Historically, communities have fostered economic activity by providing specialized settings for buyers and sellers to meet and exchange goods and services. ⁴ In Politics Aristotle proposed that a city should have both a "free" square in which "no mechanic or farmer or anyone else like that may be admitted unless summoned by the authorities" and a marketplace "where buying and selling are done ... in a separate place, conveniently situated for all goods sent up from the sea and brought in from the country." ⁵ Ancient Rome had both its fora civilia for civic assembly and its fora venalia for the sale of food. These Roman markets were further specialized by type of produce; the holitorium was for vegetables, the boarium for cattle, the suarium for pigs, and the vinarium for wine. Medieval marketplaces were places both for barter and exchange and for religious ritual. Modern cities have main streets, commercial districts, and shopping malls jammed with carefully differentiated retail stores in which the essential transaction takes place at the counter-the point of sale-where money and goods are physically exchanged.

In cyberspace the necessary connection of buyers and sellers is established not through physical proximity but through logical linkage. It is all done with software and databases. Merchants get to potential customers by accessing lists of electronic addresses; the key to successful marketing is not being in the right neighborhood with the right sorts of customers for whom to lay out wares, but (as with the older strategy of direct-mail marketing) having the right lists for sending out advertising. Conversely, customers get to merchants by accessing online catalogues; to search efficiently for particular goods, they need appropriate collections of catalogue pointers rather than convenient access to specialty stores and shopping districts. Lists of lists and catalogues of catalogues provide convenient starting points for making business connections, much as merchants of different kinds might cluster together in a bazaar or shopping center. ⁶

Technically, then, the logical pointers linking merchants and customers can run in either direction. But there is a question of who is in control. Do the merchants compile, maintain, sort, and filter all the databases, and decide when and where to direct their advertising? This raises questions about possible invasion of privacy by pinpoint marketers, of how customers can fend off unwanted advertising, of who has the right to initiate transactions, and of whether some groups may be systematically denied information about things that they need (a new form of redlining). ⁷ Or do customers construct and maintain databases of pointers to catalogues they find useful and get product information only when they request it? This makes it difficult to market new products and difficult for new merchants to break into markets. So a successful cyberspace marketplace probably needs some appropriate balance of the two.

The Prodigy online service, initiated by Sears and IBM in the 1980s, was a pioneering attempt to construct a cyberspace consumer marketplace. Prodigy was designed from the outset to carry advertising and to create records of which advertisements had been viewed. Users were also asked to provide demographic information. This information was then used to "personalize" content. The service agreement defined the arrangement clearly: "One of the valuable and unique features of the Prodigy service is its ability to personalize information and transaction services to each Member's interests. Personalization is based on data provided by the Member (or Membership Holder) to Prodigy, data derived from the Member's use of the Prodigy service, and from the Member's responses to Prodigy's questions and surveys." ⁸

In this and other cyberspace consumer marketplaces, the merchants have so far had all the advantages. They have been the ones with the big computers and the capacity to put together lists by recording credit card, telephone, and home computer transactions and buying mailing lists. ⁹ But we can expect this balance to shift as more and more customers have computers and network connections, and as client software like Mosaic and Netscape makes it easier for them to find and search catalogues. As the necessary technology evolves, we may find that an increasing amount of business is done by the highly personalized software agents of customers (who know the habits and preferences of their masters) meeting the sales agents of merchants in virtual showrooms and stores.

Immaterial goods such as insurance policies and commodity futures are most easily traded electronically. The idea is readily extended to small, easily transported, high-value specialty items-books, computer equipment, jewelry, and so on-the sorts of things that have traditionally been sold by mail order. But it makes less sense for grocery retailing and other businesses characterized by mass markets, high bulk, and low margins. Cyberspace cities, like their physical counterparts, have their particular advantages and disadvantages for traders, so they are likely to grow up around particular trade specializations.

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