So how can a news, information or related online service provider cover their costs - or if their goal is to make profits, how can they generate sufficient revenue to more than cover their costs? There are five main methods of revenue (income) generation:
A variety of information services are funded by the government indirectly through contracts issued by public agencies such as JISC or the HE funding councils. For example MIMAS (Manchester Information and Associated Services)is funded by JISC - although some of its income also comes from the University of Manchester and therefore indirectly from HEFCE. The various services of this type provided on behalf of the government by such bodies are open to competitive tender (bidding) and with a fixed term (although the contracts may often be renewed or extended).
Specialist intermediary companies have been set up to match advertisers to web publishers. The biggest such company is DoubleClick Inc.They claim to be able to reach over 35 million web users per month. By placing additional code on the web publisher's web pages they can feed banner ads or pop-ups to the users. Not only that but by using targeting filters based on keywords they can reach specific categories of users. By tracking click throughs on advertising banners and watching whether users carry on through to the online sales pages they can also provide information on the effectiveness of the adverts. Many advertisers are Internet or IT related companies themeselves and following the dot.com debacle and with the onset of recession in the US there have been cut backs in advertising expenditure all round. There have also been two well publicised problems with this method of cost recovery which has dented the enthusiasm of advertisers to use the web.
The first is the use of ad blocking software. Companies like Siemens and Symentec have produced software utilities that can block out the advertising banners from the web pages displayed on your computer screen by the browser. The idea was a very simple one. When it is loading a web page your browser requests files from the server you have called up using the URL. The banner ads and pop-ups are usually supplied by specialist companies like DoubleClick and of course they come from different servers to those of the web publishers themselves. The ad blocking software maintains a frequently updated list of ad server addresses. When it encounters one being requested from your browser it simply blocks the request. Todd Smith, a contributor to Straight Goods (an independent on-line news source from Canada), says there are three main reasons why users like to use ad blocking software to strip away the ads: increased speed, reduced visual noise and enhanced privacy . Because you are no longer down loading the advertising graphics (sometimes moving graphics) which can take up a lot of bandwidth even on a high speed connection, navigating on the web can be much faster - he reckons two to three times quicker. You can see why both individual users with modem connections and corporate users with network connections will be attracted to the ad blocking software. As Smith says you want to save the bandwidth for yourself rather than donating it to the advertisers. It is also a lot easier to read the material on a web page when you are not being continually distracted by moving or flashing garish advertising messages. However there is another reason to keep the advertising banners off your screen. Because most banner ads use cookies to keep track of how you navigate on the web and to feed information into their big databases, stripping out the ads means that you will give away less information about yourself to the advertisers.
Obviously the more that people began to use ad blocking software the less effective the advertising was becoming and so in turn the less keen were advertisers to use the web. However soon another even more controversial type of software utility appeared that web advertisers had to worry about - the Gator. Gator software doesn't block advertising banners or pop-ups - it replaces them by ads paid for by Gator clients. The Gator company claims that what it is doing is both legal and ethical. As yet this has not been tested in court. The software is linked to a browser plug-in called Smart Online Companion (that helps you manage your passwords) that consumers download and install voluntarily. Scott Eagle, the chief marketing officer for Gator, says that when consumers install their plug-in software they must view a licensing agreement and consent to the use of the Gator utility. However critics say that these words are hidden away in a lengthy and densely presented block of text and many users may not realise what they have done. Microsoft has developed its own similar technology, Smart Tags. This picks up on keywords and directs users to pages suggested by Microsoft. Microsoft had intended to incorporate the Smart Tags in the browser which is part of the new Windows XP but has backed off in the face of criticisms from reviewers.
In a further development an independent Web publisher Gary Rosenzweig of Clever Media has created a new tool that can do battle with what he calls "scumware". The tool detects which site visitors have Gator or similar utilities such as Surf+ and TopText installed and generates a pop-up message to let them know that they have these programs installed. The pop-up then surveys users to find out if they realised that they had the ad poaching software installed and redirects them to the Scumware site to find out more.
As a web publisher if you don't have access to grants or sponsorship and you don't want to rely on advertising revenue then you must somehow obtain revenue directly from the users of the service. The alternative options here are basically subscription based schemes which give users unlimited access to material for the period of the license, and pay as you use (pay-per-view) schemes which require payment for what you use, usually by credit card.
An example of a subscription service is the news monitoring service TracerLock ($19.50 per month for each of the five sections that it monitors). QuickBrowse, a tool that lets you browse multiple web sites, until now free, changed to a subscription model in September. Some online services are complements to sister printed publications, for example the online version of the periodical The Economist. Of course this service also allows users to search not only the current issue but also the archives. The Economist makes some of its articles and reports available free to non-subscribers, who can also search the archives. But if they want to read the restricted material they must take out a subscription. In July News International announced that certain parts of the online version of The Times and the Sunday Times would in the future only be available to subscribers. The Financial Times also gives access to its archive databases only to subscribers. Even the BBC was at one time considering charging non-licence fee payers for access to its web pages. However the idea was dropped owing to the logistical problems of distinguishing overseas users from UK based licence payers.
Increasingly services that had previously been offered free on the web are now only available for a fee or by subscription. A blogger web site called The End of Free keeps track of changes.