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March 29, 1999

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Subject: Zirconium Diplomacy
Author: TMFNico

Since the Lycos-USA deal was first announced, Barry Diller's comments have revealed his attitude and posture towards the online medium, its users, and those who invest in it. When Lycos stock dropped in reaction to the deal, he explained it by saying, "Shareholders began to look at Lycos as a fat turkey basted for sale at Internet premiums. I don't think they cared about the development of the company." His recent comments flesh-out and confirm that attitude.

Diller's attitude gets in the way of the points he is trying to make. His comments, though entertaining, are combative and not a little contemptuous of just about everybody he refers to. They would seem to be good bets to rub all the right people in all the wrong ways.

If we look at his comments separately from the deal at hand and from this being a personal contest with CMGI's David Wetherell, we see that Diller is raising serious issues having to do with the future and nature of this medium.

What makes this especially fascinating, though, is not Diller's attitude, but his failure to disguise it. This is an important distinction. Diller's comments, what he is actually saying, are seen in a different light once this distinction is made. They will seem less unreasonable. As a result, Diller's attitude is revealed as not all that uncommon. And that is perhaps Diller's greatest offense -- and contribution. Even the source of his success.

"If we look at his comments separately from the deal at hand and from this being a personal contest with CMGI's David Wetherell, we see that Diller is raising serious issues having to do with the future and nature of this medium. "

Again, let's look at this without respect to the details of the USA/Lycos deal. Or Diller's defense of the deal. What issues are being raised? What is Diller saying? Where and why does he go wrong?

Simply put, Barry Diller is describing a more or less standard-issue ecommerce platform, circa 1Q99. It combines marketing, sales, distribution, and vague talk of the convergence of television and online. Bla bla bla.

The outline of the combined USA/Lycos differs from that of other players and would-be players by only the few details that are peculiar to USA Networks and Lycos, e.g., USA's Home Shopping Network and Lycos's pre-existing communities. There are others. And they are not necessarily trivial. But as components of a whole that is still on the drawing board, if USA/Lycos has something of substantive value that its competitors lack, then its competitors will have to match it or compensate for it, and vice versa.

At this moment, there is nothing inherently special or unique in what this deal is putting together. It is pure unproven promise.

However, Diller's unique contribution to the debate -- to the ongoing divination of what the Internet is and can be -- is the bluntness with which he has been talking about it.

He is not wrapping his ideas in pretty words. His comments lack the requisite music. As a result, Diller's Internet visions do not ring suitably "visionary." Instead, they just sound crass.

"If you can get this stuff right in Internet terms, and use our barker ... then you can play a real role in getting normal people to use it to get normal stuff."

"Anyone who worries about the entertainment business getting marginalized is a fool."

"...unless you get commerce, this ad model ain't gonna fly too high"

Thus Spoke Barry.

"However, Diller's unique contribution to the debate -- to the ongoing divination of what the Internet is and can be -- is the bluntness with which he has been talking about it. He is not wrapping his ideas in pretty words."

Those are not words we expect to hear from proprietors of landmark Web sites. But reduce them down to their basic ideas, and filter them through a more refined sensibility -- and a savvier PR instinct -- and you can plug them into AOL's next press release and attribute them to Bob Pittman.

Whether by strategy or temperament, Barry Diller is not mincing words. Frankly, I like that. But his "normal people" using his "next-generation" spider's web for "normal stuff" are the friends and family and chatroom-mates and alternate identities of the average, tech-averse AOLers that Steve Case has been collecting for a decade, and of whom his COO Bob Pittman has boasted, "We raised our prices and our customers stayed with us. Our services went down and our customers still stayed with us."

My initial reaction to the USA/Lycos deal preceded any real knowledge of its details, and was primarily aesthetic: It might have made sense, but it lacked all appeal. From the tongue-twisting names of the companies being grafted, to the -- I'll admit it -- snob-biased associations I have for the Home Shopping Network, it did nothing for me.

Was that just me? I think "appeal" remains a subtle but potent factor here. Its lack reveals things we might prefer not seeing.

It's the difference between barking at "normal people" to sell "department store-style goods" while operators stand by, and speaking to the desire for hassle-free "ease of use" and "convenience" when diving head-first into the future. Where one vaguely insults, the other strokes and flatters. These differences are what shape companies and their products. They create the meaning behind brands, and produce effective differences between what, at a schematic level, are similar operations: Marketing... sales... distribution... ecommerce... convergence... eyeballs... eyeballs... e-bla e-bla e-bla....

Steve Case's and Bob Pittman's products disparage their customers no less than do Barry Diller's. The difference is in the veneer over the vision. In the language devised to express that vision. In acts of public relations. In the art of diplomacy.

Fool on.

TMF Nico