The year the hype died

From Napster to the dot-com downturn, Salon rounds up the biggest (and smallest) stories of the year.

Topics: Best of 2010,

To say that the bloom came off the new economy rose in the year 2000 might be perceived, in some quarters, as a slight understatement. For venture capitalists, employees of dot-com startups and technology reporters, the implosion of the high-tech/Internet economy is an obvious choice for the honor of biggest (and most disappointing) story of the year. As layoffs mount and stock prices fall, it’s becoming hard to remember those days just 12 months ago when it was impossible to turn on a TV without seeing a string of 10 pro dot-com commercials in a row. Alan Greenspan’s famous description of the zeitgeist, “irrational exuberance,” now seems more of an epitaph than a motto.

But the difficulties Net entrepreneurs have faced obscure the fact that the Internet does not neccessarily equal the “new economy.” And the Internet, despite the flames engulfing technology start-ups of every description, just keeps chugging along. Exhibit A: the peer-to-peer movement led by Napster. Love Napster or hate it, it’s hard to deny that its success is a function of the structure of the Internet. And even though advertisers are suddenly shying away from the Net, Internet usage rates show no signs of declining. In the year 2000, more people got online and stayed online than ever before: playing games, exchanging music files, and, of course, sending e-mail.

In last year’s roundup, in words that will no doubt live on to haunt us, we wrote: “In 1999, the Net grew up and went to work — and its long-standing promise to change the way we do business became an inescapable reality.” There’s a bittersweet flavor to those words — for many, the inescapable reality of this year is having to file for unemployment benefits. So maybe the Net hasn’t quite grown up yet — maybe it’s still going through some unexpectedly painful period of puberty.

But change is still afoot. Napster’s assault on copyright laws in the year 2000 was just one manifestation of a much wider challenge to traditional concepts of intellectual property posed by the rise of networked computers. While libertarian fantasies of a world without borders or governments in which individual freedom is secured by unbreakable cryptography aren’t quite realized yet, it is nonetheless indisputable that in 2000, what was once rhetoric is now reality. Traditional legal approaches to copyright and free speech are being vigorously challenged by digital data transmission in a networked universe. Where it will lead, no one yet knows, but one thing’s for sure: Things will be different.

This year, Salon breaks with tradition — instead of providing our summary of the 10 biggest stories of the year, we’re presenting what we think are the five biggest stories, and the five biggest non-stories. And in a year marked by the annihilation of so many dot-coms, we thought we’d take the chance that instant karma might bite us on our collective butt — we’re wishing a not-so-fond farewell to the five Web sites that we think the world really didn’t need at all.

The five biggest tech stories of 2000

The dot-com downturn

We all knew it couldn’t last. But even the most foaming-at-the-mouth skeptic didn’t predict just how fast the Net hyper-boom would plummet into a full-scale dot-com downturn. Suddenly, the ONLY Net business story is a seemingly endless stream of tales of woe, the layoffs of thousands of workers, hundreds of millions of dollars scattered to the wind and scads of abandoned plans for world domination. But for every 10 money-grubbing charlatans who chased after the get-rich-quick scheme du jour now receiving a delicious comeuppance, there was at least one real businessperson who is also unfortunately eating dirt today. Take Toby Lenk, the founder of eToys. Just a year ago, he was the rare Net entrepreneur who business editors and writers would meet and think: “Finally! Someone bright with an impressive executive background and idea that’s actually marginally attractive. What parent doesn’t want to avoid the screaming brats at a toy store?” But right in the midst of the Christmas rush, eToys has announced that it will run out of money in March, face layoffs and scramble to sell the company. It’s enough to make a tech hack nostalgic for all those excessive launch parties. Yes, the dot-com craze is dead. Long-live the dot-com craze!

A Napster-ing we will go

Who could have guessed that when a little MP3-sharing application called Napster was unleashed on the Net, a year ago last month, the music industry would be turned upside down? Thirty million users, a litany of lawsuits and scores of magazine covers later, Napster and its quiet wunderkind founder Shawn Fanning are rock stars.

How profound was the impact of this program? Well, Spin named “Your Hard Drive” its album of the year and nearly every band from Courtney Love to Metallica has felt the need to weigh in on Napster — with some, like the Smashing Pumpkins, using it as a promotional propaganda tool. And despite the ongoing music-industry lawsuits against Napster, both venture capital firm Hummer Winblad and the Bertelsmann media conglomerate still felt it was a smart move to invest. The SDMI coalition spent the year bickering about whether watermarks could really prevent MP3 pirates from swapping files, and me-too Napster clones like Scour and Gnutella cropped up (and, sometimes, just as quickly closed up shop).

Although it’s still unclear whether the ongoing lawsuit will shut Napster down entirely, one thing is patently obvious: The idea of file sharing is not going away any time soon. With Bertelsmann on board, Napster may eventually evolve into a secure subscription service (although how they would do this is murky); but even if Napster shuts down, competitors are eagerly scrambling to take its place. The idea is out of the box already.

Meanwhile, despite the record industry’s complaints about piracy, record sales are still up. Could Napster have injected life back into a moribund industry and made fans excited about music again? Or is it really just handicapping artists that are already struggling to get paid?

Free to be, P2P

Peer to Peer, P2P — on the surface, it sounds like just another buzzword, one of that endless series of acronyms (B2B, B2C) that occasionally overcomes the Net and then, thankfully, disappears again. But P2P seems to have staying power, and after a year of P2P hype it seems almost safe to say that this concept will go down as one of the fundamental killer apps of the Net.

P2P mania was launched, of course, by Napster — a software program that popularized the notion of connecting computers on a network to each other and letting those users share files and resources directly. A relative of distributed computing (read: SETI@Home, Distributed.net), P2P was first mainly embraced as a way to swap porn, warez and, of course MP3s. Software programs like Napster, Gnutella and FreeNet became popular for just this reason.

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But by the end of the year a variety of geeks and entrepreneurs were figuring out new ways to use the P2P concept for everything from search engines to networks for privacy freaks like Mojo Nation, to curing cancer, or just renting out your unused CPU cycles for cash. P2P had even, dare we say it, stolen a bit of the open-source movement’s thunder with its utopian idealism and fight-the-man ideology.

Sure, P2P may still prove to be the “Push” of the new millennium, but with the best engineering minds of the Net behind it, we would be surprised if it did.

Showdown at the software programmer’s corral

Law and software collided in 2000. For many programmers who previously might have believed that they could code whatever they wanted and never face any consequences, this was the year in which they were forced to recognize that they could be held responsible for what others did with their code. Hackers who only wanted to play DVDs on their Linux machines suddenly found themselves accused of illegally reverse engineering proprietary software. And in the world of music all hell broke loose.

Suddenly, Shawn Fanning wasn’t just the wunderkind music-lover behind Napster; he was also a mastermind of copyright infringement. The weight of lawsuits launched by the Axis powers of intellectual property — the Recording Industry Association of America (RIAA) and the Motion Picture Association of America (MPAA), sent one company, Scour, into bankruptcy and cost MP3.com hundreds of millions.

Indeed, despite free-speech arguments, even posting links to certain programs became an illegal act in 2000. And while the Napster case and many other lawsuits have not been settled, few would deny that the landscape has changed. Information may want to free, but in 2000, it first had to prove that it was legal.

Wireless rules!

Long touted as the next big high-tech wave, wireless became a major story in 2000. Cellphones became necessities instead of luxury items, and the Web pushed hard onto Palm Pilots and newer personal digital assistants like the Blackberry. The migration wasn’t perfect; wireless access remains slow and expensive, plus only the most-trafficked sites are available on most small-screened devices. But grass-roots interest in local area high-bandwidth wireless networks that can connect to the Net is surging and venture capital is still flowing toward mobile start-ups. And while one can theoretically see the appeal in getting apps, news and stock quotes downloaded to your cell, the real attraction of wireless is the same as the old land-lined limited Net: e-mail. When the Blackberry earned the nickname “Crackberry” for its addictive e-mail capabilities, few could deny that wireless communication had made its mark.

Five stories that just weren’t worth all the hype

All hail Bill Gates

After all the press attention, all the days in court, all the frenzied attention to every breath from Judge Jackson or Bill Gates, and finally, after this summer’s climactic order to break up Microsoft, what are we left with? A big pile of nothing, that’s what. Microsoft is still whizzing along merrily. Not only did it win the browser wars, but now it’s beginning to focus its attention on taking over the computer gaming market, of all things. The Microsoft antitrust trial is Salon’s choice for the No. 1 non-story of the year 2000.

Six months ago, the prospect of an incoming Bush administration attempting to defang the Justice Department’s antitrust suit against Microsoft seemed inconceivable. But after this past election, would anyone be surprised at what the new powers-that-be feel entitled to do? And now that the fate of Microsoft is in the hands of an appeals court known to be opposed to antitrust enforcement, would-be trustbusters might as well pack up their briefcases and call it a day.

And pity poor David Boies, the lawyer who six months ago was enjoying unimpeachable street cred as the most lethal hired legal gun in the known universe. First he defended IBM from the government, then he (seemingly) successfully prosecuted Microsoft for antitrust violations for the government. But now that victory seems a little less secure, and in the meantime, he’s been swallowed up by the Napster affair and failed to win Vice President Al Gore any points with the Supreme Court.

Microsoft recently reported that it was lowering its estimates for profit and revenue for the current fiscal quarter — a rare admission from the software juggernaut. But in an atmosphere where everybody else is doing just as badly or worse, Microsoft seems poised to continue rolling along.

The marriage of Time Warner and AOL

First, there was the Gerry Levin/Steve Case hugging, back-slapping, hand-waving fest. Then, there was the regulatory dickering with the Federal Trade Commission about what curbs on its power would keep the new corporate monolith from becoming an all-out media monopoly. And then there was the endless cloak-and-dagger speculation about which executives will really wield power inside the combined TV, cable, music, movie, magazine and online service monster company. But the real AOL-Time Warner story has yet to be told, because what effect this merger will really have on the Net isn’t known. How will it affect our access to broadband? And what impact will it have on the content on AOL? No one really knows. For now, it’s just so much crystal-ball gazing, the kind of speculative stories that make tasty fodder for the very magazines that AOL-Time Warner owns. Now, that’s synergy!

Where have all the free-software flowers gone?

OK — free software is not dead, or even dying. But we’re putting it in the category of biggest non-stories of the year because in 2000 the billowing hype that had been associated with all things open-source and Linux-y suddenly evaporated. In 2000, the free software growth curve flattened out. Progress became incremental and boring, rather than lightning-fast and earth-shattering.

Just as free software benefited disproportionately in 1999 from the excesses of the dot-com economy, which helped launch Red Hat and VA Linux to the tune of huge IPOs, so also, in 2000, did the collapse of the new economy drag down the valuations of Linux companies and other open-source startups. The career trajectory of hacker Bruce Perens, who went from coordinating the Debian GNU/Linux project to running a venture capital fund devoted to open-source, to becoming a consultant for Hewlett-Packard is just one snapshot of the overall trajectory. Even the heated Microsoft/Linux clashes of 1999 receded into the background in 2000.

Behind the scenes, however, hackers are still busy, of course, and one could argue that the whole rise of the peer-to-peer movement is just the latest wave of what free software is all about. And ultimately, what difference does it make if the companies attempting to capitalize on open-source rise or fall. Hacker’s will hack, regardless.

No armageddon here

The world didn’t end on January 1, 2000. Airplanes didn’t fall from the sky, the ATM machines didn’t go berserk, the power grids stayed up and the Net did not shut down. There was no chaos in the streets, the stock market didn’t even burp and the survivalists hiding out in the hills had nothing to hide out from.

Nope: Despite years of hype, the Millennium Bug did not make its much celebrated appearance this year. Blame this, perhaps, on the frantic work of Y2K programmers who diligently patched up the buggy code that would supposedly go kablooey when the computer clocks ticked over to 00. Or perhaps the problems were more imagined than real — a result of overstimulated minds secretly hoping for a little excitement. And so another New Year’s clicked by uneventfully. Disappointed?

Wireless sucks!

Maybe you’re a cellphone addict, or you can’t live without your Blackberry strapped to your belt or your Palm Pilot in your purse. But unless you live in Finland or Japan, it is still unlikely that you are doing anything more exciting than making phone calls on your cellphone or reading your e-mail on your Blackberry. Because of the quagmire of competing formats that have yet to sort out in the wash, this year’s U.S. version of the “wireless revolution” has been as big of a non-event as it was last year. This was supposed to be the year that we’d see the rise of “m-commerce” — that’s “mobile commerce” — replacing the boom of e-commerce. Instead, e-commerce fumbled before “m-commerce” could really get out of the gate. Yes, some day we probably will all be conveniently ordering our Christmas presents from a crowded bus or instant-messaging our friends in Paris through our cellphones on the streets of Manhattan. Just not this year.

Five Web sites we were glad to see go

No more waiting for The Man

Kick TheMan.com out of bed, throw his skanky clothes in the front yard and make yourself an omelet to celebrate. Because selling fuzzy handcuffs — this was in fact the site’s top-selling item — is not a $100 million business model, even on the Internet. If the short, stupid life of this men’s content and commerce site proved anything, it was that even a cover story in Time magazine cannot float a company that hopelessly condescends to its audience, treating millennial men like they are hopelessly clueless Neanderthals. If you never had the pleasure of reading this exercise in ball-scratching — now the site is just a shell for its laid-off workers’ résumés — try to imagine a magazine for the Maxim man’s really dumb younger brother, with a schlock e-commerce spin. TheMan-dot-who? No, we never met the guy.

The continuing consolidation of the online pet retail supply sector

Dog food! Chew toys! Sock-puppet marketing! A revolution in shopping!

Pets.com is gone, and we’re wagging our tails with joy. No other site better epitomized the contagion of enthusiastic stupidity that seized the Internet over the last couple of years. The San Francisco company didn’t just believe that anything stores could do, Web sites could do better; it actually convinced investors that a business based on delivering 50-pound bags of dog food was sexy, cool, savvy and safe. Forget the sock puppet — which, let’s be honest, was pretty annoying anyway — Pets.com’s greatest asset was its ability to woo investors. Here’s a company that persuaded Amazon to buy a 30 percent stake, raised $82.5 million from its February IPO — and raced toward a final debt tally of over $146 million.

Then, as if such colossal losses weren’t enough to justify a good grave-stomping, Pets.com dug itself deeper, announcing that its top 10 executives would receive six-figure bonuses for sticking around to help close the company that they ran into the ground. Do they really need the money? More to the point, do they deserve it? Of course not — which is why Pets.com is dead, and why we’re happy to see it go.

To hear is to obey

One thing made Mylackey different from other dot-coms; it was humble. In fact, it was annoyingly, cutely humble, promoting an army of chipper grunt-workers-for-hire who would do anything from swabbing your kitchen floor to schlepping home your dry-cleaning. The cheeky CEO had the temerity to go by the title “Chief Lackey Officer.” Imagine the glowering this cheesy gesture of corporate hip-itude must have elicited among the real lackeys at the company, the drones doing the work. But even a few months ago when the hyper-economy was inflating disposable incomes, there just wasn’t a market for an aggregator of personal services, a portal of whistle-while-you-work Seven Dwarfs who will merrily do all your shit work for you. For now, the local bulletin board or community newspaper classifieds will remain the place where we search for servants to pick up after us. And the lackeys are free, free at least from their humiliating job titles as well as their worthless stock options.

Don’t panic about this epidemic

Blink and you might have missed Epidemic.com; and if you did, you were lucky. This company rose in the public consciousness last year during the Super Bowl, when it anted up for one of those infamous $3.5 million ads. Epidemic was essentially an overfunded spam company: Epidemic members would agree to include graphic “epiAds” in all the e-mail they sent out to the world, and if their friends clicked on one of those ads, Epidemic would pay them an undisclosed fee.

We cringed at the thought of a flood of e-mail stuffed with graphic ads, of every online acquaintance becoming a potential spammer in hopes of making some extra bucks off us. But fortunately, everyone else apparently thought the idea stank, too: Epidemic went bankrupt this fall.

No boo-hoos for Boo.com

When Boo.com launched, six months late and amid much fanfare, observers scratched their heads in puzzlement. Sure, the site looked cute, and there were some funky clothes for sale, but where had the much-touted $120 million in funding gone? Some Flash animations of rotating shoes and a mascot named Miss Boo who offered coy commentary? And what the hell did that stupid name mean?

The site was slow and the animations frivolous; the clothes weren’t cheap and worst of all, the project reeked of hubris. Sure, the European founders of Boo.com knew something about style, but their plans to hawk overpriced street fashion in seven languages and 18 different currencies seemed less than thought out. According to the New York Times, the company spent $42 million on advertising alone, much of which appeared months before the delayed launch; and then there were expenses like the founders’ $100,000 apartments in London. The company was clearly more concerned with being hip than being profitable.

So when Boo.com went bankrupt less than six months after launch, few cried. The assets — including the annoying Miss Boo — were sold off to Fashionmall.com for less than $2 million, the staff résumés were posted at the post-Web site Web site and Boo.com went down in Net history as a lesson in extravagance. No boo-hoos from our corner.

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