Who Wants to Be a Billionaire?

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AIS soon began to move into the area of Web-page development. But many businesses were not yet on board the Internet, and those that were offered little more than shovelware. So Schutz asked his parents' company to become a client. In 1995, he launched a page for Blue Mountain Arts designed to sell its line of 5-D stereogram posters. In six months, the site managed to sell five of the posters. Blue Mountain's first foray into e-commerce was a flop.

So they decided on a different approach. "After having this boring e-commerce site, we decided to put free cards up," Schutz says. "It wasn't a groundbreaking decision at the time. It was like, 'Hey, let's just do it.'"

Schutz's parents already had a profitable company and weren't eager to exploit the Web to make a few extra bucks. "It never really occurred to us to charge for the cards," says Schutz. "It was just a hobby. We started with a few cards."

But Blue Mountain's free cards were an instant hit. "Right from the start, there were people using it," he remembers. "And it grew at an exponential rate. It was early in the Internet, and there were people coming online every day."

And, theoretically, at least, every person who visited the site to send a card attracted another person to view the card. One hit became two. And after the recipient "picked up" his or her card, he or she had the opportunity to send yet another card to someone else. In the Web world, the phenomenon is known as viral marketing. Blue Mountain unintentionally became one of the best examples of its power.

From its origins on one Web server built on a dorm-room floor, today bluemountain.com has 200 servers (currently housed in Phoenix and Palo Alto) delivering greetings in Spanish, French, Chinese, Italian and Portuguese. The site employs forty San Francisco-based artists to design cards, one person to create the music -- basically a high-pitched beeping sound file -- for the cards and another to match the music with the cards.

There's probably one oozing sentiment in your computer right now.

According to Media Metrix, the Web's version of the Nielsen ratings and one of the most influential tools in determining a Net company's prestige -- and worth -- here's how online greeting card companies stacked up in September:

Americangreetings.com had about 771,000 visitors. Hallmark.com had about 574,000 visitors. E-greetings.com, a San Francisco-based online greeting-card company, had 1.8 million visitors. bluemountain.com had 9.1 million.

Traditional greeting-card giants have learned a basic lesson in the new media economy way too late. On the Web, it's not about selling massive amounts of individual cards the way they traditionally do in gift shops and grocery stores. If you're a player on the Web, it's all about how many people see your site. And bluemountain.com has the world by the eyeballs.

Hallmark, with $3.8 billion in print-card sales last year, went online in 1996. "We wanted to bring the power of the brand to people online," explains company spokeswoman Kathi Mishek. By the next year, the company was offering cards on the Web site that you could buy and send to friends online. But very few people bought them. "The market said they wanted free, fast and fun," Mishek says. So in October, the company made all of its e-cards free.

"There are times when you can't send an e-card," explains Mila Albertson, publications and promotions director for the Greeting Card Association, the trade group that represents the industry. "What are you going to do? Send an electronic card when someone dies?"

The Web can't replace physical cards entirely, because sending a greeting is a "touchy-feely" type of thing, she adds. It's unlikely that people are going to store their electronic greetings in a shoebox for ten years as a keepsake.

According to Albertson, the greeting-card industry views the electronic medium not as a threat to existing business, but as a potential means of developing new market segment. "Card companies react to changes in lifestyles and demographics," she says. "Twenty-five years ago, did you have cards for the gay market? Not likely. Fifty years ago, did you have African-American cards? The Internet is a chance for expansion into a niche for people who like things electronically and like it fast."

And free, of course.

But if greeting-card companies are forced to give away their core product, where will they derive any cash flow?

"Gift solutions," says Mishek. "You can go anywhere from tylenol.com to the post office Web site to send an e-card. You get them free almost anywhere." What companies like Hallmark want to use their free greeting cards for is to lure consumers into a gift-buying environment. If you send your mother an electronic Mother's Day card, for example, you won't have to risk being disowned for sending such a cheap and impersonal memento of your love. That's because as you send your card, you'll be presented with the option to order real flowers online and have those sent to your mother's front door. The e-card was free, but it bought Hallmark the opportunity to make money on a bouquet.

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Chris LaMorte