Tuesday, April 28, 2009
The reality of web business models
I was pointed to an interesting story in the New York Times about the problems with advertising supported internet applications. at the root of the story is a little factoid: There may be 1.6 billion people in the world with Internet access, but fewer than half of them have incomes high enough to interest major advertisers.
Call it the International Paradox.It is therefore a challenge for applications companies of sweating the details of distribution. In designing technology solutions, it is relatively easy to handle the "standard" cases; problems arise when you need to deal with everything off the beaten path.
Web companies that rely on advertising are enjoying some of their most vibrant growth in developing countries. But those are also the same places where it can be the most expensive to operate, since Web companies often need more servers to make content available to parts of the world with limited bandwidth. And in those countries, online display advertising is least likely to translate into results.
A superficial view believes the internet makes the world flat - that all content can be accessed as easily everywhere thanks to a globally connected network.
Right.
It takes effort to make that kind of magic work. Effort means costs. Costs need to be recovered somewhere.
How do you deal with the high cost of delivering services when the opportunity for payback is slim? ISPs may not be the only ones who need to manage their networks.
Technorati Tags:
Net Neutrality, NY Times
Posted by Mark Goldberg @ 4/28/2009 06:32:00 AM 
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