Who's e-screwed in the Net gold rush?

There are those who find it trenchant, when we speak of gold rushes, to point out that it's the purveyors of pants and pans that make the real fortunes. Some folks want to be pants-purveyors and some folks still want to be prospectors, but no one wants to be the chambermaid or the laundryman or any of the thousands of poor-and-staying-that-way folk that don't and won't be cleaning up in the gold rush unless you count the debris left in the wake of the winners.

But who are the Net's losers? As with anything else, loser status is in the eye of the beholder, someone generally sitting not more than a rung or two above the loser-elect on the ladder of success. However, in the case of the Net the top of the ladder is both heaven-high and, thanks to that slobbery variety of pop-financial journalism known as Net porn, seemingly attainable by anyone with the wit to plug a computer into the wall.

In fact, most of the Net's true losers are living proof of the adage that a little knowledge is a dangerous thing. Contrary to geek belief, computers are still not intuitive to use, buy, or set up (that goes for the Mac too) for the average person with a life. Those who do manage to get it together and get online, even via AOL, are often considered to know something about computers.

And that's where their heartaches begin.

They are the e-screwed. This is their article.

Let's get something straight: Most of these people, these so-called e-screwed*, are decent folk looking to get a bit ahead of the wolves. This article has no truck with the day-trading set, with the vampiric Net-stock crowd sucking the life out of the rest of the economy, with the upper-middle class entrepreneurs who equate not having millions of dollars in assets with losing out on the gold rush. Those people are not e-screwed; those people are greedy.

Harder to categorize are the businesspeople who tried and failed—the mom-and-pop shops who believed that the Net leveled the playing field. Some have succeeded in transforming themselves, reinventing themselves as global micropresences even as Main Street's independent bookstores and record shops shutter in the face of massive online competitors.

But more have fallen, trampled in the rush. Their true business equity wasn't the availability of their products but the human element of sincerity—and as Amazon and its ilk have proven, once you can fake that online, you've got it made. The malls beat Main Street, Wal-Mart beat the malls, and the Net may yet beat Wal-Mart, but just because Main Street gets on the Net doesn't mean that this is some vast retail game of rock-paper-scissors. Congratulations, Mom and Pop; even if you're on the winning (Net) team, odds are good that sooner or later you too will be e-screwed.

And then there are the outright scams, promising trouble-free wealth (usually via an e-mail pitch) for doing data entry or putting up Web ads or sending spam or playing the lottery. When we think of scams, this is the sort of thing that usually comes to mind—pitches once found on the back pages of magazines like the Weekly World News, now online and headed for your mailbox.

As long as there are people desperate to make money fast and willing to believe that somewhere in this world you can get something for nothing (which everyone knows isn't true unless you're a really big corporation and can squeeze your Congressperson for tax cuts), there will be scams of this type, and there will be people who get took. The Net compounds the problem by making it oh-so-easy to disseminate the pitch and by making the proprietors all but untouchable—operating phony bank scams from Nigeria, bogus Web-hosting schemes from Israel, and just about anything you can imagine from the Bahamas.

The counterfeit auctionables, the fake virus reports, the bogus increase-your-site-traffic claims, the envelope-stuffing moneymakers that turn out to be less than zero—it's all fodder for, an excellent Web site about appalling situations. The roster of what's fooling folks never seems to get smaller, and after a few pages of this matter-of-fact bulletin you get the sense that either the Net is an even bigger racket than you'd suspected or P.T. Barnum sadly underestimated the birth rate of the demographic known as "suckers." E-screwed? Stupid? Or simply caught up in the prevailing myth that the Net is the fount of millennial prosperity?

There's one more category of e-screwed. I mentioned the Net-stock crowd and what they're doing to the market. Evidence is mounting that the so-called economic boom brought on by the Net has a shadow twin: a soft, even stagnant economy of non-Net businesses that, if they fall, will cost actual people actual jobs that aren't being replaced by the Internet. At the close of this holiday season many retailers reported that they felt that sales were poor—nothing appalling, but definitely not what you'd expect from what was allegedly the best season for retail in a decade.

The former employees of Carol Wright Gifts, a Nebraska catalog store, tell how they went from being part of a staff of about 400 in November 1999 to being out of work, their company gone, a month later. It seems that a company called Genesis Direct bought the gift-outlet veteran and, long story short, mismanaged it right out of business. Genesis Direct lost $245 million in three years in a failed attempt to construct an online megastore. Former Carol Wright employees, most of whom spent the Christmas season in temp work or job-training programs, commented that it was amazing to them how in just a year Carol Wright had gone from being well-established and profitable to being, well, dead.

Meanwhile, Genesis Direct is now doing business as and appears to be employing a bevy of customer-service representatives somewhere in the swamps of Jersey—making the Nebraska employees, as well as the state and local governments now responsible for their welfare, e-screwed.

Sure you're not next in line?

*Note on "e-screwed": I said it first, way before that fool ad campaign. So nyah.

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