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If you’re looking for the latest e-commerce business model, you might skip the business books and try a bit of fiction: James Hilton’s Lost Horizon. The novel describes Shangri-La, that fictitious land beyond the Tibetan mountains where people never aged and lived in perfect harmony. The 1933 book doesn’t exactly provide a blueprint for an Internet company, but it does set the right tone for a new business concept known as a "metamarket." In Shangri-La, a metamarket would be described as a strange and wonderful online place where customers can find everything they want that relates to complex life transactions, such as purchasing a home, saving for retirement, or seeking medical advice. Mohan Sawhney, the Kellogg Graduate School of Management professor who coined the metamarket term, has popularized it and is working with numerous start-ups that hope to become "metamediaries" that coordinate these metamarkets. But, even though Sawhney is making everybody’s list of the most important thinkers on e-commerce, there is still quite a bit of confusion. Perhaps because the concept is so new that there aren’t enough clear successes, companies aren’t sure what to use as the organizing principle of a metamarket. So, here are the four archetypes of metamarkets that have emerged thus far: ASPIRATIONS: These metamarkets look deeply into the future or fulfill dreams today. A metamediary such as armchairmillionaire.com tries to give users all the information and services that they need to satisfy their hopes of becoming rich. IExplore.com helps people plan once-in-a-lifetime vacations. Aspiration metamarkets require allowing people to self-actualize. IExplore isn’t just about wanting to climb Mount Kilimanjaro; it’s also about helping people feel like explorers. Armchairmillionaire isn’t just about having a million dollars; it’s about the lifestyle of the rich and famous. TIME: This type of metamarket is driven by specific events. A metamediary such as Edmunds.com handles car purchases by providing users with all sorts of information about the cars they’re considering buying, about alternatives, and about how to get the best prices. Edmunds also lets buyers line up financing, insurance, and other services through its site. WeddingChannel.com offers similar services for those getting married, including schedules, reminders, planning devices, and calendars. INSTRUCTION: These metamarkets can be for hobbyists and enthusiasts. Garden.com, for instance, helps gardeners design their landscaping, find or grow the plants they want, and hire advisers or gardeners. Cooking.com offers a similar array of services for home chefs. Instruction metamarkets are about mastery. So, the sites need to focus not only on great content, but also provide tools to track progress toward a goal. AFFINITIES: This type of metamarket is organized based largely on who the members are, rather than specifically on what they hope to do. AARP.com, for instance, offers an array of services for people who are retired or who are thinking of retiring. MyCFO offers a full suite of financial services for individuals with at least $100 million in net worth. Metamarkets based on affinity have the added benefit of appealing to large enough numbers of people that the metamediaries can function as buying groups, amassing so much demand that they can insist on low prices. Affinity metamarkets are about identification, so the sites need to have especially strong tools for building communities. Even when a would-be metamediary picks a reasonable principle to organize around, nascent metamarkets can be like a child’s soccer match. Each player circles the ball and kicks hard, but their efforts aren’t coordinated. For instance, ImproveNet.com can suggest a contractor to build a deck, but you’re on your own to find landscaping, outdoor furniture, paint, and an insurer to amend your homeowner’s policy. For metamarkets to succeed, the players need to realize that not everyone can be a host and must segment themselves into three roles: HOST: To be a host, metamediaries need to generate awareness by branding themselves as the place to go for a particular purpose, much as BabyCenter.com has done for pregnancy and infant care. More daunting, hosts must create a reputation for objectivity. They must provide valid price comparisons and choice among many providers. They can never be shills. Ideally, they should have no stake in transactions. At the least, they need to be explicit about their interests. The New York Times’ nytimes.com is exemplary at this. It provides visual cues that make clear what is advertising and what is news. One caution: The biggest mistake is to offer too many products and services too early. The result is integration nightmares and surly customers. EXPERTS: Because metamarkets are designed to help people with complex transactions, they all involve giving advice. Sometimes, the metamediary will provide the advice. For instance, Garden.com has its Garden Doctor. More often, the metamediary pulls together outside experts. The new HealthCite.com [See "Medicine Men," Context, August/September 2000] supplies medical advice from third parties. HealthCite also has links to U.S. government reports and top medical journals. FULFILLMENT: This is where most of those who aren’t metamediaries will play their role. Somebody has to provide Edmunds’ customers with insurance, and, at least at the beginning, it won’t be Edmunds. As metamarkets grow, there will be a host of opportunities for other companies to ally with the metamediaries and find big, new audiences for their products and services. There will also be opportunities for companies such as Keystone and Fingerhut that handle the really messy problem of order fulfillment. The metamediary still plays a crucial role here. It must make sure that everything having to do with transactions is handled so efficiently and appears so seamless that the customer will imagine himself dealing with a single company. If he has to deal with lots of different companies, then why does he need the metamediary in the first place? It’s worth noting that metamarkets could, in fact, arise in several ad hoc fashions. Expert systems and virtual guides could finally become robust enough that individuals could decide on their own to, say, search the Web and pull together all the information, products, and services associated with buying a house. Already, Spyonit.com can plant spies around the Internet to keep an eye out for answers to questions such as when Blade Runner is next on TV. Services such as the embattled Napster rove the Internet to find music or other products specified by users. Most Web surfers save lists of frequently visited sites, which sometimes function as "mini-metamarkets." An avid skier might have links to resorts, an online travel page, an airline’s Web site listing winter getaway fares, a sports store, a snow-quality report, and a weather page. The obvious lesson is that metamarkets must be designed just right, or customers will do it themselves.
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