Black Dotcom Shake-up

Many Internet start-ups that gambled on a big payoff are now rolling snake-eyes

has been tortured and has been used as a description for ‘black’ and ‘inner city’-and now it’s being used to describe a lifestyle.” At the core, says Cooper, it’s still African American and Hispanic, but’s audience is “a multicultural audience that has an interest in urban culture.”

Confusion and semantics aside, the reasons for the shakeout are simple: lack of a viable revenue model, failure to identify the target audience, and lack of market intelligence. And with such fierce competition online, it’s simply not enough for a dotcom to have a great-looking site with high-end graphics and content-or even thousands of hits. At the end of the day, the name of the game is profits.

Some maintain that the fatal flaw of dotcom entrepreneurs has been a need to “get rich quick” at the expense of developing a plan to create long-term value. Asserts Ellington: “The problem is that they should be thinking more in terms of longevity, rather than building a dotcom, going public, and getting rich overnight.”

But Cooper reads a different message in the tea leaves. He believes the fast-paced nature of the industry gives the impression that Web entrepreneurs are just seeking the big payoff. Moreover, the venture capital community isn’t just giving away cash (although the burn rate of some sites may make one wonder), they want dotcoms to show returns-and sooner, rather than later.

Many believe the shakeout is a wake-up call for black and urban sites. They view the trend as an opportunity for the remaining dotcoms to reevaluate their strategies for claiming their share of the multibillion-dollar industry (analysts put the figure at anywhere from $550 billion to $800 billion). Key to their sites’ survival: an e-commerce component.

“If a site isn’t getting banner advertising or building revenue, they’ll have to close shop once the investment dollars run out,” says Robert Rucker, co-founder of, a business-to-business hub and marketplace for black-owned businesses, which launched in 1999.

Clearly, that fact is sinking in. Emerging dotcoms are learning from the mistakes of their predecessors. For instance, hip-hop-oriented recently teamed up with rap mogul Sean “Puffy” Combs to hawk his Sean John clothing line as well as music from artists on his record label. Combs is expected to gain an equity stake in the company and serve as a member of the company’s advisory board. And, a venture owned by Tribune Co. and run by black digerati Barry Cooper, has just inked a three-year, $10 million to $15 million deal with General Motors Corp. that will not only make e-commerce available to visitors but provide a wider, more affluent market to GM. The deal will include scholarships, sponsorship of the site’s offline publication, BVQ, as well as original programming on the site.

As for the much-hyped, Russell Simmons’ deal with provides the site with the element that it has lacked thus far: entrĂ©e into the young, hip hop/urban space-and some much-needed street cred. Moreover, the acquisition comes at a time when

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