Cahners Publishing, one of the largest communications companies in the world behind Time-Warner and Disney, publishes more than 150 trade magazines and newspapers (http://www.cahners.com/). Nearly fifty are published from the regional office in Des Plaines. The Internet has become pivotal to their business, equaling the importance of their location near Chicago-O’Hare International Airport. They use the Internet for communications with clients, advertisers, and suppliers, as a means to distribute their products, and for internal management. Their entry into cyberspace has been dramatic over the past several years.

Many companies, from the very large to the very small, are looking to electronic commerce to enhance their business. In the recently released report, “A Framework for Global Electronic Commerce ¹¹,” President Clinton and Vice President Gore, describe today’s electronic commerce:

“Internet technology is having a profound effect on the global trade in services. World trade involving computer software, entertainment products (motion pictures, videos, games, sound recordings), information services (databases, on-line newspapers), technical information, product licenses, financial services, and professional services (businesses and technical consulting, accounting, architectural design, legal advice, travel services, etc.) has grown rapidly in the past decade, now accounting for well over $40 billion of U.S. exports alone....”

Further, the Internet can facilitate the global sharing of information and resources and provide an efficient channel for advertising, marketing, and even the direct distribution of certain goods and information services. A good source of information about emerging opportunities of Electronic Commerce can be found at CommerceNet (http://www.commerce.net/).

Business in Transition
The convergence of money, commerce, personal computers, and the digital network infrastructure is creating new market opportunities ⁴². Content providers, production houses, network infrastructure providers, and carriers are joining the traditional participants in commerce -- distributors, wholesalers, and retailers. Efforts are underway to create the secure and trusted financial environment necessary to guarantee payments and credits and prevent theft and fraud.

The benefits of electronic commerce are becoming increasingly apparent:

• More Options for Consumers. Consumers are able to comparison shop, with more options available daily, and use the Internet to quickly locate hard-to-find products and customized goods. This means more choices and lower prices.

• Lower Business Costs. Business and industry are seeing lower coordination costs internally, and intermediary transactions between producer and retailer are being reduced. Lower physical distribution costs are also being achieved as information is passed electronically, some links in the distribution chain are bypassed, and carrying costs are eliminated.

The risk in this shift, according to experts including Wigand and Benjamin ⁶⁵, is potentially smaller profit margins that must be compensated for by higher volume and efficiencies.

This is not to argue that everyone has developed an effective strategy to capitalize on the Internet. Some of the largest companies in the Chicago region are still casting about for the best way to generate revenue through this medium. They are looking at the challenges experienced by initiatives such as Time-Warner’s Pathfinder. In 1995, Pathfinder was one of the top three Web sites in the U.S., but it is now ranked twenty-third among the top twenty-five Web sites at home. There are two functional matters, however, that should be attended to if Metropolitan Chicago is to take full advantage of the opportunities of electronic commerce.

• Businesses Access. Free market access to electronic commerce from all facets of our business community with minimal technical barriers, such as proprietary software or line exclusions, must be guaranteed. This is especially important for business-to-business transactions that improve economic performance.

• Consumer Access. Access for all current and prospective customers must be provided. Today, the typical Internet user is white, college-educated, young, mostly male, and employed in a professional occupation. But many more potential customers in the Metropolitan region are locked out of the electronic marketplace because they lack the expertise, money, or comfort level to enter cyberspace. High speed access, ease of finding an affordable service provider, and low-cost equipment are needed to assure broad consumer participation.

“The convergence of money, commerce, personal computers, and the digital network infrastructure is creating new market opportunities.”

There is a long way to go before everyone is on the Information Superhighway. Yet, as is evidenced by the new opportunities for electronic commerce, it is in the economic interest of Metropolitan Chicago to assure that the digital network infrastructure is extended quickly and homes and businesses are connected. It is suggested by most sources that the private sector must play a key role to assure this reality.

Government’s Role
There are some issues, however, that are for government, and others that government should resist. Together, public officials and policy makers, business and community leaders need to consider the legal framework that will undergird transactions on the Information Superhighway.

• Where Does the Sale Take Place? Exchanges are flowing constantly between Internet storefronts, product manufacturers and distributors, financial institutions, and consumers, all in different jurisdictions. Yet, there may be no predictable legal environment governing transactions, particularly for International contracts, liability, consumer protection, and other aspects of an exchange. Government, particularly states and the federal government, is right in addressing such issues.

• What Can and Should be Regulated? Problematic regulatory issues regarding electronic commerce are entwined throughout government, including taxes and duties, restrictions on the type of information transmitted, control over standards development, licensing requirements, intellectual property protection, privacy, and security. These issues warrant great caution from government lest the solution be more serious than the problem.

In “A Framework for Global Electronic Commerce ¹¹,” Clinton/Gore advocate a minimalist approach from the public sector, while letting the private sector lead. “Governments should avoid undue restrictions on electronic commerce.... For example, the U.S. believes that no new taxes should be imposed on Internet commerce, and states should coordinate their allocation of income derived from electronic commerce. Governments should recognize the unique qualities of the Internet. The genius and explosive success of the Internet can be attributed in part to its decentralized nature and to its tradition of bottom-up governance.”

However, if firms doing business on the digital network infrastructure do not address the critical issues, and the public welfare is jeopardized, government will inevitably intervene.

PUTTING OUR MINDS TOGETHER we can take advantage of the digital network infrastructure to improve the competitiveness of Metropolitan Chicago businesses, encourage the creation of new products and services, assure universal access that is required to make electronic commerce work, and provide a sound legal framework for transactions.

First, the business community, through the strong network of Chambers of Commerce and other business and trade associations, in collaboration with government and economic officials, should expand their efforts to provide a forum for understanding and capitalizing on the opportunities made possible by the digital network infrastructure. The agenda should include:

• Assisting all businesses to understand the potential of electronic commerce to increase competitiveness and expand market opportunities. This could be accomplished through seminars, workshops, conferences, Web-based information, and other vehicles;

• Working together to identify and eliminate the technical barriers to free market access, such as proprietary software, lack of standards, or line exclusions; and,

• Designing and implementing a strategy to assure, along with all governmental jurisdictions, that every corner of Metropolitan Chicago — homes and businesses — has access to the digital network infrastructure.

“It is in the economic interest of Metropolitan Chicago to assure that the digital network infrastructure is extended quickly and homes and businesses are connected.”

Second, public officials and policy makers should take the initiative to work with the private sector to assure an effective, sensible legal framework for electronic commerce without creating new barriers. This agenda should include:

• Facilitating actions related to contracts and liability.
• Consumer protection and security.
• Intellectual property and information content.

Top of page