The NEW new economy
Monday, August 27, 2001 by Draginol | Discussion: WinCustomize Talk
As I surf to my various favorite websites, I've noticed two things:
Either:
A) They (the websites) are trying various new ways to make money (paypal, selling mugs, hats, etc.).
or
They're run by old "new economy" companies that are slowly going under (or fast in VA Linux's case).
Banner ads now bring in about $.15 per CPM for most sites. And it costs about a megabit of bandwidth to get a million page views. A megabit costs around $500 to $1000. So you can make $150 in banner revenue for ever $500 to $1000 you spend on bandwidth. So clearly that's not a good scenario.
So what's going to happen?
Some say that the net will go back to the hobbiests. But that really isn't possible. The problem is BANDWIDTH and then the admin costs. Joe hobbiest's website won't be able to handle 1 million page views because of the bandwidth costs.
Others say that bandwidth costs will go down. But the problem with that is that many of these companies that created all this piping did so thinking that new economy was going to keep going. Even at $500 to $1000 per megabit, they're losing massive amount. Anyone see the report on how much money Northern Telecom lost last quarter? Or that AT&T is considering letting @Home file for bankruptcy? It's a catch-22 for them.
So what's going to happen? Any predictions?
Either:
A) They (the websites) are trying various new ways to make money (paypal, selling mugs, hats, etc.).
or
They're run by old "new economy" companies that are slowly going under (or fast in VA Linux's case).Banner ads now bring in about $.15 per CPM for most sites. And it costs about a megabit of bandwidth to get a million page views. A megabit costs around $500 to $1000. So you can make $150 in banner revenue for ever $500 to $1000 you spend on bandwidth. So clearly that's not a good scenario.
So what's going to happen?
Some say that the net will go back to the hobbiests. But that really isn't possible. The problem is BANDWIDTH and then the admin costs. Joe hobbiest's website won't be able to handle 1 million page views because of the bandwidth costs.
Others say that bandwidth costs will go down. But the problem with that is that many of these companies that created all this piping did so thinking that new economy was going to keep going. Even at $500 to $1000 per megabit, they're losing massive amount. Anyone see the report on how much money Northern Telecom lost last quarter? Or that AT&T is considering letting @Home file for bankruptcy? It's a catch-22 for them.
So what's going to happen? Any predictions?
 |
|
Page 2 of 2 | |
|
|---|
misterME
Reply #22 Wednesday, August 29, 2001 8:01 PM
Reply #22 Wednesday, August 29, 2001 8:01 PM
Well, the obvious solution to the failure of the current internet advertising model would seem to be sponsorship. WinCustomize makes it, through sponsorship from Stardock, and through low-key (and nice) merchandising, or so we assume.
So my question is this: *IS* WinCustomize managing to stay afloat? We see bandwisth usage reports, but not financial statements (which is fine; I don't really *want* to see financial statements). Between the sponsorship from Stardock and the CD/T-shirt/hat merchandising, is WinCustomize keeping its head above water?
And what about Stardock? Has their sponsorship of WC been profitable? Is it paying off?
If so, then this is what we'll probably see as the internet moves forward. Special interest sites with sponsorship from some company or group of companies that have a special interest in the special interest.
So my question is this: *IS* WinCustomize managing to stay afloat? We see bandwisth usage reports, but not financial statements (which is fine; I don't really *want* to see financial statements). Between the sponsorship from Stardock and the CD/T-shirt/hat merchandising, is WinCustomize keeping its head above water?
And what about Stardock? Has their sponsorship of WC been profitable? Is it paying off?
If so, then this is what we'll probably see as the internet moves forward. Special interest sites with sponsorship from some company or group of companies that have a special interest in the special interest.
Frogboy
Reply #23 Wednesday, August 29, 2001 10:04 PM
Reply #23 Wednesday, August 29, 2001 10:04 PM
I don't think WinCustomize can be used as a model for any new economy because WinCustomize is corporate charity. There's no business justification for a software company to have a skin site such as this. But smaller companies can do things because "they want to help" just like individuals do all the time. It's only when companies get really big that they become amoral.
Just to a few numbers. Let's say this site costs 10/month. Stardock currently puts forth 5 of it. That means the site is responsible for finding the other 5. Currently Stardock's also paying the other 5 since merchandize revenue hasn't been doing that great (we sold ONE shirt today, no hats, no CDs, etc.). Clearly merchandize isn't the answer alone.
I'm going to start a second message that talks about the seperate issue.
Just to a few numbers. Let's say this site costs 10/month. Stardock currently puts forth 5 of it. That means the site is responsible for finding the other 5. Currently Stardock's also paying the other 5 since merchandize revenue hasn't been doing that great (we sold ONE shirt today, no hats, no CDs, etc.). Clearly merchandize isn't the answer alone.
I'm going to start a second message that talks about the seperate issue.
Frogboy
Reply #24 Wednesday, August 29, 2001 10:14 PM
Reply #24 Wednesday, August 29, 2001 10:14 PM
Webmasters who want to generate revenue with their sites will have to start looking at their websites just as software developers look at software. That is, they will have to find something to put in them that is compelling enough to make users pay to have it. People don't generally donate or contribute their hard earned money freely. They have to be compelled to do it.
Any shareware developer already knows that. Nag screens don't work. You have to take away something from the user that compels them to purchase it.
So if you want your website to make money, you'll have to find a mechanism to compel your users to pay to use it. How that is will depend on the website.
When I was on DeviantArt, I suggested that they require users to sign up for a membership if they wanted to access non new additions to the library. Would that drive some people away? Sure. So what? Unless your site is generating revenue based on traffic, having lots of visitors is irrelevant.
But each site will have to find their own mechanism. But it'll have to be something pretty compelling. Just like in software, if there are alternatives freely available, users will simply go to that instead. Hence, Stardock makes a lot of money selling WindowBlinds but would probably not do so well selling a really nice text editor. Why? There are no alternatives to WindowBlinds but there are plenty of nice text editors.
Similarly, if you run a nice tech news website, you're up the creek. What are you going to charge for? There are a zillion tech news sites. Same for game news.
Advertising on the net is still very primitive. Somebody is going to take it over and it'll get a lot smarter and more importantly, more subtle. But that's only part of the solution.
Any shareware developer already knows that. Nag screens don't work. You have to take away something from the user that compels them to purchase it.
So if you want your website to make money, you'll have to find a mechanism to compel your users to pay to use it. How that is will depend on the website.
When I was on DeviantArt, I suggested that they require users to sign up for a membership if they wanted to access non new additions to the library. Would that drive some people away? Sure. So what? Unless your site is generating revenue based on traffic, having lots of visitors is irrelevant.
But each site will have to find their own mechanism. But it'll have to be something pretty compelling. Just like in software, if there are alternatives freely available, users will simply go to that instead. Hence, Stardock makes a lot of money selling WindowBlinds but would probably not do so well selling a really nice text editor. Why? There are no alternatives to WindowBlinds but there are plenty of nice text editors.
Similarly, if you run a nice tech news website, you're up the creek. What are you going to charge for? There are a zillion tech news sites. Same for game news.
Advertising on the net is still very primitive. Somebody is going to take it over and it'll get a lot smarter and more importantly, more subtle. But that's only part of the solution.
Larry Kuperman
Reply #25 Wednesday, August 29, 2001 10:29 PM
Reply #25 Wednesday, August 29, 2001 10:29 PM
DavidK wrote "The internet needs a revenue model that will provide the information and content sites with a way to afford their bandwidth and operating costs." Information sites face different challenges than sites that provide a quantifiable good or service. Wincustomize provides both a quantifiable good (skins and themes) as well as information. I think people will ultimately be willing to help support this site- CD's, T-Shirts, tithes, blood donations, however. Sites that offer information without other content have to be careful that they either provide information available no where else, have some special format or editorial spin, some value ad. If they don't, they will fade away.
Frogboy
Reply #26 Thursday, August 30, 2001 10:33 PM
Reply #26 Thursday, August 30, 2001 10:33 PM
BTW, AJ's article is up on the left side under articles. 
Please login to comment and/or vote for this skin.
Welcome Guest! Please take the time to register with us.
There are many great features available to you once you register, including:
- Richer content, access to many features that are disabled for guests like commenting on the forums and downloading skins.
- Access to a great community, with a massive database of many, many areas of interest.
- Access to contests & subscription offers like exclusive emails.
- It's simple, and FREE!
|
|
Page 2 of 2 | |
|
|---|
Reply #21 Tuesday, August 28, 2001 11:28 PM
The internet needs a revenue model that will provide the information and content sites with a way to afford their bandwidth and operating costs. I can't see this evolving in any way other than the users being asked to pay. The way this gets implemented will determine how successful it is. There has to be a percieved value greater than the expense of paricipating.
I know about one plan that makes a great deal of sense but is not quite ready to be discussed. I don't know all the details but I know it's going to be introduced very soon.
I hope the internet manages to continue providing information and supporting communities and special interests. The benefits of a free and unfettered internet for the growth of knowledge and social conscience throughout the world should be the real focus. The more that advertising agencies get to determine the future the bleaker the future looks...