Introduction: The Second Dot Com Is Here And Sustainable
The first Dot Com crash was a culmination of empty promises, debt laden ideas, and technology that was before its time. In business, timing, market environment, and consumer readiness are as crucial as the awesome ideas that drove hi-tech stock prices to the ceiling. As a result, businesses failed, stock holders lost money, and confidence in the Internet diminished.
Similar to the Gold Rush in California, individuals and companies competed for “prime” web addresses, hence the evolution of the Cyber-Squatter who sits on a nice domain name hoping to capitalize on a larger company paying premium prices for the domain name. While large companies like Yahoo!, eBay, and Amazon built vertical pillars and gained considerable market dominance, a search engine called Google appeared and revolutionized search engine technology. Google’s search engine provided accurate searches and cataloging of trillions of web pages, which essentially became the table of contents for a rich collection of content consisting of text, photos, audio, and video. Google allowed smaller companies to compete against the huge Internet monopolies. Google implemented a way for smaller companies to advertise and be noticed in an exponentially growing collection of content. Clearly, Google makes billions of dollars on advertising by their revolutionary AdSense program that allows the placement of content-directed advertisements on publisher’s pages. GeoTargeting allows the delivery of local advertisements, and I will discuss this in a later chapter.
With the new competition and the ease of replicating existing business models, larger companies lost considerable market share. One competitor to eBay’s empire is Craigslist.org. Craigslist.org is an electronic community bulletin board, similar to the cork boards at local coffee shops, but this online version contains millions of postings. Craigslist.org offers a free service to the public but makes local businesses pay $25-75 per job ad, which is still much lower than Yahoo!’s HotJobs and Monster.com job listings which cost over $250 per listing. Craigslist.org generates over $10 million in revenue per year from this simple model of charging for posting a job ad. “Real estate” on the Internet has value, but the number of prime lots is infinite; thus, competing companies can destroy an existing industry leader by utilizing clever marketing strategies and undercutting the competition.
The industry leaders knew that there must be a shift from the vertical model of wealth to a horizontal model where profits are distributed to “associate” sites. Amazon.com is the industry leader in associate marketing. Instead of hiring a full-time sales staff, Amazon.com employs over a million web masters to provide content and refer customers to their huge retail selection. For their allegiance, Amazon.com pays the associate a 5-10% take of the total sale. Retail has slim returns, but Amazon.com knew that it was far better to share profits, then to remain a vertical structure that cannot survive with one million competing mom-n-pop shops on the Internet.
Thousands of companies launched their own affiliate programs similar to Amazon.com’s Associate-marketing paradigm, with incredible success. eBay for instance pays out to Rolling Stone magazine over $1 million in profit-sharing fees to the online magazine MONTHLY. Rolling Stone implemented over 7000 pages featuring eBay auctions for each of the thousands of featured artists.
The Second Dot Com is here and is sustainable because the electronic framework for e-commerce has been built and accepted by the general consumer. Customers purchase, sell, and bank electronically all over the world. As larger companies share profits with smaller ones to maintain their market dominance, there is a growing body of entrepreneurs who are finding niche markets and capitalizing on the HUGE e-commerce revenue.
The amounts of cash being tendered is staggering:
This website is mainly targeted to the medical audience, but I think there are valuable lessons for the health care industry and academia. While the Internet can be used for e-commerce, the Internet is also a powerful vehicle to reach out to patients seeking advice and information.
We are experiencing a major transition in broadcasting modality. The Guttenberg Press revolutionized education by producing the newspaper and books that allowed common folk to be educated. Radio provided rich audio content that could not be delivered by traditional newspapers and books. Television and movies have been the mainstay of communication and entertainment for the last 50 years. As broadband Internet price drops and availability to high-speed Internet increases, people are turning to the Internet for gaming, entertainment, educational material, and shopping. The Internet provides a broadband, high fidelity environment that will surpass television because the cost of transmission on the Internet is inexpensive, yet versatile enough to satisfy every consumer’s need.
The Internet is a place to conduct business, publish, learn, play, and shop. Traffic will increase as more people gain access world-wide.
In this electronic book, I will explain basic concepts about e-commerce and marketing. I will explain how to utilize the power of the Internet to market your business, practice, book, or product. I welcome your suggestions for future chapters.
Andrew Doan, MD, PhD