttle it back and forth," explained Mike Keeler, marketing manager for Silicon Studio, the SGI subsidiary that joined with Sprint to create Drums. You can snap any frame out of that movie, put it on the shared whiteboard and mark it up."
Over the next few years, similar virtual networks will emerge. As digital cash and credit schemes enable online transactions over the Net, more mainstream businesses will jump in, making the global electronic marketplace a reality. --Curtis Lang