Possibilities - Compact Disc Exchange - Buy, Sell, Trade Online

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COMPACT DISC EXCHANGE - BUY, SELL, TRADE ONLINE
-----------------------------------------------

*** From September 1990 Possibilities Newsletter ***
*** Copyright 1990 by eSoft, Inc.  All Rights Reserved ***

Compact Disc Exchange -- Buy, Sell, Trade Online
by Alan Bechtold

Online shopping has been tried by many.  However making it work takes not 
only the proper technology, but an understanding of marketing.  The Compact 
Disc Exchange, conceived and designed by Wayne Gregori, is a perfect example 
of what it takes to make this type of information system work.  The proper 
technology allows the idea to be implemented, but does not drive the design.

To see how an idea becomes a business, we asked Wayne how he got started 
with Compact Disc Exchange.  "What I did was zero in on a product that is 
pervasive throughout society and establish an online exchange for people 
interested in that product, so they could buy and sell among themselves."  
His target was the rapidly growing compact disc music market.

Now that Gregori had his idea, he proceeded to implement it.  "I came into 
the online industry not knowing a great deal about BBSs at all, so I took my 
lumps at first.  I knew I had to go with a multi-line product if I was going 
to make any money.  I was aware of TBBS and TDBS but I bought another less- 
expensive system first."

Once he had his first system up, he got a lot of positive feedback from 
callers who were excited about the service he was offering.  "But," Gregori 
added, "several users who were a bit more outspoken also pointed out that 
the software we were running was, to put it politely, a bit clunky."

Fortunately, the initial response was encouraging enough to convince Gregori 
to invest in TBBS and TDBS.  "I was extremely dissatisfied with the first 
program," he said.  "Since I was in a limited experience scenario, I didn't 
know what a lot of other products didn't have.  I had to buy the wrong 
system before I realized TBBS offered every imaginable feature I could need 
to operate the system I'd envisioned.  I was also impressed that eSoft saw 
the need for a product like TDBS and went out and produced it.  There are a 
lot of companies out there doing multi-line systems and none that I know of 
with a true multi-line online database system like TDBS."

The "new" Compact Disc Exchange went online about five months ago.  Users 
pay $10 per year to become Compact Disc Exchange members.  After the first 
year, the annual fee is waived for members who buy or sell at least four 
discs.  Members can list any compact discs they wish to sell on the system, 
including the title, artist's first and last name, selling price, category 
of music and up to four lines of descriptive text.

Members can also buy any listed discs right online.  "When a member orders a 
disc," Gregori said, "we send the seller a postpaid mailer.  He or she then 
mails us the disc and, once payment is made, we forward the disc on to the 
buyer and send a check to the seller.  We keep $1.90 per disk sold, or 20% 
of the purchase price of discs that sell for more than $20."

The whole operation sounds complex, but the system's menus are simple, and 
provide uncluttered lists of options.  These options allow a caller to scan 
for a specific CD or look at a specific category of available titles.  Wayne 
has made skillful use of TDBS programs which blend in to his TBBS menus to 
provide the database and ordering capabilities.  There is no easy way to 
tell the portions of the system which are done with TBBS internal functions 
from those which are actually TDBS programs.  The presentation format is so 
consistent and straightforward that a unified feeling emerges.

Gregori said the combination of TBBS and TDBS makes the system easy to 
maintain.  "The programs that run behind-the-scenes on our system are a lot 
more extensive than meets the eye," he said.  "What the callers see is just 
a fraction of what's going on."

All the behind-the-scenes action and a lot of the up-front options are the 
product of extensive and ingenious TDBS programming.  Gregori said he's not 
really a programmer, but he did have a couple of years' prior experience 
working with database languages such as Paradox.

"I bought TBBS and TDBS at the same time and really didn't know anything 
about the products," said Gregori.  "From the day I bought them till I had 
the system online it took about a month, working some pretty long days, 
seven days a week."

Most of that time was spent writing the intricately interlaced TDBS programs 
which allow Gregori's computer to automatically handle all of the updating 
and bookkeeping necessary to run an operation like the Compact Disc 
Exchange.

"The TDBS programming is more or less an accounting package," he said.  
"There are a lot of control modules at work.  Some modules print labels and 
track entries on the system, others produce user activity reports and sales 
and billing reports and invoices.  I wrote the system so that I pretty much 
don't have to worry about anything, except the physical side of things -- 
stuffing envelopes, putting postage on mail -- things the computer couldn't 
do.  The system also takes care of most any contigency, from sellers not 
sending in their discs to buyers not sending their money."

Most system files are automatically updated during TBBS external events.  "I 
basically just have to take a look at all the new listings before they're 
added to the system and update new users," Gregori said.

He also said he really appreciates the way TBBS lets you forget about the 
multi-line communications side of things so you can concentrate on the 
database programming.  The Compact Disc Exchange required more than a little 
concentration.  "It got kind of complicated," Gregori said, "definitely NOT 
the kind of thing you could simply whip out without a lot of forethought."

Wayne's design approach was extremely methodical -- the way all good 
application should be written, but too often aren't.  "I had the whole 
system, all my branches and logical loops and everything the program was 
going to do, written in English first."

Gregori also said he gets a lot of use out of SysOm, the TBBS Option Module 
that allows a TBBS system designer to remotely update a multi-line system 
and perform routine DOS functions even while other users are connected.  "I 
was in Michigan for two weeks recently," he said.  I did all the routine 
system maintenance remotely with a Macintosh."

Marketing a system like the Compact Disc Exchange is the key to its success. 
But it can be a problem for a specialized startup business venture.  First, 
Gregori tried classifieds in music journals. These met with considerable 
success, but the cost of the ads was prohibitive.  He knew he had to try 
something else.

"I've been in sales for a number of years," Gregori said, "and I've always 
known marketing is everything.  I started selling the system by calling 
editors in the computer and music press.  The music industry especially, is 
always looking for a good story, but all editors are.  If you pay careful 
attention to giving them a genuinely interesting and unusual story, you'll 
see print."

Wayne's efforts paid off.  A recent article about Compact Disc Exchange in 
PC Magazine resulted in more than 2,000 calls to the system and major 
stories have also appeared in Billboard and a number of other publications.

Wayne also has taken his marketing to the record stores.  He has set up a 
unique retail program, so record and computer retailers can sell Compact 
Disc Exchange memberships.  He sells professional-looking printed membership 
packages to retailers for $9.95.  Inside the package is a special I.D. 
number.  A customer who buys the package selects the <P>re-paid registration 
option on the system's Main Menu on thier first call.  Entering the I.D. 
number supplied in the package immediately gets the user one year of paid 
full-member access to the system.  The caller is also is thanked for 
shopping at the store from which the package the package was purchased.  
This linkage of an online service to the local stores is proving good 
business for both those stores and the Compact Disk Exchange.

"By the end of the year I expect the system will have more than 1,000 
members and at least that many discs always online," Gregori said.

Gregori also took advantage of Data-Tel, a third-party data switching 
service.  Data-Tel sells information providers like the Compact Disc 
Exchange a slot on their national access system and gives each a page of 
advertising in their directory of service providers.  Users are charged flat 
per-connect fees that are set by each service provider.  Compact Disc 
Exchange, for example, charges its users $1.00 per call via the Data-Tel 
network.  Of that $1.00, Gregori gets 80 cents back.

"I like Data-Tel because you don't have to use anything special in hardware 
or software," Gregori said.  "You don't need an X.25 PAD or anything.  They 
provide you with data switching at up to 9600 baud, with no hassles or 
needless complications.  Their yearly fee is a bit expensive, but if the 
Data-Tel concept really picks up and flies it'll literally turn your 
computer into a money machine."

The next step Wayne is taking is to have live nightly online conferences.  
"The users are simply amazed when they first experience TBBS's live multi-
line chat capabilities," Gregori said.  He makes online conferencing 
available between the hours of 8 p.m. and midnight and charges 10 cents a 
minute for access to the conference feature.  New members get their first 
1.5 to 2 hours conference time free.

"We use TBBS's unique internal event feature to turn the online chat option 
on and off, so it doesn't even appear on the menu except during the hours 
it's available," Gregori said.  "It's great."

Future plans for the Compact Disc Exchange include 9600 baud modems and 
connection with the FidoNet store and forward network.

Wayne Gregori might have been new to telecommunications less than a year 
ago, but the Compact Disc Exchange makes him look like a seasoned online 
pro.  He's even got some rock-solid advice for anyone getting into the 
online business: "Get a tape backup for your system.  I lost about 180 megs 
of data almost a year and a half ago.  I'm a strong person and I don't think 
I've ever cried over any material things in my whole life, but I came very 
close to tears over that one.  The data on my system is the most important 
asset my company has.  When you're spending thousands on hardware and 
software, another few hundred dollars to make sure all your data is safely 
backed up is a drop in the bucket."

Gregori also sees a lot of potential for other profitable consumer online 
systems.  "The products that exchange best online are the ones that buyers 
don't have to actually see.  CDs, of course, are a perfect example.  I think 
baseball cards would do well traded this way, too.  Likewise, stamps, coins 
and even fine wines."

Food for thought!  And Wayne Gregori's Compact Disc Exchange proves TBBS and 
TDBS make good trading partners.

To see Wayne Gregori's Compact Disc Exchange for yourself, dial (415) 824-
7603 by modem at either 300, 1200 or 2400 baud.  You can also write to Wayne 
Gregori, Compact Disc Exchange, P.O. Box 460693, San Francisco, CA  94146 or 
call (415) 695-9824 (Voice).

- END -
PS0990-3
Rev. 9/90

Copyright (C) 1994 eSoft, Inc., All Rights Reserved.  Permission granted
to distribute this file in its entirety, without modification, to any
interested party.  Any other use requires the written permission of
eSoft, Inc.

IMPORTANT:  The information herein is subject to change without notice.
Please call or write to confirm factual information of importance to you
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