Realities of Making Money on the Web
by Eric Schlachter, Esq.
Cooley Godward Castro Huddleson & Tatum, Palo Alto, CA
I. Introduction. What kind of Web presence will you have?
* Hardware only; customers will provide the content
* Order forms
* One-to-many intellectual property dissemination
* Establish a community of interests
* Full blown marketing
II. Ways to Generate Revenues
* Subscription
* Commission/brokerage
* Advertising
* Presence providing and other services
* Ancillary sales
III. Subscriptions
* Web users hate impediments
* Most content is cheap
* Distribution is cheap
* Therefore, users will pay only for extremely high-value information or for searching/indexing
* Net access is a different issue
IV. Commissions/Brokerage
* Predicated on secure transactions–coming soon?
* Best for goods and services with limited channels of distribution (hotel rooms, not blue jeans)
* Other ways to expand usefulness (unique 800 numbers, corporate partnering, take it on faith)
* Can lead to superior cost/benefit results
* Extraordinary opportunities in market-making
V. Advertising
* Can range from image advertising with links to searchable classified ads to “folios”
* Explosion of narrowcasting–interactive communities of interest
* The dangers of metrics:
- “Hits” = number of files displaye
- “Requests” = number of times a page is displayed
- Sometimes “people” is measured by the number of unique servers
- The caching problem
- The best metric is number of eyeballs
* Different ways to sweeten the pot: per-form charges or commissions
* Collecting and sharing user data is OK, but watch out for privacy issues
VI. Presence Providing and Other Services
* Presence providing is an easy extension of an existing Websites
* Many companies have incentives to outsource, but will seek turnkey solutions
* Can charge on a per-page, per-kilobyte or per-hour basis, with extra charges for links or
graphics
* Offshoots: design services, corporate image services, public relations, MIS consulting
VII. Ancillary Sales
* Superior content or links can establish expertise
* “Preview” content can be persuasive to selling intellectual property
* Image building can reinforce marketing message
* If mass market distribution of IP, need technological security to bolster copyright
About the speaker: Eric Schlachter is an attorney practicing in cyberspace law with the Silicon Valley law firm of Cooley Godward Castro Huddleson & Tatum. He has a law degree and an MBA in Entrepreneurial Finance from UCLA. He is an adjunct professor of Cyberspace Law at the University of San Francisco School of Law. He can be reached at schlachtere@cooley.com or (415) 843-5154.