About football, blankets and Internet

“Playing football is like trying to cover oneself with a blanket that is too short. If you cover your head inevitably you will not cover your feet.” This phrase from the football (soccer) arena explains how a team that tries to be offensive can come unstuck and suffer in defense and vice versa.

The illustration of the blanket also serves to demonstrate what is today one of the greatest problems confronting Internet.

The principal business model being implemented by web sites is based on advertising. The content or services are seen and freely utilized by millions of users and it is the presence of brands and their message which subsidizes this interaction. However the online advertising pie, despite its uninterrupted growth around the globe, is still not sufficient to keep out the cold that runs from head to toes.

This is the reason why the online newspapers or the Internet magazines have not yet taken off. The advertising income does not yet cover their costs and the bottom line remains red. In many cases these digital businesses are considered as cannibalizers of their mother product (the paper version) by the readers that emigrate from the physical version to the digital one.

The free model is not an invention of the Internet.

In preWeb times advertising was also responsible for subsidizing the interaction between the media and their audience (readers, listeners or viewers). The written press for time immemorial has charged its readers a minimum cost that does not reflect the true value of the product, but rather responds to a percentage of the costs of printing and distribution. The journalistic value, the reporting and chronicling, or in other words the content that converts the printed word into media communications has always been supported by advertising.

With the advent of Marketing Promotions this same business model has granted us free music recitals at the beach sponsored by a well known mobile telephone brand, but it didn’t go any further. When someone had to send a letter or make a long distance phone call they had to pay for it. No brand was prepared to sponsor that cost.

In Internet this business model - or non-business model - has extended to the deepest fathoms of the earth.

The income generated by advertising in Internet must also cover the costs of sponsoring our e-mail accounts so that these may be free, or advertising in the social networks so that no one charges us anything for interacting with our friends and in the video portals so that we may view hours of free “television”.

That’s why, and this is the heart of the problem, the advertising investment is not sufficient to cover the needs of an industry that offers practically everything for free.

Imagine just for a moment if the offline world had functioned in this way. Nobody would have paid to send a letter because Coca Cola would have subsidized the cost by stamping its logo on the envelopes. In bars, free beer would be offered because a tobacco company sponsored the moment and whoever desired a smoke wouldn’t have to pay for that privilege due to the sponsorship by a medical insurance company.

But that’s what happens in Internet and the Google generation has become accustomed to it.
Just the same the future is promising. The options for micro payments for small services and the charging model known as freemium (a free version supported by another paid for premium one) has started to make inroads on the Web and to complement income from advertising.

For the time being Internet advertising is not unlike that blanket that no matter how hard we pull on it, is a long way away from being infinite.