17: Global Online
In Henry's view, Netscape's listing was indeed a bit premature. In his past life, on the day Netscape went public, its market value reached $7.1 billion, and by the end of that year, it had exceeded $20 billion. In contrast, Netscape's current market value was just over $500 million, which felt like a loss in comparison. However, to secure development funds, Henry had no choice but to proceed with the IPO. He believed in prioritizing the future over the present.
A small loss now could lead to a significant profit later!
Having obtained $100 million in funding, Henry decided to reorganize Nicholas Bookstore and establish the Nicholas Group, which would encompass the Nicholas website, the IMDB website, and the listed subsidiary Netscape. In addition to selling books, Nicholas's primary business would gradually expand to include new product lines, starting with video tapes. Given the influence of the IMDB website, Henry was confident that Nicholas could collaborate with film companies!
The establishment of the IMDB website was part of Henry's strategy, reflecting his ambition for Nicholas not to be limited to book sales. It had to evolve, increase its inventory, and ultimately become the largest integrated online retailer!
Furthermore, the Nicholas Group would create a global online company, providing online services mainly for e-mail, web browsing, and entertainment news.
AOL may be impressive, but they were no match for Global Online!
With the Netscape browser, Global Online had an inherent advantage in terms of web browsing.
For entertainment news, the IMDB website would also greatly assist Global Online.
The only shortcoming was e-mail. The world's first e-mail emerged in October 1969. However, at present, e-mail technology felt rudimentary and uncomfortable to use. It was considered outdated because it lacked a graphical interface. This limitation made it feasible only to operate from home or on a company's networked computer, essentially tying email access to a desktop!
This situation was unreasonable and inhumane!
Change was necessary!
Henry called a meeting with his team and laid down two essential requirements.
First, the email interface must be graphical and designed to be simple and user-friendly.
Second, users should be able to manage their accounts and send emails through the Netscape browser.
Henry was not interested in making email overly complicated with numerous features; given the limited number of internet users at the moment, the priority should be to provide the most essential and straightforward email service. The best email system would not necessarily be the most complicated one, but rather the one that was most suitable for users' needs!
In October, the Nicholas Group registered a new subsidiary, Global Online, and secured its domain name.
The management of the domain name was under the jurisdiction of the U.S. government. Henry pondered that in 1993, Network Solutions (NSI) had struck a deal with the government for exclusive licensing rights and registration for three international top-level domain names. It inspired him to pursue a similar path. With exclusive rights, NSI charged a registration fee of $100 per domain per year, and eventually, a management fee of $50 every two years. NSI had amassed significant profits; imagining the number of domain names that would exist in the future, which could number in the tens of millions, it became clear that Henry could earn hundreds of millions from registration and annual management fees.
Without wasting any time, Henry dispatched someone to negotiate with the relevant government departments.
The negotiation took an astonishingly brief amount of time—just ten minutes!
Henry sent his legal counsel, Attorney Will, to convey their intentions. Once Will arrived, he immediately made Henry's requests clear. The U.S. government was receptive to the proposal and proceeded to discuss the exclusive licensing fees. They stipulated rates of $100,000 for five years, $1 million for ten, and $10 million for twenty. It was evident that the U.S. government understood the value of domain names.
Prior to Will's arrival, Henry had authorized him to negotiate for $1 million for five years, $10 million for ten years, and $100 million for twenty years. To Henry's surprise, the terms provided by the U.S. government were far more favorable than he anticipated!
In the interest of the customer, Will tried to bargain further, but the U.S. government remained resolute. Ultimately, Will had to agree to the terms presented.
Upon receiving this news, Henry was jubilant and quickly urged the U.S. government to finalize the contract.
A week later, Henry and Attorney Will signed a contract with the U.S. government, granting exclusive licensing rights for twenty years.
This was not a reflection of the U.S. government's lack of foresight; it was genuinely challenging to recognize the profit potential at a time when there were fewer than a thousand domain names registered.
Henry created a company specifically for domain name management and named it the "Domain Name Management Company," which he staffed with a small team to facilitate early operations. Once established, Henry couldn't help but entertain a tempting idea: to register domain names for the world's top 500 companies and then wait for them to purchase those domains from him!
Imagining the potential to auction off a top-level domain for tens of millions of dollars filled Henry with excitement.
Now that Henry had the Domain Name Management Company, he wouldn't incur costs to register a domain, nor would he have to pay management fees. If he registered aggressively, it seemed that becoming the richest man in the world was well within reach...
However, monopolistic practices could be problematic in the U.S.; a misstep could easily lead to complications with regulators.
Henry ultimately held back.
Establishing a domain name management company not only offered Henry substantial financial benefits but would also allow him to monitor the global internet landscape! He would know the total number of domain names and websites registered worldwide, which would be invaluable in his future strategizing!
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Gilli Hutt began reaching out to major Hollywood studios to discuss the online sale of video tapes. Film companies would appreciate the additional sales channel since cutting out middlemen allowed them to retain higher profits, even with discounted sales on the website.
Gilli inked long-term contracts with the studios, granting Nicholas website exclusive rights to sell films and video tapes from the six major studios and allowing Nicholas to earn a 1% rebate from each transaction. Additionally, the Nicholas website was obligated to promote and advertise the video tapes of the film companies.
While the agreement seemed straightforward, the film companies essentially profited passively; Nicholas website was responsible for building warehouses and logistics systems, doing far more than the studios themselves.
In November, the Nicholas website underwent a major overhaul and began offering movie video tapes. By leveraging IMDB's data, each video tape featured detailed descriptions and images, along with IMDB ratings and reviews. Links to the Nicholas website were included on the IMDB site beneath each movie listing.
The Netscape browser began actively promoting online shopping for movie and video tapes!
With comprehensive marketing efforts, Nicholas's website skyrocketed in popularity.
In just one week, sales of movie and video tapes exceeded a staggering 20,000, while book sales also surged, with 4,000 copies sold within the same timeframe.
Taking advantage of this momentum, the Nicholas website's number of registered users surpassed 10,000! Achieving this in 1987, when the total number of Internet users was still relatively low, was a remarkable feat.