A business, especially a
publicly-traded company, that conducts most or all of its business over the Internet. Dot-coms may conduct business in one or more of the following areas: Content, Commerce, and Connection. Content companies provide information, either for
free or for a
charge, and earn most of their
operating income from
advertising. Commerce companies
sell new and/or used goods directly over the Internet. Connection companies provide Internet services directly to customers.
Dot-coms were hugely popular
investments in the 1990s, with
IPOs of hundreds of dollars per
share, even if a company had never produced a
profit and, in some cases, had never earned any
revenue. This came from the theory that Internet companies needed to expand their customer bases as much as possible and thus corner the largest possible
market share, even if this meant massive
losses. While this worked for some dot-coms, notably
Google, which did not produce a profit for its first several years of operation, the theory was unsustainable because, in a given industry, only one or two companies could corner large market shares, meaning most dot-coms were doomed to failure. This dot-com bubble burst in 2000.