Second Wave Of Dot-Coms

The business plans of the second wave of dot-coms are written on legal paper (not napkins), the prospects are measured in dollars (not hits) and the focus is on media companies (not Anything.com). The first dot-com boom also featured big buyers, but much has changed since then.
- First, broadband penetration in key markets provide for graphic-heavy media sites to actually work for many consumers.
- Second, online advertising has come of age. Online ads now take in $14.7 billion per year in the U.S., according to Forrester Research, and are growing 23 percent per year, while traditional advertising is flat or falling.
- Finally, the creative process is now bottom up, as well as top down. Web users are as important as the old media gatekeepers in the production of online information and entertainment, and they are pushing the market where they want it to go.
Google plays a major role in the success of sites – earlier sites needed to be narrowly focused to attract big ad bucks. But the Google model makes it possible for even very broad-based news or entertainment sites to make money. Google charges advertisers for clicks in ads and pays some to site publishers - the deal enriches Google and the content sites, which have thus gained appeal as takeover targets. Entertainment sites are also building an edge using free labor. Sites like MySpace rely heavily on messages, stories, music mixes and photos made by users, and often this self-generated entertainment is better than what the Web editors come up with. Gambling sites like PartyPoker.com and Betfair.com, as well as photo-sharing sites like Flickr.com, take advantage of users who are, in essence, entertaining themselves.