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June 11, 1997. Refuse to accept the advertising revenue model

     The advertising revenue model. In the Internet industry today, it seems that everyone willingly or unwillingly submits to the use of the advertising revenue model in an attempt to make money. Content providers and websites relegate themselves to mere delivery vehicles for advertising. The content is viewed not for its intrinsic value but rather as a means to draw traffic or "eyeballs" to the ads placed on the site. Furthermore, everyone is trying to get better demographic and personal information out of their visitors so they can serve their advertisers better -- and charge more.

     But is that all that the Internet is good for? Will it just be a snazzier way to market "stuff" to people? Or is the Internet a truly revolutionary new medium, unlike any other, which enables individuals and organizations to do things that were simply not possible before?

     To get at the answer, let us briefly examine the short but explosive evolution of the Internet and look at some of its current trends and characteristics. The Internet started in big government and universities as a basic communication and file transfer network. With the birth of the browser, the Internet was given a new face of rich graphics and point-and-click simplicity. This simple invention allowed the Internet to spill out into the public domain where companies and individuals could point-and-click their way around to visit websites and be entertained. Within just the last 1-2 years, public awareness of the Internet exploded once companies started to use the Internet as a mass marketing tool. Now website addresses are as prevalent as (800) numbers.

     True, the Internet has evolved beyond just a collection of content put up by individuals or groups around the world. It now actually serves to put the products and services of companies in front of the eyes of millions of people around the world. In this way, the Internet is the "broadest" broadcast medium, even more so that TV, radio, or newspaper. But the Internet is far more than a broadcast medium. Already, the technologies associated with the Internet make it a medium which enables one-to-many, many-to-one, many-to-many, and one-to-one exchanges. Therefore it is unique and far more powerful than any other medium known to man. It should not be relegated into the lowly role of an advertising vehicle even if the advertising revenue model seems to be the most accepted method of making money now. It is the responsibility of everyone involved with the Internet, either as a developer, purveyor, or user, to continue to push it forward and increase its usefulness and impact.

magazine publishing industry

     Two analogies to other industries can be drawn. The first is the magazine publishing industry. In as far as the Internet is a delivery vehicle for advertisements, it is similar to magazines whose fresh content is used to draw eyeballs to the advertisements, month after month. The content is commoditized and the subscription revenues do not even cover the printing, circulation, and distribution costs of the magazine. Rather, the publishers' profits come exclusively from the advertising revenue. In this way, they are subject to the advertising revenue model and therefore particularly vulnerable to the whims and demands of the advertisers. Literally, their lives are dependent on it. Even more so on the Internet, where competitive websites abound and the costs of switching from one site to another is zero for advertisers; websites who base their revenue model solely on advertisements are thus in an extremely precarious position. Furthermore, it would seem that websites, whose content does not command payment from its users, are perhaps not providing something that is useful enough or relevant enough for which users are willing to pay.

cable television industry

     The second analogy is appropriate here. The Internet could take on a revenue model similar to that of the television and cable industries. There are network channels which are completely advertising supported and therefore free to viewers. There are also cable channels where users have the choice to pay for basic service, premium subscription channels, or pay-per-view. By analogy this suggests that on the Internet there could also be content and services which are deemed valuable enough to command payment from users, either by subscription or pay-per-view. As the Internet continues to evolve, those parties who identify and develop these useful and valuable services will survive and thrive. Fortunately, this industry is one which has leveled the playing field to the point where individuals or small companies with bright ideas and passion can also participate and shape the future playing field.

     So where is the Internet going? Where is this medium heading? Everyone is searching for the next killer app. So let us examine two trends that might point to products and services that could make the Internet uniquely useful and relevant.

content -> context -> community

     The first trend is content to context to community. In the beginning, when browsers made the Internet simple and therefore accessible to the public, there was an explosion of content. Everyone and every group put up their web pages. With the chaotic mass of content online, the need for search engines was apparent. Search engines helped to put the information in a context which was useful to the user. The user could find what he wanted. But, as has already happened, a search engine can return hundreds or thousands of hits for any given query. This is not particularly useful any more, especially since there is no way to check the accuracy or validity of the information. However, a user may have more confidence in the information if it came from someone in his community, who shares his interests and is incentivized to embetter the community by providing correct and accurate information. This speaks to focusing on the last item in the trend, community. The Internet as a medium facilitates communities of interest that are abstracted from space and time. As in the MCI commercial, "there is no race, there are no genders, there are no infirmities, there is no age... there are only minds." For the first time people can associate around common interests at any time, from any place, and with anyone. Furthermore, the Internet facilitates one-to-many, many-to-one, many-to-many, and one-to-one exchanges of pure information. These are unique and extremely powerful attributes of the medium of the Internet, unlike any other.

entertainment -> marketing -> interaction

     The second trend is entertainment to marketing to interaction. As the Internet spilled into the public domain, there was a lot of content available for people to browse. And most users of the Internet derived entertainment value from browsing, or "surfing." As soon as corporations caught on, they started to use the Internet as a mass medium for marketing and advertising. Almost every company has some sort of web presence now to showcase the company and their products and services to a global audience. The Internet is currently in the marketing phase of this trend. However, companies are beginning to use it not only to sell to their customers but also to provide better service or to interact with them. For example, FedEx's website allows customers to track their own packages. This service is available 24 hours a day - 7 days a week, empowers the customer, and reduces the customer service labor of FedEx. Other companies can get better information from their consumers, get immediate feedback on products and services, or even have their potential customers contribute ideas to the design of a new product (Volkswagen).

     Beyond simple marketing-related interaction though, the Internet is a medium that enables and facilitates true collaboration on a global scale. For example, Boeing already uses the Internet and its technologies to design all of its new airplanes. Teams from around the world share data, images, and other vital information and collaborate in real time. Furthermore, they can achieve round-the-clock development by passing each day's completed work to the team in the following time zones. GM is also using the Internet to collaborate on their electric car project with scientists and developers around the world. In this way, they are gaining access to people, knowledge, and know-how while shortening development times and reducing costs so dramatically that it has literally changed the economics of their business.

     Thus, as a medium that facilitates the exchange of information, communication, and real time collaboration, the Internet is uniquely powerful. It must not be relegated to just an advertisement delivery vehicle. People must refuse to submit to the advertising revenue model, but instead identify and provide the products and services that are uniquely enabled and facilitated by this medium. In this way alone will the Internet achieve its real promise as "the new mass medium," more important, more powerful, and more far-reaching than any medium known to man.

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