(Business 2.0) – Of all the dreams fueled by dotcom hype, few were more irrationally exuberant than those of Tuvalu, a dirt-poor nation of 11,300 citizens living on nine South Pacific atolls. When Internet architects assigned two-letter country codes for foreign Internet sites, Tuvalu was assigned .tv. By 1998 its government was receiving lucrative proposals to arrange the sale of domain names like abc.tv and m.tv. Bikenibeu Paeniu, prime minister at that time, predicted that ".tv will bring Tuvalu $100 million over 10 years"--big money for a country with a gross national product of just $20 million, much of it from foreign aid.

Reality didn't quite live up to the prediction. In 1999, Tuvalu inked a deal with Bill Gross's Idealab to establish Los Angeles-based .TV Corp. as the sole broker of .tv domains. The deal brought Tuvalu $12.5 million up front and an additional $1 million per quarter. But according to government officials, the venture burned through nearly $60 million promoting the domain brand, and in 2002, VeriSign acquired .TV Corp. for $45 million. Tuvalu got $10 million for its share, along with reduced quarterly payments of $550,000. At its mid-2001 peak, the registry contained about 400,000 names (try cnn.tv), though the number has since fallen to half that. The money has gone a long way, bringing electricity to Tuvalu's outer atolls, paved roads to its capital--even membership in the United Nations. Yet a sense of disappointment remains. "It's peanuts," says Paeniu, now Tuvalu's finance minister. "Life here hasn't changed that much."

--ANDY RASKIN