Robert J. Shiller, the Yale University professor and author of the book "Irrational Exuberance" who coined the immortal phrase that was even cited by Fed Chairman Alan Greenspan, wrote an essay published on Aug. 1 in the Financial Times entitled "Just Another Superhighway." In his commentary, Shiller compares the Internet to the building of the American interstate highway system. The impact of the interstate highway system was significant for the American economy, but, according to Shiller, "the highway system, in spite of all its network benefits, produced no sudden burst in overall corporate profits."

While acknowledging that technological advances through the decades have contributed to increased productivity and growth, Professor Shiller feels it is difficult to judge the Internet's economic impact just as it is difficult to determine that of the interstate system. He goes on to compare Internet commerce to the proliferation of shopping malls (resulting from the highways) and points out that "...personal interactions on the Internet are limited in form and one does not have the same feeling of social involvement and human contact. Marketing on the internet has both strengths and weaknesses relative to marketing in the mall but is not obviously superior."

"The interstate highway system and the Internet are both important innovations but they are similar in importance to business and to our lives. It is difficult to judge which is more important," the good professor wrote.

While these criticisms of the Internet are not characteristic of the "bashing" that we so often see today, Shiller's limited scope is still analogous to a racehorse with blinders. To judge the Internet's historical importance by comparing it to the development of interstate highways and shopping malls truly misses the forest through the trees.

If Shiller thinks that "malls" are the key to understanding e-commerce success or failure, then he is sorely mistaken. Sadly, the professor has apparently fallen victim to the brainwashing of the mainstream and financial press. The key to e-commerce is vertical integration and specialization. Sites like vitacost.com, dibruno.com, cubancigars.com and thousands of others are economically successful because they are focused and are not trying to be malls. Rather they are serving the needs of specialized interests and individuals: in this case vitamins, gourmet foods, and fine cigars, respectively. Often times these e-commerce sites are capitalizing on the offline infrastructure that they already had in place.

In fact, they are not constricted by the physical limitations of a road or highway but are offering their existing inventory to an entirely new clientele by breaking through geographic boundaries via the Internet. As such, Professor Shiller will soon see that content sites are moneymakers as well so long as they remain focused and not fall prey to the thinking of large portal sites that were indeed part of his Irrational Exuberance theories.

While it is true that our nation's highway system facilitated the movement of huge masses of people, Professor Shiller's key fallacy (and that of the mainstream media today) is the misconception that the Internet is a mass medium. The Internet is a one-to-one medium. And not necessarily a one-to-many medium.

We stand at the dawn of the Internet and people like Shiller are already writing as though the technology has reached its maturity like the mature Interstate Highway System. Far from it! We are only at the beginning. The principle challenges confronting those of us in the industry face are the myths that we must value the mass market or the mall concept. It will take time for them to be recognized since myths take time to be shattered. By the end of 2002, it will be apparent that Professor Shiller's overview of the Internet was premature by many years. In the meantime, the winners have already surfaced.

Fear or Loathing From Interactive Week
Have you noticed the fear mongering coming out of this fine publication? This week the front cover headline reads: "Worms! Think Code Red Was Bad?" or "Wait Until You See What's Next?" Headlines like this one are now the norm for Interactive Week. Perhaps the editors have been reading about financial troubles at Ziff Davis and are using the "scary" headlines to drum up more business.

A Helpful Note For The Folks at StarMedia
Fernando Espuelas stepped down as CEO of StarMedia Network this week. Whether he was pushed out or was simply fed up, I don't know. Nor do I know Mr. Espuelas personally; however, I have read numerous profiles about him. Over the previous few years, he has been profiled by a variety of media organizations for his business acumen and foresight.

I must admit that Mr. Espuelas was smart to create a Web site for the Latin American community but the praise stops there. Go back and read the articles about StarMedia from 1998 on and try to find mention of profits. StarMedia, like many other so-called portal sites, became obsessed with page views, unique visitors and brand awareness. Wall Street and day traders loved these metrics. But we are learning over and over again that quality readership is more important than quantity readership.

I am sure that within the StarMedia mix there is some valuable content that can help turn a profit. However, the new management will have to cut back and focus on the parts that can make money and give up the parts that solely produce page views and will never produce solid revenues. Now StarMedia has a new CEO and Mr. Espuelas will be an interesting footnote to all that was wrong with valuing content sites during the period of 1997-2000. He is not the first CEO/founder to be dropped and he will not be the last.

* Alan Meckler is CEO of INT Media Group, the parent company of atNewYork.com. His column appears on Friday. Send feedback and letters to atNewYork@internet.com. To view past viewpoints and columns, go to: AtNewYork Views.