Dot-com darlings and spreading the blame

Your average UK internet CEO's pay packet has swollen from £120,000 to £172,000 in the last six months. This is only 10 per cent less than people in the same positions in similar US companies earn - and, more remarkably, only 10 per cent less than the salaries raked in by those filling comparable positions in traditional companies (see 'Dot-com chiefs close in on the fat cats', http://www.silicon.com/a42397 )

The figures come from a survey of 2,000 European internet jobs by Futurestep, the online arm of recruitment agency Korn-Ferry. You may also like to know that stock options are still a major component of most execs' remuneration (which will come in handy when the internet bubble reinflates). Oh, and these folk can look forward to another 10 per cent pay rise this year.

Unlike the 1,300 staff being axed by Amazon.com, the 400 being ejected by Disney's online division, Go.com, and the 200 being made to disappear from Letsbuyit.com. Those 200 represent about half of Letsbuyit's workforce; most of its European offices will also close. The announcement came a week after the company managed to stave off bankruptcy thanks to a £2.5m injection from German venture capital outfit Kiminvestor. Letsbuy it still needs about £25m to get back on its feet.

Amazon may be shedding staff at an alarming rate, but its head honchos have started to use a word rarely heard in B2C dot-com corridors: profit. Amazon will be making money before the end of the year, they say. The UK division is on target to be the first profitable unit outside the US.

Amazon CEO Jeff Bezos boldly stated: "We've been asked thousands of times when we would be profitable. Today, we are comfortable answering that question." (see 'European necks spared the Amazon axe', http://www.silicon.com/a42395 ).

Cor blimey. And the analysts certainly think Amazon's on the right track. Nick Jones at Jupiter MMXI said: "Its turnover is phenomenal. There have been a lot of people out to get Amazon, but it's spent five years fine-tuning the business and has realised that profitability is no longer part of a big, grand plan - it's the final stretch."

Scott Smith, a research analyst with the Yankee Group, was on the same wavelength: "Lay offs for the sake of profit is very much a bricks-and-mortar decision. Amazon is getting to that size and scale of a bricks-and-mortar company... Amazon is straddling two different worlds."

[Here's a thought: why is it that the dot-com doom mongers point to these mass job losses as a sign of an industry in crisis, and yet the same people hardly bat an eyelid when a company like Lucent lays off 10,000 staff? See 'Lucent restructure to leave 10,000 jobless', http://www.silicon.com/a42247 ).

In a busy week for dot-com surveyors, PricewaterhouseCoopers (PwC) has blamed 'get-rich-quick' entrepreneurs for the new economy's bumpy, stomach-turning, roller-coaster ride (see ' Dot-com wannabes slammed for plundering new economy', http://www.silicon.com/a42407 ) Its latest Internet 150 survey highlights the ill health of the sector and claims that the poor management of companies headed by wannabe millionaires scared the market into its current slump as their ailing companies went to the wall. Only 28 per cent of internet-related companies were profitable last year, compared with 41 per cent in 1999. Many ran out of cash within 18 months of opening their doors.

Kevin Ellis, partner at PwC, said: "You'd have thought they'd be more prudent but they're not. The internet is populated by entrepreneurs with an appetite for risks."

An angry Mr Smith (not his real name), a silicon.com reader, retorted: "Who were the people who raised the money and advised these entrepreneurs? Step forward said experts and business consultants from PwC and the like. They should have their accountancy licenses withdrawn immediately. We were ALL to blame for the f**k up last year, entrepreneurs and investors alike. As usual screwed-up accountants are trying to wash their hands of any responsibility. A***holes."

And let's not forget the people who gave the entrepreneurs the money in the first place before they threw it down the pan. Mark Simon, CEO at venture capitalist The Chemistry, said: "Last year VCs were smoking dope, they have now gone past the munchies stage and are starting to sober up."

Turn on, tune in, skin up, go bust. Not a bad epitaph for all those who have gone to the great dot-com graveyard in the sky. (Or should that be cyberspace?)

Talking of making money, the suits at Napster are close to getting their way. By the summer, Napster will have launched a fee-based file-sharing service with Bertelsmann. Hank Barry, CEO of Napster, also reaffirmed his commitment to starting a subscription service this week. Bertelsmann reckons other major record companies are ready to join the Bertelsmann-Napster partnership.

Get clicking quickly, music fans: the days of the free download are numbered.

And penultimately: the UK government has named its new e-envoy. He is Andrew Pinder, formerly head of IT at Citibank and the Prudential. And the Inland Revenue (stop sniggering at the back). He's been filling in since Alex Allan resigned last October, so he's already got a taste for the job. Good luck to him. (He may well need it). If you want to find out his plans, log on to silicon.com next Thursday for an exclusive video interview with the man himself.

And finally, a PR exec, who shall remain nameless, sent the same release to our main email address (editorial@silicon.com ) four times last Friday lunchtime. Its headline ran: "Brightmail addresses EU anti-spam legislation..."

The Round-Up will be back next Friday.