Despite the recent wave of big-name dotcom failures, or "dot bombs" as they have become known, some entrepreneurs are still prepared to take the risk and Hungary is still experiencing steady growth in the number of internet startups.

With internet use in Hungary still way behind Western Europe and the US, the local e-business market remains relatively small. A new kind of internet enterprise is however emerging, which firmly targets the international market whilst using Hungary as a convenient and low-cost operating base. Budapest-based Xenomusic.com is one of many sites offering downloadable music in the now ubiquitous MP3 file format. With the rise of such controversial sites as Napster.com which offer users a forum to swap music online for free, MP3 is becoming a hot topic not only in cyberspace but also for the mainstream music industry, which considers the continuing existence of the CD to be under grave threat. Xenomusic.com is not however giving anything away for free - charging a dollar a download - nor is it offering legally questionable access to "every track ever recorded" as do many other MP3 sites. Instead, the site specializes in featuring lesser known and mostly unsigned Eastern European musicians, with a strong emphasis on Hungarian folk music. According to founder and president Douglas Hoppe, a 25-year old Yale music graduate, there is a potentially massive market for Eastern European music, especially in the US where there are millions of Central and Eastern Europeans and their descendants. Although Hoppe believes that his idea will ultimately be a big money spinner he admits that short-term success will depend on the site generating advertising revenue. MP3 is not however the only burgeoning sector on the internet. The Web is now a popular forum for professional and amateur traders of collectables, and the popular US-based collectors' trading forum eBay.com is one of the few big-name sites who are actually reporting profits. CollectorNetwork.com is a Belgian-Russian venture run from offices in Budapest which hopes to capitalize on a market which according to their own estimations will have 38.5 million online collectors in the US and Europe alone by the end of next year. Unlike most online trading sites which more often than not resemble virtual garage sales, CollectorNetwork.com allows collectors' items such as rare coins and banknotes to be traded online. An initial joining fee for dealers and a commission on each transaction are charged.