The web made the Internet a new media phenomena. However, the business model for web content is still to be determined. Web advertising is not yet a huge thing. It is not disappearing though, Internet ad spending in the US increased 78 percent in 2000 over the previous years total of $4.6 billion, according to new numbers from the Interactive Advertising Bureau (formerly known as the Internet Advertising Bureau).
The figure may sound impressive, but compare it to NABs estimations on TV advertising. The amount the NAB estimated TV station owners would make in advertising in 2000 was USD 25 billion. It's hard to find an exact figure, but this is probably on the conservative side. Other tv advertising studies speaks of USD 40 billion spent in 1999 to advertise on broadcast television.
In Sweden and in the US, web sites providing content now die the dotcom death. This is because of a number of reasons, such as reliance on venture capital, poorly managed companies, but also because of lack of payment for content. The latter is both in respect of users and advertisers.
AT&T researcher Andrew Odlyzko thinks that people are willing to pay for point-to-point communication but rarely for content. Odlyzko concludes this from historical obsverations. IBM has published a summary of Odlyzkos findings.
On a related note, Slashdot ran a story on Telstras new pricing policy. In short, Telstra is restricting data download to three gigabytes per month with additional downloading attracting a hefty 35-cent fee per megabyte ($AU). Usage after that 3 gigabyte allowance is limited to the internal network if the customer does not choose to pay the fees for excess traffic.
Content is king, but distribution is King Kong.
However, if Telstra is charging it's members for download, why shouldn't content providers charge the ISPs and access providers for download?
I want my favourite web site to survive. Someone has to pay for it. Micropayments seems to be far away. Thus, I won't be able to pay on a pay-per-view or download basis. Subscriptions are very difficult to administrate, especially on a global basis. Advertising is going slow. So I suggest that the ISPs should pay for our beloved content.
However, this is not very likely. An access provider won't gain from paying for content. Download will only increase it's costs. So maybe the access provider will pay for content, but then the customer will immediately be charged with the download. I have to agree with Odlyzko, most customers are not willing to pay for content like that.
My conclusion is that resistance is futile. Your favourite web site will eventually die or at least be substantially downsized. And I will have to settle with web sites funded by bundling and other revenue streams (such as magazine subscriptions and commercial messages) and web sites run by enthusiasts.
I would be very interested in other views from K5 members. Fortunately, you can think of models that will keep your favourite web site alive.