Business-to-business (B2B) electronic marketplaces are brilliant at reducing transaction costs and removing inefficiencies from the supply chain. But unless they become more thoughtful about how they value and charge for their services, the profit from the benefits they provide will flow to everyone but themselves.

How much value do they capture? Much less, it would appear, than they create (see sidebar, "Four roads to value"). To induce major buyers to join before they affiliate with any other marketplace—or, alternatively, before starting a buyer-led one—B2Bs have been charging little or nothing for access and even offering buyers equity stakes. One insurance-claims B2B hub (launched in late 2000) is prepared to give as much as 75 percent of its equity to insurance companies. A recent review of 23 leading B2B companies revealed that only 2 levied substantial charges on buyers.

B2Bs have instead charged suppliers, which are now, understandably, pushing for improved terms or forming their own e-marketplaces. In addition, the equity markets, once so free with capital, currently view B2B players with a jaundiced eye. Pressured by suppliers, beholden to buyers, and with little income of their own,¹ B2B marketplaces are being painfully squeezed. Can they...