Knowledge Channel Networks
White Paper
Integrating Industry Value Chains on the Internet
by Dave Davison, 1999

In our 1997 report The Knowledge Channel, we emphasized the importance of the Internet as a social and technological phenomenon becoming a key element of corporate strategy, and described the investment potential of certain types of new Internet business models. Purchase The Knowledge Channel from toExcel (ondemand publishing).

Since the publication of the report we have seen the creation of a host of new Internet companies with the business models described in The Knowledge Channel, and an explosion in Initial Public Offerings of Internet companies. These new ".com" IPO's have market capitalizations exceeding many Fortune 500 companies, giving them "trading paper" for aggressive acquisition campaigns and increasing economies of scale. These extraordinary ".com" market caps are based largely on the expected future value of subscriber "eyeballs" as these new "Media Portal" companies race each other to aggregate and retain a continuously growing subscriber base, enabling opportunities for future advertising and e-commerce revenues.

As we predicted in The Knowledge Channel, these new Media Portals seek to insert themselves between the established corporation and its customer, forcing established companies to advertise through the Portal to reach their markets, or worse, to see their Brand value evaporate through commoditization as Media Portals create major buying aggregations and engage in e-trading transactions on behalf of their subscribers.

In the face of the Media Portal invasion, we now see a rapidly emerging trend in the development of Corporate Portals. We believe that this development portends a new and important opportunity, the potential for the linking of Corporate portals into Knowledge Channel Networks that reach across and unify entire industries and their value chains.

We predict that this trend will be rapidly enabled by the widespread adoption of the new XML(Extensible Markup Language) "standards" which are described as the "platform for the Second Generation Web" in the May 1999 issue of Scientific American. XML, first introduced by the W3C in early 1998, is rapidly replacing the "dumb" HTML webpage with "smart" XML contextual structures that make web page information "self-describing".

The evolution of XML into Extensible Style Sheets (XSL) will enable content owners to "write once and publish everywhere" in dynamic formats designed to match the userís access or display devices and to support multilingual multimedia publication.

Accelerating development of XML-based Resource Description Formats ( RDF) will spread the use of a standard meta-data structure for the defining the contents of websites which will dramatically improve both the speed and the quality of searching Web-based information libraries.

Using XML and its derivative software tools, portals serving entire industries and industry clusters now have the potential to emerge as powerful market forces. They will integrate across industries and legacy information systems, and will provide electronic environments for real-time, authenticated and secure information interchange and inter-industry commerce.

Knowledge Channel Networks will build upon certain elements of the existing first generation Web, and the emerging corporate portals, but will add new cross-industry collaborative value for business-to-business information interchange based on the emerging XML standards and software tools. As a result, these networks will aggregate large numbers of industry participants, creating cohesive communities and defining enormous commercial opportunities for vendors, customers, and content owners. Similarly, targeted advertising will be a prominent characteristic of these networks, with both pushed spots and extensive "permission marketing" potentials for establishing dialog between buyer and vendor.

An integrated XML-compliant system "platform" will provide core functionality built on XML and IP protocols and will use Application Servers and Virtual Private Networks to deliver increasing bandwidth, encrypted security and ubiquitous connectivity to a new generation of digital devices ranging from the desktop to portable digital assistants providing users with "anytime-anywhere" access to the knowledge and resources they need to perform productively.

Layered on top of core Internet technology will be a suite of tools accommodating basic commercial activities, including all forms of purchase transactions, agent software for comparison shopping, shipment management, and settlement of accounts. In addition there will be tools for managing digital asset libraries, for project management, and for all forms of dialog, discussion, and query.

Additional functionality will serve industry-wide supplier consortia with catalog aggregation and inventory leveling. Similarly, industry-wide buyer consortia will be supported with bid-for-supply functionality, buyer networking and aggregation, and performance data on key suppliers, products, and product families. Industry-specific education, recruitment, employment, and publishing needs will also be supported, serving large numbers of individuals and organizations.

Knowledge Channel Networks will adapt these generic Internet tools to the needs of vertical industries and industry clusters. The value of Knowledge Channel Networks will be particularly compelling in industries with very complex and information-intensive value chains. They will enable industry participants to enhance and protect their key value-added knowledge competences in the value chain, and to better manage their relationships with suppliers, customers, and partners for mutual benefit. They will also support time compression by eliminating the "information float" that now hinders effectiveness and adds extra cost to information exchange across industry value chains.

On top of core transaction and information support tools, the next layer up will consist of industry-specific content developed by trade associations, publishing firms of all types, conference organizers, and consulting firms.

In addition, these networks will exploit the customization of generic content and functionality now provided today by portal companies such as AOL/Netscape and Yahoo. Personal E-mail accounts, calendaring, stock quotes, media "channels," and consumer buying services will all be integrated through a single,persistent Knowledge Channel user interface

We believe that the creation of Knowledge Channel Networks will generate increasing economic returns from the network effects of their widespread adoption across major industries. Working with technology platform providers, channel partners in targeted industries and venture funding sources, we will explore the potential to create and manage a portfolio of new Knowledge Channel Network companies in selected vertical markets.

Information-intensive industries in which Knowledge Channel Networks hold great promise include:

• Advertising Agencies
• AEC - Architecture-Engineering-Construction
• Education and Training
• Electronic Media Production and Publishing
• Health Care and Life Sciences
• Law Practices
• Management Consulting Firms
• New Venture Development and Management
• Pharmaceutical and Biotech Development
• Real Estate Development and Marketing
• Scientific Research and Development
• Software Development and Distribution
• Trade Show and Convention Management
• Telecom Services