How companies make money online
|How do they make money online?|
With the .com revolution a new phenomenon came into existence: websites created for the sole purpose of generating revenue. Online trading sites like Amazon and eBay make money through commission from traders and sales, online stores make money from sales, betting sites make money from gamblers, and the list goes on. When it comes to social media websites, they have two choices: make money through advertising or charge subscription fees. With so many free social media sites around, it would be crazy to charge fees. So the only real option is an ad-based business model. In a nutshell, without advertising, these guys, and many other websites, simply cannot make money.
What the geeks say
Director of MIT's Centre for Civic Media, Ethan Zuckerman strongly argues that just about every online business eventually slides into an advertising-based business model. This inevitably leads to data collection and ultimately invades the private lives of unsuspecting individuals.
With over $30 billion dollars in personal wealth accumulated through an advertising-based business model, Mark Zuckerberg obviously has a very different viewpoint.
Can any web business make money with advertising?
No. First you need a huge amount of traffic to your site just to entice advertisers into signing up. Facebook was recently reported to have as many users as the population of China. Why would advertisers pay to be on another site there if they can't expect a reasonable ROI? Secondly, even if there is a massive cyber footfall, people do not like advertising. Many internet users go so far as to install ad blockers to avoid advertising altogether. It is so widely loathed that the days of pop-up ads are practically over.
Interestingly, Ethan Zuckerman is considered the inventor of the popup ad and wrote the code for the very first popup.
According to Zuckerman, subscriptions should be implemented with micro payments, although he concedes that free or ad-supported websites do make the internet more widely available. In an ideal world internet access would be free, content would be free, and there would be no annoying ads. But then who would pay for the other major difference between Mark Zuckerberg and Ethan Zuckerman? That is, Zuckerberg is loaded, and Zuckerman is not. Maybe, as with most other things, money, or lack thereof, is what formulates the strongest of opinions.