Looking back at my childhood during the 1990s, I now realize that the Internet and I have a pretty good relationship – we grew up together.
As trite as this may sound, the Internet targeted everyone, but more specifically generation Y. I remember rushing home from school to plug the modem into the phone jack, creating a dead line that blocked all incoming phone calls, all to get connected to the Internet.
I lived for that free flow of information and connectivity to the world outside of my enclosed bedroom. That AOL voice that said 'Welcome' opened the doors to a central nucleus in which I was granted access to everyone from around the world at my fingertips.
The good thing was that it was all free. Even as a child, I understood that these "free" Web sites made money from those pop-up and banner ads that appeared everywhere. I knew that I was being targeted by outside companies, but I understood the value of the Internet, and continued to log on and participate.
It was a mutual relationship. But all of this began to change when users began to abuse the system, and online companies began to realize that their business model is unsustainable.
Around the start of the millennium, cases began to arise concerning illegal file sharing. Sites like Napster and Kazaa faced extraneous legal battles, and several people were convicted and had to pay hefty fines.
The pornography industry branched onto the Web and received a large audience made up of children, some given the freedom to chat with adults, which lead to physical meet-ups and abuse. These cases grew and created frenzy, and the government stepped in to regulate the Internet.
The main problem was that the Internet was so massive, it became impossible to maintain. Such a global platform could not fall under the same laws, thus users in the United States found loopholes by entering other countries with less severe Internet laws. This free flow of information gave rise to the sharing of copy written content that hurt the entertainment industry's bottom line.
With such out of control litigation and abuse, Internet companies found that having an online presence was far too costly, and their business model of providing free content became unsustainable. Now, we are realizing that advertisers cannot always pay for our experience.
So, what do we do? As the generation that grew up with the Internet, we must keep the virtual experience alive, but we may have to pay. In general, the Internet is a platform that tests the model of "free for all."
Almost all start-ups online offer free service (and many with no advertising) as a way to lure in unique visitors, all in hopes of one day using our participation to influence advertisers to target us. But, as stated earlier, the costs will one day exceed advertising revenue, and the users will end up paying.
Pandora recently announced that it will start charging users to stream free radio after a limited usage. HULU is in talks of introducing a fee, and newspapers are already offering online subscriptions. The fees are minimal because there is such a large pool of users, but I would argue that the main trade off in proposing fees is the limit of consumer choice.
For the most part, people go online for the freedom to visit any site of their choice to obtain free information. Having to pay for each individual site will make users decide on what news site to subscribe to, or which e-mail service to use. The fact is that people use various sources of entertainment online, and in some cases, we use many Web sites for professional purposes in our careers.
Perhaps a universal platform will be useful, in which we all subscribe to a basket of internet sites and revenue is then shared on a contract basis. This model seems to work with sites like HULU. Instead of going to individual networks, users can subscribe (free for now) under one umbrella and enjoy their favorite TV shows across various channels. iTunes is another example in which entertainment companies have joined forces to provide content under one marketplace.
The virtual world is being divided into sub arenas that are doing very well under the new 'pay for play' business model.
Yes, of course, content will always be leaked and illegal file sharing will always be an issue, but there is never a perfect solution. What's important is that our generation, along with industry leaders, need to keep the virtual experience sustainable.
Take the first steps to building your portfolio.View Course »