Last week's decision by eToys, the US online toy company, to file for bankruptcy ought to send a shiver down the spines of all remaining dot.com companies. eToys is the biggest casualty yet and the most worrying. It was once valued at an unbelievable $12bn on the stock market. Now it is worth nothing. Until recently it was possible to regard the shakeout as nothing more than the inevitable consequences of the predictable attrition rate among new companies - some 50% of which fail in their first four years. Now it is beginning to look systemic.

If nothing else, the fate of eToys ought to blow apart the strange proposition that was all too freely adopted as part of internet business folklore: that first movers had an advantage. It was never true before the net came along (ask Microsoft, Dell or Compaq).

Second movers usually have the advantage because they capitalise on the mistakes of the innovators. That is why Britain fought beneath her weight for most of the post-war years as others developed the inventions we failed to exploit ourselves. Second-mover status gave Japan a huge competitive advantage as her industry improved on the designs of others - at least until the last decade when internal financial problems put the Japanese miracle into cold storage.

But the worry now is not that eToys failed because it was an inexperienced first mover, but because the business model that it and thousands of others adopted was itself fatally flawed. The internet is not an obvious place to make a fortune out of selling old economy goods. Why?Because consumers expect rock-bottom prices while the company is still landed with the huge costs of marketing (including making itself known to the public) and delivery. It is a great model for me as a customer but not for the company trying to sell to me.

It is different, of course, if you are selling new economy goods such as music or books that can be digitised and sent down the telephone as ones and zeros. In that case the middle person is definitely being shut out (though not entirely, because online sales breed new kinds of intermediaries such as streamers).

It is fairly easy to sell commoditised old economy goods you don't need to touch and feel - like books and wine - from the web, especially when there are valued-added services such as search engines to guide you to products you like. But this may not guarantee survival because canny customers can use the search engine then buy from the cheapest source elsewhere.

The interesting question is what eToys may be telling us about Amazon's chances of survival. Amazon, the world's biggest book store, is a brilliant site for customers, up there with the very best. It has been fleet of foot and innovative - even if too heavy-handed in its interpretation of intellectual property rights.

But that doesn't make it a viable long-term proposition. At the moment there is no imminent danger because Amazon has still got warehousefuls of money in the bank, thanks to the booty from earlier capital-raising exercises.

This raises the new paradox of business-to-consumer (B2C) web companies that applies as much to Britain's Lastminute.com as to Amazon. Many of them only exist today on the back of money raised on the capital markets a year or more back. But it would never have been given had investors known then what they know now about the viability of the B2C business model.

Amazon, like so many other web companies, is in a race to secure enough market dominance to be able to raise charges before it burns its way through its legacy money. Others are gobbling up competitors or forging links or mergers with old economy companies in order to survive.

Some, like Confetti.com, the one-stop wedding services company, are doing both. It has taken over its main competitors and an old-economy catalogue company. Last week Sir Bob Geldof's Deckchair travel company laid off a third of its staff to seek a link with a rival online company. Part of the problem facing companies like Deckchair is that airtravel companies such as easyJet and Go have successfully cut out the middleperson by selling straight to customers.

It could be argued that Amazon itself only exists because of the failure of publishers to get their act together by selling books directly to the public and cutting out the intermediaries. No one, ultimately, can sell books more cheaply than the publisher (or author).

This year will see an acceleration of three trends. First, online companies will continue to gobble each other up to get as close as they can to a monopoly position so they can increase prices. Second, there will be "second generation" internet companies built to exploit the inherent strengths of the web rather than selling old economy goods in a different way.

Third, old economy companies will pick up the remains of the failed dot.coms at bargain prices to provide an extra outlet (and shop window) for their wares.

The most dramatic recent example is the John Lewis partnership. It was rather slow to embrace the net (unlike its subsidiary, Waitrose) but has now been catapulted into the vanguard by its take-over of the UK arm of the troubled US e-tailer, Buy.com.

In this way, the online companies that were supposed to replace old economy monoliths will in fact be swallowed by them once they have got their act together.

We have been here before. Remember how the Today newspaper, the pioneer of new technology, was going to change the face of the newspaper industry? It did. It forced the rest of the industry to adopt the new technology much earlier than it would otherwise have done. Today closed down and the late adopters flourished.

No one is talking much about first-mover advantage in the newspaper industry.