[8958] in Commercialization & Privatization of the Internet
A View of Diamond Mine from Sources other Than Joe Stroup
daemon@ATHENA.MIT.EDU (Gordon Cook)
Mon Dec 13 23:54:58 1993
From: cook@path.net (Gordon Cook)
Date: Mon, 13 Dec 1993 20:51:54 PST
To: com-priv@psi.com
The COOK Report has been talking to others besides Joe Stroup about Diamond
mine. These people are very concerned about their anonymity. Consequently this
is a compilation of several messages and interviews. This exact phrasing has
been checked with all sources for accuracy. They have signed off on it this
evening.
____________
Diamond mine is a revenue sharing agreement, which means no or little upfront
cost for those who agree to it.
As Joel told you in the explanation that he posted ANS really does expect to get
more in revenue from this than their standard gateway agreement which for a T-1
link is close to 50 thousand dollars a year.
This means that if you take the diamond mine option with no up front payment,
your "revenue share" proposal has to add up to $50k or more a year to make
it work for them. That's a big piece of change granted them as a
percentage of your sales
You'll have to sell ANS on the wisdom of investing in you in this fashion. They
will want to examine your business plan and marketing information. Going this
route means trusting them not to abuse the information you share.
Basically, Diamond Mine, is a way for someone with little or no capital to get
into this game. It does *not* come with CIX connectivity. [Perhaps for
some it did, and for others it did not? G. Cook]
Some view it as being asked to bet against themselves. Why? because if you're
wildly successful you're going to give ANS far more than you would under a
straight gateway attachment. Thus it really can be a diamond mine -- for ANS.
Diamond mine seems to be an investment hedge for the weak of heart. If they
fail ANS takes the loss. It would seem logical for providers serviced by ANS
competitors to target ANS diamond mine customers. Why? Because if they do not
generate the targeted sales and revenue stream for ANS, it is likely that ANS
would pull the plug by doing so effectively shut them down.
If someone wants to become a diamond mine customer of ANS, I view such a desire
as an indication that such a person is not at all confident of his ability to
sell internet access service and package it in a profitable way. Why? Because
they want ANS to bear some of that risk.
If ANS had another customer in my geographic area who had this kind of agreement
I would need to work all the harder to succeed on a gateway attachment with
them, as you can guess who they'll throw the referral business to! So while I
am not about to buy into diamond mine, knowing about it makes me reluctant to
buy a gateway attachment as well.
