In computer news this week:

Another dotcom bites the dust and pulls a lot of others down with it, or - no more spinning from Spinway.com

Do you get tired of hearing all this internet economic-speak; terms like Proven Business Models, Hybrid Model, Strategic Partnerships, Online Advertising, co-branded, and of course IPO and pre-IPO? I think with all the dotcom company's crashing around our ears, people are taking this new generation of geek-speak with a grain of salt.

I've done 2 shows this year on free internet services and now they're both gone. One was Alta Vista which I talked about back in March, and the other was Costco I just reviewed in September. Alta Vista dropped its free service agreement through 1stup.com due to financial difficulties, and the company Costco was using - Spinway.com - went out of business on December 1st.

Spinway was just formed in 1999, and had some prominent veteran industry financial backers. Ironically the company had said in a press release in February of this year it believed it may have found a way to team with its subscribers by helping them recoup losses on customers who don't pay their bills.

Now Spinway hasn't paid its bills and last week, internet access wholesaler Ziplink announced that it was going out of business and said the immediate cause of its demise was the failure of Spinway to pay its bills.

As an internet provider, Spinway was actually very highly rated, and dozens of recognizable companies were using it.

Spinway's business model was to offer internet access hardware and access line capability to Retailers who would offer it free to their customers, like a Costco. Costco would pay Spinway for the use of their service through advertising revenue, counted in mouse clicks, the universal currency of the internet. In this business plan, a company could offer free internet access to their customer base, without having to invest heavily in hardware, software, and people. Sounds great; just didn't work.

The term Burn Rate applies here; the term means the amount of money, initial capitalization, that these internet startups are using up monthly before being profitable. Usually this money comes from private investors or from an IPO - public offering.

The internet economy has no correlation to the traditional business economy. Traditional companies are profitable and have years of proven earnings histories. People invest in them based on their proven performance. Internet companies usually are not intially profitable, have no performance history, but people stand in line to invest in them, because they think these companies have a vision...........

Maybe now that vision has become fatal vision.

Someday a company has to be profitable, otherwise it will use up all its invested money and go out of business. Usually the founders of such companies make millions, and the stockholders and the investors end up losing millions.

The pc industry - tradtionally very profitable and now with over 25 years of proven performance- is in its worst slump ever, and the big question is what effect is this going to have on these internet companies.

We'll sure see.

For Raw Bytes, this is Frank Delaney

POB 222 Spangle, Wa 99031 (509)245-3736 Email: fdspokane@aol.com