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The Growth and Development of Online Commerce: The Dot-Com Boom Years

By Sammy J. Chapman Jr.

The Dot-Com Boom Years

The nineties were a crucial decade in the history of the internet and its commercialization. Brian McCullough’s How the Internet Happened is a history of the internet during its rapid adoption period of the mid and late 1990s. This book covers the important beginning years of the internet, chronicling its wide adoption by the public after Netscape’s release of the Mosaic web browser, which transformed the internet into the graphical World Wide Web. The rapid adoption of the World Wide Web in the 1990s led many companies and entrepreneurs to believe that they could make fortunes on the internet. John Cassidy’s Dot.Con: The Greatest Story Ever Sold narrates many of the first internet companies and the dot-com bubble of the 1990s. The author contextualizes that bubble within the national economic events of the decade, from Alan Greenspan’s central bank policies to the furor over technology stocks and day trading. The book offers a hindsight view of the excesses of the dot-com era, detailing why so many companies failed because of their unrealistic growth expectations and their belief that internet technology had changed the basic laws of economics. Wall Street investment banker Jonathan A. Knee’s The Accidental Investment Banker: Inside the Decade That Transformed Wall Street offers a firsthand account of the frenzy of the investment industry as it made deals with technology companies and hired employees that could understand the new technology companies. The author chronicles the bust that resulted from many of these deals, which were based on unrealistic valuations and expectations.

Bruce Abramson’s Digital Phoenix: Why the Information Economy Collapsed and How It Will Rise Again offers a different interpretation of the events of the 1990s, focusing on intellectual property and economics. The author argues that the important events of the decade were Microsoft’s manipulation of the software market, the responding open source movement, and the advent of digital music. The author sees internet technology as a positive force and believes that intellectual property laws should be reformed to take full advantage of the its potential.

In Irrational Exuberance, Nobel laureate Robert J. Shiller writes an important, comprehensive analysis of the economy in the 1990s. He downplays the impact of internet technology on the economy. Shiller postulates that the rapid emergence of the internet in the 1990s helped create a mass psychology that led to a stock market bubble. Shiller’s analysis concludes that cultural factors and mass psychology were at the heart of the speculative bubble of the nineties. Another academic book that sets out to understand the boom-and-bust cycle of the 1990s is Brent Goldfarb and David A. Kirsch’s Bubbles and Crashes: The Boom and Bust of Technological Innovation. The authors develop a model to explain the forces that create the boom-and-bust cycles that so often appear in economic history. Their model uses the e-commerce company eToys to illustrate the mechanisms of the boom-and-bust cycle. This book has several conclusions similar to Shiller’s analysis, especially the role of behavioral forces as important catalysts for boom cycles. Unlike Shiller, these authors believe that technology is the impetus for the boom-and-bust cycle. However, like Shiller, Goldfarb and Kirsch offer policy recommendations for taming future boom-and bust-cycles. They also point to one of the key driving narratives of the early internet, “Get Big Fast”—i.e., pricing low and marketing aggressively to attract consumers and investors—and how it was transmitted through a society.

Cultural forces were also at play in the internet’s commercialization. Megan Sapnar Ankerson’s Dot-Com Design: The Rise of a Usable, Social, Commercial Web offers a view of the internet during the 1990s from the perspective of web design. It examines how cultural and economic forces moved the web from a place of static content to a platform for transactions. Looking at the internet through the lens of cultural studies, media history, and design, Ankerson traces how commercialization and profit were driving forces of web design during the late 1990s and early 2000s.

Works Cited