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Organising the net to network
4 February 2002

The closure of hundreds of dotcom start-ups over the past 18 months has led to a widespread loss of faith in the validity of the web as a profitable medium.

But in its early days, the idea of making money from the internet was not taken very seriously. Primarily a network for academics and military personnel, it was about communication and education, rather than selling dog food or travel insurance online.

But as the net grew in popularity, so did the concept of the world wide web as an enormous marketplace.

Some e-business experts believe that the internet was never meant to make money. "The net itself is not a business," says Nick Earle, co-author of the internet business model book, From Dot Com to Dot Profit.

"The general perception that the net must be profitable is to completely misunderstand its value, as the loss of hundreds of billions of dollars of dotcom market capital proved," he says.

If this view is correct, then the organisations most likely to thrive on the web are those for which making money is secondary to other goals. From museums and local authorities to charities and public broadcasting networks, non-profit organisations are harnessing the most instinctive qualities of the internet to build communities, communicate their message and even generate income.

"When you look at what the web is good at, it fits the dot.org model better," says Michael Rappa, professor of technology management at North Carolina State University.

Business models revolving around advertising and subscriptions have generally struggled to sustain commercial ventures on the web. The non-profit sector, which has traditionally avoided risking its limited budgets on uncertain returns, has instead leveraged one of the most powerful attributes of the internet: its ability to foster networks.

Non-profit organisations have long understood the power of the network. This is crucial in the non-profit world, where minimal budgets and infrastructure make pooling resources the easiest way to grow.

At KQED, San Francisco's public broadcasting network, the new media department is working towards forging partnerships with other content providers and technology companies.

"It's silly for all of us to create the same content. If we work together and share content and strategies, we'll all gain loyalty from our audience," says Richard Dean, KQED's new media director.

"It's in the best interest of most NGOs to trade links," says Jonathan Peizer, director of the Network Internet Program at the Soros Foundation, a major non-profit funding body. "It increases their constituent base and is a cost-effective way to drive eyeballs to principles they share."

Most dot.orgs rely on donations from foundations, corporations and individuals to cover their costs, sometimes offering logo-placement on their websites to corporate donors and small gifts to individuals in return for support.

The websites of many non-profit entities, such as the Tate Gallery in the UK and the Red Cross, include a link to a "support us" page, where users can find out how to make a donation. KQED runs pledge drives over its airwaves to generate income. The annual revenue brought in through these drives is approaching $750,000, with 20 per cent of donations coming in via the web.

Sometimes, dot.orgs do not even need to ask for money - the service they offer, coupled with an ever-expanding network of users, elicits support on its own.

Mediachannel.org, an educational media issues forum run by North Carolina State University's Prof Rappa, has earned $50,000 in the past year through unsolicited donations from corporations.

"Companies come to me saying they'd like to use Mediachannel as an educational tool for their employees," says Prof Rappa. "These big users offer their support right away."

Prof Rappa believes that in order to profit from new technologies, dot.orgs should not try to imitate dotcom techniques. "Dot.orgs need to avoid the trap of looking at the web through the dotcom lens," he says. "Putting the museum store online isn't necessarily the best tactic."

Nevertheless, e-commerce is becoming popular among some non-profit organisations such as museums, with many websites offering online merchandising. KQED has a partnership with Amazon.com to sell books, videos and CDs, while the Museum of Modern Art in New York has an online store, selling gifts and museum memorabilia.

Elsewhere in the non-profit world, local governments generate income by selling database information to NGOs and political parties. "The selling of databases is an absolute goldmine for local government," says Alexander Stevenson, co-founder of RSe Consulting, a London-based e-government consultancy.

One of the chief challenges facing non-profits is finding money to develop technological infrastructure. Most donors prefer to give money for special programs rather than investing in organisational development. Yet even if investing in technology doesn't have an immediate impact on income, it can help cut costs by streamlining processes.

At The Samaritans, which has traditionally provided its 24-hour emotional support service via the telephone, the implementation of an e-mail contact service and streamlined telecommunications system is helping the UK charity's 20,000-strong volunteer force work more efficiently.

A new partnership with Barclays Bank, worth £500,000, will develop The Samaritans' e-mail and website capacity, so that each of the organisation's 203 branches will be able to answer enquiries online.

"This will increase the productivity of our volunteers," says Simon Armson, Samaritans chief executive. "So, when people call us, they'll never get an engaged signal. If we're going to be part of the real world, we've got to be up with the game."

While technology is having a great impact on the way dot.orgs run their daily operations, some insiders see a conservative approach to new technology as helping sustain non-profit groups through difficult economic times.

"It is not our job to be on the 'bleeding edge' of technology," says KQED's Mr Dean. "I've watched too many companies invest way too early in emerging technologies."

Prof Rappa thinks caution is the best business model for a dot.org. "Dot.orgs have generally been much more modest in their intentions and resources than dotcoms," he says. "Ironically, that approach looks much more likely to reap greater results."