NOT READY FOR PRIME TIME

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Online services will have to change the way they do business if they are to become a viable medium for marketers.

That was the view of a number of cyberspace experts attending last week's Online Developers Conference in San Francisco, sponsored by New York consultancy Jupiter Communications Co.

"Paramount sold 50,000 `Forrest Gump' shirts on America Online in 2 hours," said keynote speaker Adam Curry, the former MTV VJ who's now chairman of On Ramp, a company helping marketers and others build domains on the Internet. "There is money to be made in the online world," he said.

But online services must make several adjustments before becoming commercially viable for marketers. Among them are new types of access fees, improved content quality and development of a form of digital cash or centralized billing service.

Online will take off "if you can figure out how to create a $2 or $3 per month" subscription base, said Michael Kolo-wich, president of Ziff-Davis Interactive.

Mr. Curry said the current system of charging users for time spent online might account for the flaming of some ad messages. With the meter running, it's no wonder users don't want to sit through ads, he said.

Mr. Curry said his company was able to go unflamed by providing sponsors a service users found valuable-real-time information about Woodstock '94, including where clean restrooms were located. Sponsors included MCA Records and Pepsi-Cola Co.

A marketer like Budweiser could open a domain called "Bud's House of Beer" offering information on everything from home brewing to hangovers, Mr. Curry said.

Another barrier to true online commerce is the lack of "digital cash," an automatic debiting system that would allow users to purchase services or goods safely over computer networks. One such system is planned by a company called CyberCash, started by several former computer and electronic banking executives.

Online services also must provide a compelling experience for subscribers, said Russell Williams, VP-general manager of Delphi Internet Services. That service is itself struggling with setbacks in a planned redesign of its user interface that may make it more difficult to attract outside content providers.

Other speakers were not as optimistic about online's future.

"We are fooling ourselves [to think online] is a mass medium," said Denise Caruso, publisher of the Technology & Media newsletter.

Another observer, Tom Mandel, consulting editor for Time Online, said the transition from being a haven for early adopters to being a true mass medium may take years, if not decades.

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