• by October 12, 2000

By Masha Geller

Here's a statement sure to start some heated debate: "Independent Net Markets will experience explosive growth in size, geography and industry depth."

Once considered experimental, Net Markets - defined as online digital marketplaces electronically linking buyers, sellers and business partners - have more players coming on the field than leaving, a sure sign that independent Net Markets are in investment mode for the foreseeable future, at least according to a new Jupiter Research report.

With the number of Net Markets expected to grow from 1,200 currently to more than 5,000 by 2002, they are becoming the standard by which business supply chains interoperate, Jupiter says, adding that businesses which fail to incorporate them into their strategy risk losing their competitive edge.

The advertising media industry may be a good example of this. As the last few years have shown, media buyers are not exactly comfortable with conducting business online, but so-called media exchanges are still popping up all over the cyber map.

As newcomers work to make their marks on the media industry, old-timers are already claiming industry acceptance.

BuyMedia.com, for one, claims to channel nearly $2 million a day in TV, Radio and Cable ad time sales. With their recently completed acquisition of TvSCAN and CABLESCAN those numbers are likely to rise.

Another company that falls under the umbrella of Net Markets is Seattle-based mediapassage.com, which today announced that they have set a record in the third quarter of this year as ad revenues grew by 111%, amounting to over $100 million in billings. At the current rate, mediapassage.com will process over 130,000 newspaper insertions this year.

And who can forget one of the trailblazers - OneMediaPlace. The company recently said they saw a "2,200% sales growth in outdoor," after having launched an online RFP system that it sees as central to expanding its marketplace.

Jupiter Research projects that Net Markets will account for 35% of U.S. business-to-business (B-to-B) online commerce by 2005, totaling $2.2 trillion in spending. In 2000, Net Markets spending will reach $25 billion, compared with U.S. B-to-B online commerce of over $300 billion. While independent Net Markets make up only a small fraction of the total B-to-B economy, their influence has shaped the Internet strategies of many industries.

"Despite many industry indicators, dot-com performance is not a good barometer of the growth of Net Markets," said John Katsaros, VP of Jupiter Research. "Independent Net Markets are emerging in response to real business needs, and companies that don't participate in them over the next few years will lose the ability to compete. Only a handful of Net Markets existed two years ago; today there are more than 150 Net Markets in the metals industry alone."

Katsaros identifies growth occurring in three phases over the next 24 months, as emergence, growth, and