Part I: History of the Web

The Technology Bust

by Pauline Sugarman

This article explores the Technology Bust that occurred in 2000-2001 and the factors that contributed to bringing the internet boom to a halt.

As more and more ventures developed their product and came online, it became apparent that very few were making money, or would ever make money. By 2000 the internet’s boom days seemed numbered. As more and more ventures ran out of money, their dreams of changing the world with their internet creations went bust.

Many factors played a part in bringing the internet boom to a halt.  For one, many start-ups had no business plan as to how to make money. They were given a lot of money by eager investors and spent a lot of it on themselves, their perks and on splashy advertising. For instance, they ran ads during the Super Bowl. Now, there’s a plan.

Those that tried to make money on the internet found it hard going. Banner ads (those ads that run at the top of a website) were supposed to generate large revenues. The idea was that you would get paid by the advertiser for every person who clicked on their ad. But by the end of 2000, sites were charging way too much for the banner ads and most people just ignored them (eventually only .5% of people clicked through).

Another attempt at making money involved charging money for content. A magazine for instance, could charge for subscription. But, people were already used to receiving information for free on the internet and did not want to pay to receive it.

At the same time that many new ventures had too much money they were also under a lot of pressure to produce results right away. Many dot-coms reacted to the changing moods of their investors by altering their business plans. They failed to stick to their core business.

Another reason for the bust was the poor level of technology that was available in the late 1990s. For instance, a lot of the possibilities envisioned for the internet were (an still are) held back by the speed of the connection. Downloading movies in your home is a great idea, but if you don’t have broadband connection, it can take 24 hours. In 1990s, hardly anyone had the technology to use this service.

And last, but not least, many ideas put forth needed tremendous outlays of investment funds to bring them into the black. New marketing ventures often need new distribution systems. And these cost money. For instance, I love the idea of buying groceries online. But how do you distribute the groceries (or any goods) beyond a large urban area and still make a profit? Even Amazon is just now coming into profitable times.

By late 2000 and early 2001 the news media announced the demise of the internet. It had failed and it was over. If the big ventures couldn’t make it work, how could anyone?

But, while the reports kept coming in on all the failures, many smaller, less glamorous undertakings were beginning to have success. They found niches that worked - and some actually started making money.

How it All Got Started

Who's Succeeding on the Web Today

• Contact Information:

• Pauline Sugarman
• Blue Pearl Marketing
• P.O. Box 344
• Larkspur, CA 94977
• Telephone: 808.878.3000
• Email: pauline(at)bluepearlmarketing.net