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Marketing in the Internet - as seen from Italy

by Giancarlo Livraghi

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1. Editorial: Genes and culture
I hope readers won’t think that this is too abstract, or off-topic. Some general observations about human behavior can, I think, lead to very practical results.

This is about genes. I believe that our understanding of new communication systems can improve if we put people before technologies; because human behavior, not just technology, will set the direction and pace of development.

Genetics is a complex science; I don’t have the competence to understand its subtleties. But a few simple things are clear. All species, including ours, have definite genetic and social traits. I think politicians and economists, as well as managers and students of organization, could have avoided many mistakes by understanding more clearly the basic patterns of human behavior.

It’s proven by genetics that survival of our species is based on a complex combination of individual and community drives. We are not a totally "social" animal, such as an ant or a bee; nor driven by total individualism. As confirmed by history, totally collective human societies don’t work; nor do those based exclusively on selfishness. There are similar traits in other species, especially mammals, from dolphins to baboons; but what matters here is the unique set of genes and behaviors that defines us as "human".

Behaviors not unlike those of today’s humanity existed in "early humans" nearly a million years ago. But we don’t need to go back so far. It’s enough to know that our DNA hasn’t changed significantly in the last ten thousand years. Even without genetics, we would know that from history and literature: we find five thousand year old writings, from poetry to accounting, that seem written yesterday.

This leads, I think, to a simple deduction. When technologies offer new options that fit "human nature", they develop. If they don’t relate to our true needs and desires, they are only a passing fad or fashion.

There are several practical applications of this concept. For instance, there is a lot of interesting discussion about the value of communities in the net. A social and economic system based on mutual help; a sharing of information and service. The more I give, the richer I shall become; of knowledge and, why not, money. Skeptics would be right in calling this utopia if we were dealing with something totally new.

This is as old as humanity. There would be no human culture or society without a relevant amount of apparently "unselfish" free exchange. Cruel as we can be, we also know how to help each other. This attitude is not based on a strict quid pro quo; we give away information and help, and expect receive it, even when there is no immediate reward. There is a basic perception, often intuitive rather than rational, that it’s more pleasant to have dialogue and exchange that to be isolated in a selfish world of aggressiveness and fear.

The study of organization has proved over and over (though it’s rarely practiced) that sharing and partnership in groups that spontaneously define roles and functions is much more effective than any hierarchy or bureaucracy. The network economy is the result of new tools that enhance a type of human behavior that was successful when our ancestors lived in caves.

These "success machines" (that of course are biological, not mechanical) are often born spontaneously and unexpectedly. In that case we need to be good gardeners: we must nurture them and protect them without damaging their growth process. But they can also be generated, if we have a clear strategy and flexibility in the way it’s achieved. The internet is a good example: it was conceived as a strictly defined objective, built by an extraordinary aggregation of different people and a variety of competence and knowledge. To this day it’s still based essentially on free exchange: I give away something because I need something from everyone else. Communities are not based on unconditional generosity, but on an exchange of benefits.

The power of the net is in the countless opportunities it offers for human exchange and community. It allows us to do what the best human organizations have always done, but offers more options than we have ever had. We can use it for fun, for the sake of knowledge, or to make money. It’s perfectly possible to mix the three – if well done, it makes the process more effective and the experience more pleasant.

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2. Another set of data
This year’s 400-page report by EITO (European Information Technology Observatory 98) contains an enormous amount of figures. As all statistics, they need to be taken with a pinch of salt; but I think it’s interesting to look into this vast reservoir of information.

According to EITO, this is the volume of the information technology and telecommunications market by large geographical areas in 1997 (millions of ECU):


% of total

United States 424,202 34.6
Western Europe 355,962 28.4
Eastern Europe 15,017 1.2
Japan 170,615 13.9
Rest of the world 259,446 21.2
World 1,255,242  

This is the development of the information technology market in sixteen European countries:

IT market
(millions of ECU)

  1994 1995 1996 1997 % 97 over 96 Per capita *
Switzerland 6,330 6,728 7,197 7,671 + 6.6 1,065
Denmark 3,386 3,651 3,930 4,921 + 9.2 950
Sweden 5,623 6,318 6,629 7,110 + 7.3 810
Norway 2,555 2,816 3,057 3,361 + 7.5 774
Netherlands 7,337 7,944 8,583 9,746 + 10.4 629
France 26,035 27,525 29,532 31,793 + 8.3 548
UK 24,207 26,459 28,682 31,490 + 9.8 540
Finland 1,984 2,239 2,448 2,712 + 10.8 530
Germany 35,299 38,224 40,422 42,725 + 6.2 524
Belgium 4,192 4,392 4,683 5,190 + 10.8 513
Austria 3,093 3,369 3,546 3,886 + 9.6 488
Ireland 903 965 1,040 1,144 + 10,0 322
Italy 12,724 13,393 13,992 14,879 + 6.3 260
Spain 5,282 5,702 6,193 6,843 + 10.5 173
Portugal 977 1,051 1,148 1,282 + 11.6 131
Greece 669 742 805 900 + 10,9 8

* ECU in the IT market per 1000 inhabitants – 1997 Source: EITO 98

Southern European countries are behind, with Spain. Portugal and Greece growing faster than Italy (a trend that will continue, according to EITO, in the next few years). Of the large European counties, the strongest is France; as we shall see, according to this study the French are also leading in online communication.

Here are the data, from the same source, on telecommunications:

Telecommunications market
(millions of ECU)

  1994 1995 1996 1997 % 97 over 96 Per capita *
Switzerland 5,813 5,944 6,310 6,783 + 7.5 942
Norway 2,187 2,447 2,779 2,949 + 6.1 679
Denmark 2,727 2,915 3,214 3,476 + 8.1 671
Sweden 4,680 4,985 5,309 5,647 + 7.3 643
Ireland 1,451 1,607 1,923 2,138 + 11.2 602
Netherlands 6,678 7,328 8,210 9,087 + 10.7 586
Finland 2,035 2,193 2,412 2,712 + 7.9 531
Germany 37,075 40,191 40,840 43,102 + 5.5 528
Belgium 3,802 4,199 4,757 5,237 + 10.1 518
France 22,457 24,239 25,793 28,075 + 8.8 484
Austria 2,813 3,039 3,323 3,700 + 11.4 464
UK 19,785 22,365 25,120 26,602 + 6.7 460
Italy 18,403 19,603 21,647 23,674 + 9,4 414
Portugal 2,141 2,441 2,783 3,121 + 12.1 318
Greece 2,056 2,405 2,842 3,305 + 16.3 316

* ECU in the telecommunications market per 1000 inhabitants – 1997
Source:EITO 98

The two markets (IT and telecommunications) have similar trends in the more advanced countries, while in Southern Europe there is a relatively stronger development of telecommunications than information technology.

This is the number of telephone lines in seven countries:

Telephone lines
  1996 1997 % change % of world
Per 1000
United States 165,537 171,382 + 3.5 21.5 651
France 33,000 34,136 + 3.4 4.3 588
Germany 44,168 46,156 + 4.5 5.8 566
UK 30,720 31,579 + 2.8 4.0 542
Japan 62,229 64,017 + 2.9 8.0 512
Italy 25,259 25,913 + 2.6 3.3 453
Spain 15,413 16,231 + 5.3 2.0 410


Source: EITO Task Force

Southern European countries (and Japan) are weaker than the US and Northern Europe even in the most basic communication technology: telephone and fax. The picture is somewhat different when we look at mobile phones:

Mobile telephones
(thousands of subscribers)

  1996 1997 % change % of
world total
Per 1000
Japan 18,167 28,000 + 54.1 14.2 234
United States 44,093 55,000 + 24.7 27.8 209
Italy 6,418 11,000 + 71,4 5.6 192
UK 6,810 8,700 + 27.7 4.4 149
Spain 2,996 4,800 + 60.2 2.4 121
Germany 5,504 8,000 + 45.3 4.0 98
France 2,501 4,400 + 75.9 2.2 76

Source: EITO Task Force

It’s common knowledge that Italians are heavy users of mobile telephones; but there are more subscribers to that service in the United States and Japan.

An now... the net. Let me repeat here that all estimates of the number of online "users" are inaccurate, and we are not even sure that comparable criteria are used for different countries. In spite of those necessary doubts, I think it’s useful to compare different sources.

Let’s see the number of online users, according to EITO, in the same seven countries.

Users of online services

  1996 1997 % change % of
world total
Per 1000
United States 36,627 46,956 + 28.2 52.8 178
France 6,800 7,000 + 2.9 7.9 121
UK 3,014 4,519 + 49.9 5.1 77
Germany 2,783 4,461 + 60.3 5.0 55
Spain 1,106 1,412 + 27.7 1.6 36
Japan 2,962 3,960 + 33.7 4.4 31
Italy 723 1,315 + 81.9 1.5 23

Source: EITO Task Force
Figures for 1997 are projections, thus even less reliable than those for previous years.
In the case of Italy, the best sources indicate a 40-50 percent growth last year, not 80 percent.

The most remarkable difference in this picture, as compared with other sources, is online activity in France. In this study, online does not mean only internet. The difference is due to the French peculiarity that was pointed out several times in this newsletter: wide use of the minitel. This study indicates that, when the minitel is considered, online activity France is one of the highest worldwide. As we have seen, France is also ahead of the game in information technology; if and when its minitel activity moves to the internet, the impact could be quite remarkable.

Here is a graph that summarizes the situation in the same seven countries.

Three communication systems
(users per 1000 inhabitants - 1997)

Three communication system

Source: EITO Task Force

In the United States there is almost equal development of all communication technologies. All other countries are unbalanced. Japan and Italy have a higher concentration of mobile phones, less of cable TV and online connections.

Let’s look at Europe in greater detail. This is a bit complicated, but I think the comparisons are interesting.

Four communication systems in 22 European countries
thousands – 1996

% inh.
Cable TV %
% inh.
Online Online
% inh.
France 33,000 56.6 2,280 10.2 2,501 4.3 6,800 11.7
Finland 2,860 55.8 822 38.8 1,491 29,6 521 10,2
Sweden 6,032 68.0 1,770 42.4 2,492 28.1 672 7.6
Luxembourg 244 59.6 134 88.7 45 11.0 22 5.4
United Kingdom 30,720 52.3 1,700 7.3 6,818 11.6 3,014 5.1
Switzerland 4,547 64.4 2,150 75.4 663 9.4 322 4.6
Netherlands 8,431 54.0 5,900 91.5 1,014 6.5 664 4.3
Norway 2,500 56.9 714 39.4 1,258 28.7 158 3.6
Germany 44,168 53.8 17,700 47.5 5,504 6.7 2,783 3.4
Ireland 1,390 38.7 520 49.0 265 7.4 109 3.0
Spain 15,413 39.3 1,890 15.9 2,996 7.6 1,106 2.8
Denmark 3,301 63.1 980 41.0 1,387 26.5 120 2.3
Belgium 4,725 46.7 3,630 88.5 477 4.7 232 2.3
Austria 3,902 48.4 870 28.2 599 7.4 109 1.4
Italy 25,259 44.1 20 0.1 6,418 11.2 723 1.3
Greece 5,329 50.8 3 0.1 513 4.9 134 1.3
Portugal 3,753 38.2 110 3.2 663 6.7 80 0.8
Western Europe 210,731 46.9 42,733 26.1 36,001 8.0 17,889 4.0
Hungary 2,680 26.2 1,130 28.1 467 4.6 84 0.8
Poland 6,425 16.6 3,040 24.0 244 0.6 164 0.4
Czech Republic 2,815 27.1 790 19.7 203 1.9 18 0.2
Romania 3,170 14.0 2,350 29.7 19 0.1 12 0.1
Bulgaria 2,650 29.4 140 4.7 38 0.4 4 0.05

For a quick glance at some of the most relevant differences, here is a graph, covering only two new communication systems (mobile phone and online).

Online connections and mobile phones
online "users" and mobile telephone subscribers per 1000 inhabitants – 1996

Online connections and mobile phones

Note: "Europe" here stands for "Western" Europe, including Turkey
Source: EITO Task Force

Throughout Europe (except in France) there is greater penetration of mobile telephones than online connections. We must remember that mobile phones can be counted precisely (number of subscribers) while the number of online users is an estimate, always larger that the number of contracts with ISPs or other online providers.

Now a quick summary in two "pie" graphs. According to EITO (that, I think, overestimates the role of Europe) this is the worldwide breakdown of online connections:

PIE-1.GIF (2207 byte)

And this is the situation in Europe:

PIE-2.GIF (5454 byte)

Once again, we see France as the leader, with 37 percent of online activity in Europe (and over two thirds of the European total concentrated in three countries). It this a "true" and fully reliable picture? I don’t think so. It’s debatable, as all other data. But it’s an interesting change of perspective; and one more proof of the fact that different sources and types of analysis can reach very different results. Once again, this is a picture of a very immature, unbalanced and unpredictable market.


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3. April trout
One of the traditional qualities of the internet, that I hope will be maintained as the net grows and spreads, is the frequent use of humor.

As usual, there were many "April fool" tricks this year, and it was quite fun to see major newspapers swallow a bait that was originated in the internet. Other jokes, such as this one, were not as widely reported.

I am grateful to Enrico Colombini for his permission to quote a story that he wrote (on April 1) in an online forum about viruses:

New "Trout" virus

It’s reported that there is a PC virus designed to hit a specific program, possibly written by a competitor or by someone that was fired by "Autofish", a company in Genoa that makes automatic feeding systems for fish farms (it’s recent restructuring caused a lot of debate).

Apparently this virus makes the devices controlling feed input open more that they should, so the fish can eat as much as they want. No way has been found of uninstalling the virus, that replicates itself even when the software is re-installed from a "clean" boot. There have been some complaints by the ecologists, but authorities don’t seem to be taking them seriously.

The owners of fisheries are worried about the cost of wasting fish feed – and also the loss of revenue from the "entertainment" that some of them sell to lazy fishermen: the fish are overfed and don’t bite. Those that do bite the bait are people who believe what I’ve been writing.

There is a double catch here. The humor is about the frequent imaginary virus scares, that are still echoed by so-called "reliable" sources, and by the press, years after they were identified as jokes. But it’s also about the widespread reporting of an endless variety of nonsense on new technologies – and especially the internet.

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4. Monopoly threats
on electronic transactions
Many big interests, all over the world, are trying to gain control of electronic payment systems (several of them are spreading scare stories that get in the way of business activities online). One of them is, guess who? Microsoft.

A report by Nathan Newman published by Netaction on April 13 describes how the Justice Department’s 1995 opposition to the proposed Microsoft-Intuit merger opened the door to industry competition and ultimately resulted in the emergence of an open standard for electronic banking protocols. But... Newman says:

Continued vigilance by the Justice Department is necessary because Microsoft continues to use its financial and technological power to establish a monopoly in online financial transactions. If Microsoft is successful, it could ultimately gain control of the economic lifeblood of Internet commerce.

The government’s intervention made it possible for new competitors to enter the online financial marketplace, and at least gain a foothold in some of the markets that Microsoft was attempting to monopolize. Although Microsoft had sought to control the standards of online commerce through its merger with Intuit, the Justice Department’s opposition killed the proposed merger and forced the company to compromise with competitors in building core open standards into the online financial economy.

Unfortunately, Microsoft’s increasing dominance of corporate computing and Internet technology has led to a renewed monopoly threat in the world of online financial transactions. Microsoft is inserting its Internet servers into most online financial transactions. With its growing control of the Internet browser market, Microsoft is not only in a position to direct customers to its Internet sites, it can direct consumers to the financial services from which it gets a commission.

The most serious threat is that Microsoft is building a partnership with First Data Corporation in an effort to replace the role of banks in processing online bills that were previously mailed to customers by credit card companies, utilities or other merchants. The danger is that rapid, unregulated changes in the financial world can have dire economic results.

This is not the only attempt to monopolize electronic transactions. There are also big interests in Europe trying to gain control. Even before net marketing has had any chance to develop, greedy maneuverers (that often do their best to stay away from the public eye) are trying to set patterns that could be stifling for a free development of business online.

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5. More developments in "light" technology
I’ve read good reports on a browser called Opera. I must admit I haven’t found the time yet to test it thoroughly (I’m rather lazy with technicalities) but it seems to work well and takes up much less space than its more popular competitors. It’s reported to be faster and more efficient. But there are even simpler offers on the market.

Of course there are fast "text" browsers such as Lynx, and browsers included in simple operating systems, such as Caldera’s WebSpyder.

More are coming. For instance a Czech programmer, Michael Polāk, has developed a browser called Arachne, that works on any old DOS computer (a 386 or even a 286) with full efficiency (including graphics). This suite includes other utilities, including a file manager, e-mail, telnet and FTP.

I don’ think we shall see this news reported widely in the general press, or even in specialized magazines. And it’s most unlikely that simple, efficient software will be offered in stores where unnecessarily expensive computers are sold. But there will be remarkable opportunities for wider use of the net if and when people find out that they don’t need expensive equipment. They can use their old computer; or buy one on the second-hand market for one tenth of the price of the latest innovation now announced by the trade – that of course will be called obsolete in a few months’ time.


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