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By Brian Kahin, Hal R. Varian

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Extra resources for Internet Publishing and Beyond: The Economics of Digital Information and Intellectual Property

Sample text

Perhaps a cryptographically based software analog might be developed that relied on some secret that the purchaser would have a strong incentive to keep to herself. In each case, a form of rivalry results, since multiple users can be prevented from using the data simultaneously. But imposing rivalry where it is not naturally found means imposing a socially unnecessary cost on someone. The result may look and feel like a traditional market, but it cannot, by definition, carry the “optimality” properties markets have possessed in the past.

Currently, the two most dominant forms of advertiser-supported Web sites are sponsored-content sites, such as Hotwired, the Industry Standard, and Salon, and entry-portal sites (for example, Yahoo, MSN, and Altavista), which function as gateways to the Web and provide search and directory features to Web browsers. The sponsorship model has attracted management attention because advertising is expected to be an increasingly significant source of revenues in the new medium of the World Wide Web. Sponsored sites are of interest because they are well suited to the Web environment (Hoffman and Novak 1996), yet also retain important parallels to existing media in the physical world.

The average is currently $35 (Adknowledge 1999). In comparison, CPMs for advertising in traditional media range from $6 to $14 for national television, $8 to $20 for magazines, $18 to $20 for magazines, and $18 to $20 for newspapers (Advertising Age 1999). The ultimate challenge will be the identification of the business models that will be effective in the new Web environment. At present, the advertiser-supported business model is driven largely by a broadcast paradigm, which has initially gravitated toward CPMs as the appropriate unit of measure.

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