Pay Per View Internet

It’s going to be interesting watching people try to charge for something that was always free. And free because that’s the way the chose to do business.

The Wall Street Journal from day one on the web was a subscription fee. And they were one of the first to make a profit at it.

But to put the cat bag in the bag so to speak, will not work. Because someone, advertisiers or Microsoft or others will subsidize the site to keep it “free”.

As to your car analogy. There has been talk of the car model could be like cell phones. Oil companies either buy a car company(s). Give away a car with the contract. Holding the customer to buy only gas and service from Mobil as an example.

But websites dug thier own grave so to speak. Once free and then going to charge, the site needs to offer something so compelling that the user will cough up money. Won’t happen. There will always be a free alternative that offers 90% or the pay site, but free.

Hardboiledwonderland, although this article isn’t aimed directly at Apple users and Apple Computers as such, it does include those of us with Macintosh computers (as much as it includes anyone else with a computer accessing the internet), thus, seems fair to a fit a place on this site.

I think for the time being there is always going to be competition between companies such as Microsoft, Yahoo, Google etc. for the price to remain either cheap or free. I mean, look at the e-mail services. Gone are the days where we have 2MB of space to play with. Now, for free, companies are offering us between 250MB to 1GB+ of space to play with, all to attract new users. The internet will probably end up splitting into two categories

You’ve got Product A with a few features that will allow most users enough freedom to get by.

Then you’ve got Product A again, but this time with added features that are well worth paying the money for - something users will want to pay money for as well, provided they have the intention of using them, of course.

When it comes to products and services, nothing is free. Someone pays, somewhere. Don’t get all lefty on me and proclaim that because the government pays for it or a business pays for it that it’s free to you and me. That’s simply ignorant, as the business deluges us with ads to recoup costs, or the government increases taxes to recoup costs.

Don’t believe me? What if everyone started using ad-blocker software tomorrow? Just how long would Google stay in business? As for Applematters, don’t you think that they pay for storage and bandwidth every month? What about the domain name registration fees? It ain’t free, child. 

I pay for my email, too. Granted it’s part of my overall DSL service, but I still pay for it.

Hear, hear, bart.

...the time will come when it will be replaced with something more sustainable. -James

Sustainable as in what way? Metric?

Something you forgot to mention, though, is an internet company’s critical mass or equilibrium. Look at Google, for example, they can [in the foreseeable future] sustain their massive growth rate and keeps on adding thousands of massively-parallel server systems connected directly to the backbone of the net. Googleplex being built at the Oregon/Washington border (Oregon side of Columbia River) is a massive proof of that critical mass requirement.

Now, pick any web wannabe past or present. Do they have this critical mass? If yes, they will keep on giving us “free” lunches with sprinkles of upper-tiered services - a la Google Earth or even unlimited storage & email, etc [Aaron Wright]. If not, forget it they will eventually give in to giving the “free” stuff, wilt and die, or both.

As to the question you raised. “How did we come to have this expectation?” Simple - radio and broadcast T.V.

Since the early days of AM radio, advertising revenue has been the fuel for the “free” stuff and has sustained radio very well to the present. TV is another matter - and you have to refer to Aaron’s input here. Broadcast TV is “free” but not CATV nor satellite broadcast. Why? First of, you have to pay for the access to these “free” content. Your $45 monthly access is not “paying” for the content per se - the embedded ads do that. 

So, advertisement for the foreseeable future will be the only medium to sustain the content. Getting that content to “eyeballs” is another matter.

And yes, web sites cost $$$ so I would suggest not to complain about the embedded ads or skip altogether. Read one now and then for they don’t hurt anyone. It is all for the sake of having “free” content for everyone.

Good points all the way S^2. Same sentiments from Robo’s side.

So, people listen, it is “free” only if we participate fully in that time-honored system called advertising whatever the medium - print, broadcast radio or TV, CATV, DBS, IPTV, and last but not least, the internet.

Furthermore, I am also aware of a small fact that most web denizens are willfully ignorant of. Websites cost money.

Firstly, I would seriously question your assertions about the intelligence of most of humanity. Even the slightest appreciation that websites are built, come into existence and change over time shows there must be expenditure involved. Indeed, our experience of the internet is that we have to pay for access to it. What are we paying for? In technical terms? Sure, that question beats most “web denizens” but they still know that there is some system for The Getting Of Stuff From The Internet which must be required in some sense by the companies that provide the service.

There are servers to buy (and maintain), sites to develop, bandwidth to purchase, and many other expenses that must be paid in order for your favorite “free” website to exists. And guess what, last time I checked, none of those bills can be paid in “eyeballs”.

I’m sorry to say it, but this seems far better an example of wilful ignorance than the original. You well know that eyeballs are exactly what pays for websites, in terms of advertising, and with great success. Then you say:
This was a fact that many companies forgot when the first internet bubble burst. (can you believe that companies actually have to make money to stay in business?)
You very well know that the reason for the internet bubble’s collapse was not that they were trying to pay for things “in eyeballs”. It was instead that the myriad business ventures were based on poor strategy, and executives were shrewdly cashing in on the stock market’s optimism and ignorance. Being generous, we could say that the problem was they didn’t have enough eyeballs to foot the bandwidth bills. However this would be untrue, because during the internet bubble’s collapse, it was as inevitable for a majority of online sales-driven businesses to go bust as it was for a majority of advertising-driven businesses to do so. To make out that the problem was reliance on eyeballs (aka advertising) is, simply, wrong. The real problem was widespread foolishness and false hope.

Because the simple fact is that as much money as advertising brings in, that figure is dwarfed by the amount of money generated by actually selling something. Don’t believe me? Check out the difference between Google’s net profit and Microsoft’s.

Yes, compare advertising companies with, like, the most profitable company ever that operates its sales in a totally different arena, yes, that shows there’s no money in advertising, yes. Yes indeed.

Perhaps we could make a less deceitful comparison. The hypothesis is: “as much money as advertising brings in, that figure is dwarfed by the amount of money generated by actually selling something”.

So if we compare a company that actually sell “things” exclusively over the internet with one whose revenue is eyeball based, we expect the company that sells “things” to be more successful, on average.

Well, you chose google, unfortunately, because that’s like, the most successful advertising-driven net company of all. But hell, what’s the most successful sales-driven net company we can think of? Amazon?

Did you know that Amazon has a quarterly income of around $50m, being generous? This is on sales revenues of about $1.2 billion. Did you know that Google’s net income in Q1 06 was almost $600m on revenues of $2.25 billion? Did you know that this represents a 79% increase in profit compared with Q1 05? Did you know that for much of its history, Amazon has made huge losses? I’m fairly confident it’s financial history actually sums in the red so far, on balance, though it has turned profitable in the last 5 years.

There is money in eyeballs. Really, really big money. And the intelligent readership of Apple Matters is not going to be persuaded this is not the case, nor that eyeball-generated money is somehow systemically inferior to sales-generated money.

So we come to the interesting bit of this article:
Right now the vast majority of the web is paid by someone else. It is paid by advertisers and large corporations and governments, but it is not paid for by the people who actually use it. And as a result we have two inescapable effects of such a system. One, we are not in control of what is offered for us to use. And two, those responsible for the sites we visit will try every way (legal or not) possible to recoup their losses via their users.

As I see it, this statement though interesting is flawed, because its premise is wrong. It is not paid for by the people who actually use it.

James, it is paid for by the people who use it. That is, not directly, thank heck (otherwise I’d be needing a new addiction) but, and this matters, the revenue stream is dependent upon the people who use it, which amounts to the same thing.

Therefore, the ideas that:
1. we are not in control of what is offered for us to use;
2. those responsible for the sites we visit will try every way (legal or not) possible to recoup their losses via their users

have no different truth-value in eyeball business as in paid-directly businesses. The simple, honest fact of the matter is that there is no important difference between advertising and direct-payment revenue streams. Each has to attract customers, and each has to convince us to stick with their service in order to get their money. Each will try to recoup their losses - or rather, maximise their profitability - to the maximum extent permitted by the (im)morality of the executives.

Congratulations everyone, we’ve discovered capitalism! (Though considering the nature of the thing discovered, commiserations are probably in order for the longer term.)