Crisis separates dot.com weak from the strong

"That which does not kill me, makes me stronger." The philosopher Nietzsche said it, but the economic fallout from the atrocities of 11 September means internet businesses that are surviving are thriving ­ while the weaker ones go to the wall.

In America, Inside.com and Brill's Content, which primarily analysed the doings of the media, closed last week; so did The451.com, a technology site that charged £600 a year for access and had offices in London and New York.

Kurt Andersen, the co-founder of Inside.com, said in a valedictory story on the site: "To say you're surprised at any media business finding it hard to remain in existence at this point would be silly."

Try telling that to eBay, the online auction site. It just released quarterly figures to the end of September showing that its revenues rose by 70 per cent to $194.4m (£135m) ­ and even more impressive, that its net profits were $18.8m.

Those figures would make any ordinary company happy in normal times, let alone during wartime.

Or ask Brent Hoberman, the chief executive of Lastminute.com, the one-time stock market dot.com darling. He has seen the number of last-minute bookings made on the site rise by more than 50 per cent.

The increase is due to the combined effects of consumers waiting until the last moment, and suppliers such as hotels, airlines and holiday companies having more places.

"People still have confidence enough to buy these things," Mr Hoberman said. "But it's just that more and more of them are deciding at the last minute. And the suppliers, who used to pretend that they didn't do business with us but secretly always did, are even more friendly than before."

This could be the time when companies that are already established online ­ such as eBay, lastminute.com, Amazon and Yahoo! ­ squeeze rivals out of existence and come to dominate the online world that emerges from the shadow of 11 September.

A dot.com manager said yesterday: "What you're seeing is the last flushing out of people who wouldn't survive anyway in the longer term. They're going to go to the wall, and that will leave those who survive even stronger."

There is even room for online content companies ­ provided you approach it the right way, says Drew Cullen, the co-editor of The Register, an online technology news website. It started as an e-mail newsletter in 1994 and went to the Web in 1997. Now it has 200,000 readers every day. Whereas The451.com charged, it is free. So how does it keep going?

"The thing about The451 was they spent millions when they launched on marketing and offices, when it would have been simpler just to buy the rival, called Computerwire," Mr Cullen said. "We never took part in all that venture capital fund-raising stuff. We are just a small business."

The Register has an office in Mayfair, because the companies that its small staff of reporters want to talk to are based in London.

"But it's above a kebab shop," Mr Cullen said. "We cut our coat according to the cloth."

What is its income? "There's T-shirts," he said. "Last month we sold £10,000 worth." Many dot.coms would kill for sales like that. "And adverts, as 70 per cent of our readers are in the UK. And there's a marketplace, and recruitment sections," he said.

All bring in cash to pay its journalists, who have broken a number of significant stories in the technology sector. "It's all about word of mouth, not big marketing spend," he said.

By contrast, Salon, another American content site, is searching for new sources for funding­ whether from viewers' subscriptions or new capital. Without it, the doors will close in the next few months.

"Hindsight is a wonderful thing," Mr Cullen said, "but you have to say that as a site it's just misconceived. It would be better on paper."

However, he thinks there is still room for buccaneers on the web. "People think it's over, but there's always room for entrepreneurs. Fortune favours the brave."