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E-Commerce For The Little Guy
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"Wow, a free book! All this work and no revenue ... these guys must be broke!"



E-Commerce for the Little Guy 101

Let's imagine this scenario. You have UNLIMITED real estate in a town with no borders that everyone on the planet (everyone on the planet with money, that is) can get to. You say to yourself, "what the hell," and go into business. You have no idea what you're doing, but you tell some venture capitalists that you are a storeowner in this town and you can conceivably have millions of customers. So they give you a few million bucks, and you go out and hire a bunch of monkeys to make your widgets.

A few months go by and you realize nobody is buying the widgets.

You have to have some sort of revenue, so you decide to talk to some other guy next door, who sells similar widgets and, similarly, has no customers. So you decide that you're gonna let your buddy put a banner up for his store on your store, and vice-versa. Now you're making some money off of this guy and he's making some money off of you…money is actually moving. After a while, being the brilliant mathematical mind that you are (that's why you're in business, right?) you realize that this game of tit-for-tat is fooling your financial investors for a little while, but you're still not making any money.

And still…nobody is buying the widgets.

You figure you need more reach…there are way too many competitors out there. But how can you possibly get your banner plastered all over everybody else's stores? And how much room can you afford to give to your fellow online entrepreneurs on your storefront? You go to the guy who puts up the posters and he tells you that he can help you out…he'll put your banner all over the place! Not only that, he'll also handle putting up banners on your storefront. Seeing as you have no customers, you shell out a few hundred thousand to this guy. Time goes by…the entire town is plastered with banners for stores that sell widgets (99% useless widgets, mind you)

Nobody is buying the widgets, and now you're almost broke.

In a last-ditch effort, you spend the rest of your cash on some cheap whores, throw out all the widgets, and plaster your store with porn. Your buddy next door follows suit.

Finally…you're making money.

Your neighborhood is a dump. It's covered with huge, flashing advertisements and banners, and there are only three types of items for sale: Whores, dildos, and hardcore porn. But you're in business and you're giving the people what they want…and you don't even have to give anything away for free any more! Does this scenario sound familiar? Didn't that happen to 42nd street a little while ago? Didn't we learn? Apparently not! For some reason, we thought the online world was a place of elves and fairies, and not voyeuristic bestiality fetishists. What a reality-check, huh? Well…the good news is that we were able to clean up 42nd street. The bad news is, we needed to do it with equal parts fascism, physical force, and brand advertising on a scale that makes the Great Wall of China look like one of those tongue depressor models you made in kindergarten. In any case, this does bode well for some of the big internet players out there. And the few people who are smart enough to steer WAY clear of Times Square when they visit New York will be the ones who will stay the hell away from the big web sites. Unfortunately, we know how people operate - especially Americans. So what does this mean for the internet? We'll let you decide.

Enter Ad-Man.

Actually, let's be fair. As we all know, there was a time when all looked rosy for our shop-owner friend. You see, some of the shop owners were smart. They realized sooner than most that no one wanted their widgets. They also realized that widgets, whether in the form of original online content or actual products, cost money to make. Why bother? Our smart shop-owner realized he could only make money by selling advertising. And the more people who came by his store and looked around, the more these ad sellers (the banner guys) wanted to pay the shop-owner to put ads on his storefront. The shop-owner decides it's smarter to throw out the widgets and instead put pictures of bare breasts, lewd jokes, and gambling machines around his shop. The more people that hang out, the bigger his "store" gets, and the more banners he can hang up. He can even put really attractive breasts up instead of average breasts and people actually pay him to come and hang around! Wow…he's finally making money…but these poor advertisers! Don't they realize nobody sees the banners?

We don't want to get into a serious discussion about branding and advertising here, but the point is this: the web publishers who were smart took the advertisers for all they were worth. And the advertisers and ad sales people who were smart took their clients for all they were worth. Hmmm…sounds like good ol' every day American business, huh? One big difference…this was Generation X we were taking advantage of, kiddies…a veritable army of naïveté! A gaggle of amateurs fresh out of school and ready to be jerked around - or better yet, employed and worked to death! The technology and society came together at just the right time…the "Perfect Storm", so to speak. A once-in-a-lifetime occurrence!

But alas! What happened? We were doing so well! We had a new vehicle for advertising. We had the money. We had the advertisers. We had unlimited "real estate" to work with. We even knew how to measure the effectiveness of our advertising efforts. Ah…perhaps this was the problem. With unlimited real estate, limited customers, and the fact that one could now measure how ineffective advertising really was, we were in for a little lesson about how the internet and advertising really work.