Up until a very specific moment some 65 million years ago, dinosaurs had every reason to believe they ruled the earth and always would. Funny the difference one meteor can make.

Dinosaurs are being compared to dot-coms quite a lot these days. The outsized beasts and the over hyped darlings of the new economy do have something in common – extinction came not as the result of gradual evolution but by cataclysm.

Industry-wide, extinction is too strong a word for what’s happening in Internet, but not for many specific companies and their employees. The flight of capital from Web-based business has caused hundreds of failures in the last year, the loss of as many as 50,000 jobs, the disappearance of billions in investments. And in the last few months the pace has accelerated.

Many of these businesses deserved to die. E-retailing always had the same problems of good old-fashioned mail order – delivery expenses, delays, bungled orders, merchandise returns – but too many investors refused to acknowledge them until consumers forced the issue. Even that aspect of retail the Web does best, the selling of information, suffered from a glut of outlets, with too much information chasing too few interested in being informed. Until the most recent wave of shake-outs, for instance, there were as many as nine heavily financed, heavily indebted Web sites devoted to the review of consumer products, principally electronics, entertainment and automobiles. As the wave suggests, that may have been eight too many.

Overall, the sudden loss of these overnight fortunes is part of the natural order of things; the greater the potential reward, the greater the risk. The absorption of many failed dot-coms by larger companies of the old economy, or at least the fire sale purchase of the worthwhile technologies they developed, is a healthy indication that good management, sound business plans and realism still matter. These are hard lessons to re-learn for those business school graduates and investors who forgot the fundamentals.

There is, however, a significant downside for the rest of society. The shudders rippling through the venture capital industry and Wall Street is not just affecting Internet start-ups, but all manner of innovators. Companies in such fields as alternative power, fuel cell technology and biotechnology are all experiencing severe difficulties in raising the cash for the research and development of these important, even vital, undertakings.

This sudden stinginess on the part of venture capitalists may pass as the losses are absorbed and the importance of good ideas reasserts itself. To some degree, it may already be under way – at the Internet Expo in New York just two weeks ago, potential investors laughed out loud during the demonstration of a gizmo that allows smells to be synthesized over the Net. On the other hand, a gizmo that allows the user to transmit to physicians health data collected by sensors attached to the body drew respectful and interested crowds. Imagine how different things would be if the dinosaurs sensed something was amiss and ran for cover.