INTERNET COMPANIES MEET UNTIMELY DEATH
A new study by Net tracker WebMergers shows that 130 dot-coms shut their doors this year. The San Francisco-based company predicts more Net heads will roll.
Around 75% of the failures were consumer businesses and 60% e-commerce companies. The closures have left some 8,000 Net employees without jobs. Latte consumption saw a commensurate drop.
The report cites the top reasons for closures to include insufficient funding, poor business models, a lack of branding, bad timing, impatience on the part of venture capitalists and a surplus of Web-savvy employees in the job market.
The study shows fall to be especially hard for survival. This month alone, 21 netcos stopped operations, a slightly better number than the 22 that closed in October. California was hardest hit this year with 46 closures, followed by New York with 14 shutdowns.
According to WebMergers President Tim Miller, the closures represent only a small portion of cyber-commerce. He said: "If you think about it, there are probably about 10,000 Internet companies out there."
Miller admitted many Netcos have been absorbed through mergers, which also left countless employees on the streets. Of the more than 1,000 Internet companies that have been acquired since 1998, at least 700 of the deals were struck this year. "Clearly, some of those were sold at distressed prices," Miller added.
The most notable netco to crash and burn was Digital Entertainment Network, which filed for bankruptcy in June. In addition to overwhelming financial losses, CEO Marc Collins-Rector and co-founder Chad Shackley were among the parties named in a sex suit filed by a minor employee (hitsdailydouble.com, 7/10).
Online labels AtomicPop, whose roster included Ice-T, Public Enemy and the Gas Giants and SpinRecords.com, which housed The Color Red, both closed down this year. CMGI has already offered up its free Internet provider 1stUp.com and its iCast entertainment site. ARTISTdirect.com, Emusic.com and Musicmaker.com are all on the bubble.
For ongoing coverage of dot-com failures, we encourage our readers to visit www.fuckedcompany.com.
Ironically, two non-music sites that went belly-up were Furniture.com and Pets.com. Both had advertising campaigns featuring talking animals: a haughty cat and a sock-puppet pooch, respectively. Coincidence? We think not.
