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To: Oeconomicus who wrote (5234)	2/17/1999 11:13:00 AM
From: j_b	Respond to of 13953

<< re ISPs and additional revenue streams, isn't that part of what drove them to these levels?>> Yes, but............ When they first started, no one suspected what the future revenue sources would be. After they realized ad space would provide revenue, the market underestimated the amount. E-commerce potential has so far been overestimated (IMHO). No one really knows what the future streams will be or where they will come from. As long as those streams meet or beat expectations, the market will reward the companies. When new revenue streams are disclosed, the market ups the ante a little. Notice we are talking here about the stock price (I couldn't help it - this is a stock discussion board). The original post you were referring to was talking about value per customer. That valuation is obviously related to a companies cost of acquiring (and keeping) a customer, and the expected lifetime revenue stream to be derived from that customer. If AOL expects to realize an average of 2 years of subscriptions per customer ($480), plus ad revenue ($24/1000 views x 10 ads viewed per day x 260 days using the internet per year x 2 = $125), plus a commission on any sales transaction ($50/mth x 24 mths x10% commission rate = $120), plus miscellaneous marketing agreement payments, etc., you can see where the valuation of a customer comes from. As long as the cost of acquiring and servicing the customer stays low enough, there is quite a revenue stream there. The easiest place to leverage that customer is by increasing the amount of money they spend on online purchases. No one I know is willing to bet the farm on what those levels will be, and the major research houses were off the mark for this past year. If the spending level looks like it is increasing drastically, the per customer valuation will too. If any new revenue streams appear, they will then be factored in. I don't believe they currently are.