In the wake of advertising

Back in the late 1990s, it was all about the banner ad, the skyscraper ad, the button and … well, you get the picture. Now, as advertising budgets suffer a deep freeze, Web site managers have to look elsewhere for new business.

And who are they setting their sights on? That’s right, users. Though many sites tried – and failed – to get money from their visitors, Web site managers are stepping up to the plate again. And this time, they are hoping for a home run.

The key which Web powerhouses like Yahoo, Microsoft and AOL are trying to figure out is the killer applications that users are willing to pay for. Yahoo, for instance, is working on premium packages that offer users access to gaming and video programming.

Web site managers are targeting users who will soon be able to access these services over the growing number of PDAs and multimedia-enabled cell phones that are flooding the market.

I’m skeptical about their ability to capture huge dollars from users, though. After all, service providers in the 1990s tried to offer paid access to premium content – which in that era was a killer application – and many ended up offering the content for free.  It’s a risky game… and I predict that eventually video programming and gaming will become commodities… all part of a basic package, not a premium one.

Sure, the service providers will go through the motions. You’ll see service rates being offered that boast bonus packages for these applications. And then you’ll see more providers enter the market. Then you’ll see the service providers, in order to maintain their subscriber bases, lower their prices and eventually, you’ll see them fold access to these killer applications back into the basic plans.

That’s how I think it’s going to play out. And in the meantime, they might gather a few dollars here and there from users, but nothing to make Wall Street impressed. Hopefully, by that time, advertisers will be ready to vie for eyeballs again and we can start the cycle over.

What do you think? Let me know at sgittlen@nww.com