Sure, the digital economy changed many of the rules of competition. But too many Web companies have tried to grow their businesses with marketing strategies that defy the laws of arithmetic. They've been willing to spend more than the lifetime value of a customer in order to acquire that customer. They've run branding campaigns on buses, billboards, and blimps -- programs that attracted plenty of eyeballs but not nearly enough business to ever justify cost. Over the last few years, dotcom marketing has been driven by a giant leap of faith -- the equivalent of a 7-year-old leaping from a tree house to prove gravity wrong.

Now that the digital economy has experienced a reality check, Net companies are getting real when it comes to marketing and are moving toward a model in which companies pay only for the media that sparks a desired action: getting someone to visit a site, subscribe to an email newsletter, or make a purchase. Forget Super Bowl commercials. The new marketing tools of choice are affiliate programs, and pay-for-performance deals such as revenue sharing and bounty systems. Welcome to the Kickback Economy: Merchants and media sites are forming alliances that refer customers back and forth -- and are sharing in the spoils.

The Kickback Economy is driven by equal parts greed and fear. Most Internet companies still sense an urgency to get big fast. But they also feel the heat to keep their costs under control and (gasp!) make money. "The days when dotcoms were willing to spend money without calculating return on investment are gone," says Stephanie Healy, 31, CEO of WFS Direct Inc., an email-marketing firm based in Omaha, Nebraska, and a former interactive-sales manager at Omaha Steaks, where she established one of the first online-retailer affiliate programs. "You can't spend $5 million on a portal deal and only get $1 million in sales," she says. "The industry is starting to grow up."

Besides, maintaining a single outlet on the Web where customers can get information about an offering goes against the very grain of the Internet: It's just not distributed enough. "We have over 80,000 affiliates right now," says David Gitow, 40, chief marketing officer at enews.com, which sells magazine subscriptions. "Through our partners and affiliates, we can be just about anywhere someone would want to buy a magazine. When you go to Barnes&Noble.com and hit 'magazines' that's us. If Home Depot wanted to provide its visitors with magazines, we could put up a customized newsstand. All of our deals are commission-based."

In fact, Gitow says that enews isn't buying any impression-based advertising right now. "It just doesn't work for us when you spend a ton of money and then cross your fingers," he explains. In the Kickback Economy, even handpicking the sites that will form your referral network is considered counterproductive. Some companies, like Eddie Bauer, do so in an attempt to control the context in which their brand is placed. But most allow affiliate sites to pick them (reserving the right to eliminate inappropriate sites from the network). That sometimes produces surprising results. "We laughed about an affiliate site called Student Medical Informatics set up by some med-school students," says Kendall Fargo, 30, VP of e-commerce at Handspring. "But it's one of our best sites."