From the ashes, internet businesses that work

Just six months ago, using the words ”internet” and ”profitable business” in the same sentence tended to elicit little more than cynical reactions.

After all, the dot-com-fuelled stock market crash of early 200 saw thousands of Internet businesses, which never made a profit, close their virtual doors for good — and caused lots of technology investors to lose lots of money.

But it’s too early to count out all of the dot-coms just yet. In fact, out of the ashes of the internet startup bonfire has arisen some businesses that, by their very uniqueness, seem destined to take a place among the best brick-and-mortar shops around. What’s more, these businesses are either currently profitable or headed that way soon.

Take Netflix (www.netflix.com), for example, an online DVD rental company that has become a poster-child in the United States for what a successful business based on the internet can be.

The company, which went public in 2002 under the tutelage of CEO Reed Hastings, who grew tired of paying late fees at his local movie rental store, just turned its first profitable quarter and already has a devoted following that’s growing by the minute.

The idea behind Netflix sounds simple. Users log on, create a wish list of movies they would like to see, and then rent up to three of those movies at a time for $19,95 per month.

Users can keep the movies as long as they like; the company never charges late fees.

Netflix sends the movies directly to subscribers by mail. When subscribers return one or more movies using the prepaid envelopes Netflix provides, the next movie in the queue is sent out automatically.

In this way, Netflix subscribers can rent many movies each month, never paying a late fee and never having to drive to the local movie rental store only to find that the title they wanted is not in stock.

Netflix offers subscribers over 15 000 titles from which to choose, more than any traditional movie rental store can have on hand.

In the United States, Netflix has opened enough distribution centres so that movies reach subscribers within one to two days. Those who use the service are invariably enthusiastic.

”After the first month, I knew I’d never go back to my local rental place,” Dick Ludke, a Maryland-based manager who has been a Netflix customer for over a year. ”My late fees alone used to cost me $20 a month.”

While Netflix has stated that it plans to expand internationally in the future, its success in the United States thus far has been indisputable. Now boasting over 1,2-million subscribers, the company is adding a new subscriber each minute, by some estimates.

If the internet is all about communication, few companies have figured out a way to capitalise on the fact. Newcomer MeetUp (www.meetup.com) seems to be different.

MeetUp.com is all about communication — the old fashioned type, between real people. The company’s ultimate goal is actually to get people away from the internet and into the real world with each other.

Meetup.com provides a way for people with similar interests living in the same area to find one another and meet up, individually or in groups.

”There’s something about people who share an interest, a hobby, or whatever” that makes a service such as Meetup.com worthwhile, says says Meetup.com’s CEO and co-founder Scott Heiferman.

It’s not easy, says Heiferman, for many people to find others with similar interests in their neighbourhood — interests such as photography, knitting, hiking, or particular musical groups. That’s where Meetup.com comes in.

Emily Smith, a student based in Washington, DC, agrees. ”I live in this big city and didn’t know anybody else who was interested in photography like I was,” said Smith. ”I joined Meetup and I now have a group of folks that meet once a month,” she said.

Like Netflix, Meetup.com’s success has it on the fast track to profitability. Heiferman expects his company to be in the black by the end of the year.

What such promising new internet businesses as these have in common is both a product that people want and a synergy with the internet itself.

Indeed, like Ebay, Amazon.com, and a handful of other proven businesses, these ventures could not exist without the internet.

Netflix could never offer its subscribers 15-million DVDs without its front end on the Internet, and Meetup.com could not provide a way for people with similar interests around the world to find one another without the worldwide network acting as the go-between.

While the unwinding of the internet bubble of several years ago seemed to call into question the viability of internet-based businesses of any kind, well-grounded, conservatively-run ventures such as these suggest that the internet can still spawn efforts able to link ”success” with cyberspace. – Sapa-DPA

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