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NET.WORKING: Advertisers can't pull all the Web freight

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A newsletter crossed my desk the other day giving me the lowdown on an Internet conference in Hollywood, where the online divisions of the big studios had trotted out lots of data showing that the Net would one day be as big an entertainment medium as TV. I'm afraid I laughed out loud at this.

There was a great statistic in the newsletter about how Internet surfers spend 60% more time on the Web than they do watching TV. Wouldn't you love to see the sample of respondents this survey was based on? Unless it's measuring college students or TV-less workers surfing at the office, I'd file this under the heading of "lies, damn lies and statistics."

There's a great urge in the consumer advertising world to build the Web up as the mass-media successor to broadcast TV, because that's the model everyone's familiar with. A more precise model would be cable TV, which, like the Web, builds large communities of like-minded people interested in sports (ESPN), music (MTV), news (CNN) or kids stuff (Nickelodeon). But guess what? No cable network can support itself solely on ad revenue.

The rule of thumb (and it varies from network to network) is advertising accounts for only about half of a cable network's revenue. The other half comes from subscriber fees. Take away the paying customers and even the biggest ad-supported cable networks would be struggling.

On the Web, the prevailing wisdom is that you cannot get away with charging customers a subscription fee. And you can't dispute it; consumer media content is a commodity online, and if one site started charging, everyone would simply move to its four free competitors. On the other hand, no one says you have to put your entire site behind a tollgate.

ESPN and others have set up pay tiers, and that may be one way to go. Or there may be a way to bring true e-commerce elements into the mix, through classified-type advertising, brokering of services or something more novel. The point is to develop other revenue sources and go beyond advertising.

Is the Internet a mass media? Sure, in the same way the Interstate Highway System is: A lot of people travel on it -- but only to get somewhere else. The reality is that people are using the Web to get things done, as a vehicle for direct action, response and retrieval. It's about point-to-point transactions, broadly defined, and not about aggregating a huge crowd of watchers.

That's why business-to-business companies have adapted so quickly to the new networked world. They don't need a mass audience in the first place; they just want the right audience. B-to-b Web sites are intrinsically about transactions: They sell stuff, or take orders, or save money, or distribute product, or handle customer service, or add efficiency. Even on the media side, b-to-b trade books have it easier because their news and data is less a commodity; if you need hard-core details about plastics manufacturing or computer networking you're not going to get it at MSNBC.com or pathfinder.com.

I understand the Net's legacy of free content makes it difficult to devise a balanced media model. But I believe that the ad-sponsored sites that succeed are going to have to offer extra levels of value that customers will pay for. Just like business sites do.

David Klein is associate publisher-editor of the Ad Age Group. He can be reached at dklein@crain.com.

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