- guardian.co.uk, Tuesday January 16 2001 10.52 GMT
Less than 12 months ago it all seemed so rosy. Jeff Bezos, the founder and chairman of Amazon, was Time Magazine's man of the year. The National Portrait Gallery presented its 21 leaders for the 21st century, which included several internet entrepreneurs. And everyone was going to make a killing from lastminute.com. How different does it look now? The Financial Times ended the last year quoting an analyst at Merrill Lynch - "People now feel nauseous when you mention the word 'internet', whereas in March it was the new paradigm."
Which is all rather embarrassing if you look at the current UCAS guide and the courses that are hurriedly being prepared for the 2002 issue. There, internet studies and e-commerce is the big growth area.
With higher education institutions pushed to compete in the market place, the internet and e-commerce seemed to be the place to be. Course planning structures were streamlined, new courses rushed out and old ones modified. But now the internet bubble has burst it is not only academic investors in lastminute.com who are left with egg on their faces.
In the 2000 UCAS guide, 13 institutions offered degrees in some aspect of the internet and a further three in internet engineering. For 2001 more than 30 institutions are listed under "internet" alone, offering some 130 degree courses. Some institutions appear to have got swept up more than others. Lincolnshire and Humberside list nearly 30 courses involving the internet, Anglia 19 and Bolton Institute of Higher Education 11. But look beyond the internet section and there is more. In straight business studies, a dozen institutions are offering new e-commerce degrees with Brunel having created three degree routes. And this is to say nothing of the business information technology degrees and the modifications introduced to make other, seemingly "old-fashioned" degrees that much more more alluring.
How did so many in higher education get caught up in the internet and e-commerce bubble? Just as in the real market it is hard to separate real opportunities from the hype; the same problems exist in the pseudo-market of higher education. The search for quick-fix growth areas to establish institutional profiles, the idea of academic entrepreneurship, the aim of attracting funding from cash-rich (but unprofitable) internet firms, as well as the fear of being left out, have all helped to turn heads and drive institutions forward into this new area with scant regard for its real potential.
And what exactly will courses in e-commerce, internet business and marketing teach? In the heady days of the bubble, the talk was of "new paradigm" theory. At the level of the global economy the internet was creating a new industrial revolution that would perpetuate high growth, high productivity and low inflation. E-commerce was said to have rewritten the rule book. Profits no longer mattered, nor did sales. What was important was customer base measured in website hits, which provided the evidence for future potential and inflated share prices.
Now all of this is gone. In the B2C area (business to consumer) big company after big company has crashed. Never mind, said the pundits, the real potential is to B2B (business to business) - until reality forced a more sober view there. Still others insisted that the real potential was hardware and software development, then the puncturing of the boom hit this sector, too. (In California, B2C now means "back to college" as disillusioned twenty-somethings who skipped university to make dot.com millions rethink their options).
The irony is that much of the e-economy has been a gigantic value destroyer. With capital more or less free, venture after venture has been started, buoyed up only by hot air and misguided expectations and universities have meekly followed. Now it has exploded. There is no new paradigm and e-commerce has not rewritten the rules of business success.
But this presents a problem. Traditional business studies courses developed the idea of teaching by example. Does this still apply to e-commerce courses? Business studies has also taught by means of case studies with students solving real problems. But what inspiration will they get from a diet of case studies of failures such as Boxman, Clickmango, boo.com or "successes" such as lastminute.com or Amazon, which have yet to show any profit at all?
The hope of those putting forward this rash of new courses is that the e-economy will come right in the end and when the first students graduate a more stable growth path will have emerged. Just as railways survived the first railway manias, so will the internet and e-commerce. But cynics can equally point to the tulip-buying investment mania of the 17th century. Tulips, too, survived but they hardly formed the basis of a new wave of capitalist development. And in any case, try searching the UCAS guide for degrees in railway or tulip studies.
But the lack of honesty in the evaluation of the internet and e-commerce goes further. Sex is the one area that is booming on the internet. This is not surprising because sex is the most widely used search term. But the central role of selling sex on the internet and e-commerce activity is systematically obscured by the way that sex sites are excluded from published lists of top sites.
Last year, Forester Research suggested that successful US sex sites expected 50 million hits a month and generated incomes of $5m-$10m. Annually they estimated that US internet sex sites produce $1bn of revenue and are growing faster than any other part of the e-economy. By the middle of the decade their revenues will be over $5bn. This is not only big business but highly profitable e-business. Indeed, at one stage some estimates suggested that the major ity of e-commerce activity was in the "adult" industry and if the share has fallen it is possibly still the biggest single e-commerce market.
How much of this will figure in any of these new university and college courses? Like top-shelf publishing and video development, internet sex sites invite universal condemnation yet underpin a vibrant sector that is more closely related to the mainstream than most people understand.
Mari Kim Coleman, Britain's managing director of internet research group MMXI, says: "Porn sites are among the top 20 sites in some countries. Adult entertainment is the 11th most popular category on the internet in Britain."
When an international conference on streaming video over the internet was held last October, entrepreneurs from the "adult industry" boasted that sex sites provided the successful business model for the internet: an expectation of moving into the black within six months of start-up with profit margins of 20% - an achievement that puts Amazon's long search to break even into context.
To achieve this, the sex site developers told how they had produced the easiest sites to navigate in order to attract the biggest market. They compared their success with a failed start-up such as boo.com whose software was so sophisticated that many people could not access it. Indeed, even the technology of the internet itself to a considerable extent has been driven by the needs of the sex industry (including the much talked about broadband) as sites try to trap surfers with faster loading and more attractive images.
None of this happens accidentally. Sex sites need specialists in web design, marketing, e-commerce, security, encryption and so on. They also need people able to manipulate photo images (you didn't think those pictures of Britney Spears were real, did you?) and to design the technology to do this. And they need the legal protection of teams of lawyers who know about internet law etc. All of which means that, like it or not, the legitimate and less legitimate "adult industry" is absorbing a lot of internet talent and it is likely to absorb a significant group of those who come out of the 2001 UCAS cohort.
Yet when a group of enterprising Edinburgh graduates were found last year to have set up highly profitable Antigua-based sex sites they were roundly condemned. What seemed to upset people most was that, competing with the new higher education courses, they were offering business advice about how to emulate their own success. Under pressure from the British police they were deported from Antigua but appear to have merely shifted their sites' locations and presumably continue to rake in large profits.
Whether they will appear on the new courses as an inspirational model is doubtful. This is the one area these students won't be allowed to study and the one area their teachers will be reluctant to research. Indeed, accessing the real growth area of the internet and e-commerce is not only forbidden on university computers it can get staff and students dismissed - which is why some of the research for this piece was done at home!
• Mike Haynes lectures in European studies at Wolverhampton University
