Internet Death Rate Is Slowing, Report FindsInternet Death Rate Is Slowing, Report Finds

Is that a light at the end of the tunnel? The digital death rate fell more than 30% in July, with only 32 Internet companies shutting down or declaring bankruptcy, according to a new report from Internet research firm Webmergers.com.

"There's certainly been a sharp change in the number of shutdowns," says Webmergers president Tim Miller. "This marks a major shift in the landscape."

July's total compares favorably with the 53 closings recorded at the same point last month, and the apparent peak of 60 companies recorded in May. July's victims are the smallest amount of casualties since September. For the year so far, 367 Internet firms have gone belly-up, representing 62% of the 592 companies that have gone under since Webmergers began keeping its tally in January 2000.

The month's victims include online grocers Webvan and Homeruns.com, wireless Internet service provider Metricom, and optical-routing company Ipoptical.

Miller attributes the slowing death rate to a rapid deflation of the business-to-consumer bubble that has already weeded out most of the weak firms in that sector. What we're seeing now, he says, is the early to middle stages of a shakeout of business-to-business companies. The casualties in that sector, he says, should be slimmer, and we've probably put the worst behind us.