Unless it is a hobby or pro bono/charity, at some point people have to be paid for their work.
I admit to at least some complicity in this whole process because in early 1994 I co-founded the first news website, sfgate.com, and we didn’t make anyone pay for it. This was before Yahoo, Google, Amazon or any of the big web content providers. Everything was experimental.
Back then, nobody was going to pay for any content. The reasons were not that different than they are now in the sense that connectivity got direct payment. Back then it not only cost money to connect, but it was kind of a hassle for the average user to even get onto the WWW.
Everything was still modems outside of big net-connected institutions and businesses and while that was a big part of the early web traffic, those users were not going to get their universities or companies to pay. A lot of the time was spent in off hours when the boss wasn’t looking. And if you used a modem things could get pretty slow. We often called WWW the “world wide wait.”
And print was still king back then, despite the large presence of proprietary services like AOL. So one could not realistically ask for money directly for content. And, there was no realistic way to collect the money unless you had an admin infrastructure set up to deal with it, which back then involved someone calling a new subscriber to make sure they had a valid credit card.
So, we started by giving away selected news and sports stories to build traffic in the hope that sometime in the future we could charge for it. I think it was Wired! and their early pioneering service Hotwired! that ran the first banner ads. This was the start of the process we have today. And because I was working for a newspaper that had an ad sales department, we too sold some banner ads.
Then Yahoo! began. This was the first game-changer. They had so much traffic that they could sell ads in bulk for very low per-impression prices. This forced everyone else to get more “creative” if they wanted to sell an ad.
At the risk of going on too long in this post, let me pause to explain a reality about selling advertisements. You have a media product for which you want to sell ads. You go to an advertiser and make your pitch. They seem interested, but often they will say something like, “looks good but can we do something a little different, a little more special?” So you, the salesperson, thinks, “if I say no we can’t do that then I am going to walk out of here with nothing. If I say sure we can do something special, then I will put a burden on my tech people, but I will get the sale.” Good salespeople always take the money. So what special things can you do?
At first, we manually put certain ads next to related content, but Yahoo, and in a few years Google, were getting the big-volume search traffic, far beyond anything we could do. We could automate it to a degree, but again, the volume just wasn’t there. In our case, we bundled the online ads with the print and TV stuff (my company also owned a TV station and we ran TV content too). That was the extent of our sophistication, and this is generally true of the industry itself back then. Match ads with content in whatever meaningful way you could figure out. That was the pervasive model. Same with Google.
Then in 2000/2001 came the dot-com bust period and the now-huge search companies had gone public and saw their stock price dropping. they had to do something or they were going to go bankrupt by losing their investors. Google realized that they were sitting on huge amounts of personal information that they could use for better ad targeting. And they had enough money to hire the best programmers. And so began the age of “surveillance capitalism” which is where we are today.
Meanwhile, during this time, the big phone companies, that had been surprisingly clueless about the data gold mine they were sitting on, started to catch on and made it easier for the public to “jack in.” In the process, the speed and convenience increased and they were able to begin raising their prices, locking in for themselves the direct-pay component of this new world.
And, given Metcalf’s Law, that says the network grows more powerful as each node connects to it, the Net’s winner-take-all model pushed everything toward the reality we have today.
Maybe it was all like a stream that started small and you could navigate your little boat, and then as it grew the current got to where you could only try to stay within the momentum of the flow…until, what - we all go over the waterfall?
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