Comehither.com:
Why the debt-ridden New Media throw so much good money at the Old.
New York Times Magazine
November 21, 1999 p. 52-53

Max Frankel

So how come my television screen and newspapers are filling up with come-ons for dot-coms? Besides cars and telephones, the ads on "Ally McBeal" are pushing eToys.com and petstore.com and drugstore.com. Dot-coms flash on my screen between murders and disasters on the 11 o’clock news. Ads in The Times shout Yahoo and Excite and eBay and E*Trade and ask me to think AltaVista every time I dream of Michelangelo’s ceiling.

Quit remarkably, it seems the New Media have suddenly decided to enrich the Old. Or, if you prefer irony in your paradox, are greedily wolfing down the poison that will hasten their destruction by the New.

Paradoxically, too, most of the dot-com companies still lose money on every sale, which means that the more successful their ads, the greater their losses. Indeed, they are bidding up the cost of commercials in what could turn out to be a giant Ponzi game: they are spending huge sums obtained from venture capitalists and stock-market gamblers on ads that can only increase their so-far unprofitable business and deficits. And they can only hope that the added traffic will cause investors to send them still more money.

That Peter-to-pay-Paul rondo is only one reason to wonder precisely what business the dot-coms are in. Mainly, even the best-known, like Amazon, Yahoo or America Online, are looking to tattoo their names on the minds of surfers while they evolve every season into a new enterprise.

For example, Yahoo and AltaVista began life as sophisticated "search engines," which quickly scour the Web to produce an index of documents answering your questions. Ask about Shakespeare's sonnets or sourdough bread, and they can instantly cough up texts, recipes and relevant commentaries. Instead of charging a fee, the search engines thought they could get rich from ads posted alongside their findings. But the appearance of many competitors (Hotbot, Excite, Google, et al.) soon ruined their prospects.

A further challenge was posed by the success of America Online, with its colorful array of public and proprietary goods and services. It became popular by also providing e-mail, chat rooms, bridge games and live reports on the price of stocks or airline seats. And once it, too, made itself into a search engine, AOL became an all-purpose Web gateway, a network of networks financed not just by advertising bur also by a flat monthly fee from millions of subscribers.
That was only the beginning of the Web's evolution. Other gateways soon appeared and charged less than AOL. And searchers like Yahoo became gateways for no charge at all. Almost all these "portals" now offer news, e-mail and a cascade of services like tax advice, movie schedules, bill paying, games, clubs, calendars, football scores. For income, they look not to fees or even ads but to the growth of dot-com commerce -- their sales of goods and commissions for sending customers to other merchants.

Imagine a future, then, in which virtually every Web site is linked to every other. Read a news or feature story about a lovely resort and with a few clicks of a button you can locate a suitable airline schedule, order the rickets, choose a car rental and hotel, reserve golf time and restaurant tables and maybe also order babysitters, guidebooks and the appropriate wardrobe.

What AOL and the other gateways currently long to become is your port of entry to this vast commercial net. Some dot-coms may be content to sell a single line of goods or services -- videos, tulip bulbs, lipsticks or banking and bill paying. Some may grow like Amazon.com, which is fast becoming a department store offering not only books but also electronics and computers, CD's and videos, toys and drugs. And like Amazon, they may also compete with eBay, which brokers auction sales of both gems and junk among its customers.

Once enmeshed in the Web, every dot-com will relate to every other. Merchants find it useful to post complementary news and advice. And companies offering news and advice grow eager to link themselves to the sellers of goods and services. E*Trade.com, for example, began life as a stock marker charging only small commissions. But it soon added headline news about the economy, business articles and discussion groups, a bookstore and shopping service and most recently a one-button connection to a full-service telebank. Similarly, The New York Times and other newsmongers will lure you with reading matter but hope to pay for it by directing you not only to ads but also to purchases inspired by your reading.

Potentially, every site on the Web can be a portal to all other sites, just as in the air age every American city can be a gateway to our country. The ultimate competition among the dot-coms will be for a place in the subconscious of every Web user. But while the Web stores must build warehouses and employ order fillers, the grandest portals will exist only virtually and collect from you every time you pass Go. Think of stocks and you may begin your Web journey on E*Trade. Think of news and we hope you'll reach for Nytimes.com, for The Times and most other publications also expect to be Net portals for communities of like-minded readers whom they can sell to Web advertisers and merchants.

So even in these primitive stages of Web commerce, the struggle for name recognition has grown fierce. A few name-brand dot-coms are hoping to end up with outsize reputations as Net ports, attaining the stature that actual ports like New York, London and Hong Kong achieved as centers of commerce. Since every Web site can blossom into a great portal, the richer ones are throwing all their resources into ads that might distinguish them from the pack. They want to be famous in the old world even before they are well defined in the new.