HomeFax: Spare us the junk! – new information service

HomeFax: Spare us the junk! – new information service – includes related article on consensual commercial applications

HOMEFAX: SPARE US THE JUNK! Attempting to promote an information market of a very different kind are Chip Elitzer, president of HomeFax, and co-founder and chief advisor Don Peppers, head of Chiat/Day/Mojo’s direct-marketing arm. HomeFax is a service every former Regional Bell Operating Company should be jumping on, now that the government has allowed the RBOCs to offer information services. Likewise, it’s something every newspaper in the country should be offering, if only to keep the RBOCs out. In fact, Elitzer has had little luck in raising funding or finding a corporate sponsor to implement his project; the advertising industry and everyone who depends on it are in inimediate-problems-only mode right now. The basic idea is extremely simple, but the overall scheme is complex and airtight. Fax servers, fax response and other fax tools are no longer novel, but HomeFax is different: It’s fax as an advertising medium, with the intermediary, HomeFax, selling the recipients to the advertisers much as a newspaper does. However, it’s closer to direct mail in the specificity of its targeting; like all new media, it’s similar-except … HomeFax also offers an elegant solution to the problem of data privacy. All without government regulation, it uses the guarantee of privacy – limits on junk faxes – as a customer benefit and carefully controls the access to its customers by advertisers. (This requires no government action along the lines we proposed in our June issue – that the government should assert and enforce each citizen’s full rights to disclose, sell or keep private most data about himself and his transactions. Instead, such ownership is guaranteed by contract in the HomeFax model.) A fax for your attention In short, the idea is that HomeFax offers its subscribers the use of a “free” fax machine; in return, the subscriber agrees to receive a specified number of pages (two, for now) of targeted advertising each day in a fax mailbox and to fill in a monthly questionnaire about purchase intentions. In any given month, the consumer can decline to fill in the form and pay $10 for continued use of the fax machine and mailbox. HomeFax acts as the middleman, receiving payment from the advertiser for delivering messages to qualified prospects. In the long run, there could also be different payment schemes based on transactions, but those work best with electronic mail and electronic transactions, as in the American Information Exchange, above. HomeFax makes its money from the advertisers, who are not allowed to know the identities of the subscribers (unless a subscriber explicitly identifies himself to an advertiser). HomeFax knows who they are but won’t tell an advertiser without the customer’s permission. The HomeFax promise – “We won’t reveal who you are”(2) – protects both the subscribers’ privacy and HomeFax’s economic interests. The customer is free to buy from the vendor

(2) HomeFax was thinking of offering mail-merge as an an option to advertisers; HomeFax would have managed the process without letting advertisers see the names. But that’s one of those too-clever ideas that could have backfired. “People would think we were breaking our promise,” says Elitzer. directly through normal channels, send in a coupon with a credit card number and address but no fax box number, or send in a fax coupon or free-form request for further information through HomeFax without revealing his fax box number. HomeFax tells the advertiser how many people responded and forwards their communications and the advertisers, responses, but it keeps the subscribers’ names and box numbers secret. Subscribers, however, are free to give out their box numbers to friends and family or even advertisers. The logistics To get a critical-mass service started, Elitzer estimates, HomeFax should start with at least 5000 homes – a capital cost/barrier of about $4 million. Each fax machine costs only about $300, or less in volume, and then there’s software, marketing, support and overhead. Much as the phone company used to own your telephone in the good old days, HomeFax will own your fax machine, taking responsibility for keeping it in order. In a few years, home fax machines are likely to be so prevalent that HomeFax will own only the server and the information, but the basic dynamics of the system – service subsidized by advertisers – will be the same. HomeFax’s large-scale fax server will receive, store and transmit faxes, including the advertising materials and also consumers’ personal messages. It will also contain a database to manage the mailboxes and direct communications correctly, and handle billing and customer records. (The owner of the public fax box doesn’t know who receives its messages. Someone who’s not a subscriber who calls up a public fax box thus also keeps his identity unknown, because the request is handled by the HomeFax server.) The consumer benefits from having a fax mailbox (with a PIN), so that his line isn’t tied up receiving faxes; he calls up his mailbox to retrieve his faxes at his own convenience. Except for identity-protected responses to advertisers, however, he sends faxes directly to recipients at his own expense from his “free” fax machine. (He can also call his mailbox from the road, or from home or office.) People sending him faxes don’t get busy lines, and can reach him from any fax machine as long as they know the HomeFax system number and his personal, unlisted fax box number. HomeFax will impose a limit on free box traffic and charge for it beyond about 1000 pages per month; that will keep HomeFax from having to do so retroactively – a la Prodigy. (In retrospect, it’s clear that at least part of Prodigy’s problems arose from a less explicit contract with users and a mingling of advertising and editorial contents. With HomeFax, the distinctions should be clearer – especially since HomeFax can learn from Prodigy’s mistakes.) The advertizer’s role Why do the advertisers need HomeFax? Can’t they just fax their messages direct? HomeFax acts like any other advertising medium (but with a flavor of direct mail), finding and delivering messages to consumers. HomeFax’s limits on commercial messages (which in theory could be adjustable by the subscriber in return for a lesser or greater subsidy or even a payment) make the service more appealing to the consumer, and provide the advertiser with a less cluttered medium and presumably a higher quality of recipient. The advertiser benefits by getting targeted subscribers. Although the advertiser can’t find out an identity until the consumer contacts him, he can specify what kind of customers he wants and (for a price, and to the extent that people who plan to buy three Forsches a year are available) HomeFax will deliver messages to them. Separately, advertisers can rent public mailboxes from HomeFax (a good tie-in for a newspaper) and publish their fax numbers, either over HomeFax or in any other medium, such as newspaper ads, Yellow Pages, or even restaurant fliers: “Fax GOOD-EAT to download our daily specials and prices! Then fax your order back. 20 percent off before 11.30111 Thus an advertiser can publish a single number in a display or other ad, and deliver a continually changing message through the medium of fax. Just as with other fax services, for example, HomeFax public-box renters can publish a catalogue of numbers, prompting the customer to dial in for the particular information he wants. (This is also a handy service, but it doesn’t offer the unique privacy or other features of the HomeFax advertising/private-box service.)

Slow response So why can’t HomeFax get funded? It’s a model of how future systems will operate. In a sense, that’s the problem. The idea is such a natural that everyone fears his advantage will be wiped away by immediate competition. There’s little proprietary content to it. And since it’s a medium for ads and a user’s own communications rather than an editorial product, the assumption is that one guy’s HomeFax service would be much like another’s. But that’s not necessarily so. For starters, Elitzer is going after newspapers as the most logical target: They’re local, they have a subscriber base – and they have a lot to lose if someone else starts such a service in their territory. For example: “Free” With your paid-up subscription to the Globesville Gazette – a brand-new fax machine and up to 20 free fax messages per month. All you have to do is agree to receive two sponsor messages a day…. They are also uniquely positioned to include some editorial in the service: “Now you can receive background information on our editorial coverage sports scores, stock tables, maps of trouble spots around the world… After reading an article on the school board, readers could call HomeFax to download a referendum ballot or an opinion questionnaire; a map of traffic hot spots for the holiday season; or the details of a housing commission meeting. The paper could publish an index of letters to the editor, sparing those of us who are not interested, but allowing virtually anyone to consider himself “published,” with his opinions accessible to those readers who care. The New York Times is already generating serious audiotex revenues with telephone tips on its crossword puzzles; think what it could do with HomeFax. The newspaper’s advertisers, of course could also publish their public fax numbers in their ads (also in their ads in competing papers and Yellow Pages, of course). The newspaper gets the fax revenues, cuts its printing costs (perhaps) and provides additional customer service. What’s to prevent a competing paper from offering the service? In most towns, there is only one paper. But yes, the rub is that HomeFax has little that’s protectable other than the benefit of getting there first. But that’s a big one. If HomeFax can gain critical mass, other media will have trouble butting in. Why wait? Perhaps the problem is that the newspapers feel both embattled now but (perhaps wrongly) secure enough in the long run to wait, and the other potential players don’t want to take on the newspapers. That’s why we’re glad to see that the Bells have been unleashed – and disappointed to see that they’re not doing much about it. Of course, many may be planning services such as HomeFax on their own. We suspect, however, they’ll discover there’s more to it than technology. Owning phone lines isn’t enough. Elitzer has also talked with RBOCs, especially their directory operations, venture capitalists including telecom specialists, Yellow Pages publishers, fax machine manufacturers and others. Most of them asked me to come back after I had proved the concept with someone else’s money,” he says. The problem of unprotectable intellectual property is something of a red herring. Most good ideas (as opposed to implementations) are unprotectable. SHould HomeFax be successful (or even if it’s not) there will inevitably be similar services around. Elitzer, however, isn’t really asking for money for his idea. He’s asking for money to implement it. If the implementation is good, the first one in should make a lot more money back. Consider Federal Express – one of the companies Elitzer helped to launch as a junior investment banker 15 years ago. Its idea was similarly ambitious and similarly unprotectable, yet the company did extremely well by being the first one in with a clear concept and a meticulous implementation. The broader implications

Whoever the eventual players, HomeFax and media like it should open up a market for smaller advertisers who aren’t in the game now, much as AMIX is doing for information vendors. Elitzer sees HomeFax as a local service (the customer pays for the phone calls to his fax box) that provides a medium for local advertisers though public fax boxes. It will probably start with existing local advertisers such as restaurants, retailers and the like. But with volume-dependent service – the advertiser pays depending on how many people call in for a fax – smaller advertisers such as babysitters, semi-professional photographers, free-lance network techies, moonlighting pastry chefs and the like can join in – as illustrated on the page across. Lots of people who couldn’t afford to advertise will be able to do so. Altogether, but on a different level from AMIX, HomeFax will offer a more fluid marketplace for occasional, low-cost services and occasional, low-cost suppliers to meet each other, replacing the bulletin board at the local supermarket and amplifying the backyard-fence informal network Juan and Alice use now. The purpose of AMIX is to extend the market for general information country- or even worldwide; the purpose of HomeFax is to introduce a more efficient market locally. (See Release 1.0, 9-91.) For example, HomeFax could provide lowcost babysitter listings. Each babysitter would have his or her own fax number, from which a prospective customer could download the sitter’s own description of his or her services (across). And of course the babysitter could change the listing by sending in a new one as bookings are made. One benefit of fax: You can tell a lot from the handwriting! HomeFax and Prodigy: Compare and contrast

HomeFax and Prodigy reflect the two technologies they are implementations of – fax and electronic mail. Long run, HomeFax should give way to HomeMail,” a similarly ID-protected, advertiser-sponsored e-mail network. (We hope, however, that it will be one of hundreds of linked networks, each with its own character, rules and members.) But in the short run, HomeFax makes a lot of sense. Prodigy (whatever the company says) requires a certain amount of computer sophistication – or at least comfort – to operate. The psychological aspect of HomeFax is very different: The customer is in control. He dials the fax box. He collects the mail, and faxes stuff back at his own pace. There is no blinking cursor, no interactivity that (seems to) require an immediate response, no keyboard. It all feels comfortably lowtech, and you can send handwritten messages. Of course all the benefits of computers are lacking, but many people don’t want them yet. Moreover, many of them could be offered by the server: Address lists, electronic transactions based on phone calls or fax forms, and so forth. Privacy is also easier to guarantee convincingly. When all the information is electronic, it’s easier to search than fax images. (Of course, HomeFax knows who’s faxing to whom through its service, but it represents itself as the consumer’s friend. Any faxing the consumer does to his own friends independently of HomeFax is as private as he wishes.) When the content is image, somehow it’s easier to keep the content and the medium separate. Of course, much of this distinction is in the users’ minds – but it’s reflected in their willingness to experiment with fax while they may still be leery of computers and e-mail. HOW HOMEFAX PUBLIC FAXBOXES WORK

HomeFax assigns you one or more box numbers and a Personal Identification Number (PIN) TO POST an ad or other information you, 1 call THE LOCAL HOMEFAX PHONE NUMBER

from your fax machine 2 A recorded voice prompts you to ENTER

YOUR BOX NUMBER AND PIN. 3 If the PIN is valid for that box, the voice

instructs you to PRESS THE START” KEY

on your fax machine at the tone, and hang

up the handset. TO RETRIEVE your ad or other information, a caller 1 dials THE LOCAL HOMEFAX NUMBER from

any fax machine (if he’s calling from out of

town, he’s placing a long distance call to

reach that Homefax number). 2 A recorded voice prompts the caller to ENTER

THE BOX NUMBER of the information he

wants to receive.

The voice gives the caller the option to enter

additional box numbers or to begin receiving

the faxed material already requested. 3 The voice instructs the caller to PRESS THE

“START” KEY on his fax machine at the tone,

and hang up his handset.

The ad or other information in your box is

immediately printed out on the caller’s tax

machine on the same phone call he initiated HOW HOMEFAX PERSONAL FAX MAILBOXES WORK

HomeFax assigns you an unlisted box number and a Personal Identification Number (PIN). TO SEND you a fax, a caller 1 dials THE LOCAL HOMEFAX PHONE NUMBER

from his fax machine. 2 A recorded voice prompts the caller to

ENTER YOUR BOX NUMBER. 3 If the box number entered is valid, the voice

instructs the caller to PRESS THE “START”

KEY on his fax machine at the tone, and

hang up the handset TO RECEIVE your faxes, you 1 call THE LOCAL HOMEFAX MESSAGE

PHONE NUMBER from any tax machine

(if you’re calling from out of town, you’re

placing a long distance call to reach that

HomeFax number). 2 A recorded voice asks you to ENTER YOUR

PIN. If the PIN is valid the voice tells you how

many pages of faxes you have in you, box 3 At the lone you PRESS THE “START” KEY

on the fax machine, and hang up the handset. Your faxes are immediately printed out on the fax machine you’re calling from on the same phone call that you initiated If for any reason any of the pages are not successfully faxed-out-of-paper, line error, receiving machine malfunction, or simply because ou are calling from a regular phone to see how many pages are in your box-those pages will remain safely in your box until you retrieve them. Consensual commercial communications

Despite claims from the direct-mail industry that most consumers don’t really care about “privacy,” Elitzer’s focus groups found it to be a major concern among the upscale consumers he hopes to address. Maybe they don’t call it “privacy,” just the right not to be bothered with junk. But whatever you call it, says Elitzer, most of those surveyed liked the idea of a fax mailbox as a gateway and intermediary between them and would-be advertisers (or other uninvited communications). And most would be happy to make the explicit contract HomeFax offers – a free, identity-protected fax machine and service in return for a limited amount of screened advertising.

A consumer can even respond to an ad and request further information through HomeFax without revealing his identity. The only time he gives away his identity is when he knowingly fills and returns a form from the advertiser (not HomeFax’s forms, which protect his identity), or if he purchases by credit card (at which point the credit card company gets hold of it, too). HomeFax keeps track of all his activity and mediates between him and the advertiser; in a future version, it could even handle billing and fulfillment with guaranteed confidentiality. Of course, then HomeFax would know everything… It would become, in effect, a databank like those we described in our June issue – except that it would be a private one at the service of a defined group of advertisers. Those are issues for the future. For now, this is the closest we’ve seen to a commercial venture that addresses the privacy issues. It’s not perfect (it can’t be in a world where privacy is unprotected) but it’s a good start – and an excellent model.

COPYRIGHT 1991 EDventure Holdings, Inc.

COPYRIGHT 2004 Gale Group