What is a Dotcom?
A dotcom, or dot-com, is a company that conducts business primarily through a website. These companies leverage the Internet as the pivotal component of their business models.
Dotcoms get their name from the URL or domain name that users enter to visit a website, with the “.com” extension symbolizing a commercial entity. Interestingly, “URL” stands for uniform resource locator.
In addition to “.com,” there are a variety of extensions available such as “.org” for nonprofits, “.edu” for educational institutions, and “.gov” for government agencies.
More extensions continue to be introduced over time due to the saturation of “.com” sites, making it challenging for new companies to find an intuitive name. There’s even a degree of prestige associated with certain extensions: For example, “.io,” signifying ‘input/output,’ is seen as trendy among tech enthusiasts and gamers, while “.info” can be used to hint at authority and trustworthiness.
Key Takeaways
- A dotcom, or dot-com, is a company with a business model that revolves around operating a website.
- Dotcoms derive their name from the “.com” at the end of their site URLs.
- The term is now particularly associated with businesses that emerged during the infancy of the World Wide Web, particularly throughout the 1990s.
Understanding Dotcoms
The dotcom business model necessitates an Internet presence for the business to thrive; this is the principal component of its delineation. Most or all of the products or services offered by a dotcom company are presented, marketed, sold, and backed via the Internet.
Originally, a dotcom was a broad reference to any internet-based business. However, the term now most often refers to internet companies conceived during the internet boom of the 1990s.
The Dotcom Bubble
In the late 1990s, dotcoms captivated the world, their valuations escalating at an unparalleled rate within recent memory. During this time, any entity with dotcom in its moniker could attain a significant stock market valuation, despite lacking tangible profits or assets, and sometimes without producing a coherent business strategy.
A myriad of early dotcoms disproportionately invested in marketing and brand visibility, often neglecting to develop substantial products or services.
The bubble eventually burst in 2001 when investors grew disillusioned from waiting for profits. This led to a mild recession in the United States and other developed nations.
Examples of Companies From the Dotcom Crash
A notable example of the dotcom crash is Pets.com, a site focused on selling pet supplies. The company notoriously spent over $2 million on a Super Bowl ad in January 2000. Later that year, it reported losses amounting to approximately $147 million for the first three quarters. Despite a peak stock price of $14 per share, stock values plummeted to below $1 following news of the losses. The company ultimately failed.
Another example is Pseudo.com, which concentrated on internet broadcasting and live-streaming services. However, poor business operations led to its downfall, and the site could not turn profitable.
Not all stories from the dotcom era were failures. Successful companies born during this time include Amazon, established in 1994; eBay, founded in 1995; and iMDb, created in 1990.
Related Terms: startup, valuation, dot-com bubble, internet economy, domain name, URL.
References
- Finextra. “Why .io is the cool new domain”.
- Campaign. “History of advertising: No 147: Pets.com’s sock puppet”.
