Some Good News for the Net

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Now the Net shakeout gets positive. Three events today could mean a great deal for the remaining players.

First, the Net's sense of entitlement -- "it's free, I ain't paying" -- has made it a nightmare for capitalists. Napster's decision to help create a pay-as-you-go system is a major change in that mindset. Sure, there are other, alternative systems that don't charge, but the record companies will shut them down now, or co-opt them into Napster's arrangement. The precedent is now out there.

Second, Random House's decision to make a business out of e-books also means that someone can charge for commerce in a space where people believed in ripping everything off before. That sense of entitlement must be banished before the Net can go commercial.

But the best thing that has happened is the demise of Mortgage.com (MDCM:Nasdaq - news - boards). I feel terribly for those who labored there, but this crushing signals the end of the "good URL, good business " period. We all knew it was faulty, but when something this big blows up, we know that realism is creeping in at last. It simply wasn't worth keeping this URL alive. Why does this matter? Because until the clear losers shut down, we can't have any clear winners. And until we accept that the Web isn't meant for every activity, we will continue to view the Web, which is a truly great invention, as a capital crusher, not a capital creator.

The Web was great as long as we didn't force it on ourselves. I will never forget speaking the brilliant CEO of Ethan Allen (ETH:NYSE - news - boards) a couple of years ago while I was waiting for Squawk to begin. I was telling him about all of the money being thrown at selling furniture on the web. He laughed. People like to buy furniture in a showroom, maybe a from a catalog, but not the Web, he said. The web is fantastic, but not for everything. How true.

Now that we are starting to charge for the things that the Web does better than the offliners (CD burning, e-book buying) and shutting down the things it does worse than the offliners (mortgages) we will get back to realistic expectations that can be beat for the remaining Web enterprises. That's an immensely positive development for the remaining players.

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James J. Cramer is manager of a hedge fund and co-founder of TheStreet.com. At time of publication, his fund had no positions in any stocks mentioned. His fund often buys and sells securities that are the subject of his columns, both before and after the columns are published, and the positions that his fund takes may change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Cramer's writings provide insights into the dynamics of money management and are not a solicitation for transactions. While he cannot provide investment advice or recommendations, he invites you to comment on his column at [e-mail].