Who will win the coming online battle? Will it be the Internet, or the large commercial gateways—Prodigy, America Online, CompuServe, and now Microsoft? It’s a question that many industry participants have been asking. In most respects, however, it is the wrong question because electronic communities will emerge in the next 12 to 18 months to revolutionize online services. The real questions are: What will these communities look like? How will they create value? Who will organize and own them?

All companies marketing goods and services to consumers or businesses, and particularly those involved in direct marketing, should be concerned about these issues. (This article focuses on the consumer arena, but the principles apply equally to business.) Electronic communities are set to transform the structure of many industries, and the role and scope of the marketing function within them.

Emergence

Millions of individuals have begun to participate in the online arena in the past three years. Conservative estimates cite 7 million users of proprietary services such as America Online, Prodigy, and CompuServe, and 5 million private users of the Internet, in the US. These users have reached the critical mass and...