The Internet: The Novel

Richard S. Braddock

Financial Analysts Journal, 2001, vol. 57, issue 5, 17-19

Abstract: Businesses that want to succeed in e-commerce in this chapter of Internet development had better learn the new rules of the game. In the first chapter of the Internet novel, Net stocks rose like rockets, and now in the second chapter, most have fallen like meteors. The commercialization of the Internet that was supposed to occur not only did not happen; it failed miserably—leaving investors broke, visionaries disillusioned, and many businesses bankrupt or heading for the virtual exits.What will Chapter 3 bring? Three scenarios are possible: The technology-led, Web-induced recession might force a moratorium on e-commerce; the more traditional and deep-pocketed bricks-and-mortar companies might step up to resurrect advertising and commerce on the Internet; a select few e-commerce pioneers might hang in the game long enough to leverage their first-mover advantage and firmly establish themselves as the preeminent brands for the next generation of Internet businesses.The first reality that analysts need to keep in mind is that the Internet is here to stay. The question is: What companies will profit from it? My thesis is that all three scenarios will come to pass. Online success is attainable for many aspiring businesses, not simply the brick-and-mortar companies or the traditional e-commerce mainstays, but only if the players apply what has been learned to date about consumer behavior, online commerce, and the Internet. This article discusses four rules based on the lessons companies should have learned about e-commerce: Business models must incorporate revenue sources directly linked to actual customer behavior.Profitability must be attainable by using immediately available capital and revenue.Business models must be both appealing and sustainable.Business models must leverage the medium.The businesses that learn these rules and put them into practice will be the Internet winners in Chapter 4 of The Internet: The Novel.

Date: 2001
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DOI: 10.2469/faj.v57.n5.2477

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