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Recently in Salon Technology

Singing the MP3 blues
Indie musicians find online music distributors every bit as greedy as the recording industry they aim to replace.
By Emily Vander Veer
[12/02/99]

Sex sells, doesn't it?
Tales of financial chaos at the heart of an online porn empire.
By Mark Gimein
[12/01/99]

Technology: View from the top
The music man
MTVi's Nicholas Butterworth says he wants the audience to do the programming.
By Janelle Brown
[11/29/99]

The man who fell to mirth
David Bowie makes light of van Gogh's ear, Ziggy's future and sowing "creative wild oats" in a chat about Omikron.
By Janelle Brown
[11/24/99]

Review
A soul-sucking parallel world
Will you free the residents of Omikron's totalitarian regime or lose yourself in the beauty of this game's futuristic city?
By Janelle Brown
[11/24/99]

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What a wonderful selling point for AOL! Other online service providers might offer low rates, personal service or superior bandwidth. But AOL has a trump card: Its promotional offers can be seen on TV. They aren't just vapors in cyberspace; they have the hard, palpable reality that only network broadcast confers.

Of course, AOL is now the most successful online company around, with a claimed 19 million subscribers. Perhaps "AS SEEN ON TV" appeals to focus groups and boosts response rates by 0.1 percent. What does AOL care if Silicon Valley sophisticates sneer?

The surprise this season is that "AS SEEN ON TV" is no longer just the proud slogan of mass-market-hungry AOL -- it has suddenly become the mantra for the entire horde of Internet start-up companies vying for our clicks. The flood of e-commerce ad spots on TV is so thick that commentators are already talking about a "dot-com backlash." In the San Francisco Bay Area you can't turn on your radio or TV without hearing some Internet company's desperate effort to etch its Web address's idiosyncrasies into your brain cells ("that's www.landsend.com, one word, no apostrophe").

By one estimate, online companies will spend $2 billion in 1999 on offline advertising. (Salon.com has done its small part with a modest TV campaign of its own.)

Readers with memories longer than six months or so will recall that one promise of the Internet in its callow youth was to connect people directly with the information, products and services they sought, cutting out middlemen -- like TV networks -- via a process dubbed "disintermediation." The commercial Internet's collective embrace of TV advertising now has many pundits singing dirges for disintermediation, arguing "plus ça change, plus c'est la même chose."

"See?" they crow. "The Internet is no different from any other business. To succeed, you need eyeballs and market share, and TV is still the best way to grab them."

Just how wrongheaded this argument is will be measurable in the aftermath of this holiday season, as gaggles of Internet start-ups that gambled much of their venture-capital inheritance on TV time go belly up. The dot-com TV frenzy isn't a sign of things to come; it's a mere transitory spasm of folly -- albeit a spectacular one. To understand how this vast failure of imagination came to pass, we need to look at the nature of today's overheated venture capital market -- and the pathologically impatient mind-set it has promoted among the Internet start-up companies it spawns.

Next page | How permissive investor parents breed bratty, spendthrift start-up kids