The Future of Making Online Revenue?

e4 asks: "Let's see here: CNET and DoubleClick have patented banner ads. Amazon and LinkShare claim patents on affiliate programs. The Web essentially has an unlimited supply of advertising space, and demand from advertisers is pretty low, since the average click through rates are hovering around one percent. New products like Junkbuster are coming out all the time that help users block ads completely. Future prospects for ad-based revenue seem precarious. Venture capital may be drying up. The Internet community isn't too keen on fee-based services, and collecting and selling mailing lists, demographics and other bad mojo will get you blacklisted in a heartbeat. So how will information-based Web sites (especially smaller, independent ones) be generating revenue in five years? What will the business model be? Or will these sites just start to wither and die like neglected petunias in Phoenix?"

Comments

Re:Micro-payments?

[dattaway]

I can see it now: micropayments are the 900 numbers of the internet. The backbones get toghether and license thier service to the ISP's that any of these pay sites that are visited get billed to them and conviently passed on to the customer. That way, no consumer can opt out. Visit a commercial site, either by linking or accident and you will get charged.

Services

[panda]

I think you'll see more companies online offering their services to clients. You'll see some sites that offer free downloads of software (whether free or closed) and then offer their programming services to customize that application to a customer's need.

You'll also see a few e-commerce sites prosper, while most wither like your petunias.

There's more to the Internet than just the web. I'd look for more ad-supported email digests and mailing lists.

I think someone who offers a service to a particular community might be able to make a go of it with a subscription based section of their web site that offers some truly unique information (ie. information not available anywhere else, not just all the information from everywhere else collected in one spot). You combine that with ecommerce and special support services tailored to that community and you might just have a winner.

The gold rush is over, but that doesn't mean you can't make money on the 'Net or that you can't get rich. It just means you have to earn it, and it won't just be handed to you.

Info sites need not make money

[divec]

how will information-based web sites (especially smaller, independent ones) be generating revenue in five years?

It doesn't matter if these sites can't be profitable. People want to make information available. Over the last 20 years, people have put masses of information up on the Internet without hoping to make money from it. As long as putting stuff online isn't too expensive for an individual to fund with a bit of spare cash, people will always make information available.

The only threat to this is litigation. If a large organisation threatens to sue an individual because it doesn't like the contents of his website, there's not much he can do right now. As the law gets more biased towards those who can afford to litigate, it may mean that these volunteer sites can't reliably hold objective information against the will of a big company. Slashdot can respond defensively to cease-and-desist letters because it has lawyers. Smaller sites cannot risk it.

Profits from making a new interface to customers

[colinscott]

I'd suspect that most revenues will come directly from the online sales of goods and services, or indirectly as a form of dedicated advertising by a company providing it's own site. Given the widely known ineffectiveness of banner ads (I've clicked on less than 50 since 1995, and I'm online almost every day) I fail to see the provision of advertising space as a significant revenue generator.

The web provides a very good way of getting information about certain products and services, and allowing purchasing of these. The problem would appear to be selecting products that can be delivered to the customer cheaply. I suspect very few of the companys that are currently losing money on every sale will survive. The markets seem to be very relucant now to give out money to internet startups that don't have a good business plan and a real chance at making real revenue.

Companies can also use their own website to promote offline sales. A website can be a lot more interactive than a brochure. You can provide extra services to entice people back, and at the same time give them information about your products.

This is what I think is the essential point. The interactive nature of the web, and the Internet as a whole, requires something that does more than just sit there (animated gifs don't count, and tend to be annoying and/or automatically ignored). Unlike more static mediums (print and to a lesser extent TV and radio) many Internet users are used to a dynamic experience, and tend to automatically determine if the site they're viewing is of any real interest. If not, they can change to a competing source of information very quickly. If one of the sites I frequent doesn't have what I want, I can skip to another within seconds. In other mediums getting to competing information sources tends to take longer.

Banner ads don't answer the question "What's in it for me" that needs to be addressed in order to draw attention in the long term. Hits are one thing. Hits from return visitors, people who keep comming back, are another.

One simple fact

[SmileyBen]

I think what a lot of people seem to miss about the Internet is that, quite simply, people are not going to be making the staggering amounts of money that they currently make. People wonder how Amazon will ever make money if it's always undercutting the competition, but the fact is that they won't ever make the sorts of money large bookstores do - even with overheads. There is always going to be someone who can undercut people with large mark-ups, since it's so much easier to set up shop on the Internet.

We have to stop thinking in terms of the millions of dollars that middle-men make, and start thinking in terms of maybe no more that 1% of any give price.

Re:One simple fact

[Cryofan]

You are correct. The whole idea of business making big profits is based upon "barriers to entry."
I don't think people realize how much of society is based upon barriers to entry. But the Internet has very low barriers to entry. This is why there really are no long term huge profits to be made for business.
That's the bad news.
The good news is that everyone Joe/Jane Citizen can make enough for him or her
The Net is the soul of egalitarianism. And watch out, Internet, when those with big wallets really discover this simple truth.
But hopefully it will be too late by then.

Re:One simple fact

[TheReverand]

But the Internet has very low barriers to entry

This is true in a comparable sense (say compared to getting venture capital to open a storefront, etc...) However there is still many barriers. Not to be an elitist, but let's face it, not everyone can code, not everyone can run a business, and there aren't that many jobs out there for Joe-SixPack that are net-related. I think in the VERY long term you are correct. But we (the U.S. at least) are still heavily based on the service industry. The net simply will not replace this until someone comes up with 1. Reliable Teleportation, and 2. Matter synthesis (a la Star Trek food machines). Then you will you have a true economy upheaval.

I guess all I'm trying to say is that no, not every citizen can make money off the net right now.

Re:One simple fact

[Pig Hogger]

But the Internet has very low barriers to entry

This is true in a comparable sense (say compared to getting venture capital to open a storefront, etc...) However there is still many barriers. Not to be an elitist, but let's face it, not everyone can code, not everyone can run a business, and there aren't that many jobs out there for Joe-SixPack that are net-related.

Not true. A friend of mine (about whom I talked above) would never had prospered if he did not had an online catalog. And yet, he was the unlikeliest guy to get connected; a retired railroader who also owns a tavern, he instantly saw the Internet potential and he was quick to harness it to his advantage.

Just like any small-business owner who asks a plumber to do some plumbing work, he hired some coding kids to do his website and everyone was happy.

--
Here's my mirror

Re:One simple fact

[Snocone]

I think what a lot of people seem to miss about the Internet is that, quite simply, people are not going to be making the staggering amounts of money that they currently make

Indeed. Contrary to conventional opinion about the free market being an apologia for exploitation and massive profits, Adam Smith consistently maintained that profits were proof of inefficiencies and/or market breakdown, and in a perfectly free and efficient market profits would be zero as all products and services would be priced at exactly their cost of provision. As the Internet is the freest and most efficient market ever created, profits to be sustainably extracted from it will inevitably turn out to be lower than in any other portion of the economy.

The wild card here is that the underlying technology is improving so fast that new ecosystems arise out of nothing constantly, and the colonizers of these new ecosystems extract the windfall profits that successful pioneers always do. To date this has almost completely masked the underlying efficiencies and therefore lack of long-term profitability, but sooner or later it will become obvious.

Conclusion: Ride the wave, sell out early ;)

Tips

[Caled]

What is needed is an easy way of leaving tips at web sites. I bet a lot of sites would make more money if it was given voluntarily, rather than making people look at stupid banner adds. Bands could play live over the web and fans could show their appreciation with a buck or two. And as an added bonus, sites that get a lot of hits aren't necassiraly the ones that will get the most money, posting an inflammatory article to get mentioned on slashdot will no longer work.

All thats needed is a safe and easy way to leave the occasional quarter. hmmm.

Re:Tips

[RobinH]

Actually, one way that normal *hip* places make money is to sell merchandise. People love to wear the logos of their favorite sneaker company, and are willing to pay lots of money for it.

Re:Tips

[ralphclark]

Spot on. People *would* be prepared to pay for information services if the cost each time was negligible, i.e. a few pennies. But if the cost per click is over a dollar then most people will (quite sensibly) not be interested - we all know how these things can mount up over time. The internet desperately needs an efficient, secure and convenient implementation of micro-payments. But it simply won't happen until the banks get together and agree on a common system.

Consciousness is not what it thinks it is
Thought exists only as an abstraction

why the ads?

[snillfisk]

We'll probably see a change from todays ads-based services - the ads are kinda boring and as mentioned, they have a quite low click-rate. What I think we'll see, is that the sites will evolve into more user-based services, where the user can define their own needs - and that they'll pay a minor fee for the use of the material provided therein.

Take Slashdot for an example, i'd gladly be paying a buck a month for getting access to those slashdot-news, but that's probably not i the correct slashdot-spirit. However, there's already a few sites doing this, take a look at http://www.digitalblasphemy.com/ for example, providing high quality 3d-wallpapers (some of the featured in Eterm). There's a quite a large number of free images provided by the site, but for a small fee ($25) you can sign up for the full gallery - and you'll get permission to use the pictures on your own webside and alike. This is a great example of how one could make money of a perfectly "on-your-sparetime" website.

Times are a changing

[Pengo]

There is going to be a serious shakeout in the B->C sector. Serious revenue models are going to have to be revised as investors patience are thinning. You can't open up a news-portal without seeing or reading about consumer plays burning out of cash ... and fast.

You might see free services, but only a few of the e-biz's in that particular market segment will be able to compete much less survive the outragous valuations and sustain the burn-rate which has been created. They will have to be very creative how they actually sustain their free services.. in the end, nothing is free.

I believe that the real opportunity in the internet is in the B->B->C market... and all the prophetic notions about brick and morter companies ruling the net space in the end, might be true.. as they have a 'Business' to sustain their companies.. not just 'Compaines' searching for investors to help them build a business.

£.02

Revenue is on the other end

[ugen]

Let's look at things as they are - there
is only one steady service that people pay in
the Internet for - the actual connection.
Be that your provider of dialup, dsl, T1 etc,
you pay your subscriber fee. (Let's not bother
with netzero and such - they will all be dead
before time).
This is where the revenue comes from - as long
as people pay to come online providers are
interested in keeping online going. If the
sites will start to dry up, i am pretty sure
programs will appear to join providers of
connectivity and providers of information.

This in fact is how TV works in some countries -
you pay yearly TV tax and tv studios get their
share. Of course then internet will more and
more resemble one giant AOL with link providers
dictating content. But this has been the case
with every media and this one will conform
just the same.

O well...who cares.

Re:Revenue is on the other end

[sansbury]

A brief history of mass media, and why the Net is so special, and why it won't end up like TV.

In the beginning, there was no writing, and information was transmitted orally, if it was transmitted at all. Talk about loss-ful transmission.

Then there was writing. Of course only a few people could read or write, and they were the kings and the priests. Books had to be copeied by hand, and were thus quite expensive. A single man could very possibly own a copy of every book in existence in the west, and read them all in his lifetime.

The printing press made "transmission" of information cheap enough for people less rich than kings and priests, and so reading and writing started becoming commonplace. Not coincidentally this was also the time of the Enlightenment and the birth of modern ideals of democracy and liberty.

Then came radio and TV, and transmission of information once again became the property of a privileged few. Now "the media" had always existed in the form of newspapers and pamphleteers (and town criers) but not since feudal times had this much power been concentrated in the hands of so few.

TV, meet cable. Same one -> many transmission model, but a lot more choices and a lot cheaper. And don't tell me there aren't choices: The Food Channel, the History Channel, the Discovery Channel, the Jesus channels- if there's enough demand, there's a channel.

And now, while good, innovative programs are popping up like mushrooms on cable, the Big Three are pumping out more and more desperate trash like "Survivor" and "Millionaire" to revive their old magic. Of course it wasn't magic, it was monopoly.

And finally, the Internet. Like the printing press, it's a publishing/transmission system open to anyone who can afford it. And due to technological advantages, it's so cheap that in many cases it's free.

And if there's one truth that the history of cable tells us, it's that people want targeted content, even if the quality is a little lower. Sure, network sitcoms had better actors and production values than a lot of the early cable stuff, but the cable programs connected with their audience better. The net takes both aspects of this to levels much higher- in many cases the quality is abysmal, but there's so much of it you can find what you need.

My only fear is that the AOLs of this new media world will try to control this ability to self-publish by making the process more difficult and expensive. But I think that people like the freedom of the 'net too much, and will leave services that limit what they can see too much. This won't happen overnight, but it will happen over a period of years. Have a little faith.

Revenue? I see psuedo-networks with voluntary micro-payments as one of many possibilities. Sites that can build good communities will eventually find ways to monetize this with sponsorships, merchandising tie-ins, and so on. It is now still a lot cheaper to run a website than it is a magazine, newspaper, or professional sports team, all of which, mind you, are supported by advertising dollars.

-cwk.

Dirty work.

[Anonymous Coward]

Why should we do e4's dirty work by thinking up business plans for him? He is running razorlist.com. Just another ratings site. Rating sites are lame, look what happened to deja.com. Think for your damn self! From his questions list:

2.How much does Razorlist cost?
Since we have so few reports right now, there is no charge for membership. At some point, we hope to find a means of income to support and expand the site. This will most likely be accomplished through banner ads.

Content only sites are dead...

[Pengo]

You can basically get the same thing from a library. It's still very expensive to build a interactive web-site.. as the web goes more towards a ASP style of network and less a brochure and eLibrary.. ... look at the thousands of man-hours that have gone into creating Slash..

Hopefully as time goes on the means of creating interactive websites will go down, computers will become more powerful, bandwidth to consumers will increase and cost to host will decrease..

But right now it is a very expensive business.

Advertising is the wrong model

[shermozle]

I wouldn't block ads out if they weren't so annoying. It's impossible to read text on a screen with some annoying animation hovering over it.

There are still plenty of ways for web sites to intermediate themselves into the value chain. Say, for example, slashdot started its own shopping mall. Instead of them putting whatever products someone paid to have in there available, they'd have only products that the Slashdot team thought were cool. So long as /. never breaks that trust, people would buy stuff.

What network cards do you guys use? That cool new toy you just covered, where can I get it? Oh looky, I could buy it from the place you linked to but who would I rather trust with my personal details?

Should we be so lucky.

[Black Parrot]

With luck, the rank commercialization of the internet will wither, and we'll be back to were we were a few years ago, i.e. a Web built mostly of sites like you describe, and which don't require a bag of cookies and a pile of ad downloads just to see the next couple of paragraphs of useful information.

But don't bet on it. I suspect "they" will use technology that says "no cookie, no content", and similarly for ad displays. VC may dry up as the new wears off, but commercialization is surely here to stay. Lots of people think it is immoral to let you have anything for free.

--

Re:Should we be so lucky.

[trog]

The company I work for offers cookie-based registration, but does not require it for use. It is actually benifitical to the user to accept cookies on our site. We don't sell demographics, and we respect our users privacy.

You get sane design like this when your "Team of Geeks" who built the site are sensitve to privacy issues. The best of both worlds.

Unfortunately, I can't give you the url, as I am sensitive to MY privacy :-)

PayPal

[Sebbo]

I suspect that PayPal (which is currently mostly used for EBay auctions, I think) will be able to accomodate that niche eventually. It should be very straightforward: "To make a donation to this site, enter your Paypal name, password, and the amount you want to donate in the fields below."

Wasn't there an essay on a similar topic called "The Street Performer Protocol" floating around recently? Anyone have the link for that?

Re:PayPal

[superkorn]

And HERE is an HTML version if .pdf's annoy you :)

Re:PayPal

[Robotech_Master]

An anoncow wrote:

Oh PAYPAL.. Another lamb ready for slaughter. How long before the expenses and fraud catch up with PayPal? Talk about a zero sum gain business. Speaking of "lets just throw some money down the toilet", how about dialpad.com, how long can that last?

Well, I don't know about Dialpad's revenue model, but they certain seem to get used a lot, and they own their own fiber-optic network so they're not paying premium phone rates to someone else for it...so they might just be doing all right after all.

But as for PayPal, I can tell you right now they must be making scads of money off the thing. PayPal's one of the most popular auction-payment services ever...which means a whole lot of money is passing through their coffers every day. Do you think they don't float interest off of that money?

Furthermore, they just introduced a "business account" system, where they provide additional services to those who want them, while taking up to 2.5% of those transactions. They were certainly attractive enough to be bought out by the X.com full-service Internet bank within just a few months of their creation.

Trust me on this--banks have little tricks of making money off of things that would cause you or I to scratch our heads. They wouldn't be providing this service if they didn't think it would make them a bundle.
--

Micro-payments are the 900 numbers of the 'net

[wowbagger]

Micro-payments are the 900 numbers of the 'net, and that's the problem.

First, for those readers who aren't in the US: a 900 number is a telephone number that you call and a charge is added to your phone bill above and beyond the normal cost of the call. One good(?) use of a 900 number would be for "pay for service" calls: you call the number and are charged $50/hr for tech support.

The problems with 900 numbers are as follows:

1. The most frequent real uses for these things are "Psychic Freinds Hotline" scams and dial-a-porn services. Funny, just like much of the 'net today...
2. The numbers usually have little to no verification that you really are allowed to authorize such a charge. Many calls to these sorts of numbers are made by children/teenagers who don't pay the bills. Mommy and Daddy do, and all hell breaks loose when the phone bill comes in...
3. Some 900 numbers masquerade as 800 numbers (800 numbers are usually free of charge): you dial 1-800-<some number here> thinking it will be free, and you get nailed.

Given this analysis, what risks would micropayments incur on the 'net? Would most sites using micropayments be porno or scams? Would some sites claim to be free, while draining your micropayment account? What about E-Mails containing HTML/Javascript that cause you to access a micropayment site? (What's this charge to "31337 roolz U"?) What happens when you find you've just sent $500 to "Pokemon freinds network"? ( BART! Get your ass in here boy!)

Submitted for your (dis-)approval....

Re:Micro-payments are the 900 numbers of the 'net

[lamasquerade]

Would it not be possible to use the 900 numbers as tips instead of micro-payments? I'm referring to the the idea mentioned in 'Tips' (above) but noting that there is no current system with which this could be done.

But say, you go to GoodSite.com and you feel the information is good quality, you get somthing out of it, and so because your a nice guy/gal you ring their (hopefully subtely) listed 900 number, which has a max cost of $1. This is a tip and maybe you give them a dollar every week, or every time you are particularly impressed. Obviously it cannot be mandatory, but I think enough people would be courteous enough to make such a small donation every now and again (after all its not mandatory to leave tips in restraunts..is it? I dont konw, I'm in Australia:)

As for the problems with 900 numbers:

1. This is n/a because it is a tipping service not a mandatory payment, the pr0n sites etc. already have their methods.

2. This I see more as the users responsibility, if they can't control their kids thats their problem. Plus childrens sites would obviously not have the tip mechanism in place.

3. I dont know about 900 numbers, but in Australia they are either 1-500 or 1-900 and you *know* your gonna get charged alot. 1-800 is always free. And maybe there could be a compleatly new number which everyone knows can only charge 1 dollar maximum per call.

Of course there would also be applications for bands releasing their music as mp3's, they only make 20 cents a CD or somthing as it is don't they?

____

Re:Micro-payments are the 900 numbers of the 'net

[Sensor]

actually one of the major problems with micro payments over the net is the overhead of processing these - you either have a choice of not auth'ing the card (in which case you could see fraud rates as high as 70%) or you have a processing cost which could be greater than the ammount in question.

Simple Answer: They Won't Unless...

[Carnage4Life]

First of all I'd like to clear up what seems like a misconception of the original poster. Banner ads and affiliate programs are a drop in the bucket compared to the costs of running a website. After investigating the Net scene last year when I was planning to start a website I noticed that dotcomms could be divided into eCommerce sites, pay service sites and banner ad sites. Most of the successful non-eCommerce had either been sold to larger parties (e.g. Slashdot to Andover then Andover to VA Linux, Hotmail to MSN) to offset the cost or become pay services (JenniCam) simply because banner ads couldn't cut it. heck, even rusty has incorporated kuro5hin . So even now information (non-eCommerce) websites with sizable traffic (i.e. need expensive servers, bandwidth and maintanence) cannot survive on banner ads and affiliate programs indefinitely. There is more exposition on how dotcomms cannot survive on ads alone on ZDNet

The entire everything is free idea on the Net is based around the loss leader concept. Give away stuff to gain market share then make the revenue by exploiting the marketshare. Unfortunately this is the rub, few sites have anyway to make up the revenue lost by undercharging or giving away content or product. This is now being felt by the rash of layoffs and also the large number of dead or dying dotcomms which include cdnow.com, drkoop.com, toysmart.com, boo.com, foofoo.com, reel.com, apbnews.com, etc. The surviving information/nonE-commerce sites (especially independent or pseudo-independents like slashdot) will eventually have two choices
1.)Get bought out by a larger company who either wants the site for goodwill purposes (AOL owns Winamp.com which never make back the $20 million they spent on it, VA Linux owns Freshmeat, Slashdot and freeCode.com which will make just enough to hold their own or slightly less) or want to exploit the user base in a way the original site could not (e.g. MSN buying Hotmail so that logging out of hotmail redirects you to MSN.com).

2.) The second option is to become like the only sites to actually turn a profit on the Net on information, pr0n. Charge for premium membership and giveaway just a enough to entice members. The Wall Street Journal already does this with no ill-effects.

3.) The third option is to close down. Which off course is not an option many are willing to make. Of course, if this keeps up the Net will eventually mirror the real world with it's homogenized Walmarts, Starbucks' and Barnes & Nobles' being frequented by the many while independents close up shop and die. Only a short while ago everyone espoused the beauty of the Net and how everyone could be their own publisher but with the death of websites daily (linsight.com, reel.com, toysmart.com, boo.com, drkoop.com, peabody.com, and soon cdnow.com) are we not headed for a Net that is controlled by the few? For instance VA Linux via Andover already controls Freshmeat, slashdot, and a bunch of other frequently visited open source sites and is estimated to draw 50 percent of open source/linux traffic on the Net.

PS: This post is not trying to bash VA Linux but instead is mentioning the fact that already in the real world almost everything is in the hands of a few corporate entities (the same company that sells Marlboro cigarettes sells Post Cereal and Kraft foods, Disney owns ABC television and Miramax films, AOL owns CNN and Time)and the Net was supposed to be haven away from that where opposing views and opinions were only a mouse click away. I am not sure we should be celebrating the death of that...

Re:Simple Answer: They Won't Unless...

[jbc]

Those dead or dying sites you mention have died/are dying not because the Web doesn't allow independent voices to survive. They're dying because they suck(ed). They were created by people who don't understand the Web.

Since the days of gopher servers, archie, and the Internet Hunt, the net has offered an amazingly useful and revolutionary resource for giving people access to information. This process took a quantum leap forward with the appearance of the Web, and we've only seen the beginning.

The next phase will see a layering of additional layers of usefulness atop the substrate of the Web. The creation of compelling information products using the net will continue to become easier and cheaper.

In the meantime, the clueless who came storming in from whatever failures they had engineered in other industries, who started slinging a few buzzwords around and got tens or hundreds of millions of dollars in funding from greedy investors, are turning belly-up as it becomes clear that their sites are uninteresting, or unusable, or just plain stupid.

Good riddance.

sponsor pages

[cc.Scotty]

Just like "faq" became a standard link on a website, what about a "sponsors" link. A sponsors area of a website would allow a visitor to view advertisement if they wanted to, without annoying them, and these pages could be elaborate enough to actually do justice to the sponsors. You could even be candid about the fact that it helps pay the bills of the site and encourage the visitor access these sponsor sites via yours if they do business with them in the future. In other words, be a portal to other sites for fans of your site, while avoiding being annoying. I think advertising is annoying, and it is important. Once in a while I actually see an advertisement that is informative or even amusing, but these are always on tv. I've never seen a banner ad that managed to grab my attention let alone be informative or amusing (except that one with the little monkey you're supposed to click on, I fell for that one once, duh!)

Inefficiency of Banner Ads

[The-Bus]

I think the problem is how the 'effectiveness' of a banner ad is measured. I find it ridiculous that companies still follow this mantra of 'low-click throughs = bad'. It's like they are missing some basic information.

First of all, advertising effectiveness is one of THE hardest things to measure in the field of business. There's no clear way (currently) to measure how 'good' your ad is. Sales, especially in consumer products, are influenced by many other forces (media, store promotions, seasonality, etc.). Ad executives already know that if sales for their soft-drink jump 15% while they are running an ad campaign, that it doesn't necessarily have anything to do with the campaign. Now, with the interactivity of banner ads, some people think that advertising can be "figured out". Guess what. It can't. Click-through rates do not mean I was interested in the ad. A click-through rate means I was interested in the ad, but it doesn't mean I was interested in purchasing the product. Maybe I was just clicking ads to support the website (I do that with smaller websites). Or maybe I clicked on something that looked like content by mistake (take a look at the side columns on the front page of Sharky Extreme). People need to realize that click-through rates aren't a good approximation of wether or not the advertising was succesful. Yes, it may be "the best estimate," but trust me, it's not a very good one.

I also think that this 'click-through' mentality has created a lot of bad advertising ('Click on he Monkey to Win $20'). In order to have users click on ads, they throw in every possible gimmick that's in the book: animated GIFs, Java applets, sounds, etc.). As a firm, I would rather have a banner ad that informs, rather than entertains. If it can entertain while it informs, that's not a problem. But I'm still amazed at the number of banner ads that promise something ('Speed Up Defragmentation and 10 Other utilities!'), yet the ad itself never shows a brand, or a webpage. I'm not going to click on an ad to find out what it's about, that's something the ad should do. And if it can do that, it's done SOME service to the company or product it is promoting by increasing brand awareness.

Oh boy, now I'm way off-topic.

I think the Internet is going to stay, for the most part, free. As long as the service you are looking for can be found free on one site, you can go there. As long as /. keeps the site the way it is (free speech, free beer), I'm not going to any other site that wants me to pay for it's information. And when all the sites suddenly start charging, there's very little that will keep someone from making a free site of their own to steal customers.

More importantly though, I don't think a lot of sites will be able to migrate to pay-per-view or a monthly charge, at least not for a lot of their main content. Once someone is getting something free, they're not too likely to enjoy paying for it (some exceptions to this case exist, obviously).

If you've come this far and understood what I said, I applaud you. I lost myself after the second paragraph.

Advertising will grow up

[Oestergaard]

Today banner ads are usually a GIF served from some specific site, the link to the GIF is positioned at almost the same place on all sites with banner ads. This simple scheme opens up for the business of ``serving banner ads''. I think that this business is in danger, but not on-line advertising in itself.

Banner ads could be served from the site itself. And they could be made to fit better into the layout and philosophy behind that site. This would bring two things: Banner ads would be less intrusive, and, they would be impossible to block. Both the advertiser and the consumer wins here. (Uh, beware, I see the win-win scenario emerging here)

Companies that today make a living of serving (and accounting hits for) banner ads, will have to find a new living. But the new model should open up for that just fine. There will still be a need for the advertiser to have some figure over the effectiveness of the ad, now that there's no longer to usual third-party involved.

There's still a third party though; the consumer. Most browsers can supply the advertiser with referrer URLs, which would give the advertiser a way of assessing the effectiveness of an ad on some specific site. The advertisers would probably like ways to verify the number of actual exposures of their ad as well. This is where the old ad-serving companies come in. If they figure out a way to act as this third party that can account and verify the number of exposures, they may not be completely out of business after all.

Isn't it wonderful seeing this marketplace mature :)

1% click through seems pretty good...

[piku]

Thats one in a hundred. Thats 1,000 clicks per million views. How many companies can boast that even a thousand people acted on their commercial and went right out and bought something from their company? I doubt too many.

Re:1% click through seems pretty good...

[seebs]

That would be 10,000 per million, and keep in mind, not all people who click through buy anything. Some of them complain about the ads. Some of them realize the ad was misleading.

One of the most effective banner ad techniques was the little banners that look like a Windows error message with an "OK" button. They get about 10x the clickthrough of other ads, maybe more. They get an *astounding* rate of clickthrough.

And *no one* ever buys anything. People who come in through ads like that, if they go anywhere, go looking for contact info. Most just back out of the site. Most never come back, under any circumstances.

Click through, alone, is a poor measurement.

They should be realistic. 1% is pretty good!

[TheLink]

It seems to me that advertisers have the impression we care more about their ads than we actually do. And now that they are getting the true picture from banner ad stats, they're either disappointed or in denial.

Recently a bunch of Japanese manufacturers, rivals even, got together to promote a single lifestyle brand. Why? Because even though consumers remember their individual/competing ads, the consumers still don't remember what the brand was! Heh, ironic - I can't remember what the shared brand is! (But I'm not in Japan tho, so I haven't seen _any_ of the ads).

In my opinion, the "low rate" of click-throughs is not surprising. Advertisers should realise that people have lives to live, other things to do. When we watch a movie on TV, I bet that more than 99% don't really care about their ads, brands or products. Sure we may be mildy entertained by the ads, but that's about it. At best it registers subconsciously, so the brand will be _familiar_.

With click through banner ads, advertisers finally are getting a good idea of what consumers think about their ads and products. And face it, we don't care that much. Advertisers: Wake up! Your products aren't the be all and end all of our lives. Deal with it. When I wake up in the morning, it's not a 10% chance that I think of product ABC. It's not even 0.1%.

So 1% is pretty good for click through. Sounds high even. What were they expecting? 20%? Get real. As if one in five visiting a.website.com are looking for computers/printers/plush toys/etc. Doh. Most of us are visiting the website because of _the_website_ right?

They should be thankful that 1% of us are actually _clicking_ the ad. They better hope it's not because of sympathy, or begging from the website owner.

And if they keep trying that webtracking stuff, it's going to make it more difficult/expensive for them.

Cheerio,
Link.

You can make money if you don't _spend_ too much

[JPS]

I think one of the problem with Web sites is that their owners think that they can afford to spend
gazillions bucks to make theit site great and that advertising will cover the costs. That's the problem. Creating a Web site doesn't necessarily cost so much. Take Slashdot for example, it started easy, with a few guys having a neat idea and doing some great coding, then it started to become more and more popular, and is now what it is. I'm might just as well be plain wrong, but I believe that Slashdot is generating money. I have a small web site myself (that only costs me web hosting and a few hours of work a week), and I hope to be able to win a bit out of it eventually (pay a rent, maybe?). It won't be a lot, but my point is, it is possible to make a site whose revenues are higher than its costs if you design it without aiming too high right away and without necessarily blowing away hundreds of millions of dollar, like some shity startups do.

In the future...

[Greyfox]

All web sites will have to support themselves by selling porn. For example, Slashdot might sell live goat porn (And allow users to comment on it,) while the RIAA web site might have some pictures of Lars fucking some napster users. The CBS web site might have tastefully done pictures of Dan Rather showing all, and the Fox web site would have cops in speedos and alien porn.

With so much porn to choose from, the quality of the porn should go up and the sites with the best porn will be able to charge a premium for it. Slashgoatporn.org might well be one of the highest grossing web sites in the future.

No sweat.

[Pig Hogger]

Let's see here: CNET and DoubleClick have patented banner ads. Amazon and LinkShare claim patents on affiliate programs.

No sweat. Moving elsewhere (that's everywhere) where software & business plans aren't patentable will just do the trick.

--
Here's my mirror

I'm not so sure this is the end of ads...

[Midnight Ryder]

I'm not so sure that banner ads are as dead as people think, nor are the revenue streams that they create. Lemmie provide a couple of examples:

While not a banner, this is a good one: right now, I just bought 660,000 ad impressions from a game related newsletter with a subscriber base of 220,000 people (everyone gets to see the ad three times.) Normal banner advertizing doesn't really get my attention - but, this newsletter is for people who are seeking out reviews for games, and special deals on games. Instead of being a 'blanket advertizing' campaign where I just start spending money at random trying to generate sales, I picked an area where people are actually LOOKING for things like contest, reviews, special offers, etc - IE, where they are looking to spend money. Targeted advertizing actually has a much better success rate - something that I figure that more and more online-world services and sellers will finally take advantage of.

While websites focus on general areas of a topic (for instance, /. focuses on the geek crowd, or what CmdrTaco & C. want to post, take yer pick ;-) advertizing based on that topic is still iffy. Just because someone is a geek, for instance, doesn't mean that they happen to be looking for a new Linux based server - which means any ads for new servers that reaches that particular person are pretty much a waste. In the articles themselves, however, it's much more focused. For instance, an article on MySQL & Perl would be a good place for someone to advertize a hosting service that allows MySQL, Perl, PHP 4,0, etc. You are more likely to reach your target audience. I look for more websites to start going that direction - allowing for very focused advertizing which allows for a MUCH better bang-for-the-buck.

More advanced profiling technologies, checking to see if they have already seen an ad (based on cookies), etc. will probably help the ad dollars thing. Keep in mind - while TV & radio commercials work sometimes, the same can be said about banner ads - they work sometimes. Content, how catchy the subject it, how well focused the ad is, etc. all makes a huge difference on the number of click-throughs you get.

Are ads annoying - damned straight. Some of them have been going way overboard anymore (Java and Shockwave based ads are really annoying). But does this really mean the end of ads online? I doubt it. We'll just start seeing ads that are reaching the right target group more often.

And personally - I really hope these revenue streams don't dry up. It would be a pitty for so many news sites that get so many hits to just die away.

(PS: When I released my last game, Boulder Panic! 2, I put a link at the bottom of my .sig. It wasn't advertizing for me - it was just showing off that I actually accomplished the task :-) BUT - do you have ANY idea how many people clicked on that link, and went and checked out my game?! 1% clickthrough may be right, but, even then, 1% somedays can really make a difference!!!

Re:Profits from making a new interface to customer

[Pig Hogger]

Companies can also use their own website to promote offline sales. A website can be a lot more interactive than a brochure. You can provide extra services to entice people back, and at the same time give them information about your products.

On-line catalogs are quite effective, especially when your inventory changes rapidly. A friend of mine has had a business selling surplus sleeping-car parts (yes, there is quite a market for that), parts that he acquired while scrapping some 60 surplus sleeping cars over several months.

Well, he had an almost "real-time" catalog, showing the parts he had available, complete with pictures, he would get different kind of parts as he would work with different kind of cars, and that online catalog accounted for well over 90% of the sales he did.

There was no way a paper-based catalog could have coped-up with the various changes that happenned. In fact, whenever somebody asked him for a paper catalog, he would simply print the website and charge $20 to mail it to the prospect (subject to discount on the first purchase).

In fact, he got several of his customers getting wired (people who would not have thought about even touching a computer), as they found out that it was far more effective and hassle-free to go online...

--
Here's my mirror

related careers

[geekpress]

I've been thinking about how to make money from web sites lately, largely due to two fairly different sites I run.

First, there is olist.com, a site for people interested in Objectivism. I've been running some variant of this site since something like early 1995, without ever directly making a dime. But I did make money indirectly; I learned HTML in creating the site, which landed this poor philosophy major her first programming job.

In a month or so, I'm going to embark on a major project to create a new type of community-moderated "mailing list" through the olist.com site. I'm going to ask people for "donations" (non-tax-deductible) through PayPal, to compensate me somewhat for my time. I'm hoping that Objectivists, of all people, will be willing to pony up to have a high-quality discussion list again. (I might also be able to sell the software later, which would be great, as I'm sure donations won't even remotely cover the cost of creating the software.)

My other site is GeekPress, a tech news site. After creating the site, I realized that advertising and affiliate programs aren't going to cut it. Why? Banners suck. They suck up space and bandwidth. And their long-term viability as a source of revenue is doubtful. And affiliate programs just don't make enough revenue, unless the site is directly related to what's being sold (like my Nathaniel Branden site). So, I can ask for donations. Yeah, right.

But there is hope. Perhaps GeekPress can, as my Objectivism sites did, propel me into a related career. I have a strong background in analysis, writing, and public speaking from philosophy. I have, through maintaining GeekPress (or more precisely, by reading so much tech news that it makes my head spin), a pretty good grasp of where technology is headed, particularly given our legal and cultural climate. And I have noticed that people seem hungry, given the relentless speed of technology, to make sense of the changes happening as a result of new technology. So, if I can manage to spin out engaging and insightful analyses of tech news to be published elsewhere, I might be able to make some money. And that money will be, somewhat indirectly, the result of my work on GeekPress.

I'm sure that this "related career" model doesn't work for every free site out there. But it has surely made many a site developers a great deal of money, even if they don't quite realize it.

-- Diana Hsieh

Re:The Old Fashion Way.

[lpontiac]

The missing element from websites like /. is a banner index.

If you can remember the name of the vendor, try http://report.andover.net/cgi-b in/ad_current_ads.pl.

Re:You can't click through on TV adds.

[JamesKPolk]

Who hasn't seen the VA Linux adds on slashdot

I haven't seen any advertising on slashdot. The combination of not loading images, and running the junkbuster proxy, is very successful.

Think about the value add

[Sensor]

Nothing new or novel below

I think that the (consumer based) sites which are going to make money online are those which fall into one of the following categories:

1) they provide a superior way of performing some sort of task (i.e. online banking or news feeds)

2) they provide an equivalent service but their market segment is composed of "tech savvy" people - e.g. computer components suppliers.

3) their site provides an integrated discussion/community area and goods purchasing forum (i.e. online building suppliers with an associated DIY site).

4) they can genuinely offer savings over traditional stores, something which (once you factor tax breaks) only a few online businesses actually achieve.

Some sites fall into several of these categories - for example I would say that Amazon fulfilled almost all of them:

* you can search for specific titles rather than having to physically hunt through the shelves
* the ratings and suggestions systems make it easy to locate new books
* I suspect a significant amount of their business is in computer literature.

I'm a very long way from convinced that an online shop which is just "online" will ever be particularly useful for a small business. Consumer hubs and price comparison services make it very difficult for a small business to actually generate very much interest in their site let alone generate many sales, and what many /.'s will forget is that web sites are only cheap if you know how to build one yourself.

Like I said you have to add some value with your site if you want it to make money - and I think that this is what the VC community is just waking up to - of course I'm not a VC so maybe that's just an impression from the media.

Other people in this discussion have talked about tipping sites or selling very low ticket goods, the problem is that presently (in a distributed environment) its not very easy to process those small amounts. Online payments really need to be authorised against something or the fraud risks become enormous - now this is either by using a traditional bank account which incurs minimum authorisation charges (typically around 5p which makes truly micro payments impossible) or against some form of online stored value system (either developed as part of your site or externally i.e. Beanze).

However micropayment solutions are still a long way from pervasive and I'm not sure if consumers are really interested - people like to have a single account that they keep track of and having to occasionally charge a separate online account seems like something of an overhead - perhaps if the account was set up with a direct debit so that your online "charge" was transparently topped up when required it would be easy to use - but then you run the risk of huge bills being generated if the architecture is compromised.

In short I'm not convinced that micropayment based revenue is going to be practical within the next few years - I'd be happy to hear different but I just don't see the social or economic hurdles evaporating.

just thoughts

Tom

PayPal, Storytellers' Bowl

[Robotech_Master]

PayPal just came out with a business upgrade to its account for people who want to use it, offering various additional gimmicks for a 1.9-2.5% transaction fee. Included among those gimmicks are the ability to integrate payment acceptance into websites. And you know, since there are no minimum transaction amounts with PayPal (you could pay as little as a penny if you wanted), I bet people would be willing to "tipclick". I know I'd rather pay Userfriendly or Sluggy Freelance a nickel of my own money than have to take the time to click a banner ad to help him out. (For that matter, Sluggy has been considering an ad-free paid subscription model in addition to its ad-studded regular one for those who want to cut the ads and help out at the same time.)

Now that I think about it, I sort of wish I could put a tipjar on some of my Themestream articles, like the one about Jon Katz, but I think that might be a violation of contract or something. But at least they pay me a dime a hit, and they don't seem to have any banner ads so far (I imagine they might add them once they get out of their trial period, though). (That's another way individual authors, at least, could make money off the web, I suppose...)

Another interesting new model built on similar ground to the Street Performers' Protocol is the Storytellers' Bowl, which is going to accept PayPal and publish stories on a supported-by-patron-donation basis. I'm really looking forward to its launch.

And by the way, for whoever wrote the copy quoted in the story blurb--Junkbuster isn't new; it's been around for several years at least.
--

Merchandise

[Robotech_Master]

I've heard that there is actually a mug-manufacturing company that will set up to sell mugs with logos of any website/webjournal/whathaveyou on it, and the webjournal owner takes a cut of the profit. I don't know the name or location just at the moment, but I know some of my journal-writing friends have been considering using it. (If someone knows who I'm talking about, tag it on in a follow-up?)
--

Re:Merchandise

[stripes]

www.pix.com is one. Mugs, mouse pads, all kinds o stuff. crowded market, www.mymug.com use too as well, but they seem to be gone.

Web Should Follow TV

[FigWig]

The obvious answer is that the web should follow the TV based model of advertising - Subliminal Messages! Why is television advertising FNORD! effective? I don't think it's because we watch commercials and then make a balanced, logical decision to purchase the product. It's because we are constantly bombarded with consumptive (as in consuming, not TB) pressure. You think I drink Coke(tm) because I like it? Hell no! It tastes like shit, rots my teeth, and makes me fat. I drink it because I have been programmed since birth to drink gallons of the stuff.

The only way to get ads to work online is to bombard the consumer, not just have these puny little banner ads. Maybe have branded web sites, like Redhat's User Friendly, or Mountain Dew's Slashdot, where ads are integrated with the content. Imagine:
Posted by Hemos
SomeGuy writes "check out these new low power Intel chips, they're hella cool!" Wow, that's almost as refreshing as the caffeine packed Mountain Dew that I'm drinking right now.

This could easily be accomplished with something like the askjesus.org filter, so that existing web sites don't have to be changed. As long as the user isn't presented with any alternatives, they will have to expose FNORD! themselves to advertising.

Mark my words, the web will become a uber-capitalist wasteland in 3-5 years!

I don't remember any banner ads on any Gopher sites...

The web amplifies the stupidity of advertising

[Junks Jerzey]

With the draw of the web being free information, banner ads stand out like a sore thumb. Not because we're all cheapskates, but because really stupid and obvious marketing ploys are out of place. A cute chick with a flashing "HOT" next to her. Punch the monkey. Fake polls ("Do you hate spam? Vote now!"). It's all so *dumb*, in the same way that most spam is (Make money fast! Lose weight overnight!). Attempts by people to promote their web sites in sly ways--"Hey everyone, I just stumbled across this awesome new site!"--are equally brain dead. Advertising has always been like this, but it's just never been so obvious against a contrasting background as it is on the web.

Adverts don't have to be the only model

[Robotech_Master]

The e-literature website Mind's Eye has an interesting model. You have multiple ways to pay for a story, including buying it by credit card (their prices are quite reasonable; most short stories are 35-70 cents each) or reading it interspersed with banner ads. Their story-serving system is smart, too; no ad-view, no further content-loading. I hope that sites don't start using this tech in general; Mind's Eye's use of it is legitimate and one with which I cannot argue (they have to be paid for their content somehow; if you don't like banner ads, you can charge it), but if sites started thinking they were "entitled" to banner ad revenue, that could be a problem.
--

Online Business == Meatspace Business

[trog]

The answer here is simple. By offering goods and services that bring convience or benifit to consumers. Online businesses should be treated no different than meatspace businesses, except with a web-based interface that provides 24-hour access without the overhead of a brick and mortar.

A solid business model is the key. If the company is trying to make the business work, rather than cashing in on the "dot-com" frenzy, they will survive. Nobody but Yahoo or C-Net can make money on advertising.

As an aside to this: In my last round of looking for work, I received three offers; all three from start-ups in Menlo Park. I chose the company that, to me, had the best future. The result: The company I work for now is the only one of the three still in business. We will be going public later this year, in spite of the stock market dry up, as we have solid business practices and offer services that bring value to customers.

It takes three years to establish any business...

[w3woody]

Having been sucked into the wonderful world of eCommerce, I've been spending a lot of time thinking about the very same question. It seems to me that when the shakeout takes place, we will probably have the following sites left:

1) Goodwill sites. Those are sites which are run at a loss by a company who is interested in some form of good will. In this category I would lump sites like /., the developer sites at Apple and Microsoft, and many sites set up and run by open source advocates who aren't interested in making money, but are instead interested in the good will running such a site generates.

2) Service sites. These are sites which provide a time-saving service or provides a service which would otherwise not be available by going to the local mall or grocery store. In this category I also lump merchant sites: as the fascination of merchant sites has declined, all that is left is the service of obtaining difficult to find or difficult to obtain merchandise, usually for a premium. In this category I would include sites such as Amazon, Fatbrain, and HomeGrocer. (Amazon and Fatbrain provides the service of allowing us to quickly find otherwise impossible to find books such as programming or technical books--but at a price that is, in the end, about a buck or two more than if you could have bought the book at the local bookstore. HomeGrocer provides the service of home grocery delivery--but at a price that is, in the end, about 5% greater than buying the groceries at the local grocery store. HomeGrocer is a reasonable example of this because, as you order more and more products, a "favorites" list is generated that allows you to quickly, in about 5 minutes or so, reorder those same products--a typical grocery shopping pattern. So the service HomeGrocer provides is delivery and time savings.)

If you are a merchant site and you are not providing a valuable service beyond shipping crap to someone, or you're the on-line version of your regular catalog (such as Victoria's Secret's on-line web site is simply a browsable version of their catalog), IMHO you're doomed to failure.

On the other hand, if you do provide a valuable service people are willing to pay for, you'll do well just as long as you remember the "three year rule." The three year rule, which everyone in this "modern, faster than the speed of light web world" where time appears to be measured in negative dog years, is that no matter how good your business is, it will take three years to establish a solid clientel. For some reason or another, perhaps because they were blinded by the shiny bobbles of web technology, otherwise intelligent businessmen thought they could start a web commerce site and establish clientel in 2 or 3 months--and that just does not happen. It takes three years to establish a business, no matter how good you are, if only because it takes three years for people to get used to using your service. That most web companies don't last half that long speaks tons about the short-sightedness of the people who run those companies.

3) Closed-network B2B sites which in an earlier era would have been done using a mainframe coded in COBOL and a bunch of VT100 terminals. I'm currently working on such a site. The site is structured as an eCommerce web site, but from the business model perspective, all we're doing is bringing out the business's existing database system to the web in a password-protected web site which permits their partner companies to connect and order product.

Of course the one group of people who will make money in the future of eCommerce is the programmers and software tool developers who are helping to build all this stuff. Just so long as you negotiate a good contract that doesn't screw you up-front so you can be screwed when the company founder's hair-brained idea doesn't generate a multi-million dollar IPO.

one domain controls advertising

[Sludge]

Let's say that one domain, or even three or fifty controlled all of the advertising on the Internet due to patents. While junkbuster is a godsend, no third party software is going to stand up to the simplicity of simply firewalling these offending domains.

Internet advertising relies on the same things as distributing DeCSS: A massive distribution of the ad content so that it becomes hard to block it.

Already, I've been bitching at the sysadmin at work to firewall incoming traffic from doubleclick.net; these guys have got a ton of traffic coming from that one domain, and none of it is useful to us. Furthermore, I know a lot of sysadmins who ALREADY block doubleclick.

Why would anyone answer?

[Lucius Lucanius]

If anyone did have a solution to the problem of how to really make money on the net, why would this post it publicly? (Oh wait, they could share their real valuable money making idea w/ the entire world, on slashdot.)

In other words, this entire thread is a red herring (not the magazine, though that is a red herring too, literally speaking, ironically enough). I wonder how many journalists scrum through this stuff for "insights".

e-gold for web busking

[TheDullBlade]

I think e-gold is the best currently available system.

E-Gold:
-is up and running (unlike almost everything else)
-is internationally available (unlike PayPal), and supports conversion to and from several currencies
-needs no special software to either send or receive
-charges small transaction fees (1%, to a maximum of 50 cents)
-can be used for micropayments
-supports a form system, so you can put a page on your site where people can both pay and leave a comment
-is easy to fund (for example, this place, lets you fund your e-gold account with your credit card; slower methods are cheaper)
-is free to sign up for

However, it works in precious metals (gold, silver, platinum, palladium), not cash. Personally, I prefer this (though I trust silver to retain its value more than the others). If you don't trust precious metals, you can always just buy it as you need it, and OutExchange (have them send you a cheque for the current market value) whenever you have more than you intend to immediately spend.

I'm not sure I trust it for pay-for-view pages, but it certainly seems adequately secure for donations (as long as you pick a good password, and use a web browser with good 128-bit SSL). It also seems to be quite private, though it doesn't support truly anonymous payments.

Go sign up for free.

Feel free to tip me for this valuable info ;-)
I'm account # 134343

Micro-payments avoid high transaction costs

[billstewart]

The purpose of micropayment technology is to reduce transaction costs enough that you can do things like charge a penny for reading a page. Credit cards have been the primary payment mechanism because they're fairly universally accepted, and many of the micropayment systems use them as a bridge in and out of the money system, but use variations on crypto digital cash, green stamps, small-denomination accounts that only pay when you aggregate enough tokens, etc. to avoid paying transaction costs except when you've got enough money to make it worthwhile.

And the problem is?

[Chris Johnson]

Why is it the site's job to make money? That seems flatly ludicrous.

Look, let me sound off from a probably-not-unusual position- I am a dotcom. Literally- I have 'airwindows.com', have had it since May '98, and that's where I keep my stuff. I have linux XPMs there, and some desktop pictures, and actually stories and novels I wrote (well, one finished novel and two unfinished). I have the software I use to remind myself what's going on each day, and the software I use to generate the site from a bunch of flat-text files, and I have the GPLed source for the programs.

I pay $45 a month to my ISP for this plus my dialup account. Some of that is extra megs of space at about $1 a meg- you can see why I turn to mp3.com for my music ;) but the site is not ABOUT paying ME- _I_ pay for it, because I want it to be there.

Where is the need for ads, for micropayments to force any readers of my books to cough up a halfpenny for each chapter? What the hell? I don't get this. If you have a barbeque for your family do you charge each kid a quarter for the extra cooking you do for them? If you go down to the town swimming pool and take pleasure in doing fancy dives or showing people how to do the backstroke, do you then charge them a nickel? There is something crazy wedged into the collective unconscious about this sort of thing, and this talk of micropayments really, really highlights it. _WHY_ is it a given to some people that if I write little poems and put them on a web page, I must therefore be in favor of billing people a penny to see each one- and flaky or 'amateur' if I choose not to? This is nuts, just nuts.

(p.s. first 200 karma! woohoo! yay! and there was much rejoicing! Quick, somebody moderate me down and make me go "Wauuugghh!" as I get dragged horribly _back_ _under_ the double century mark! let's have a war between '+1 Funny' and '-1 Fscking Karma Whore!' moderations! *hehehee* do yer worst, I just laugh at all that anyway :) I promise if I get a '-1' to make a followup post saying 'waugh!', hit me :) )

Re:And the problem is?

[Chris Johnson]

Amazon already is without revenue *g* woops, I mean 'profit'.

Sorry, I don't buy it. Your example, Amazon, uses brick and mortar. The web side is the front end, it's the back end that brings in the money because it's the back end that gives people products.

What you're not seeing is how quickly technology can develop to take care of piddling details like handling Amazon-like loads. A few years ago most people were on 14.4 modems, now most people are on 56K- or would that be cable? Information _can_ be free and it's rather startlingly absurd to claim the opposite. Go tell the FSF *g* now there's an outfit that's made a difference with only a very old-school web site. Consider how much it cost to send 20 gigs of data across the Arpanet with how much it costs now to send the data five times as far and God knows how much faster. You _cannot_ behave like information is coal or ore- it is much more slippery than that, under some conditions it can proliferate madly and span the globe.

I admit I am not a dotcom *g* I think the classic dotcom phenomenon was silly greedhead ridiculousness and I am happy they are all going broke. You're trying to suggest that only by throwing the financial resources of a Big Studly Company at a problem can you get any meaningful result (beyond just some guy and his little files, or whatever). You might want to look at not me- but Gnutella- and reconsider. The connectivity of the net is cheap- the _electrical_ power sucked up by all the little computers is staggering, but the information exchange? That's tiny, slippery, hard to even quantify unless you're filling the pipe, and there are so many pipes... and every day we roar onward devising new consumerware with more horsepower and bigger tires and selling it to their egos. You are probably sitting at a computer that totally stomps what most of the _big_ sites ran when the Internet sprang from Al Gore's forehead ;) now, what will it be like some years down the road when Joe Average's home computer rivals what Amazon runs now- and can handle a comparable network load? Amazon is already worldwide- there is no more unless they start selling to Mars. All that's left is for that technical capacity to take the orders of the whole internet... to come to the home. It might be a great time to be a cottage industry- with the technical capacity, the CPU, the network, the programs to handle that sort of full dotcommage trickling down to where regular people have them to play QuakeIIII^HDoom. *g* ...or do you think that the bytes needed to send an order from one computer to another will also follow Moore's Law?

Solving Courtney Love's Problems, too...

[FFFish]

If you read Love's rant (a five-pager, given during a speech to the music industry: *very* well-spoken and filled with startling facts), you know that most artists get screwed over to the point of being dirt-poor.

I think one of the solutions is for music artists to start releasing their works as lower-quality (FM radio quality) freebies, and to sell their own CDs and merchandise on-line, along with high-quality MP3 releases.

I'd love to be able to sample a ton of music for free, even at FM quality. And I'd be more than willing to pay even a buck a song, if I got it in CD-quality format, ready-to-burn. And I'd *LOVE* to be able to put together custom CDs of an artist's work and have them mail it to me.

And for the FM-quality stuff, I'd even be willing to toss money at them, as long as it was optional donations.

The music artists would benefit *greatly*. They currently get something like twenty cents on every CD sale. Selling me one song is worth five times that!

How do they get known, though? By offering their music for free, and by setting up thematic radio stations. Play the popular artists, but sneak in the newbies.

It's all completely possible to do *right now* -- all it takes is a good, coordinated effort that isn't aimed at ripping the artists off. They've been stung enough to be *really* cautious of pie-in-the-sky BS artists.

An open-community project would probably get a bunch of them interested, for starters...

--

PayPal making money? I doubt it.

[TheDullBlade]

They have to pay credit card fees to make those charges, and they give away about $45,000/day to new users (about 9,000 new users per day, getting $5 each for joining).

Don't get me wrong, I think the idea can work. I just don't think they're making money yet. I also wonder if they will ever be truly international, being based on credit cards and such. Unlike e-gold, they have to be able to chase down cases of credit-card fraud and suchlike.

So whats the problem?

[Restil]

You have ecommerce sites. They sell (mostly) meatspace products which turn a profit. They make money, costs are covered. No problem.

You have the average personal homepage which doesn't make any money now and probably never will because it wasn't designed to. Nothing changes, no problem.

You have the megaconglomerate media services which rely on banner ads for revenue. If they lose too much money on the internet, maybe they'll be forced to make an economic decision to quit using the internet. I'm really crying over this. No problem.

It really doesn't matter if you CAN make money on the internet. The internet was not founded to serve commercial purposes. If a business can discover an honest way to use the internet to its economic advantage, great. If the scam artists and porn kings are making a killing, hey... there were always suckers in the world, its unlikely they'll die off very soon.

The biggest issue here is the seeming inability to sell information. I don't necessarily see this as a problem. 99% of the information out there has been provided on a completely voluntary basis. I provide a tidbit to the world, as do hundreds of millions of other people. Those tidbits add up to a great wealth of information.

If the cost to run a site gets too large, there will be a source of revenue available. It might not be as obvious as banner ads, but if you have a large number of eyeballs, you WILL be offered compensation. I run a relatively low volume website that gets at most about 20,000 hits a year and I have been offered several jobs for over $50,000/year. I consider that to be a revenue source. In fact, there may be other economic options that have not yet presented themselves in massive numbers. The internet of today barely resembles what it was a mere 5 years ago. The next 5 years could have even more dramatic implications.

Also, remember the basic rules of supply and demand. Wherever there is demand for something, there WILL be a product offered, and there will be competition. And it may very well not resemble anything we've experienced over the last 5, 10, 20, or 100 years. Look around you today, you can get computers for free, internet service for free, DSL for free, long distance phone service for free.

You can spend $100 on a computer, pop off the case and make a few minor changes and you've just quadrupled the value of the machine. Then the company that should be losing money like crazy over this, thinks it over and decides that this isn't a problem and figures it might make them even more money in the future. Imagine that.

These things are happening because the world is changing. For many years the world was, for all practical purposes, held back. Held back by governmental regulations, excessive taxes, etc. However, the internet found a new life and has literally redesigned the entire world economy in such a short period of time that the governements of the world have been having a really hard time even attempting to keep up with it.

Record companies never saw mp3's coming. Now they're screwed and the industry as a whole has been changed forever. They might attempt to recover to some extent, but by not looking ahead, and not paying attention to which way the wind was blowing, they lost their opportunity. And they're not the only ones. MANY businesses are having the same problem. You HAVE to adapt. And the internet is probably only the first step.

This really has nothing to do with making money off of your website. The internet's affect on the future is so much more complex than a simple profit for information served.

-Restil

my suggestion... (from kuro5hin.org)

[eries]

coincidentally, I just wrote a piece on Kuro5hin.org about this very topic. Check it out if you're interested.