Chris Anderson says the good thing about the Internet is that “it is free”. “Free because it gives us freedom and free because we can now do gratis some things that used to be very expensive”.

That change, explained here by Dan Biddle -with all its pros and its cons- is no small thing. To me it has changed our way of life. It wasn’t terrorism, it wasn’t the war, it wasn’t the financial crisis; it is technology, the Internet and the social web.

We can have endless discussions – content should be free/content should be payed for; people talk about it on TV, on the Internet, at Uni, at the markets and in the street. At the moment it seems people don’t want to pay for certain content; we don’t want to pay for news, we don’t want to pay for movies, or books, or music, if we can simply download it all from the Net, for free.

A poll in 2009,  revealed 77% of American interviewees thought they would not pay for content, but this might change. As Gary Hayes pointed out in class, most TV users said they wouldn’t pay for TV and in 2009 about 88 per cent of Americans were doing so.

We will see how things evolve here. There are several possibilities, paying for part of the content being offered (freemiums– they give away all of the content for free but then they charge for the ‘extra bits’), or you can pay small amounts of money per download, and so on.

The other tricky issue is how to measure traffic on the web so we can sell advertising. I understand there are a few ways to measure banner advertising: CPM, CPC, CPA, CPE, RoS,…

CPM – Cost Per Mille (Thousand) – a certain amount of money when the ad has been shown to a 1,000 visitors.

CPC – Cost Per Click – so much money every time a visitor clicks on the add.

CPA – Cost Per Acquisition – so much money every time a visitor clicks on the ad and acquires whatever is being offered, or fills in a survey, or registers their interest in a product.

CPE – Cost Per Engagement – so much money every time a visitor clicks on the ad and engages with it – watching a video, playing a game.

RoS – Run of Site – the client pays for the period of time the ad runs (ownership of the site for a period of time)

This blog post explains it very well and there are some basics about ‘Online Advertising‘ in Wikipedia. Also, there’s “content monetisation”, which includes advertising and other forms of monetising the content of a website: Freemium, Transaction, Subscription, Affiliate, Text Links, Banner Advertising, Sponsorship,…

The reality is, that people are already paying not to read news, but to play on the web. The worldwide game industry will likely reach revenues of $64.9 billion by 2013. As the industry just recently reached a value of 46.5 billion in 2009, that’s an increase of $18.4 billion, or 39.5% over the next three years”.

To have something to compare these figures with: “The United Nations and all its agencies and funds spend about $30 billion each year, or about $4 for each of the world’s inhabitants.

Piper Jaffray (virtualgoodsnews.com) conducted a “Pay to Play” report in which he predicted the total US revenues from virtual goods – virtual items and gifts that some social media users exchange with each other by buying them with Virtual Currency – would total $621 million in 2009, and that figure will be %2.5 billion (only in the US) by 2013.

Sometrics, a provider of virtual currency, reported that it has awarded more than 1 trillion virtual currency credits in the past year; now connected to 100+ million online gamers.

And Virtual currency and payments solution provider Social Gold concludes in a recent study that the average amount spent per customer per game = $60

What do you think, is there money to be made or not? (There is money and there is not money, but I find it interesting that the perception is that the internet is for free, but of course we’re all paying for it in some way or another. I also find it interesting, that with the current global obsession with climate change and sustainability, that the internet never gets a mention. The energy has to come from somewhere to keep Facebook running. Ed)

1st of March 2009

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