7. CNs and Economic Development

In Healthy Partnerships Between City Guides and Community Resources (1998), Peter Krasilovsky discusses some of the main issues surrounding commercial involvement in Community Networks at various levels based on several community models. Some of the issues involve non-profit status for CNs collaborating with commercial groups, boundaries of acceptable commercialism, and ways that working together can increase usage for both the CNs and the commercial enterprises.

A key question for CNs is whether, in fact, access to the Internet will assist local small business to develop markets. Madeline Brand, airing on the January 11, 1999 Morning Edition, National Public Radio, reports that although there was a 200% increase of 1998 holiday sales over the Internet from the previous year, most retailers have yet to make a profit on Internet sales. The only consistent profit segments on the Internet are pornography and financial services. Electronic commerce is still not a mainstream activity. Larger businesses expect Internet sales to jump as more households have Internet access through cable services. Several major players like Macys Department Store have come on-line during 1998. Although they still experience losses on the Internet, large businesses can justify it as an investment in the future. Smaller companies may not be able to make that same investment.

A recent publication by the Michigan Small Business Development Center (1998) reports on an Internet marketing study of 15 diverse small businesses from September 1996 to January 1998. (Internet: Force or Farce? 1998) Most small business in the study expressed frustration with the time necessary to make their Web pages work well. Their comments clearly point to the need for an intermediary service to support small firms efforts to use the Web. The study found the use of search engines by the businesses as a marketing method was a complete failure. Businesses tried using "key words," a technique that has yet to be refined on Web searches. Many customers would not know which key word to use, and other key words are used by thousands of companies. Attempting to build effective links to their site was a major frustration for small businesses with limited staff and resources to dedicate to the task. Those businesses that actively marketed their site in every way (putting their URL on invoices, for example) reported slightly higher traffic on their site. Overall, sales directly connected to a Web site were minimal and disappointing for the businesses. Study participants reported that they did see the Internet as an economical marketing tool, they felt more "professional" from having a Web sites and they were generally optimistic about the future use. All participants received email or inquires from other countries and they felt encouraged about these "global connections," however minor. They also benefited from the low-cost communication services. For very small businesses, reducing long distance phone charges is also a very real saving. Several of the businesses had more concrete success with the Internet as a tool. One business, a horticultural design firm, had moved to on-line contracting and design work. Another firm found that they were able to focus and target their battery disposal market on-line.

On another level, Community Network advocates argue that the network goes beyond just the packaging, delivery, sale and advertising of products. The Internet platform allows for what Richard Lowenberg (rl@don.davis.ca.us) calls "the steep learning curve and processes inherent in becoming smarter and more economically generative participants in the new information economy/society." Amy Borgstrom, Executive Director, ACEnet, notes that small firms begin to access high-value markets by engaging in a "bundle" of ongoing Internet-based activities including locating new sources of inspiration for products, feeling comfortable in trend dialogues that typically begin on either the East or West coast, tracking new discoveries related to opening emerging markets, networking with peers outside their own community, and having access to innovative packaging and marketing. One response to this collection of needs is to build public access sites that can "bookmark" access to useful business information. This is another level of the "training wheels " strategy which supports small firms to build the competency needed to succeed in global markets.

Some critics question whether allowing commercial and economic development uses of the CNs will only allow the large commercial industries to eventually capture the local market, out competing the small business utilizing the networking services. This has been an important issue for Andrew Cohill, Ph.D, Director of the Blacksburg Electronic Village (http://www.bev.net/). The Blacksburg Electronic Village, like many Free Nets offers a kind of "Yellow Pages" listing for local businesses called the "Village Mall." Approximately 215 firms are listed.. Another FreeNet, RTPnet, a community network for the Research Triangle Park area of North Carolina (Raleigh/Durham/Chapel Hill) offers a directory of local business Web pages organized by topic.

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