dot.com gets its pay

Well a first attempt to categorise; market research companies no doubt have found a better categorisation complete with market forecasts.
Basically there is no difference with a brick-and-mortar company, but the added dimension is that the 'Internet sales channel' itself is a medium and hence can carry advertising with it.

Category A]: Information 'sales'. Eg Yahoo, AOL. Turnover is from
- Subscribers (decreasing possibilities, but AOL still partly earns because of content. Next to that ofcourse it's an ISP charging for its network).
- Advertisers
- Companies being indirectly promoted. There have been large debates whether the Yahoos and the like are allowed to have _preferences_ in their search results, e.g travelcompanies A and Bon screen 1 and the bunch on a later screen. Of course companies A and B pay for that...

Category B]: Services. Ebay is a classical example, once something is sold Ebay gets a commission. So turnover is:
- simply charging for their work, comparable to a real estate broker
- advertising

Category C] might be shops like Amazon. And the 'rest', like Napster or MP3, try to move into services or shops (music?) or to survive on advertising.

Hope this helps,

/ The Netherlands

Most dot-coms don't turn a profit or even have a positive cash flow.

The dot-coms are surviving on venture capital and stock. Even amazon.com is not profitable (Bezos, amazon's CEO has recently been quoted he hopes to turn a profit in 2002). This is part of the reason for the high tech stock market tumble. Investors realized the companies did not have underlying financials to support them.

I suspect in the next two years, Internet sales will be dominated by established (brick & mortar)companies. They will use the INternet for two buisness purposes: as a convenient catalog slaes arm and as a way to let customers avoid paying sales tax. Look for a big scandal involving online sales for the purpose of avoiding taxes in the next couple of years.

From the VC pouring in the "fuel". Well, adverts would be one revenue. Membership could be another. The employees get their pay from the pool of money from the VC and the VC get their money from their Stocks options. If you really think it through, dot.com are basically empty shell. That's IT.

members=cash flow

The trick is staying afloat while you build your client base. One you have "sticky" members you can start to manipulate for a profit. Sure ebay profits from it's advertisments but their real money comes from charging the customer a low rate for a service that used to be free. Ebay is so addicting to most users that they dont mind paying the dollar or two fee to list and a percentage of the final sale price. A dollar or two may not seem like alot to you or I but multiply that by the thousands of new listings they receive each day. Now your talking profit. And now with the venture into autos and homes they will be making alot of money. Keep in mind that dot-coms with semi or fully automated sites do not need many employees so their overhead is really low.

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