Internet's Strength Is Responsible for the Current Drop

Computerworld - It's easy to see the recent dot-com carnage as the natural result of yet another bubble of foolish greed. The problem with this view is that, although it's mostly true, it's not really very helpful. While an atmosphere of gloom and recrimination might temporarily lead people to act less foolishly or less greedy, it provides no real guidance as to how to best move the Internet industry forward.
I would like to suggest a view that is both more abstract and more practical. The primary cause of today's Internet collapse is actually the flip side of its greatest strength. The Web was able to expand so quickly because it was based on the freely available work of the university and government communities. But more than anything else, it was these same noncommercial origins that set the Internet on the course that led to the current situation.
To see why, it's worth revisiting a bit of history. Before the Internet became publicly accessible in 1994, consumers had no reservations about paying for online content and services from vendors such as CompuServe and Prodigy. These services, of course, had many problems - most important, their lack of e-mail interoperability - but their business model was clear. Online vendors put together a package of content and services, then tried to sell it. There was an active class of paying, early-adopter customers.
The novel idea that online information and services should be free was the direct outgrowth of the Internet's research and public-sector roots. It certainly wasn't something IT vendors would likely have come up with on their own. Eventually, of course, companies such as Netscape, Microsoft, Sun and RealNetworks greatly reinforced the culture of free services by their strategic software giveaways. By 1995, the IT-consuming public had adopted an almost visceral resistance to the idea of paying for Web-based information, and the market began heading in a new and uncharted direction.
Looking back, it's clear that what once seemed like a blessing has turned out to have some severe, unforeseen consequences. Companies, investors and the public unwisely came to accept the idea that eventually, Web-based value would somehow be turned into actual money, even though this thinking ran against virtually all precedent of how viable markets are typically formed - with lead customers, niche markets, established pricing, the sort of things described so well in Geoffrey Moore and Regis McKenna's Crossing the Chasm (HarperBusiness, 1991). The belief that profits would come later quickly spilled over into noncontent B2B and B2C sectors.
Many Web-based