Internet Ad Revenues Don’t Add Up

Tim O’Reilly commented the other day on an interesting blog post, the gist of which is that it’s hard-to-impossible to make real money from an advertising-funded website.

As I’ve surely ranted many times in the past, the logical conclusion is that media on the web won’t be exclusively (or even primarily, in my opinion) funded by advertising. Most of the traditional media that has a good model for direct payments (films, music, print) is at least partially (and in many cases mostly or entirely) financed by that means. The only real exception is television, for the simple reason that advertising was the only technically feasible model until relatively recently.

The counterargument is the oft-heard assertion that “people won’t pay for content on the web.” Of course, this claim is true in exactly the way that, once upon a time, most people wouldn’t set foot on an airplane or eat sushi or buy a Czech-made car. But once the quality of the experience or product — and the peer pressure to try it out — rose to a certain level, suddenly everyone piled on, and now it seems like you can’t leave the house without seeing people noshing on maguro nigiri in their Skoda Superb while on the way to the airport. Buying content online is still pretty inconvenient and people aren’t used to doing it. But the medium is very young, and the status quo says very little about the way things will end up once the dust has settled.

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2 Comments »

1. My own site is slowly building to make money just by advertising, but what you need for that I have found is a large amount of *casual* readers.

   The people who come to your site for the content because they know what to expect and so they ignore the advertising. It’s the people who stumble upon your site, have a look around, then follow and advertising link out of it that generate the income.

   I do however belive that people will be willing to pay for content - daringfireball.net for example charges for an all-inclusive rss feed and seems to be doing alright too (although the site also features pre-paid advertising.

   I belive that for a website to be profitable without charging for content they need to either have advertising deals that do not rely on click-throughs, or they need to use the website to drive business in another area, such as the webcomic questionablecontent.net, which uses the daily comic to drive the sale of t-shirts.

   BTW - for good paid-for content on the net, check out redvsblue.com

   Comment by Alan Taylor — 3/15/2007 @ 1:52 pm

2. Had to chuckle at the Skoda reference. We had 4 Skodas in the UK - from a 1986 120LS (rear engined, Eastern bloc engineering) to a 2001 Octavia RS (1.8L 180bhp turbo, VW in cheaper clothes). I’d have bought one in the US, but they don’t sell them here

   Tell Cedric I said hi!

   Comment by Pat Patterson — 4/2/2007 @ 8:00 pm

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