May-June, 1996, Harvard Business Review. Two related articles which examine c'punks interests -- proposed business regulation of the Net; on-line security; copyright; encryption; authentication; E-cash; electronic commerce; protected communities to escape "frontier anarchy." Executive summaries by HBR: "Ruling the Net." Debora Spar and Jeffrey J. Bussgang The Internet promises a radical new world of business. But for many companies, it has yet to deliver. Although doing business in cyberspace may be novel and exhilarating, it can also be frustrating, confusing, and even unprofitable. Debora Spar and Jeffrey Bussgang argue that the problems companies face have little to do with a lack of technology or imagination. Their problems stem instead from a lack of rules. Without the order that rules create, business cannot be conducted. The authors explain why the informal rules that have developed on the Internet since the 1960s are no longer sufficient. Businesses thinking of allowing millions of dollars of transactions to occur on the wide-open Net need specific assurances. They require clear definitions of property rights, a safe and useful means of exchange, and a way to locate and punish violators of on-line rules. The authors believe that the key to commerce on the Internet lies in the creation of managed on-line communities. Such communities can be formed by service providers -- entities that will restrict on-line options, fine-tune offerings to match a select group of users, and provide some means of recourse in cases of fraud or abuse. Under those conditions, they will draw new companies on-line and increase the productivity of those already there. And, say the authors, the rewards for service providers will be substantial: Companies that make the rules on the Internet's emerging frontier have the opportunity to reap the greatest profits. [40 kb] "The Real Value of On-Line Communities." Arthur Armstrong and John Hagel III The notion of community has been at the heart of the Internet since its early days, when scientists used it to share data, collaborate on research, and exchange messages. But how can businesses best use its community-building capabilities? Not merely by putting their products or services on-line, the authors contend. Real value will come from providing people with the ability to interact with one another -- from satisfying their multiple social needs as well as their commercial needs. Companies that create strong on-line communities will command customer loyalty to a degree hitherto undreamed of and, consequently, will generate strong economic returns. The authors present four different types of community: communities of transaction, interest, fantasy, and relationship. Examples of each type already can be found on the Internet or through on-line services, but the successful community of the future will incorporate all four -- or as many as possible. As for economic value, the authors see four ways for a company to generate returns: through usage fees, content fees, transactions and advertising, and synergies with other parts of its business. In the near future, new business definitions may emerge around the notion of owning a specific customer segment across the full range of its interests and needs; owning specific products and services may no longer be so important. The authors urge businesses marketing to consumers to make the small investment required to "buy an option" on electronic communities in order to understand both their potential value and the radical changes they may cause. [33 kb] RUL_net (for the 2) ----- Reprints of "Ruling," No. 96309 and "Real Value," No. 96301 may be ordered from HBR for $5.00 each by email to: custserv@cchbspub.harvard.edu