RULING THE NET.

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. [ABSTRACT FROM AUTHOR]