Who Pays for the Web?

Who Pays for the Web? Stef nodded in agreement, but Claude and Anita seemed surprised by that. "I thought," Claude said, "that the Web was started by the government. You know, for military research."  "You're confusing the Web and the Internet, Claude," I said. "The Internet came first. As you said, its roots were in the military. Originally, the Internet linked educational, research, military, and governmental organizations together for noncommercial purposes. It was considered 'dirty' to use the Internet for purely commercial purposes." "Not any more!" said Stef. "No," I agreed, "so things have changed. But the Web we know today began in the early 90s as a simple collaboration tool for physicists and other scientists. The Internet already existed, but it was mostly used for file transfers and email, not interactive browsing." Stef was surprised. "People traded music even back then?" "Well, not really," I said, "that came later. But before the Web, there wasand still isa lot of free software you could download along with all kinds of useful information. The Web made it much easier to do these things, though, and as the Internet grew, so did the Web. Today there are billions of pages on the Web, most of which are available to anyone with a Web browser and an Internet connection." Web Origins Learn more about Tim Berners-Lee and the origins of the Web at www.memwg.com/history-of-the-web. TINSTAAFL Influential economist Alvin Hansen (d. 1975), who helped introduce Keynesian economic theory into American policy-making, was one of the designers of the Social Security system. He is usually cited as the originator of the acronym TINSTAAFL, for "There is no such thing as a free lunch." The Origins of the World Wide Web Oddly enough, the Web did not originate in a computer science laboratory, but in a European nuclear research facility known at that time as CERN and now called the European Organization for Nuclear Research. A researcher there, Tim Berners-Lee, wrote a proposal called Hypertext and CERN that led directly to the creation of what we now refer to as the World Wide Web. "For free!" Stef said. "They certainly seem to be," I agreed. "But are they really? Alvin Hansen said it best: There's no such thing as a free lunch. Well, there's no such thing as a free Web, eithersomeone has to pay for it." And then I explained why advertising is so important for the Web. The Web Is a Communications Medium The Web is a communications medium, a means of mass communication comparable to television or radio and yet different because it's a two-way, interactive medium. Some people compare the Web to a giant library, but that's a weak analogy: A library centralizes and classifies information, while the Web is decentralized and anarchistic by its very nature. Even if the information being communicated is free, the medium itself isn't free. It costs money to build and run the Web, just as it costs money to build and run television or radio stations. We pay for these things in different ways. As individuals, we pay for Internet access from our homes. Companies and other organizations also pay to connect their offices to the Internet, but then they also invest money to develop and maintain Web sites and other Internet-based services. Internet service providers pay for much of the infrastructure that ties it all together. Easy Donations Large Web companies like eBay (through its PayPal Donations program, see www.memwg.com/paypal-donations) and Amazon.com (through its Amazon Honor System program, see www.memwg.com/amazon-honor-system) now make it easy for nonprofit Web sites to receive donations from page visitors. In other words, everyone pays something, directly or indirectly, to keep the Web running. In particular, the costs of running a Web site can vary dramatically based on how many people visit it, especially if they're downloading files from the site. To pay these costs, or even turn a profit, many Web sites turn to advertising. Advertising and the Web Conventional print and broadcast medianewspapers, radio, and television being the typical examplesfund themselves in different ways. Some sell subscriptions. Some sell advertising space. Some ask for donations. Many use a mixture of funding modelsyou probably don't find it unusual to buy a newspaper full of advertisements, or to pay cable fees to watch television programs peppered with commercials. These funding models also work for content-oriented Web sitesin other words, sites that aren't directly selling products or services. Subscription-based sites offer readers exclusive content that is limited to those who are willing to pay for the privilege of reading it. Many small, independent sites rely on monetary donations to get by. And, of course, advertisements are displayed on many sites. Again, funding models might be combined: It's not unusual for an ad-supported site to have a subscribers-only section, for example, where subscribers have access to additional content or services. No model is perfect. Subscription-based sites have to convince people to spend money for content and services whose value may not be apparent, especially when competing sites already offer the same things for free. Donation-supported sites depend entirely on the kindness and generosity of their visitors. And advertising-based sites give up valuable screen real estate for use as ad space. Ad News The Clickz site www.clickz.com/news/ provides a daily insider's report on the Internet advertising industry its trends, events, and personnel. Of the three models, however, advertising is the best bet for a content-oriented site to make money, because you don't need to sell and manage subscriptions (which can be complicated) or ask for (and perhaps never receive) donations. Deliver enough viewers to the advertisers (which isn't always easy) and you'll probably make some money. The proof? You'll find advertising on all kinds of commercial sites, not just the large ones (Figure 2.1). And it's not just media outlets. Advertising is everywhere on the Web. Even online retailers like Amazon.com display advertisements: Each book description at Amazon.com includes a section of sponsored links related to the book's subject and/or author. (A sponsored link is one that has been placed on the page by an advertiser through a special arrangementin the case of Amazon.com, the links are supplied by Google, the same company that offers AdSense.) Figure 2.1. The ClickZ Network, an Internet advertising report, is itself powered by extensive advertising in several locations bing techniques are sometimes used to combat banner blindnesssee www.memwg.com/banner-blindness for more details. Figure 2.1. The ClickZ Network   As you might imagine, though, selling advertising space and then displaying the advertisements can be a lot of work. That's why advertising services like AdSense were created to do most of the work. All you do is decide where to show the ads on your site, and for a cut of the revenue the service does the rest.