Plate glass has a remarkable history. While its development might seem to be of minor importance, plate glass set in motion an enormous shift in power from companies to their customers and changed how companies compete. Plate glass had the far-reaching, unintended consequences that characterize "killer apps."

Plate glass also turns out to be a good analogy for what's happening with electronic commerce, which is causing upheaval in the world of business for many of the same reasons that plate glass did. Looking at how far the unintended consequences of plate glass spread suggests that we have only begun to come to grips with the changes that electronic commerce will force on us.

Developed in France for Louis XIV's "Hall of Mirrors" at Versailles, for hundreds of years plate glass remained an important but expensive alternative to blown glass. In the late 19th century and into the 20th century, however, remarkable developments in mass production (inspired in part by the automotive industry) made plate glass cheap enough to put everywhere. As could have been expected, the formerly powerful guilds that were responsible for glass production were reduced to niche producers of art and other specialty glass.

The unpredictable changes began because, as storefronts switched from small displays or brightly painted wooden fronts to full-length and full-width windows, they revealed the entire contents of the store to anyone passing by. In effect, the merchandise itself became an advertisement, reducing the need for advertising in newspapers, on sandwich boards, or on the storefront itself. But the change didn't just reduce merchants' costs. It also facilitated comparison shopping. Customers merely walked down the street to inspect a variety of goods from a variety of sources.

Plate glass literally and figuratively made merchants transparent to consumers, who quickly discovered that many food products and dry goods were identical in quality regardless of the seller. The products became commodities.

In reaction, companies developed increasingly complex forms of advertising. Merchants highlighted intangible qualities rather than tangible differences. McDonald's focused on the consistency of its hamburgers, not the burgers themselves. Toothpaste makers promoted sex appeal. Luxury cars sold status. Because the products themselves no longer appeared so distinct, sellers had to differentiate goods based on how it felt to use them. Remember the early ads for Lexus cars? The viewer saw beautiful, serene scenes of nature and heard soft, reassuring music. The voiceover was just a few evocative words. The ads never even mentioned a car, let alone showed one.

While plate glass changed advertising, retailing, and many consumer goods industries, in addition to glass-making, the effects of electronic commerce will be much more far-reaching and unpredictable. As much as plate glass made merchants transparent, electronic commerce applications make the workings of markets and companies 10 times easier to track. These applications are now introducing transparency into markets not only for commodity goods but for services as well, and for carefully branded items like appliances, cars, and information.

And the changes will accelerate. Over time, developments in agent technology will let customers crunch enormous databases of other market information so they can go well beyond evaluating price and look at a product's reliability, trendiness, or any number of other invisible attributes. Electronic commerce will do far more than just let consumers look in a shop window; it will let them inspect products and services with personalized electron microscopes.

Scary? It is for merchants. Consider the remarkable NetMarket Web site. NetMarket is a subscriber service, a virtual version of the shopping clubs that made CUC successful long before it merged with HFS to form Cendant in 1997. NetMarket offers a wide variety of products and services (books, sporting goods, computers, airline tickets, hotel rooms, and refrigerators) as well as detailed information and easy comparisons. Launched in July 1997, NetMarket sells an amazing 250,000 items over the Web, and in its first year signed up one million new members. NetMarket sold more than $1 billion in merchandise. (The site is still thriving despite the well-publicized accounting irregularities that Cendant discovered at CUC this spring.)

Even more remarkable is NetMarket's approach to selling. Recently, I went to the site to check the price for Unleashing the Killer App: Digital Strategies for Market Dominance, a book I co-wrote. I knew that Amazon was offering 30% off the cover price that day, while Barnes & Noble had a 40% discount. NetMarket showed a 31% discount, but its screen also included a button that read, "Compare prices." I clicked it, and it retrieved the other booksellers' prices. The screen now said: "We're lowering our price to compete with Barnes & Noble." And they beat Barnes & Noble's discount by one percentage point. At that moment. For me personally. NetMarket cut its price 10 percentage points based on superior competitive information provided by NetMarket itself.

Are these people crazy? I don't think so. NetMarket makes money by building its subscriber base. It does that by offering the lowest price. If NetMarket can maintain this advantage, it will attract more subscribers. The more subscribers (at $69/year for this service), the bigger the base over which NetMarket can spread its operating and marketing costs. More importantly, the more subscribers, the greater the leverage NetMarket has when it negotiates price and availability with its suppliers.

Like Wal-Mart before it, NetMarket offers low prices that are a direct result of increased purchasing power. If Procter & Gamble doesn't agree to sell Wal-Mart its goods at an attractive price, Wal-Mart and its mass of customers can walk away. Well, today, NetMarket and Cendant's other clubs represent 67 million consumers. That translates to significant leverage over producers to cut prices so low that NetMarket can confidently offer the lowest price on any of its 250,000 items.

NetMarket is not so much an electronic shopping mall as it is a gigantic consumer cartel. The subscription is, in effect, the company's fee for organizing and representing that cartel. And now NetMarket is using the Web, with its drastically lower costs of organization, customer service, and information delivery, to turbo-charge that cartel.

Who knows how the cartel will develop? Maybe NetMarket will help members communicate with each other, creating new dynamics that change buying patterns. Maybe something else will happen. In any case, if plate glass is any guide, the transparency being provided by NetMarket and some other electronic commerce services will ripple through a host of industries for years and decades to come.