It's not really game-related, but it's interesting to those of us who find the online news scene interesting. The Washington Post takes a look at how the online sites are suffering now. It really makes me wonder about the long-term viability of even heavyweight sites like CNET.

http://www.washingtonpost.com/wp-dyn/articles/A31505-2001Feb20.html

I wouldn't worry too much. Like they said in the article, before March 2000 you could do no wrong, and after March 2000 you could do no right. Extremist thinking happens when you are under the eyeball. As soon as the Next Big Thing hits, the Internet will not be subject to such radical scruitiny as has been the case recently. Or, at least certain parts won't be. The same thing happened with mobil phones, biotech and a slew of other developing industries in the past decade. It'll blow over, a new standard will develop, and life will go on. It might look a lot different than it does now. But really, does the Internet today look anything like it did in '95?

"There's a feeling of disappointment, inevitably, about all the miracles this medium was supposed to wreak," says Kurt Andersen, co-founder of Inside.com, the media and entertainment site that has fallen short of the 30,000 online subscriptions it had hoped to sell. "What the mania and hysteria and over-optimism did was make people forget how hard it is to build a brand. It takes years. Coming back to earth is the realization that for all the power, magic and novelty of this medium, certain facts of life haven't changed."

You know, it's funny.

I gave a presentation on Internet business to a local community college back in March 2000, which was still the boom time. And one of the first things I showed in my presentation was a graph of the penetration of high-speed internet-- pitifully small relative to the number of dialup users. And the slope of that graph is not encouraging.I warned the audience that nothing can _really_ change until a vast majority of people have high speed internet connections.

And sure enough, here we are today with things seemingly falling apart all around us. For some reason all these brilliant industry "analysts" can't seem to grok that the internet, for all its wonderful content, is only as good as your connection speed. Until that changes, everything else is just a waste of effort. Honestly, have you guys tried surfing the 'net with a modem recently? It just SUCKS for 98% of the things you would want to do.

To this day, I can't believe the nightmarishly complex, bandwidth hogging web sites so many corporations produce. The only major 'net company to really "get" this-- let's keep it simple and fast-- was Yahoo.

When everyone's (and I mean _everyone_, at least 80-90 percent of the users) internet connection is at least the speed of a single-speed CD-ROM drive.. and "always on".. that's when things really start to change, big time.

But no sooner.

wumpus http://www.gamebasement.com

"The larger problem is that the dominant model -- content supported by advertising revenue -- isn't working, in part because so few surfers click on the ever-present ads. In this free-lunch culture, Slate and TheStreet.com had to give up on charging for subscriptions."

They might as well have deleted the rest of the article. This is, by far, the most important point.

The internet ad model is horribly broken and I have no idea how to make it work. Let's look at it this way: which web sites are MAKING money? If any? And how are they doing it?

wumpus http://www.gamebasement.com

"When everyone's (and I mean _everyone_, at least 80-90 percent of the users) internet connection is at least the speed of a single-speed CD-ROM drive.. and "always on".. that's when things really start to change, big time."

Maybe, but Internet users will have to be willing to embrace new types of ads for advertising models to work. High speed connections will help, but they're not a guarantee.

I'm going to oversimplify, I'm sure, but it looks to me like there are only three or four revenue models that will work for Internet-based content providers:

1) Advertising. Attract eyeballs and sell eyeballs. Right now this is a failed model, since Internet users don't pay attention to ads.

2) Pay-per-view sites. Historically, this has failed. Given the low barrier to entry that will always generate free sites competing with pay-per-view sites, I think this is a poor model too.

3) A network model like cable TV provides. Bundle together a network of sites and make them part of an ISP's exclusive offering to attract customers. This is sort of what AOL is now.

4) A revenue sharing model, where sites funnel customers to merchants and take a cut of the sale.

Personally, I'm rooting for model number 1 to make a comeback. I think that's the simplest model and the one that will result in better content sites. Model 2 would be great if it worked, but I don't think it will. Model 3 isn't bad, but it eliminates a lot of small sites. Model 4 would just marry editorial to sales too closely for my comfort.

"1) Advertising. Attract eyeballs and sell eyeballs. Right now this is a failed model, since Internet users don't pay attention to ads. "

Yeah, but do you really pay attention to TV ads, or magazine ads (a closer analog to the web)? What was the last magazine ad you actually remember reading?

Maybe part of the problem is that advertisers all of a sudden can figure out how many "click throughs" they're getting. I seriously doubt the average magazine ad gets "clicked through" (eg, read by someone interested in the ad and acted upon in some way) much at all. My guess is having hard data on how often ads are ignored freaks out the advertisers-- though it's old hat to us. My behavior with web ads is no different than my behavior with magazine or newspaper ads. They just don't register. I doubt the absolute "click through" is any different for magazines. But it's a safe intangible in print, whereas it's a measurable metric for the web.

I think it's unrealistic for advertisers to expect anything but a millionth of a percent of click through. To me, advertising is about plastering everything in sight with your logo so it eventually starts to become part of everyone's consciousness. Sort of like that goddamn Tropico ad..

wumpus http://www.gamebasement.com

"My behavior with web ads is no different than my behavior with magazine or newspaper ads. They just don't register."

I look at the ads in game magazines. I think full-page ads have a much larger impact on readers than do tiny banner ads that are positioned near the top of the page.

"I look at the ads in game magazines. I think full-page ads have a much larger
impact on readers than do tiny banner ads that are positioned near the top of the
page."

I agree with this. But large ads on the web are much more obtrusive than full-page or even double-page spread print ads. My gut reaction when I get one of those giant pop-ups when I close the PC Gamer site is one of annoyance. However, when I'm sitting on my favorite, er, "reading chair" in the bathroom thumbing through a gaming mag., I don't mind large ad spreads at all. I either stop and look at them or keep turning the pages without giving it a second thought.

Why this is so, I'm not sure. It probably just comes down to expectations. After all, the effort involved in closing a pop-up isn't measurably greater than turning a page, and yet (at least to me, and I'm sure to others) it seems like the pop-up is invading my space, while the print ad isn't. Maybe it's a Marshall McLuan "the medium is the message" thing and we really haven't figured out yet just what the medium or the message of the Web is yet.

I think Wumpus is right. The advertisers have a very different idea about what the advertising does on the web because they can see if someone clicks it. If a site served ads (in the early days) and hadn't linked to anything from it, you still would have SEEN it, just as you do now. The problem is that advertisers expect a return because everyone (including you Mark) are perpetuating the click-through as an important gauge. It's not. It never was and never will be.

Wumpus point about putting your logo everywhere means way more. The Tropico ads here at Qt3 are the best case in point. One advertiser, one ad, LOTS of eyeballs. It works. I guarantee more people are aware of what Tropico is from these ads than they are from news stories on the web or maybe even the ads in the game mags. Because I come here every day and there it is. It's gotten an eyeball.

I also have to say that placement and an uncluttered site design (mostly) are contributing to that. The problem with many ads is they get lost in overly convoluted web sites that bombard users with a million links to click. Cut your site down to the essentials and that changes. As much as many people hate CGO's design because of all the Javascript, the damn thing is fantastically easy to navigate because of its bare bones design and content display frame. Also, try those genre buttons, they really do work!

--Dave

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Sort of like that goddamn Tropico ad..

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Yeah, but do you really pay attention to TV ads, or magazine ads (a closer analog to the web)? What was the last magazine ad you actually remember reading?

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It's called "The Rule of Nine." You have to see an ad 9 times before it becomes ingrained in the back of your mind. After that, you will register products related to the ad with an "I've heard of them," or "I know those guys" attitude.
Now, the average ad is only seen and registered 1 time in 3 by consumers. So if you are running an ad in a daily newspaper, you need to run the same ad (changing it breaks the recognition pattern) for 27 days in a row (3X9)for that patterning to take hold.

An alternate approach is to use 1 ad for 1 month, but blanket many sources with it. A clothing ad might only appear for 1 month, but you'll see it in many different magazines, on billboards, buses, taxi boards, etc. A new video launch might have you seeing the same ad 2-3 times -per commercial break- during a TV show. It's not voodoo, guys. It really works. It has been scientifically proven to do so. But everyone seems to have forgotten that in terms of the internet.

Having the ability to "click through" has caused a wierd blinders effect to hit advertisers. They want to see results from the click-through on an ad, rather than the more indirect results they are used to. But the Rule of 9 is designed around giving you an impression that kicks in when you see a product, not in making you respond directly to an advertisement. So it fails as soon as click-through enters into the equation. Last, banner ads don't work for the simple reason that they rotate. If you visit the same site every day, but the ad rotation only has you seeing the same ad once or twice, it isn't worth the effort the made to generate it, frankly.

"Web advertising is ineffective for a number of reasons. One of the main reasons is that it's not aesthetically pleasing. A banner ad isn't any more striking than the web page that it's on, and often is much less attractive. But that Nextel ad is much more visually grabbing than the text in Newsweek. Which means I may look at it. I doubt I'll get Nextel wireless service because of an ad, but not everything can really set itself apart through quality. And if I do all my homework before some purchase and find two similar products for the money, which one I ultimately choose may be influenced by a subconscious perception of a product that is at least partially due to advertising. "

I think there is absolutely a relationship between bandwidth and advertising effectiveness. Look at magazines-- the ads take up a full page (or more), and are as high "bandwidth" as the rest of the magazine. And television-- the programming is interrupted and the commercial has full control of your television to do whatever they please. These ads take over. They aren't marginalized into a tiny little corner of the page like animated GIF banners on the web. Just look to your left!

Consider a site like adcritic.com-- people love watching funny television ads, but only as full-blown real-time movies. Which isn't practical for 90% of the internet audience because they're stuck on super shitty modem connections for the forseeable future.

If we can create truly cool internet ads-- and not have to subit to the humiliating kick in the crotch that is "shock the monkey"-- they'll get watched in the same way people watch the superbowl who have no interest in football.

Once we have 150kb/sec always-on connections for every internet user, these kinds of cool, fully animated entertaining ads will become a reality. But what the heck can you do with a cheesy animated GIF? Ads are second class citizens on the internet, and that's both a bandwidth and a design issue.

wumpus http://www.gamebasement.com

:Once we have 150kb/sec always-on connections for
:every internet user, these kinds of cool, fully
:animated entertaining ads will become a reality.

Yes, but even then, will they sufficiently attract users' attention? I suspect this won't happen until TV-quality commercials, with TV frame rates and TV production values, are beamed into most PCs, and this kind of megabandage is probably decades away. Internet advertising simply does not attract my attention. I never look at the ads, and when they pop up in their own windows, I instantly turn them off. I have yet to see one that's more than a virtual poke in the eye--an irritant like that paper clip-shaped helper who turns up within Word occasionally.

"Internet advertising simply does not attract my attention. I never look at the ads, and when they pop up in their own windows, I instantly turn them off. I have yet to see one that's more than a virtual poke in the eye--an irritant like that paper clip-shaped helper who turns up within Word occasionally."

It's a two-fold problem. First, like Peter says, the ads suck and are much more ineffective than advertising in other media. Second, people surfing the web are interacting instead of passively receiving, and as such they tend to be much less tolerant of interruptions and distractions.

Even if they come up with better advertising models, I doubt the ads will command anywhere near the rates they did this time last year.

One reason that the model isn't working that noone has mentioned yet is targeting. If you were to watch little kid shows you would see ads for toys. Teen shows have ads for choling and adult shows have ads for cars. When i come here im looking for imformation on games so its likly ill click on the tropico banner(i did) but if it was a Visa banner or the ever present 'harm the monkey in the way of the month' banner i would immediatly lock it out of my head. One site i go to has an advertising survey that you can take. We need more surves like this so ads can be taliored to thier viewers.

No matter how many times i see and add for a car
I still cant drive!!

I agree about the targetting, but game companies haven't spent a lot of money advertising on websites, for some reason.

Here's another good article that summarizes the attempts to build businesses on the Internet over the last couple of years. It's at Variety of all places. It briefly mentions Michael Ovitz and Gamespy also.

http://ev.variety.com/index.asp?layout=ev_story&articleid=VR1117794107

"One reason that the model isn't working that noone has mentioned yet is targeting."

No, there is definitely SOME targetting going on. I get BellSouth DSL ads frequently (on even european web sites), which would only be relevant if I was in.. BellSouth's region. And I am.

I used to get similar US West DSL ads (now Quest) when I was in Denver, too.

This gets into privacy, which is always contentious, but I'd rather see ads that are targetted to me (which requires giving up some demographic data) than the random hodgepodge of crap I usually see.

wumpus http://www.gamebasement.com

"Here's another good article that summarizes the attempts to build businesses on the Internet over the last couple of years. It's at Variety of all places. It briefly mentions Michael Ovitz and Gamespy also."

That's a good article; thanks for the pointer. The more I think about this, the more I realize that we're stymied by the garden variety modem.

I know it's a chicken-and-egg thing, but even if God himself ran a website, it wouldn't be worth visiting over a 56kbps modem. The latest stats I dug up show 85% of internet users (yes, I was off by 5%, sue me) are on modem connections.

Anyway, the article was right. This is a 162 game baseball season, and we've barely started spring training.

wumpus http://www.gamebasement.com

"I know it's a chicken-and-egg thing, but even if God himself ran a website, it wouldn't be worth visiting over a 56kbps modem. The latest stats I dug up show 85% of internet users (yes, I was off by 5%, sue me) are on modem connections."

Except for content/information sites. A site like Blue's loads pretty quickly on a modem. The fact that 85% of the Internet users are on modems shows that they're not chased away by their slow connect speed.

Now, if you argue that advertising won't work until we have broadband, as Peter Olafson did, that might be a good counter to why content sites don't make money.

One thing about the Variety article: They were talking about building large Internet businesses. The small mom and pop sites like Blues might be able to eke out an existence through minimal advertising revenue by containing their costs. Right now that advertising revenue seems to be below even "eke" levels though.

Advertising will work fine over modems. The particular challenge is just to make ads that are usable and interesting at those connection speeds. They were able to do it for the last two centuries with black-and-white newspaper ads that even today feature drawings instead of photos. why not on the web? Isn't it really a case of how interesting something is, not how fancy? Didn't we just have that talk in the Nintendo forum?

"The particular challenge is just to make ads that are usable and interesting at those connection speeds. They were able to do it for the last two centuries with black-and-white newspaper ads that even today feature drawings instead of photos. why not on the web? Isn't it really a case of how interesting something is, not how fancy?"

It's the size and placement of the banner ads that kill them. They're too small to convey much information and they are easily ignored because we've conditioned ourselves to not even look at the top of the page. Every once in awhile I hit a page with the banner ad in an unusual spot and I *always* notice it.

I guess the banner ad was supposed to be small but act as a gateway to more information about the product and possibly an instant sale. Sounds great in theory, but as most of us can testify, clicking on a banner ad is usually a disappointment. So banner ad clickthroughs have plummetted as we've learned that they lead to nothing of interest.

So we'll probably see larger ads that convey more information and impact just in and of themselves, much like magazine ads function. The problem is in figuring out just how much of a nuisance you can be with the size and placement of the ad and not drive away readers.

I think that's the root of the problem. People don't just buy things. They buy things when they want things. Or they gear themselves up to go shopping. In either case, the "spontaneous buy" is something of a myth. People will buy things they had not planned to buy, like rust-proofing or scotch-guard on a car, but when they do that it is because they are already in buy-mode, and looking at stuff. Just like when you are hungry is a terrible time to go grocery shopping, because you'll buy all kinds of things you shouldn't, so going shopping for something you desperately want is usually a bad idea. Telemarketers take advantage of the innate inertia of people to go do things, and cash in on it.

Web ads look for instant gratification via click-through. You may notice the ad in the odd place, but it doesn't make you click on it. Still, if you notice it, the next time you are ready to buy the type of thing it advertised, you'll think about it. Then you'll rush back to that page...and the ad will be gone. It'll be off-rotation, or just canceled. Now what? Now you use a search engine, and the company what ran the ad thinks it failed (which is true, because the ran it badly).
A good case in point is Q23 here. I let the Tropico ad run for about 2 weeks before I clicked on it. Why? I read a preview for Tropico elsewhere, and remembered the ad running here. So I surfed back here, clicked the ad, and voila! All the Tropico info I could ever need, short of playing the game. If that was a rotating short-term ad, I might not have gotten my information, and not been so hot on the game.
Sorry, I'm rambling. I'll stop.

"Except for content/information sites. A site like Blue's loads pretty quickly on a modem. The fact that 85% of the Internet users are on modems shows that they're not chased away by their slow connect speed."

Well, what I meant was that broadband is required for the internet to truly become part of the fabric of everyday life-- like the telephone.

The analogy is if the telephone operated using morse code. People would still use it, but it definitely adds another layer of delay, extra work, and frustration to using it. Ditto for the analog modem.

Many of these e-business models assumed the internet would be so prevalent that people would use it to order pizzas, building supplies.. hell, pretty much everything. And over a modem, that isn't happening. Thus they failed due to completely unrealistic expecations.

wumpus http://www.gamebasement.com

I've ordered pizza of the internet. I'd live of the internet like the dot com guy if it wasn't for the fact that where I live there are no supermarkets that deliver.

"I've ordered pizza of the internet. I'd live of the internet like the dot com guy if it wasn't for the fact that where I live there are no supermarkets that deliver. "

Rob, I don't think you and I are exactly representative of the other 95% of the internet users. ;)

There's another article on new ads here:

http://www.zdnet.com/zdnn/stories/news/0,4586,2689767,00.html

wumpus http://www.gamebasement.com

I'd live of the internet like the dot com guy if it wasn't for the fact that where I live there are no supermarkets that deliver. "

I know the feeling...I love the internet. I'm still trying to talk my wife into broadband. (Just started trying to seriously talk her into it recently.) Soon, though...