First-Mover Advantage: What's It Really Worth?

When you're building a business on the Internet, what's it worth to be first? Maybe not as much as you think.

That may be a problem for Internet investors, because many assume that the first company to set up shop, whether it's a bookstore, auction house or Net broadcaster, will benefit hugely. The notion of "first-mover advantage" is gaining currency quickly and, in turn, influencing companies' chances for success.

The idea of first-mover advantage seems to have become fashionable only recently. In a Dow Jones database search, the term appears 156 times in publications since the beginning of 1998, but only 28 times in the six years from 1988 through 1993. Much of its usage, before the rise of the Internet, was in overseas business publications and academic journals. ...