RULING THE NET

The Internet promises a radical new world of business. But for many co mpanies, 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 o r imagination. Their problems stem instead from a lack of rules. Witho ut the order that rules create, business cannot be conducted. The auth ors explain why the informal rules that have developed on the Internet since the 1960s are no longer sufficient. Businesses thinking of allo wing 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 p unish violators of on-line rules. The authors believe that the key to commerce on the Internet lies in the creation of managed on-line commu nities. Such communities can be formed by service providers - entities that will restrict on-line options, fine-tune offerings to match a se lect group of users, and provide some means of recourse in cases of fr aud or abuse. Under those conditions, they will draw new companies on- line and increase the productivity of those already there. And, say th e authors, the rewards for service providers will be substantial: Comp anies that make the rules on the Internet's emerging frontier have the opportunity to reap the greatest profits.