Kooped out

National | Former surgeon general's dot-com is running out of money; government is trying to save you from losing your money; and is your hyperlink worth money?

Issue: "Money to burn," April 15, 2000

C. Everett Koop's self-titled website was supposed to take the Net by storm, but now its vital signs are looking critical. The former surgeon general and Francis Schaeffer disciple co-founded and owns a seven percent stake in Drkoop.com, a company that is now a case study for the current dot-com shakeout. The Austin-based health information website is one of many that found last winter very cold after a brief moment as a hot Internet stock. The site is losing so much money that its auditors at PricewaterhouseCoopers expressed "substantial doubt" that it can stay in business. And Drkoop.com isn't exactly a failure. It's one of the most visited health sites around, but it competes in a field of about 17,000 others. That means competition is fierce. The company lost $56.1 million last year after taking in just $9.4 million in revenue. Other sites are in trouble too. The online department store Value America released its own PricewaterhouseCoopers letter saying that it "has suffered recurring losses and negative cash flows from operations that raise substantial doubt about its ability to continue as a going concern." A recent Barron's listed about 200 e-commerce companies that are at risk of running out of money. E-commerce sites that target consumers must fight huge promotional costs, never-ending price wars, and an ever-changing market. Numerous online media sites are struggling, but survive because their print-world owners see them as necessary investments in the future. So is this Internet boom just a financial bubble? Doubtful, because the number of people surfing and shopping online shows no signs of decline. But that doesn't ensure everybody's success. After all, even the best shopping malls see tenants move in and out regularly. We're from the government, and we're here to help
Watch out! An amazing number of Internet scam artists are offering all sorts of bogus get-rich-quick schemes. Federal regulators want to deploy new technology to catch the cons, but is the cure worse than the disease? The Securities and Exchange Commission is building a new computer system to troll the Net looking for investment fraud. This surveillance network would scour websites and discussion groups for leads that would be followed up by investigators. Doesn't that violate people's privacy? One of the world's largest accounting firms, PricewaterhouseCoopers, won't participate in the program, saying it encroaches on the rights of innocent people. The technology "is equivalent to, in my opinion, wiretapping ... the equivalent of planting a bug," said partner Larry Ponemon. The SEC claims it is just automating what it must do manually anyway. It has some 240 people prowling the Internet for scams. Rep. Bob Barr (R-Ga.) wrote SEC Chairman Arthur Levitt urging him to reconsider "in light of the serious constitutional, legal, and policy questions raised by such a system." No one questions that scams go on every day. The SEC is especially concerned about what it calls microcap fraud. This involves hypesters buying up shares in some obscure cheap stock, then making wild statements about how the price is going to skyrocket. Attention makes the stock rise, then the hypesters sell out, the price collapses, and cheated investors lose money. Of course, reams of legitimate investment information is available on the Net (or from brokers). Avoiding a scam isn't hard. But is it comforting to know that if you discuss your stock portfolio or your retirement account on the Net, the Feds are listening for you to say something that could trigger an investigation? Click on the underlined text
What's so great about the Web? Hypertext. The ability to have those little blue links zip you from one page to another, regardless of who owns the content. Any page can link to any other page. It's simple, it's neat, and it's fast. Ticketmaster Online has a little problem with this. The site sued upstart Tickets.com, claiming that a practice called "hyperlinking" should be banned. This happens when one site links to a specific page within a site, rather than the home page. What's wrong with that? Ticketmaster claims it means their site gets fewer clicks and less ad revenue for delivering the same service. The suit didn't work. U.S. District Judge Harry Hupp dismissed four counts of Ticketmaster's claim. Ticketmaster plans to refile, but the decision protects one of the Web's hallmarks. If linking to a page required cutting a deal with another website, lots of convenience would disappear. People can point to Web pages for any reason: as a helpful hint, a bibliographic reference, or even mockery. Yet like many technology court cases, time is changing this issue faster than court cases. Programs already exist that will keep a hypertext link from working after a short period of time. Thus the website owner can force users through whatever hoops he wants (ads, registration, whatever) before showing the valuable content.

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