The Internet Changes Everything – Or Maybe Not

What this episode covers

December 23, 2007: In his most personal podcast on this site, Jon uses the hard-won examples of his own web sites to talk about how the Internet can be used as a “feedback loop” to affordably market test new ideas. Jon explains why “do what you love, the money will follow” doesn’t work and how the Internet can help us to make our passions marketable. Remember all the idiots who said that the Internet was going to change everything? I was one of them. Yep, I was a card-carrying member of the mid-90s gold rush. The money felt queasy easy, but I still wanted a piece. The Internet’s value to businesses has swung back and forth ever since. Where we’re at now: a pretty good market for smaller players with attitude like you and me. True, giants like eBay are now entrenched, but the Internet still provides an avenue for those who want to test new businesses without risking shirts. And it’s a great place to experiment with the feedback loop – you can get instant response on new products. And you can get a great handle on the popularity of your pages by crunching traffic stats until your eyes dry. Ever since the mid-90s, companies have been trying to figure out how to (wank word warning) “monetize” their web sites. The obstacles have changed, but the challenge continues. As of this writing, youtube.com is getting a lot of business press for how much money it is losing despite the site’s huge popularity. There was a point in the late ’90s where advertising was supposed to save struggling web site sites and solve their revenue problems. But the first wave of Internet advertising collapsed. Banner ad rates came down to earth as companies wised up to the fact that intrusive, “one size fits all” advertising has severe limitations. In the last couple years, Internet advertising has seen a huge comeback. Traditional advertising has been complimented by the Google “contextual” ad phenomenon. Google Adwords is now just one form of embedded advertising that is driven by keywords. You can see these ads on the right side of Google’s search listings. But more importantly, you now see Google-type ads on all kinds of web sites. Any web site with a decent amount of traffic can now use this type of advertising as a revenue stream. Enterprising folks such as www.askdave.com can make a very good living solely through hosting these ads on their sites. “AskDave” goes extreme, forcing you to smack into those Google ads early and often, but you can opt for a subtler approach than “AskDave” and still make money. Contextual ads make a big difference in the Internet economy: you don’t have to be ESPN.com to attract an advertiser’s attention. The days of “if you build it, they will come” have returned – though without the evangelical zeal this time around. You can see this even in the case of youtube.com, which built a hugely popular site without a business model and then sold it to Google before I could finish this chapter. Build a site, get traffic, put ads on site, make money. Advertising revenues are crucial because consumers won’t pay for much content besides porn. There are exceptions: ESPN has found a way to charge users a modest amount per year to access their Insider program, but even CNN.com, which tried charging for its video content, had to revert back to offering video for free, using an advertising-based model instead. Knowing that “if you build it, they will come” sets us free: we can now build sites that cater to our interests. Keep in mind: not all consumer groups are created equal in the eyes of advertisers, but just about any site that has significant traffic can convert some of that traffic into ad revenue. Of course, the most effective sites have multiple revenue streams, combining advertising with paid premium services and mail order products. A small publis[...]

Distinct summary based on available episode metadata or transcript content.