The dramatic irony is too rich, even for the scriptwriters of the over-the-top dot.com soap Attachments: while the need for quality interactive content has never been so pressing, the companies that are producing the sticky stuff - the e-content and commerce producers - are being abandoned en masse by their financiers.
Indeed, the much-maligned dot.com is rapidly becoming an endangered species. At the current rate - one closure a day, according to www.Webmergers.com; or 30 last month, 75% of which were Business to Consumer or e-commerce - analysts are predicting there will only be a handful left by this time next year, apart from monster brands, such as Yahoo and AOL and those owned by media giants.
Last week, financial news site TheStreet.co.uk, which launched with £10.6m in the spring, was cut off by its American parent TheStreet.com because of "failing to meet profitablity timetables". Closure seemed the only option, despite the fact it was bringing in a respectable £200,000 a month and had closed syndication deals with AOL, Compuserve and Lycos, as well as having 80 advertisers.
In addition, Dobedo, the teenage chat site, announced 23 staff cuts; Citykey, a proprietary WAP city guide application, had to call in the liquidators; and it was reported that upmarket gossip site People News.com had laid off staff and lost its chief executive.
The previous week, Wowgo.com, the teenage girls' portal, was left high and dry by backers Unilever, Durlacher and Eureka after just six months of operations. Sponsorship coups with Capital Interactive, Sure deodorant and celebrity endorsement from popsicle Billie Piper were not enough to persuade the consortium that Wowgo.com had a future as an independent entity.
This month's catalogue of dot woe also includes Ebop, the trendy youth lifestyle site, which has laid off all its staff except for its founders; Ready2, the upmarket shopper's advice portal fronted by Daily Telegraph columnists Susannah Constantine and Trinny Woodall, are back down to three mugs and freeze-dried coffee from a peak of 40 at launch; and finally Switch2, the music, sport and internet service launched by Tim Southwell (former editor of Loaded) and Adrain Pettett (founder of soccer title 90 Minutes), have been dropped by Edison Interactive because the "penetration of ADSL into the market is too slow".
Since the Boo.com debacle in May, it is true to say that there has been carnage. But Boo's very public fall was a black-and-white case of bad management, poor research and overspending. The same cannot be said of The Street.co.uk or Boxman, the CD retailer which closed down without warning this autumn. Many of the recent victims had perfectly sound long-term business models but were unable to bridge the gap between the first and second round of financing.
Mike Murphy, MD of Ebop, claims that the company was eight weeks from breaking even when the liquidators were called in. Two unsuccessful attempts to float on AIM had not helped their market value. He says: "Our backers took the view that the net wasn't enough to sustain a business model such as ours [which included a record label and a popular Italian TV show, which is now being sold off]. In the past, people looked at the internet as a whole new business model when really it was just another delivery medium."
On the day Murphy had to break the news to their staff, Ebop reported their highest-ever user figures. "It is very disheartening for entrepreneurs - we know we created good businesses in their own right," he says. The only thing to do is "batten down the hatches and wait for a sale". Flotations are now very out of fashion.
Speak to any "serious" venture capitalist these days and he will tell you that the B2C model of sponsorship and advertising has been completely discredited. Those, like Ready2, who did not wake up and smell the emergency-board-meeting-coffee and change their business models months ago, have had to suffer the consequences.
Trinny Woodall might complain that the venture capitalists they approached for a further £7m funding, "preferred not to make a decision they could be fired for rather than take the risk", but the backers don't see it in such emotional terms.
"They have a fiduciary duty to their clients. If they think they are throwing good money away after bad, that's their decision," says Peter Bradshaw, analyst from Merrill Lynch Associates, in their defence. He explains the phenomenon in unequivocal Darwinian terms: "What we are seeing is the end of the beginning. That was the pre-Cambrian growth phase and this is the great extinction phase. When it is all over, good companies will emerge, but only a handful of them, and that's been the real eye-opener for these dot.coms - it's a winners-take-all market. Only those who are number one or two in their particular market will survive."
Far from thinking that the internet has been overhyped, most analysts believe we are underestimating the effect it will have on our lives. Online shopping has tripled in the last year (Internet Monitor BMRB figures show that consumers spent £2.5bn online compared with £860,000 last year) and mobile commerce and TV commerce is predicted to outstrip even internet forecasts.
Ironically, this should be the time for a spurt of growth among content providers. The telcos, who have paid a painful £22bn for their UK 3G licences, are looking for compelling applications, services and commerce partners to justify their expenditure. Without the likes of Wowgo, how is Nokia going to persuade teenage girls to buy their new generation of phones?
Without cool broadband entertainment and short-film sites such as Pseudo, Den or Dreamworks SKG-backed Pop.com - victims of the US's recent dot.com "inverse hysteria" - how are the broadband providers ever going to make ADSL attractive to the customer, offering them something they can't get on the TV?
Where will the new generation of dot.com service providers come from if there is no funding? Venture capital matchmaking events, which were once buzzing with ambitious young entrepreneurs wanting to change the world, are now focused on pure infrastructure plays and dull enabling technologies.
Jerome Moll, chairman of tornado-insider.com and CEO of internet incubator GorillaPark, which specialises in early stage start-ups, claims it is "now more difficult than it was 10 years ago to raise money for a dot.com. Venture capitalists are running scared from B2Cs."
Even ivory-tower media companies such as News Networks, Emap Online, Associated Newspapers and UNM have been affected by the dot rot, and are dumping their ailing sites and modifying their new-media strategies in order to avert future embarrassment. Only last week, United axed uTravel, their leisure destination site. Andrew Nugee, head of Xilerate, said at the time, "We are not afraid to act decisively when it's clear that long-term success is not within our grasp. Our strategic emphasis is now to develop our considerable B2B assets."
New economists predict that the investment market will pick up again in six months. Can we then expect a new breed of leaner, meaner dot.com start-ups - if only for our further amusement? "Unlikely - unless they have seriously divergent business models," says Merrill Lynch's Peter Bradshaw. "The AOLs and Yahoos are developing very quickly and have all the use of the bright-brains fallout from the dot.coms. In a few years, it will be unlikely that anyone will challenge them. Also, don't forget that offline brands are beginning to ramp up online and buy up 'shell' B2Cs very cheaply." Despite these negative forecasts, the wireless market is already throwing up some interesting hybrids, such as Cheeky Monkey, which began as a WAP competitions site and has now developed into a direct marketing medium, gaining revenues from SMS share as well as B2B; and iBalls, a video-messaging station service launching next year which plans to expand into shorthand dotTV broadcasting and dotShop retail.
And despite last week's doom-mongering, PeopleNews is pleased to report that they are "getting in shape" for the new year (the staff cuts were no more than a winter detox) and are in fact "hiring aggressively". It will be interesting to see who makes it to New Year 2002 for the annual Dot.com Staying Alive party.
