How Penny Per Page Might Work

The Web is an amazing and remarkable phenomenon that has changed the way we think about information, publishing, commerce and computers. Most importantly, the Web has had a huge effect on every individual's ability to distribute information to the world. Prior to the Web, there really was no way for an individual to easily reach a worldwide audience. Today, with the Web, worldwide publishing is simple and instantaneous. Anyone with a computer can publish anything they want, and the entire world can see it a few seconds later. There is tremendous creativity and thousands of new ideas. The possibilities for content and services that the Web can offer seem endless.

While it is extremely easy for any individual or business to publish material on today's Web, one thing is currently missing -- there is no easy way to make money from those Web sites. In 2000 and 2001, this "missing link" caused the death of thousands of Web-based businesses. The Web is becoming somewhat like a desert. There are some survivors -- Ebay, Yahoo, Amazon and so on -- but nothing new is germinating in any significant way. And many surviving Web sites are turning instead to the subscription model.

The proliferation of subscription fees is causing a lot of people to become extremely concerned. There are two reasons for concern:

Subscribing to dozens of content Web sites will be a royal pain in the neck. For example, imagine having to keep track of and pay subscriptions to Google, Yahoo, CNN, etc. A frequent Web user would have to be paying monthly fees to dozens of sites, and would be blocked from all others.
High subscription fees will ban many people from key sources of information. The world will divide into "haves" and "have nots" in a way never before imagined.

The only solution to this problem is to figure out a simple way for Web sites to be paid for their content. A business that publishes on the Web must have a way to make money -- otherwise it goes out of business, and its content is lost. The subscription model used for magazines, however, is a bad way to achieve this goal because it is a major headache for users.

There is something else to think about as well -- the current environment leaves much of the promise of the Web untapped. Without business models that work, there is no way for the Web to reach anything near its full potential. Here is one very simple example. Go to any bookstore today and you can find hundreds of thousands of titles available, all of them published on paper. It would be extremely useful to have all of this information available in an electronic form on the Web, but none of these titles are currently on the Web because there is no way to make money from them. We are locked into paper publishing right now because of the lack of a good Web business model.

What if it were possible to change things? What if we created a business model for the Web that worked? In other words, what if we could find an easy general way for Web sites to get paid for their content and services that did not require subscriptions? If we could figure that out, new Web sites would surge from the desert floor. We would have millions of Web sites producing every sort of content and electronic service that you can imagine. There would also be millions of jobs created in an electronic economy that we only see the barest outline of today.

In this article, we will discuss the "penny per page" idea, a simple business model for the Web that would allow Web sites to receive direct payment for their content from everyone that uses the Web.

This idea is being published here so that people in the Web Community can see the current problem, see the effects it is having, and discuss possible solutions. The "penny per page" idea described in this article is one easy solution that might have a positive effect on the Web. However, even if this idea is never adopted, the discussion will be extremely productive because there is a huge change in the Web taking place right now.

The Challenge Facing the Web

How can we build a successful electronic economy on the Web?

Originally it was thought that advertising would support free Web sites in the same way that advertising supports free TV stations and free radio stations. Almost all commercial Web sites therefore adopted the "free content with paid advertising" model. Unfortunately, this business model ended up being completely wrong for the Web, and a huge number of sites went out of business by using this model.

The reason that advertising does not work very well on the Web is because the Web is nothing like TV or radio. TV and radio are linear, and with a linear medium you can force the viewer/listener to pay attention to an ad that interrupts the program. The Web is nothing like that. Instead, the Web is much more like a book or a magazine. People come to the Web primarily to read and see pictures, and they can flip to a new page or to a completely different site whenever they feel like it.

For small sites, the reason that advertising does not work is because you have to hire a sales staff to sell advertising. In addition, advertisers are not particularly interested in small sites. For small sites, advertising is not an option. [See this letter from the President of StockCharts.com for an interesting discussion of the situation faced by small and intermediate-sized Web sites.]

When you go to the book store, you never see free books. It is also very rare to find books containing advertising. Instead, people pay directly for the information that books contain because the information is valuable to them.

The challenge facing the Web today is that the Web is using the wrong business model. The Web needs to adopt a new business model in order to be successful -- in order to reach its full potential. The Web's revenue model needs to involve payment like the book revenue model, but it also needs to accomodate the completely infinite and fluid nature of the Web.

A Penny Per Page

One possible mechanism for creating an easy, sustainable revenue model for all Web sites has a very simple name: It's called a penny per page.

Here's how it would work. Let's say you go to Google to do a search, or to CNN to read about Afghanistan, or to Amazon to buy a book. Whenever a person looks at any Web page, that viewer will pay a penny. The Web site will receive the penny. It is that simple.

With a penny per page, in five years we would see incredible changes on the Web. Here are four examples:

Example 1: A search engine

Example 1: A search engine

Google.com gets about 100 million page impressions per day right now. With a penny per page, Google would make $1 million a day, or something like $350 million per year.

Would $350 million per year make a difference to Google? From a business standpoint, it obviously would. But think about it from a development standpoint. Google is arguably the best search engine out there right now, but it is only scratching the surface of what a search engine could be. Imagine what Google could become if the site could afford to spend $200 million per year on new software development. In five years, Google's capabilities (or those of a competitor) would be breathtaking.

Without a penny per page, Google will still improve, but at a dramatically slower pace. There needs to be money to support the development of new features, and right now the money is not there in any significant way. So it's a trade-off: "Free" is probably one of the most beloved words in the English language; but by not paying Google when we use it, we're effectively denying ourselves the increased benefits that our payments would bring about.

[See Objection #3 toward the bottom of this page for additional information on Google.]

Example 2: Any content Web site

Example 2: Any content Web site

Imagine what a penny per page would do to:

CNN (or any other "news" site)
The New York Times (or any other site associated with a newspaper or TV network)
ESPN (or any other sports property)
Britannica (or any other "reference" site)
Salon (or any other magazine site)
The Motley Fool (or any other financial site)
NASA (or any other government site providing tons of content)

The list is endless. All of these sites would receive significant revenue from a penny per page. They could then produce immense amounts of content at a breathtaking pace and have a financial incentive to keep producing more and more. Millions more content sites would start springing up like weeds, and they would all be hiring people. The effect that Web revenue would have on the economy, and on the types and amount of content posted to the Web, would be significant.

Example 3: Any Expert

Example 3: Any Expert

Imagine a person who has an area of expertise. The person might know anything, from financial analysis to landscape design to car repair -- it doesn't really matter. Right now, the person has two options:

the person can write a book, take it to a publisher and publish it. The person will make a royalty of approximately 10% of the book's wholesale price.
the person can publish the information on the Web and make nothing.

Neither of these options works very well for the person with the expertise. Writing a book involves a tremendous amount of work, and there is no guarantee that a publisher will accept it. The publisher also takes 90% of the revenue*. Publishing on the Web does not require a publisher, and also allows incremental publishing -- the expert can write and publish a little bit every day. But the expert makes nothing for his/her effort.

With a penny per page, millions of people around the world would be able to publish information AND make money. Conventional publishers would also have a reason to bring existing books over to the Web. The pool of information on the Web will explode.

[* A very common question -- why does the author of a book get only 10%? It is not because publishers are "evil" or "greedy", but instead because of the way book publishing works. To edit, lay out, print (thousands of copies), warehouse, market and distribute a book, the minimum amount a publisher will spend is approximately $100,000. Many books cost much more than that to arrive on the bookstore shelf. That is a very steep cost of entry per title.

Out of every 10 books published, as a general rule, less than half are able to dig themselves out of the $100,000 hole. The publisher eats all of those costs and still pays royalties, in the hope that several books out of every 10 will make a profit. After all of the costs are taken into account, all that's left is about 10% to pay to the authors and still maintain a profitable publishing business.]

Example 4: Anyone with a Good Idea

Example 4: Anyone with a Good Idea

Imagine a person or small business today with a good Web idea that they would like to implement. The person has to devote the time (potentially hundreds of hours) to develop the idea, and then pay a hosting company to host the new Web site. Unfortunately, there is no way to make money from the idea. The lack of revenue means that thousands of good ideas -- ideas that would be very beneficial to Web users -- are not being implemented right now. This is a perfect equation for stagnation. [See this letter from the President of StockCharts.com for an interesting discussion of the situation faced by small and intermediate-sized Web sites.]

Resonance

There are many, many Web sites that started out as a hobby and then made it big. What made them big is a process called resonance. When a Web site resonates, it can grow a very large audience very quickly. Resonance comes from normal human behavior. People tend to do two things when they find a Web site they like: They tend to come back, and they tend to tell their friends. The retention and expansion of audience is resonance.

Napster, of course, is the poster child for resonance. When people found Napster there was a huge probability that they'd come back, and a huge probability that they'd tell their friends and that their friends would come back. So Napster went from zero to 50 million visitors per month in something like six months.

The Web allows any individual or business on the planet to create a Web site and reach a worldwide audience. Anyone can create something, upload it to the Web, and the entire world can see it. Any 10-year-old can learn the technology, and anyone with a computer has the tools, so there is no barrier to entry. At no time in the history of the world has there been this sort of freedom of speech or this sort of worldwide voice for this many individuals. The access and potential is virtually unlimited; resonance then picks the winners.

The Web allows true individual publishing and planet-spanning distribution. What is missing right now is any way for an individual or business to derive value from an innovative Web idea. With a penny per page, we would have a self-propagating combination of business and creativity: instant publishing with instant revenue for any individual who can access the Web.

Under the penny-per-page model, millions of businesses and individuals can try millions of ideas, and if they are successful they will directly and immediately benefit. They do not have to seek venture capital. They do not have to experiment with and invent convoluted business models. They do not have to hire large sales forces to sell ads.

What this means is that the richness and diversity of content and services on the Web will explode. In the process, individual people and businesses will, for the first time, be able to directly benefit from their work. A person with a great idea will be able to make a significant amount of money almost instantly because of resonance.

Changing the Culture

What will people think about the idea of paying a penny per page? Won't people complain about having to pay for the Web?

Anyone who accesses the Web from home pays a monthly fee to an ISP for the privilege. An AOL account is typical, and it costs about $20 a month. MSN and Earthlink are about the same. People in the United States are already paying for the Web; but the Web sites -- the reason people log on in the first place -- get none of it.

Will people complain about paying slightly more per month under the penny per page model? Right now people pay for cable TV, newspapers, magazines, telephone calls, directory assistance, video tapes, movie tickets, DVDs, pay-per-view, CDs, books, ring tones, 900 services, college courses...

The fact that we don't pay for Web content is a historic anomaly. The benefits to be reaped by paying a very small amount of money for Web content are gigantic. Right now, people are actively denying themselves many of the most amazing things that the Web could provide because of the "totally free" World Wide Web.

One of the reasons for choosing a simple approach like a penny per page is because it is such a small amount of money. Here are four examples to illustrate the point:

If you are looking for information about portable defibrillators, is it worth a penny to get the 10 most relevant links from Google?
If you are thinking about buying a book, is it worth a penny for Amazon to let you see the opinions of 10 readers who bought the book you're interested in?
If you are doing a term paper on Afghanistan, is it worth a penny to go to Britannica to find out the history of the country?
If you need someone's phone number, or a map to someone's house, is it worth a penny to find it at PeopleSearch or MapQuest?

These are ridiculous questions -- of course it is worth a penny. Right now you probably pay a dollar to get a person's phone number from directory assistance. A penny is an amazing bargain.

It's also not going to add up to very much per month. People who log on to check stock prices, look up the weather, read the top news stories and so on might look at 25 or 50 pages a day. They would pay something between $5 and $15 per month for Web content. But let's also take the worst case scenario. Let's say that you sat in front of your computer 8 hours a day and looked at a new page every two minutes without interruption 20 days per month. That would cost $48 for the month. That is the worst case scenario, and it is unlikely anyone is going to do that. The cost will be minimal for just about everyone.

Flat Rate Pricing

One important thing to recognize is that a penny per page is not the only possible billing model. The goal of a penny per page is to find a way to pay Web sites directly for their content so that they can survive and thrive, and so that people have an incentive to develop new sites. One alternative would be a flat rate pricing model.

For example, people might pay a flat rate of $10 or $20 per month. Web sites would not receive "exactly one penny per page", but instead would receive a portion of each user's $10 fee based on traffic. If 10% of a user's page views went to CNN in a particular month, then CNN would receive 10% of the user's fee that month.

This approach answers the key objection that many people have to the pure penny per page concept -- its open-ended nature. Web sites would not receive a penny per page, but they would get money based on their traffic. An extremely easy way to implement this model would be for ISPs to collect the $10 fee from users and distribute it to Web sites based on traffic stats available to the ISPs.

Getting Started

What is the best way to implement a penny per page? There are three possibilities:

Web sites manage it individually.
The ISPs manage it.
The Internet community manages it.

The first possibility has been tried in myriad forms, and it does not work. When a Web site tries to unilaterally charge for its content, the audience almost always rejects it because everything else is free. Web sites will have to act in unison for a penny per page to work.

Having the ISPs handle billing would probably be the easiest approach if the ISPs can create a common, fair and uniform model for all customers.

The traditional way to get anything done on the Internet is for the Internet community, in the form of existing standards organizations, to create a standard which is then implemented on a non-profit basis. Alternatively, the top 1,000 or so Web sites, working in unison, could do it. Here's how it could be done:

The top 1,000 Web sites agree that everyone will switch over to a penny per page on a specific date under a unified system. The sites need to work together. If some sites switch and others don't, you will get the same problem that happens now when a site decides to unilaterally charge for its content. If there is not a uniform and super-simple billing model (so that users get one simple, easy-to-understand bill), the thing just won't work.
The community charters a new, non-profit corporation that will handle the flow of cash from the audience to the Web sites. This is the same sort of corporate model that today allows users to register domain names at a standard price. That corporation will be able to charge a handling fee on the penny that each page receives. That handling fee should be capped at something like five percent.
The non-profit corporation is open to every Web site, so that any site can sign up and get its money. The whole process needs to be incredibly simple -- something like the process that lets money flow to sellers at Ebay or Half.com.
Either that corporation handles billing, or billing flows through the customer's ISP, with the ISPs keeping a small handling fee to handle their costs.

The key, and the reason for a separate, non-profit company in the middle, is to keep the process pristinely fair and unbiased. What makes the Web so strong now is the fact that it is a comletely level playing field. Anyone who can work a computer can get a domain name and start a Web site -- there's no social hierarchy on the Web. One of the main things that creates popular sites is resonance. In keeping with the populist sense of the Web, everyone with a Web site should have equal access to the penny per page payment system.

An unbiased system like this with no middlemen would have huge benefits in terms of innovation.

Implementing Flat-rate Pricing

Flat-rate pricing (for example, charging users a flat rate of $10 per month to access Web content -- see this page for a description) would be even easier to implement. Here are two options:

ISPs collect the fee -- Three or four large ISPs could begin to collect the $10 fee from their users each month. They would distribute the money to Web sites based on traffic. Web sites wishing to receive the money would block access to all users who are not entering the sites via those ISPs. Other ISPs would have an incentive to collect the $10 fee because most of the Web would "black out" to their users once the fee was put into place.
Web sites implement it -- The top 1,000 Web sites would decide to begin collecting the $10 fee through a separate company, as desribed above. The separate company would track traffic and send money to the Web sites based on traffic. Any user not paying the $10 fee would be blocked from all of the sites in the consortium. Other Web sites could enroll to begin receiving money as well.

Q & A

Is a penny per page the right amount?

The penny per page approach is extremely easy for everyone to understand. A penny per page does not present a large barrier to the payer, and it pays a nice amount to the Web site. It could be argued that half a penny would work, and so would two pennies. The Internet community can play around with the numbers and decide.

Under a flat-rate pricing model, users would likely pay a flat fee of $10 to $20 per month.

Is charging by the page impression the right unit? Why not charge by the byte?

If you pick bytes, then you will see people bloating images and doing all sorts of other crazy things to inflate their pages.

Won't Web sites chop up their content into a zillion pages if they get a penny per page?

Probably not. Banner ads have already caused as much chopping as we will ever see. If sites chop things up too much, they won't resonate and they'll die out.

Why should pricing be uniform? Shouldn't each site be able to set how much it charges per page?

Maybe, but it complicates things. Say you are looking at a list of pages in Google and you want to click on one. Before you click on it, you have to remember to look closely to make sure that the Web site is not going to charge $100 per page instead of a penny per page. If it's a uniform pricing model, then you can click on any page without worrying about it, just like you do today.

What do we do about streaming audio and video, and things like MP3 files?

Streaming video is unique because it consumes significant bandwidth. A 10-minute streaming video at 300Kbps consumes upwards of 20 megabytes of bandwidth and might cost the Web site 10 to 20 cents to send it to the viewer. A pay-per-view model might be the right approach. Or maybe it's a dime per stream. With MP3 files, if artists automatically and directly received a dime every time someone downloaded one of their songs, it would create an unbelievable musical revolution.

What would prevent a site from having a page that pops up 100 new pages when you land on it to ream the unsuspecting visitor out of a dollar?

The billing mechanism should track for and eliminate charges for that, as well as for pages that auto-refresh themselves, error and non-existant pages, pages arrived at by pressing the back button, duplicate pages and so on.

People in the U.S. tend to prefer a flat-rate model to a pay-per-unit model. Could there be a flat-rate model with penny per page?

As discussed on this page, flat rate pricing would be extremely easy to implement and would eliminate one big objection that many people have to the "penny per page" concept.

Answering Objections

Readers have voiced a number of objections to the penny-per-page idea. Here is a list of the most common objections, with responses to each one.

Objection #1 - Penny Per Page is impossible to implement

There are variations on this objection that range from, "there is no way to track the traffic" to "there is no way to create a bill" to "there is no way to collect the money." Right now ISPs, as well as the Web sites, have comprehensive tools that let them track each page viewed by each visitor. Third party companies can track traffic as well -- see, for example, Hitbox.com. ISPs are already billing tens of millions of people on a monthly basis. Implementation is straightforward.

Objection #2 - Penny Per Page is an invasion of privacy

Many people voice the objection that the penny per page billing company will have a complete list of every site visited by every user, and that is a violation of privacy. The penny-per-page situation is no different than your phone company having a complete list of every phone call you have made, or your credit card company having a complete list of every store from which you have purchased goods. Right now, chances are that your ISP and your employer/school already have a complete record of every page you visit.

Objection #3 - Penny Per Page will make it impossible for search engines to spider sites

The objection here is that, even though Google will make lots of money from the penny per page idea, it will have to pay even more to spider all the Web sites it keeps track of. There are two possible answers to this objection:

Google spiders something on the order of 2 billion pages, but it does not do that every day. Let's say Google spiders its way through all 2 billion pages four times a year. That means that Google will spend $80 million per year to spider the Web, which is a small price compared to earnings of $350 million per year (google's earnings are described in the example on this page).
Google can charge sites to spider them. The sites will immediately get the money back when the spider comes through and pays a penny per page.

Objection #4 - Third-world countries and other disadvantaged populations will no longer be able to access the free Internet

This is one of the more surprising objections. The gist is, "poor people and people in third-world countries will be unable to view the Web if they have to pay for it." This objection neglects the fact that, to access the Web:

People have to pay for their computers to view Web pages
People have to pay the power company to turn on their computers
People have to pay their ISPs to connect their computers to the Internet

If it is OK for poor people to pay for all of these other items, why should it be bad for them to pay for the content?

The common solution used to give disadvantaged individuals access to the Internet is free public access. Libraries, schools and other public organizations pay for computers, power and Internet access, and offer them to the public free of charge. These same organizations can also pay for content.

Objection #5 - Penny Per Page is too open-ended

The concern is that a heavy Web user might receive a bill for $100 after a month of extremely intense surfing. $100 implies 10,000 pages. If someone is accessing 10,000 pages of content, it seems appropriate to charge for it -- 10,000 pages is roughly 20 to 30 books, which might cost anywhere from $200 to $600 depending on the price of the books.

Another solution is a flat-rate pricing model as discussed earlier, or a cap on the monthly bill. Either eliminates this objection completely.

Objection #6 - Many Web pages are not worth a penny

A big concern is the pages that show up in search engines that contain junk. "Why should I have to pay for junk sites?" is the objection. One easy solution would be to allow a user one page view (or three or five, whatever) on a given domain for free, with the option to block that site in the future. In that case, the user would not be charged for visiting that site.

Objection #7 - It will be impossible to get the top 1,000 sites to act in unison, and without them penny per page will not work

This is a valid point. It seems like it would be difficult for second-tier sites to charge for content if top-tier sites did not.

Objection #7a - If you do get all of the top sites to cooperate, I will not visit them after they start charging for their content. I will visit other sites instead.

A small but vocal minority mentions the "I will NEVER pay for content!" threat constantly. Here are two important facts to keep in mind about this minority:

If the top 1,000 sites started charging for content, then nearly every other content and service Web site would jump on the bandwagon to get a piece of the pie. At that point, the never-paying minority would have no Web sites to visit. New free sites could then arise. However, these new sites would not be able to generate any revenue to support themselves, so their contribution to the Web would be minimal. And as soon as they reached critical mass, they too would join the penny per page system to support operations.
There is always a small minority of people who refuse to pay. They are the same folks who do without cable services (or steal them), and who do not have telephones in their homes. If you look at the penetration that the cable industry and telecommunications industries have been able to achieve, however, you realize how small the "I will never pay" minority is.

Objection #8 - Penny Per Page is too expensive for businesses and schools

Let's take schools as an example. Elementary schools and high schools are currently spending billions of dollars on text books for their students. A single college text book typically costs $50, and students must pay for them each semester. In that context, $10 to $20 per month per student is a bargain.

Objection #9 - Penny Per Page will cause huge media companies to buy all the good sites

A typical comment: "Most worrying is the possibility that Murdoch, Turner and a few other big media moguls will buy all the good sites as soon as they can make money from them." If that were a concern, Murdoch, Turner, etc. could buy the entire Web right now, because Web sites have little or no value -- it is impossible to make money from them. If the sites could generate revenue, it would give their creators a way to keep them on the air. If large media companies then wanted to buy the sites, at least the creators would have a bargaining position and a way to compete.

Objection #10 - Sites that need to make money can simply charge their readers using a normal subscription model

This is a valid approach, and it is happening more and more. For example, you can get subscriptions to:

The Wall Street Journal - $8/month for online financial news
Britannica - $6/month for an online encyclopedia
Questia - $20/month for an online library

Let's say that Yahoo, CNN, Google and hundreds of other sites went this route. Just the 5 sites listed above would cost about $500 per year, and you have to take the time to sign up for each one individually. The cost of subscribing to several dozen sites would potentially run thousands of dollars per year. In the process, it would make general research on the Web impossible.

It makes far more sense to have a generic model, like a penny per page, where there is one bill for all Web surfing.

At this moment, the "free Web" approach is backfiring on those who advocate it. It is stifling new sites and causing existing sites to go out of business.

Time for Change

In this article, we have explored a parallel universe -- a universe in which people pay for Web content instead of getting it for free. Imagine what the Web would be like if a penny per page had been woven into the Web's fabric from the very start. Our world, and the world's economy, would be completely different today. There would be millions of companies and individuals making significant amounts of money off of Web-based content and services. There would be thousands of times more content on the Web, and there would be the incentive to add more and more.

But the biggest difference it would have made is in the number of new Web sites that would appear on the Web. Right now, the number of ideas being implemented is severely constrained because there is no way to make money off of most of them.

Here are three key things to keep in mind about the parallel universe that for-pay Web content would bring about:

For the first time, it would be possible for individuals and small businesses to easily make significant revenue from Web content. Right now, the only people making money off the Web are the top sites, because they can afford large sales staffs to sell advertising. Anyone with a good idea that resonates would be able to make money on the for-pay Web.
At this moment, the Web community is actively and significantly slowing down Web development by not paying for content. Many new ideas are not being implemented right now because there is no way to make money from them on the Web. Most things of value are being published on paper rather than on the Web (e.g. - hundreds of thousands of book titles) because there is no way to make money from them on the Web. Many existing Web sites could advance much more quickly if there were an easy way to generate revenue.
The penny-per-page model is not the only one possible. It could just as easily be a flat $10/month fee collected by ISPs and distributed to Web sites based on traffic. The goal is to figure out a first-of-its-kind revenue model that would make direct payment to Web sites possible. As mentioned, if the artist could directly and easily receive 10 cents every time someone downloaded an MP3 file, it would revolutionize the music industry. The same goes for Web content. If an individual expert, author or artist could be paid directly for creating content, it would totally change the Web landscape, and the economy. There would be a thousand times more content on the Web.

Would it be worth a penny to you to look up a phone number you need? Would it be worth a penny to you to get a map to your destination? Would it be worth a penny to you to get the answer to a particular question? A penny is an incredible bargain. The fact that none of us is paying that penny right now is putting a huge damper on Web innovation. A penny per page will bring consistent revenue to the Web, and the change that it will bring will amaze all of us.