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Part of what was pushing everyone to spend like mad on the Web was the idea of the rst mover advantage. America Online gave away six diskettes to every man woman and child in America and soon not only became number one, but absorbed most of its rivals and then took over the giant Time Warner conglomerate. AOL was always pro table. But several unpro table dot coms had successful IPOs, making their backers very wealthy. After that, investors went absolutely crazy over the Web. Many of these Web companies focused on the new economics. Pro ts were unimportant to the new economics. The important things were hits and clicks. How many people visit your Web site How long do they stay there What do they look at What do they click on Those who pointed out that the Web sites did not show any pro ts were considered old-fashioned people who just didn t get it. Many of the Web rms were run by young people, many of them technically inclined, who had never run a business of any kind before. They wore jeans and ponytails and shopped for organic foods. It was a weird, wonderful world, and it lasted about 5 years. It all came to a halt in May 2000 when the judge s decision in the Microsoft case came down. While Microsoft was the biggest software company in the world, it was not a dominant presence on the Web. But Microsoft, in everyone s mind, was at the heart of the boom of the 1990s. Most people felt that the boom was due to the PC revolution, which Microsoft was given credit for starting and servicing. The Web was the second step in the PC revolution. If the government was going to break up Microsoft, what was next Perhaps the whole boom was on shaky ground. Venture capitalists began to wonder if they would ever get back the hundreds of billions of dollars that they had invested in Web companies 99 percent of which had yet to show a return, or a hope of a return. That was when hundreds, then thousands, then millions of people began to realize and admit that the emperor had no clothes. Investors began to look more closely at their Web investments, and they did not like what they saw. Microsoft, after all, was one of the most pro table companies in the history of the world. But only a handful of the hundreds of thousands of Web sites were pro table at all. And, worse, few of them had any hope of pro tability in the near future. Most of them even
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lacked a long-term pro t forecast. Selling on the Web to consumers turned out to be a gigantic failure. Let s see why that was.
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You listen to radio, watch TV, or read newspapers and magazines because of the content. Nearly everyone in the United States uses one or more of these media every single day. While you are doing so, the media blast ads at you. You can try to ignore those ads, but you cannot be totally unaware of them. The Web, on the other hand, is not nearly as essential to daily life, and probably never will be. There is content there, but most of it duplicates content that can be found in other media. Furthermore, it is easier to get the content from those other media. If you turn on the TV or the radio, or pick up your newspaper from your front door stoop in the morning, there is the content ready for you. You can read or listen while you eat breakfast or while you are getting dressed. You can listen in your car on your way to work. To access the Web, you have to sit down at your computer. You cannot do this while you are dressing, eating, or driving. Once you get to work, however, the Web is available. Most employees do not have TV or radio at work, but nearly every of ce worker today has a PC, many of them with Web access. Of ce workers can, and do, read and write email all day long. It has become essential to modern of ce work. But email is not the same thing as the Internet. Employees are supposed to be working while they are at work, not sur ng the Net. Some employees do listen to the radio while they work, but no one can work while sur ng the Net (unless they are in search of business information). So the Web is basically off limits for most people for most of the working day. The same thing is true in the evening. You can sit down at your computer in the evening, and millions do just that. But what most people are doing is reading their email or playing computer games. Only a few spend much time sur ng commercial Web sites. It is an exhausting and boring experience after the rst week or so. So the Web cannot be an active medium, blasting ads at people. The people are not watching. Web sites are passive; they are active only when
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