E-biz strikes again

April 2004

As the Internet boom turned into bust, corporate America could be forgiven for allowing itself a small sigh of relief. When all was giddy, and the stock market giddiest of all, big companies feared the disruptive power of the Net. Look what happened to Barnes & Noble (BKS ), they fretted, as Amazon.com (AMZN ) changed the game of bookselling. Or how Expedia Inc. (IACI ) overran travel agents. No one wanted to be the next to get "Amazoned." So when the NASDAQ buckled in 2000, the corporate giants relaxed -- relieved that things weren't going to change as radically or as rapidly as they had feared.

Uh-oh -- the threat is back. Net companies have survived their nuclear winter, and throughout the economy, big companies are again under assault. Again, the Web is threatening to force down the prices charged by traditional players, squeeze their margins, and even put some out of business.

New technology, new ways of doing business, and new approaches to cutting out the middleman mean the old pricing power is collapsing in a series of industries -- and existing leaders will be forced to find new ways to make money. The pressing question is: How many more industries will be transformed by the Net? "How high is the sky?" answers Barry Diller, CEO of InterActiveCorp, which owns Expedia and other Net properties.