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Dear Subscribers:

You know the game of "Freeze!" People are running and dancing around madly, when someone yells "freeze!" and gets to see what crazy position everybody was in at that second. That's what the Digital Kids conference is like every year (this was our third): It's a freeze-frame opportunity to look at where all sorts of Internet publishers, retailers, and entertainers - from old TV and publishing giants to startups who still haven't unveiled their sites - are right now, this second week of June '99. It's telling. Parents should hear about it. Here's our lineup:

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A look at the inside

Earlier this week we sat for hours in the slightly darkened ballroom of a small, chic hotel in San Francisco's financial district, listening to people in the Internet, entertainment, retail, and publishing industries talk about kids. Our kids, their kids - and specifically online kids.

It was Jupiter Communications's annual "Digital Kids" conference. The big guys - Disney, Nickelodeon, PBS, Discovery Channel, and other familiar names - were (and always are) there. So were the year's hottest startups, the launches of their products and services seemingly timed to Digital Kids; the conference helps generate buzz (very efficient, low-cost marketing). It's an intense two days, and we learn a lot every time. It's both a snapshot of the industry's thinking and a sampler of the results: the latest innovations, business strategies, and perceptions of the market (kids, as well as parents, since they talked about us as the gateway a lot). It's a rare chance to get behind the press releases and sound bytes.

Just how can a silly conference reveal such things? Well, if you put mics in the faces of 4-5 heads of companies (often they're competitors, to add a little spice), seat them in a row in front of hundreds of peers, and ask them questions for which they've had virtually no preparation, you're liable to get a little spontaneity. Spontaneity is revealing.

Another interesting ingredient in this volatile mix is the actual medium they're trying to talk about so articulately up there on the stage: the Internet, the medium to which some of them have been dragged kicking and screaming (others are very excited about it, of course). Though some of us may feel the 'Net's been around a while, it's actually a very new medium for those trying to make money in it. Plus all the technology they're working with is constantly changing.

So, whereas at conferences in other industries executives might be presenting a spanking-new product that will actually look the same when it's on the market for Christmas '99, these people know that what they're presenting could look radically different in a month or so. Their business model could change. They could get bought out or spun off next week. They might file for an IPO. They're figuring it out as they go along, and they know their audience knows that (we were kind of glad to be in the audience).

We said this last year, and it remains true: The Internet is a humbling thing, whether you sit at the top of a giant media conglomerate or you're the CEO of a venture-capital-funded startup set to launch next month. Even as we were sitting down to talk with a vice president of Disney Online to hear about the launch of Club Blast instant messaging, news was breaking that Disney was "shaking up" its Internet unit and considering spinning it off entirely to help raise Disney's "sagging stock price." The Internet keeps everyone on their toes.

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Digital Kids themes

We'll cover the details of this just-gathered "Digital Kids intelligence" in future weeks and focus on themes right now. Our coverage will be pretty complete because 1) what we heard in San Francisco will have direct impact on kids' online experiences (and therefore you!) in the coming year, and 2) you won't get this anywhere else. We're putting links to news pieces about the conference at the bottom, but they're mostly about research data released at the conference - not a lot of context.

This week, major themes at the conference and a little bit about them:

  1. Online safety is hot

    We'll give you new products and services (there are many, and they're good) - next week. The topic itself came up in every roundtable discussion and talk, almost every presentation even. Trish Lindsay, executive director of FreeZone, said, "The safety issue has become a business in itself!" There was verbal and visceral evidence of that all over the conference.

    It even threaded its way through a discussion on "Revenue Strategies for the Near Term." For us, this made revenue strategies rather interesting! This panel talked about what kinds of ads are appropriate for kids at various age levels, whether e-commerce should ever target anyone under age 13, and what kind of personal information is off bounds for site publishers to gather. The people on the panel were from Nickelodeon Online, Sony, JuniorNet , MaMaMedia, and ZapMe!. All were discussing publishing on the Web at large except JuniorNet (a closed online service for kids 3-12) and ZapMe!, which markets 'Net-related tools and technology to schools. More on these guys later.

    Back to "safety as big business." It's partly sheer numbers: Whereas two years ago this month we reported Jupiter saying there were 4 million kids online, now there are 17 million (kids and teens). That's becoming a significant "market" for online-safety purveyors. But the real market is the parents of all those online kids. In their coverage of violence in school, the media have folded the Internet into many stories. Parent awareness - both positive and negative - is growing. We can help our peers who are new to the Internet to develop a healthy balance in their approach to the medium.

    Nickelodeon president Herb Scannell spent his whole keynote address on online safety, starting by holding up a full-page ad in the New York Times. Pointing to it, he said some companies are using "blatant scare tactics … marketing to the fear of parents." He referred to the effects of Littleton: "There's a tremendous amount of public soul-searching going on," with media stories about "the secret lives of teenagers," ads referring to the dark side of cyberspace, President Clinton's announcement of a $1 million FTC study on the "marketing of violence". Herb told his fellow children's programmers, "We need to do everything we can to make the Internet safer, but we need to be constructive in tackling the safety issue and not perpetuate a climate of fear."

    To editorialize a bit here, we support that view, adding that the best way is to stay informed - about our children's online activities as well as about developments on the Web and in government and industry where they affect this young medium.

  2. E-commerce & kids

    The 21.9 million kids and 16.6 million teens who will be online by 2002 will be spending $1.3 billion in cyberspace that year. But even at that spending level and even though they represent the fastest-growing sectors of the online population, online kids and teens won't exactly represent a consumption windfall to online retailers. They will "directly account for less than 5% of the online shopping revenues in 2002," says Jupiter, the NYC-based Internet research firm which hosted the conference and which announced this data on Monday. For the most part, our children will just continue to have a lot of influence in their parents' online purchasing decisions, says Jupiter. Not much will have changed. (BTW, for comparison purposes, Sports Illustrated Kids told us that kids 7-14 spend $17 billion of their own money right now, online and offline.)

    We'll go into more detail on this subject, too, in a couple of weeks, telling you about alternative means of payment (forget credit cards, use your "BEENZ") that make e-shopping more secure and accessible. Here are just some themes and observations:

    Won't sell direct. We were interested to hear corporate presenters - whether they were retailers or publishers thinking about adding e-commerce to their Web sites - saying they would not sell directly to kids under 13. The one exception is iCanBuy.com (which we reviewed two weeks ago, which gives parents control over spending amounts, product choices, and actual purchasing. Toy and other kids retailers (e.g., eToys, BrainPlay, Fogdog Sports, and kidflix.com) don't even target kids; they said they just market to parents.

    Responsible retail. In presenting its research, Jupiter stressed the need for responsible selling, and this point was echoed throughout. Being responsible is good business, marketers said; if they alienate parents, they added, their business simply goes away. Would that it were that simple, but the logic is there and when it's stated repeatedly at an industry gathering like Digital Kids it begins to suggest consensus.

    Our kids are smarter than we were. Ok, so why, really, is it good business to be honest? Because - as marketer after marketer suggested - this generation has advertising street smarts. They know when they're getting a pitch. Kids like advertisers to level with them. When they do, kids respond very positively; when they don't, kids run as fast as they can in the opposite direction. Marketers also say kids expect more value now: A message isn't enough. An environment needs to be created, people on a branding panel said - a place where kids can "hang out." The brand needs to fit their lifestyle, offer them something of genuine value to them, panelists said. Which puts the onus on marketers to understand their customers better than ever before - either that or just put up a space on the Web where kids can talk to each other, swap cards, Beanies, Furbies, etc. Kid auctions will shortly follow eBay and all the other auction sites, we suspect.

    More control to come. Many presenters said e-commerce will represent greater control over children's shopping and spending, making the "nag factor" more manageable and shopping experience more warm 'n' fuzzy. Idit Harel, CEO of MaMaMedia, said it's hard enough dragging a child off to the store to buy a birthday present for Great-Aunt Gertrude. If done online, it can be a fun experience for parent and child, she said. Idit spoke of the new opportunities this gives e-retailers to learn and innovate. She said MaMaMedia was spending a lot of time educating its advertisers, and that they were seeking that kind of help. Because parents will soon have the ability to turn off ads entirely in a Web site or portal, it behooves advertisers to do their Web work very well.

    Privacy policies are out in force. That's the good news. More and more marketing and e-commerce sites are complying with FTC regs that they post privacy policies. The bad news is we really have to read 'em. Some sites are technically complying by having privacy statements, but they state in them that they sell personal information to third parties. That's not what the FTC had in mind. So just having a privacy policy is no guarantee of fair consumer practices.

    A postmodern Consumer Reports. You might find this site useful: BizRate.com. Not only do their own "staff reviewers" rate retail sites, we do - the average Joe shopper submits ratings, based on his shopping experience. BizRate is an "infomediary," one of those unique-to-the-Net ideas that potentially has phenomenal usefulness to all parts of the equation - buyers, sellers, etc. Buyers can find out about fair pricing, customer service, etc.; retailers can find out what they're doing wrong; and with all this information public, startups figure out how to do it better. The only downside right now is that BizRate's in process. The database is incomplete: eBay, the first and biggest auction Web site, cannot be found in the Auctions category!

  3. Kids: Natural interactors

    Why are kids and teens the highest growth sectors of the Internet population? Well, partly because they're easy adopters of new tech, yes. But also because the medium is interactive. Presenter after presenter talked about how kids love to share online. Here, at last, is a medium whereby they can talk back, vote, display their artwork and inventions, and play.

    Let's look at that word "play." Its meaning has expanded with the Internet. Not only can kids play interactive games against a CD-ROM or their computer. Now they can play against each other, in multiples, across a global network. No barriers of time or location - except when we tell them to go to bed!

    From play to display. Peter Eio, president of LEGO, kicked off the conference. He said the most popular part of the LEGO MindStorms site is its "Hall of Fame," where young robot designers' inventions are on display (designers themselves do the nominating). What do they want more of in the MindStorms site? LEGO says the interactive stuff: message boards, chat, interactive games, and - interestingly - more languages and countries represented in the site. Caveat: Though LEGO targeted kids aged 12 and up with this "toy," the average age of its customers is low-20s. Which brings up another point Peter made: LEGO is finding the line between the kids and adults markets increasingly blurred, and they're trying to figure out how to market to this "confusing market." (We wrote about MindStorms - a "bundled toy" consisting of microprocessor, software, LEGO pieces, documentation, and Web community - last December in our "Toys to Watch" section.)

    Girls compete differently. And a gender-related point that was made about kid interactivity: Nancie Martin of Mattel said girls "don't want to crash into each other, they're competitive in the "look what I can do way" - and, as we've seen, no medium allows this more than the Web. (Even as she spoke as Mattel's director of online content for Barbie, Nancie was moving on to an ambitious new spinoff of GirlGames Inc. called Planet Girl. We wrote about the Barbie Web site, too, last December, because of what we felt was the ingenious way it maximized what the Web can do for toy manufacturers, as opposed to retailers: allow customers to create their own custom toy. Barbie.com, FYI, is the No. 1 site for girls 6-12 and in the top 10 for girls 12-17, Nancie said.)

  4. Online-parenting

    We are the first generation of Internet parents, Nick president Herb Scannell pointed out. He was not alone. Several speakers remarked on this. Peter Eio, president of LEGO, said our children are "the first generation where kids have overtaken parents in use and knowledge of new technology."

    Ginny Markell, president-elect of the National Parent-Teacher Association, spoke to this, too, when, shortly after the Littleton story broke, she told the New York Times: "When you talk to parents about technology, it's a foreign vocabulary to them. Our kids are much better at it. But we are coming around to the realization that this is something that needs to be incorporated into the routine responsibilities of basic parenting."

    Think about it: Online-parenting is something we couldn't possibly have absorbed from our parents and grandparents. In this area of parenting, we're starting from scratch. We're all at different points on the learning curve, though, and some of us have learned some precious lessons that can be useful to others. That's why Net Family News feels we need to talk to each other more: We are in many cases each other's own best experts. Send in your own questions, lessons, insights, and hard-won family Internet policies (via feedback@netfamilynews.org) - we're very interested in publishing them.

    Also, what do you think of the themes above? Does your kid have advertising "street smarts"? Do you have concerns about e-commerce? Do you like/dislike what you hear from marketers above? Do you just want to give your kid an allowance and send him to the mall? Do e-mail us!

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DK elsewhere

Here's other Digital Kids conference coverage found this week:

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That does it for this week. Have a great weekend.

Sincerely,

Net Family News


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