All these sites search the Web in one of two ways. Either they’re a directory such as Yahoo! that searches its own database, or they search actual Web pages looking for keywords residing in the page itself.

There are two recent additions to the search engine world that search the Web a little differently. You also should register with these new search engines. Google! at google.com uses text-matching techniques to find pages that are both important and relevant to a search. Google! keeps track of which pages actually get chosen when presented in a search result. The next time that keyword is searched on, it remembers which pages were selected by the user before and presents those pages high on the search results list. Direct Hit at directhit .com is a similar site that ranks search results according to what other people have selected as the most relevant and popular sites for their search request.

Registering your Web site at the major search engines is relatively simple. The challenge is making your site appear at the top of the search results list when a shopper searches for an eTailer that sells your products or services. To accomplish this feat, you have to optimize your site for the major search engines.

Optimization is more art than science because each search engine uses different search rules. But there are some key things you can do to ensure that your Web store does not come up as site number 1,000 in a search results list. Now, there are many books and online services that claim to guarantee top placement in the major search engines if you use their tricks and services. But the search engines regularly change the ways they search the Web, so many of these tricks do not hold true for long.

Whatever your choice, you need to know the general basics of how search engines search the Web. As I said before, search engines fall into two basic groups. Some search their own database, such as Yahoo!, and some search actual Web pages looking for keywords residing in the page itself, such as AltaVista. This means you have to know how to register with a search engine directory, such as Yahoo!, and what search engines, such as AltaVista, to look for.

To optimize for both, you have to keep the following in mind.

Page Titles, Keywords, and Your Web Pages

It’s very important that you take care when creating the title, description, keywords, altags, and the first paragraph of your Web pages. The search engines in one way or another will read this text and use it to return a list of search results to the Web surfer making a search.

Don’t make the mistake of creating a page title that’s good for people but bad for the search engines. Don’t use a title for your page such as “mySoftware Store—We Sell Computer Software.” With a title like that, you’re asking to be overlooked by the search engines. Keep this rule in mind: All your most important keywords must be in the title tag. Make a list of all the keywords that describe your Web store and create a title tag that uses them with the most important words first.

A good title tag for your page would read:

<T I TLE>Productivity software for business and home office use—selling word processing, spreadsheet, database, and presentation software including utilities and accessories—mySoftware Store, your store for business productivity</ TITLE>

Notice that your company name is near the end of the title tag. Why? Your page description will probably be truncated by the search engine, so you want your most important information on what you offer upfront.

Another reason for all this verbiage is that the three most important places to have keywords and phrases are your title tag, your metatags, and your first paragraph. You want them to all contain the same important words because this will improve your ranking in a search result. Why? Because all these keywords in all your tags increases your keyword density and improves your rankings.

Now let’s look at your metatags.

The metatags are important to getting a good ranking in the search results. Metatags come in two flavors—the description metatag and the keyword metatag. The description metatag is a brief description (about 100-200 characters) of what’s on a Web page.

The description metatag looks something like this:

<META name=”description” content=”Productivity software for business and home office use—selling word processing, spreadsheet, database, and presentation software including utilities and accessories“>

The other metatag is the keywords tag. Create a set of keyword phrases that explain your page or site and list them in the metatag separated by commas.

A good resource for choosing the right keywords is GoTo.com. You can use its service at inventory.go2.com/inventory/searchInventory.mp to see how many times a particular keyword has been searched on. This can help you choose keywords for your site that will drive more traffic to your store.

After you have your keywords, turn them into key phrases. Don’t repeat a key phrase, and don’t repeat any individual keyword more than five times or so. The reason for this is that many of the search engines will penalize you for doing this.

Here’s an example of a keywords metatag:

<META name=”keywords” content=”productivity software, word processing, accounting software, spreadsheet software, productivity tools for business, home office computer software, virus protection, modems, surge suppressors”>

Finally, pay attention to the first paragraph of the Web page you are registering with the search engines. The first paragraph of your Web page should duplicate and expand upon everything in your title and metatags. Make sure the first paragraph has all your key phrases in it. Turn those keywords, key phrases, and title into a welcoming message that will make a good first impression on the consumer visiting your site.

Keep in mind that unless you have substantial resources (or happen to be a relative of Bill Gates), promoting your new eBusiness takes a lot of hard work and time to see results. So make the most of your time with these basic grass-roots marketing strategies to launch your eBusiness.

Promotion does not mean advertising. So, before you go out and spend a bundle of money advertising, start your marketing first on a grass-roots level. This gives you a chance to find out what works best for your eBusiness and what doesn’t before you put your limited resources toward a full-fledged marketing plan.

Swapping Links and Banners

After registering your site with the search engines, the first grass-roots marketing initiative should be to search for sites that will link to you and vice versa. Swapping links can come in two ways.

Reciprocal linking

Placing links on your page to complementary product sites that, in turn, place links to your site on their page.

Banner exchanges

Swapping banners that advertise your site with the banners of other sites.

First go to the top search engines that you’ve registered with and—using the keywords and key phrases you’re using for your Web store—search for content and community sites that would match the products or services that you are selling.

For example, your site sells cigars. Another site sells humidors. A relationship made in Web heaven! Look for sites that sell products or services complementary to your own. Then contact them and offer a reciprocal linking arrangement. The same goes for cooking sites. If you sell kitchenware, then contact recipe sites or gourmet cooking communities and ask to exchange links.

Although time consuming, reciprocal linking pays off handsomely in the long run with increasing traffic to your site. The more sites that link to you, the more shoppers you will draw to your site. And even though it can take up to a couple of months to begin getting substantial amounts of reciprocal links from other related sites, this should be one of your top priorities.

Another way to get reciprocal links is to exchange banner ads.

You can either work directly with the sites you contact to exchange one another’s banner ads, or you can join a banner exchange program such as LinkExchange at adnetwork.bcentral.com. LinkExchange will place your banner on more than 400,000 Web sites and rotate its banner on your site for free. LinkExchange administers the program and provides you with reports as to how many times your banner was shown around the network and how many times it was clicked on. Check out bCentral at bcentral.com for other promotion services.

After you have submitted your site to the search engines and started to communicate with other sites to get reciprocal links and/or joined a banner exchange network, you want to focus your time on email discussion lists and newsgroups.

Sow Your Participation and Reap Site Visitors

One of the best ways to get the word out about your company and what it offers is to join in the community gabfest that’s on the Internet. By monitoring and participating in newsgroups and discussion lists, you have the opportunity to respond to potential customers and promote your product or service. And because you will be communicating with others with similar interests, you might find that there are other eTailers on the list or in the newsgroup that you might want to form a strategic relationship with to increase sales for one another.

For example, if you sell camping gear, you might find that an eTailer who sells freeze- dried food is also a participant on your discussion list or in the newsgroup you monitor. You might strike up a relationship where you would promote his product on your camping gear site and he would do the same in turn. You might even decide to work together offering bundled products to each other’s customers—thus both increasing sales. Or perhaps you might sell travel packages and form a relationship with a luggage site.

The possibilities are endless. Participating in the newsgroups and on discussion lists is an easy way to find and form these strategic relationships. Where do you find these lists and newsgroups? Liszt (liszt.com) has a searchable directory of more than 90,000 mailing lists that you can participate in. The List of Lists (catalog . com/vivian / interest -group-search. html) is another site packed with discussion lists to join and TileNet (title.net /lists /) will point you to newsgroups in just about any subject area.

Finally, although you can’t blatantly advertise your Web store on the lists and groups, you can still get your Web store some visibility by creating a good sig file.

A sig file—or a signature file—is a text tag that you can place at the bottom of the emails that you send out. When you participate in an email discussion group or post to a newsgroup, your sig file can be attached to your message. Created properly, a good sig file can attract shoppers to your Web store. In reality a sig file can act as a small promotional message at the end of each and every posting that you do.

The trick, of course, is to create a compelling sig file. Do this by creating a brief 4-5-line statement that describes a specific benefit your product or service provides, why that benefit is important to your target customers, and why they should respond to you now. It’s cheap, fast, and it works.

Viral marketing has been around forever. Spreading the word through word-of-mouth was the world’s first form of marketing. But the Internet has taken this organic form of marketing to new heights by making communications better and communities of people tighter—thus making word-of-mouth even more effective.

So, how do you spread the word of your Web store virally on the Net? Motivate your customers and visitors to do it. Here’s how.

Tell ‘em Sam sent you

Reward your steady visitors for bringing new visitors to your site. Create a special referral program that your steady visitors can sign up for. Have them invite their friends to visit and if they do, have them mention the referrer’s email address and the referrer earns something free from your site.

Got any good jokes lately?

I don’t know how many times I’ve forwarded jokes or scam and virus alerts I received in my email to friends and associates. So, create a funny newsletter or an email alert that someone would pass on to friends.

Take my site, please!

This is similar to “Got any good jokes lately,” but in this case you give away your best assets. Don’t just send out a notice about new content on your site—send out summaries by email and ask people to forward them on (with copyright and URL attached, of course). A variation on this is to let other sites reprint your content on their site, with appropriate credits and links to yours.

The challenge is to exercise some control over how your message is delivered and how others perceive it. But when you master this technique, your message and your site can spread as quickly as the common cold.

Finally, don’t expect a Viral Marketing program to pay off immediately. Like a real virus, viruses don’t become epidemics until they reach critical mass. Your virus must propagate through the host population until it reaches a certain threshold of visibility and scale.

Think of it this way. Suppose a real-world virus doubles every year. In the first few years it’s scarcely detectable. But within a few years after that it suddenly becomes an epidemic. You should understand that you’re playing the same game. Viral Marketing takes time. So be patient, be fruitful—and go out and multiply!

The marketing strategies to attract consumers to your site fall under two groups. These are the ways to attract Web consumers to your site and keep them coming back.

• Promotional Announcements
• Continually announce special seasonal, event and, limited time promotions. Loyalty Programs
• Build loyalty programs to keep shoppers coming back.
• Conduct surveys to find out what your customers want and need.
• Attract visitors to your site by giving away something free.
• Establish a free email newsletter.

Armed with this list of simple but powerful marketing strategies, you can give your Web store the success it deserves.

Promotional Announcements

A great way to get shoppers to your Web store is to offer them a timely product or service. Better yet, have them tell you when they would be willing to shop.

First, design your product or service offering around seasonal promotions. Use the major holidays such as Christmas, Hanukah, Easter, Valentine’s Day, Father’s and Mother’s Day to design special sales and promotions to draw shoppers to your site. Then give the shopper who visits your site a chance to tell you when he or she would like to be contacted with offers from your Web store.

Offer shoppers a reminder service. Allow shoppers to enter the details of any event they want to be reminded off, such as a birthday or anniversary. Send this reminder to them via email along with a link to your Web store with products that are made to order for the event they are reminded of. Another idea is to send shoppers at your site an email when a selected product or service they are interested in changes in your store—such as perhaps a price drop or a special limited time sale.

In all your promotions, try and give away something a shopper might value. It could be something as simple as a free piece of information that a shopper might find useful. With your promotion, inform him that he can find this free information on your site and send him to that page on your Web store. You might even offer a trial size of a product or a small piece of the service you offer.

If you sell software, offer a shopper a free demo to download from your Web site. If you offer a cooking course, give him the first lesson free.

You could tie these free offers to a customer survey asking the shopper a series of questions that lists his interests and helps you market to him in the future. But surveys can be tricky. It’s a well-known fact that the more information you ask people to fill out, the fewer people will complete the form. But there is a way to collect as much information as possible without having the shopper bolt for the mouse button and abandon your survey.

Ask for the information in stages.

First, ask for his email address to receive the free offer. After he enters his email address and hits submit and your server has recorded it, direct the shopper to a second page that has a form that asks for more a little more information. After the shopper hits submit on that page, direct the shopper to another page and another form to gather further information. Thank him for his help and offer another form on another page.

At each step you’ll lose people who won’t complete the additional information, but you’ll get many who will fill out more information than they would have if you had asked for it all at once. And besides, you will at least have their email address to send them promotional material in the future.

And it goes without saying that you will tell the shopper that his or her information will be kept in the strictest confidence—right? Remember your privacy guarantee?

Loyalty Programs

Getting good responses on your promotional activities is great. But a response is not a relationship. And you get that with loyalty programs. Loyalty programs also are known as incentives, membership clubs, frequent buyer programs, and rewards programs.

How important can a loyalty program be to your eBuinsess?

Jupiter Communications wrote that 56% of online consumers would buy more often if awarded loyalty points. The Harvard Business Review stated that companies could boost profits by nearly 100% by retaining just 5% more of their customers and that cutting defections in half can more than double a company’s growth rate.

As you can see, a well-run loyalty program can be of great value to a new eTailer.

A loyalty program can help you identify loyal customers, and a good loyalty program at your Web store can accomplish a number of marketing objectives. First, giving incentives to new shoppers can get them to purchase from your Web store. Second, a loyalty program encourages repeat business. Finally, with a loyalty program, you can track and build customer profiles with every customer transaction associated with your rewards program.

A loyalty program entices shoppers to become customers and then encourages them to purchase more often by offering rewards. Customers are encouraged to buy more by earning points, which they can redeem for special promotions and free products. You can set up a loyalty program yourself—but why bother. There are several good ones already available on the Net that you can join and will perform all the administration tasks necessary to run the program.

How much e-mail traffic can you expect? The answer to this query will direct how much bandwidth you arrange for your company. Underestimating can result in delays, and overestimating may mean overpaying. Remember to include not only outbound but inbound messages. Also, the type of files being sent will have a great impact on the speed and reliability of your e-mail connection: mostly-text is a much lighter load than are sounds, pictures, or especially video attachments. If e-mail traffic will share a “pipe” with other Internet use, that other use must be factored in.


What e-mail features do you need and want? Choosing e-mail software that can send and receive a variety of formats is important. If your business demands accurate tracking and forwarding of messages to the right people, detailed and flexible filtering is a must, and form-generation can help you automate your intra-office procedures. Security needs may require easy-to-use encryption tools, and if you have a mobile workforce, you’ll want mail servers accessible via the Web or software allowing easy exchange of mail between PCs and devices such as 3Com’s Palm organizer. If you are standardizing across international offices, you may choose a software package that has multiple language versions (although you should make sure that all can be centrally managed).

What e-mail sending and client software are others in your industry using? Beyond helping you match any competitive advantage they might have found, their choice may reflect a needs analysis applicable to your company, too. You may even want to collaborate with your competitors, if feasible, to pressure the software vendor to add or improve features particularly beneficial to your field.

Does your internal IS staff have sufficient knowledge to implement, integrate, and train your users on the new e-mail system? If not, will you need the software vendor to supply required services, or are consultants available who would be able to support your company?

Once your company has completed its investigations, the answers can help you shape an RFP (request for proposals) which you can send out to vendors. Even if you are doing all acquisition and implementation in-house, filling out the above checklist would be a useful reference for you and your colleagues both before implementation, and afterward as a benchmark of how the system you’ve selected fulfills your goals.

One major culprit is misdirected e-mail. It is frighteningly easy to send a message to the wrong recipient. Even if the sender realizes the mistake two seconds after clicking “send,” few if any e-mail systems allow message cancellation once it is transmitted. Imagine that the message is one sharply critical of your company’s biggest customer, but instead of forwarding the customer’s latest unreasonable request to a colleague, your employee instead sends both the request and his lambasting response right back to the customer’s CEO. You will be dealing with an unhappy account, if not an ex-account, within a matter of minutes.

Similarly (and perhaps more common), in the case of a miiltiperson online discussion, a private reply to one participant may instead be sent to the entire list. Depending on the contents of that reply, any number of consequences may descend on the sender, intended recipient, and even their employers. The misdirection problem is made worse by a feature of many popular e-mail programs that automatically matches a typed name with an e-mail address from the composer’s address book. There may be people with similar names within the address book, and a note meant for John Jones may instead go to James Jones (whose name comes earlier in the alphabetical list). When a single program and address book services the internal and Internet e-mail systems, this can cause company messages to go out to the world and vice versa.

In most cases, an e-mail message is considered “in writing,” and e-mail is often stored long after it has been read and may exist on backup tapes months or years after both sender and recipient delete the note (as Oliver North found to his dismay). To the extent that an e-mail message sent from or within your company contains a serious allegation or slanderous accusations, or otherwise violates applicable law, the offended party and law enforcement officials may be able to use it against you much more easily than had the same offensive message been said in a telephone call. Even an otherwise personal message sent by an employee (such as a variation on the “Make Money Fast” chain letter that pervades the Internet, or an advertisement for a home-based business that makes fraudulent claims about a product or service) using your company’s system might bring you into a private or governmental enforcement action, perhaps long after the employee has left the company.

To maximize the chances that your e-mail connection will benefit rather than devastate your business, it’s crucial that your company both make and enforce a proper e-mail usage policy for your employees.

Company e-mail is only for business purposes. It’s useful to give positive and negative examples as a nonexclusive illustration of the policy: “Please do not give your work e-mail address to friends or family to contact you other than for work-related matters. Also, you should not put your work e-mail address as a contact point for any online shopping or similar services, nor should you subscribe to e-mail discussion lists for hobbies or private interests with this address. If people do start sending you personal notes to this account, please let them know that they should use another address or, if you don’t have a personal e-mail address, contact you in a different way outside the office.”

All company e-mail is the property of the company, and may be monitored to ensure the system is used for business purposes. This is a crucial point to make, and one that is frequently ignored or resented by employees. It means that anything created on the company system or using its connection (if an employee is out of the office) is the property of the company not only for copyright purposes, but for review as well. In most cases this is both a matter of law and policy, but stating it to employees prior to their use of the service makes it more likely that the company will be able to enforce this doctrine if necessary. It can be helpful to remind any unhappy employees that the company pays for the software, hardware, connection, and support that makes the e-mail service possible. Many employees would be surprised to hear what their “free” e-mail is costing their employer.

Any e-mail message from the company’s domain may be assumed (or legally held) to be the official position of the company, with all the liability that may entail. Even mandatory disclaimers on messages such as, “The preceding message may not reflect the opinion of my employer,” may not be sufficient to prevent bad will or legal action against the company for a statement made by an employee in a mail note.

Double-check every address before sending a message… then check again. Even with this warning, mistakes will happen, but the more the policy can emphasize this risk (together with some horror stories, real or hypothetical), the less likely employees will be to send messages incorrectly.

Do not use e-mail for sensitive or legal materials without checking with a company manager and/or counsel. There are a number of reasons for this, ranging from the increased exposure in the event of misdirection to a later discovery request that could pull copies of any messages from the sender, the recipient, or either’s backup tapes. Unfortunately, for all its seriousness, this is often the most difficult policy item to implement, particularly in time-critical situations like acquisitions when materials are being sent and received by a number of parties both inside and outside of the company. Still, it is imperative that you educate those employees handling sensitive materials and create a chain of authority for quick decisions about whether to use e-mail or not.

Do not infringe copyrights or other proprietary rights by e-mailing materials without getting the permission of the author. If you can’t find the author, don’t send it. It is a little-known but nonetheless important point that almost all e-mail is protected by copyright from the moment it’s created—any author can in theory prohibit another user from forwarding the message. In reality, most authors will never assert their copyrights in e-mail, in part because most e-mail does not have the same commercial value. On the other hand, there is a tremendous amount of e-mail forwarding of articles, jokes, images, and videos—almost anything that can be digitized. This is not only a copyright infringement, but (depending on how large the forwarding list and the commercial value of the material being passed along) may even represent a criminal copyright violation, one just as likely to be imputed to the company (with its deeper pockets) as to the individual, even if such individual can be found.

Under no circumstances should any of the following, if received via e-mail, be forwarded, particularly by nontechnical personnel, without careful verification: warnings of new viruses such as those that can propagate through e-mail; chain letters; appeals for donations of any kind; or stories that a friend’s friend swears are true. E-mail users, particularly ones with online friends, will receive dire warnings about the Good Times virus or pleas to send cards to Craig Shergold, probably multiple times. The Internet and especially e-mail have allowed many rumors, misunderstandings, and out-and-out hoaxes to perpetuate themselves long after the original creators have gone on to other, perhaps more productive, pursuits. People often forward these warnings or solicitations with the best motives, feeling they are protecting their acquaintances or doing a good deed, but the result is a large volume of useless and even costly e-mail.

Just because this is technically simple, however, does not make it an optimal approach. A large corporation can have literally thousands of messages flowing through its system every day, making manual review impossible. Small and large companies alike may wonder whether reading employees‘ e-mail is even legal. One can easily imagine privacy arguments comparable to those made by people whose phones were tapped or letters opened.

The good news for U.S. business owners and managers is that, by and large, it is legal to monitor employees‘ communications in the workplace. In a number of cases throughout the United States, employees who protested when their bosses read allegedly private e-mail were rebuffed by the courts on the grounds that the e-mail system is the property of the company and meant for company business only, and that the company (as owner) was permitted to ensure that its resource was being used properly.

For the most part, employees are understood not to have a right of privacy in the workplace, particularly in regard to a company-wide e-mail system. It is noteworthy, though, that in most of the cases and commentaries that come down on the side of the employer, the employer has published an e-mail policy stating that employee e-mail may be monitored. It is also important that, before you implement any sort of e-mail monitoring, you check with the current laws in the state or states in which you operate.

The legality of monitoring is not your company’s only concern. E-mail is often felt to be a particularly private activity, even when employees know (or should know) that the system is meant for business. Employees who would never dis‑truss customers or coworkers on the telephone or around awater cooler will do so in an e-mail message to a colleague. A lovestruck staffer will send steamy electronic notes to a spouse or significant other. Both types of messages can be devastating to the sender and recipient if publicized or read by management. There are few things other than layoffs that are worse for morale than a feeling that management treats employees without respect. Monitoring e-mail can quickly become a rallying point for dissatisfied workers.

Should your company monitor e-mail? Most employers will not as a rule read every message sent or received by their staff. However, it is crucial that in your e-mail policy you reserve the right to do so, since there may be cases in which your business depends on learning the contents of an e-mail sent over your system. You may also wish to put filtering software on your server to automatically watch for risky communications (for example, your chief competitor’s domain name, or unusually large file attachments).

Once a potentially suspicious message has been flagged, a manager aware of both the stated policy and the risk issues may wish to review it and, if it turns out to be damaging to the company and in violation of the policy, to take appropriate action.

By the same token, any employee who is illicitly monitoring others’ e-mail without authorization (whether an IS technician or a curious manager) should be admonished and, if necessary, denied access to the e-mail files. It’s important to prevent abuses that could incite employees and interfere with the necessary monitoring the company wishes to do.

The business risks associated with improper Web use and downloads include serious human resources issues as well. Web browsing and surfing by employees, and the distribution and display of files retrieved from the Internet, can lead to claims of discrimination or sexual harassment, criminal investigations, and multimillion-dollar infringement actions. The types of online use that are most likely to generate liability:

¨ Downloading copyrighted material

¨ Online gambling and other crimes

¨ Obtaining illegal material

¨ Displaying or distributing harassing materials.

INFRINGEMENT

The web sent copies of every file on a Web page to each machine as the page is requested. Most legal scholars understand this to mean that under U.S. copyright law Web users have been granted an “implied license” from the site owners to make that copy, at least for the purposes of viewing the page on a computer screen.

This notion of an implied license assumes, however, that the designer of the Web page has the legal right to grant licenses to the page’s content, and that the only use will be for a one-time viewing by a single individual. What happens, though, when materials are included within a Web page to which the page’s owner does not have licensing rights, and when users save Web-based files onto a hard drive and reuse or redistribute them? Some copyright holders send cease-and-desist letters to each infringing site that they find. Those holders will tell you, though, that their letters are often ignored; new sites are established faster than they can send more letters out. Most owners of pirate sites are young, often students with few assets against which a large record or television production company or software publisher can seek damages.

What many aggrieved copyright owners do instead is to work with others in their industry to enforce their rights against larger offenders, preferably those with deep pockets—in other words, the corporate world. The software industry has been aggressive in its tactics, especially following the formation of the Software Publishers Association (now the Software & Information Industry Association, or SIIA). The SIIA’s Web site at is filled with press releases about litigation against small and large businesses that have illegally copied software. Many times investigations are instigated by reports from disgruntled ex-employees. Often, the executives at the target company were not aware of the illegal software use until the subpoena or search warrant arrived at their desks.

Today, in addition to copying software illegally, employees are using their multimedia networked PCs to play the latest albums or watch digitized versions of last week’s South Park episode, and even to post their favorite files on the network server for everyone to view. It’s a frightening scenario. Large companies have difficulty auditing every file on every computer. Small firms can be seriously damaged or even bankrupted by the award in an infringement action.

THE DANGEROUS MIXING OF CASINOS AND CUBICLES

Historically, it would have been difficultfor employees to conduct high-stakes betting from their desks on a regular basis. But now we have the Web.

Online casinos are proliferating as entrepreneurs exploit the ease of credit card use online and the ability to reach potential players during their workday. Some countries and regions, including New South Wales, Australia, and the islands of St. Martin and Antigua, have been courting online casinos, promising freedom from regulation in exchange for a portion of the profits.

Regulators such as the U.S. Congress and state attorneys general have not ignored the growth of online gambling, which threatens not only the economic health of citizens but tax revenues derived from lotteries and casinos in states that permit them. Many legislatures have passed laws banning or restricting online gambling, and attorneys general from Minnesota to New York have brought successful lawsuits against casino operators who permit local citizens to participate in Internet gambling against state law.

Companies may find themselves in the middle of these battles because (as with infringement) the company providing the Internet connection for the gambler may be the biggest target within reach. Further, you can imagine an impoverished spouse going after a gambler’s employer because it failed to prevent the gambler from losing his life’s savings at the office. Another danger lies in many online casinos requiring players to download proprietary software–a virus or other harmful application could unwittingly be installed onto your company’s network.

The FTC takes a dim view of misleading or fraudulent claims about products being sold through Web sites, and your colleague may be managing such a virtual store over a lunch break. Another area of abuse involves pedophiles who have learned to practice their “craft” by assuming false identities online and luring their underage victims via chats to meetings after hours.

Illegal activity is one thing—what about illegal materials? Certain types of documents, images, and other information are not only unlawful to produce, but illegal to have at all. Child pornography is a prime example. Because today many people have their primary and fastest Internet access at work, and because so much material, including illegal material, is available anonymously and conveniently online, employees are using company systems in record numbers to download questionable items.

Child pornography is not the only type of material which is illegal to download, and whose mere presence can cause a company embarrassment or prosecution. In some cases, specific types of information have been interdicted for public policy reasons, such as 128-bit encryption algorithms. The export controls for encryption have been described as prohibiting any kind of export, from shipment of disks containing encryption software to a T-shirt on which an encryption algorithm is reprinted. If your employees access your computer network outside of U.S. borders (either in a foreign office, or via a dial-up from a hotel room or conference center overseas) and download a high-level encryption program or any software containing such programs, they may be breaking the law, and the computer that they are utilizing could theoretically be seized for evidence. Obtaining some types of military-related information (nuclear weapon technology, designs for super-computers, and even instructions for making explosives) can be illegal without proper authorization. In the aftermath of the 1995 Federal Building bombing in Oklahoma City and the Columbine High School massacre in 1999, the U.S. Congress made it illegal to transfer or receive bombmaking information via the Internet, even though the same information may be freely and legally gotten from almost any public library.

Addressing such risks can be tricky. Many downloaders will not know that the file they’ve requested, or the Web page they’re reading, puts them at risk of arrest or even imprisonment. Others will know, or perhaps should know, but differentiating them from innocent downloaders can be a matter for a jury rather than a staff manager. Further, a company that discovers illegal materials on its servers or users’ PCs may be under a legal obligation to report the illegality and to bring authorities into the picture, whatever the potential impact on the company’s reputation or the possibility of criminal prosecution of the company may be. In the event something like this occurs at your company, it is a very good idea to get advice of counsel knowledgeable both in employment and criminal legal issues.