While some Internet-related ventures are demonstrating the ability to generate revenues, most are still trying to develop a viable, profitable business model. Moreover, e-commerce consumer projections, which form the basis for valuations, vary wildly. Major IT research firms such as Forrester, Jupiter and IDC all fail to agree even on where we are today, let alone where we will be in four years' time. By the year 2002 the distinction between the Internet and other electronic media, such as digital and cable services, might be difficult to define, further confounding efforts by financial analysts to come up with meaningful figures. The numbers are big and it's growing.
Consumers have yet to show their preferences in a convincing and irrevocable way.
The growth of book and music retailing on the Internet, from a small base, may provide useful data on how a select group of relatively sophisticated consumers are currently willing to use an online medium for their personal and professional activities, but it has yet to persuade financiers it points to a widespread trend. It finds that more than two-thirds of consumers with Internet access, research products online, but buy them later through traditional channels. This is double the number that researches and buys the same products online. The US valuation model for Internet companies often results in prices that exceed 20 times the annual turnover. Price-earning ratios, one of the benchmark measuring tools for many industries, are not applicable to Internet companies, because few, if any, have any earnings to speak of.