Date: Thu Jun 22 2000 - 10:10:48 PDT
Seems the bubble is bursting. Had no idea.
Salon.com Typifies Demise of `Content' IPOs:
By Christopher Byron
Weston, Connecticut, June 20 (Bloomberg) -- When the history of the great
dot-com investment bubble of 1996-2000 is finally written, surely a few
comments will be heard from some quarter or other regarding the role that
Wall Street has played in this game. It's called How to Fleece the Public
Get Away With It.
This week we'll drop by for one of our characteristically unwelcome visits
one of the more vivid -- and easily grasped -- examples of that fleecing:
initial public offering of Salon.com Inc., the San Francisco-based Webzine.
This desperately struggling company perfectly encapsulates the failed
and doubtful future of an entire generation of IPOs in the dot-com
These are companies that never should have been taken public in the first
place but were dumped on the public anyway. The senseless business theory
that lured in the gullible: That advertising alone could support
marketing on the Web -- this when, in many cases, the advertising and
marketing costs of the content companies themselves were greater than the
total advertising revenue collected from others.
Worst of all, it was the IPO proceeds from one company that became the ad
revenue of the next company -- a kind of Wall Street financed
in which dot-com startups became little more than a capital transfer
mechanism from Wall Street to Madison Avenue. It was all dependent in the
end on the continuing flow of funds from the new issue market -- a flow
was destined to end sooner or later, and now has done just that.
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