Slashdot Mirror
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?"
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.
Just be sure to wear the gold uniform when you beam down -- you know what happens when you wear the red one.
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.
perl -e 'fork||print for split//,"hahahaha"'
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.
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
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
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:
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....
www.eFax.com are spammers
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...
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.
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.
Small potatoes make the steak look bigger.
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.
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.
I'm trying to teach myself to set people on fire with my mind... Is it hot in here?
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.
--
Editor Emeritus and Senior Writer, TeleRead.org
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...
Scuttlemonkey is a troll
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 :) )