Alternative Revenue Models for ISPs and Websites Handout by Eric Goldman

Eric Goldman, Esq.
Cooley Godward LLP

1.                  INTRODUCTION.

  • Overview
  • Review of Business Models
  • Things You Can Do Tomorrow

2.                  OVERVIEW.

  • The Attention Economy is alive—pay attention to it!
  • Beware the pitfalls of diagonal competition.
  • The looming Dark Clouds of Regulation…can we keep Congress out of our businesses?

3.                  INTERNET ACCESS.

  • Examples include dial up accounts, dedicated lines, and collocation.
  • Ways to distinguish yourself: price, quality of customer support, reliability/quality of service, marketing alliances.
  • Is the consumer user interface worth millions?
  • The long term: AOL’s $21.95/mo….or Juno’s zilch??

4.                  WEB DESIGN/DEVELOPMENT.

  • Some of these services are low-margin per-hour consulting.
  • The goal is to do higher-margin consulting and leveragable projects.
  • Beware giving this away for free.

5.                  SERVICE OUTSOURCING.

  • Value-added, leveragable way to license software and collocate.
  • Beware competing with your customers!
  • “Distributing” services is very complicated (must understand the interplay between cash flows, data flows and flow of legal obligations).
  • Buyers need to be very careful in outsourcing negotiations—all leverage is lost post-signing.


  • The Phoenix rising from the ashes?
  • Placement schemes: banners, buttons, text links, interstitials, pop-ups, placement in content.
  • Pricing schemes: CPM, CPC, percentage of results, payment for exclusivity.
  • Tracking schemes: IP addresses, referring URL, custom landing URL, cookies.
  • Conclusion: part of a healthy diet, but not a complete meal.

7.                  IP METERING.

  • Ways to meter include periodic fees, one time fees and per use fees.
  • Technological controls—pre- and post-infringement controls.
  • Is IP fungible?  Is it susceptible to diagonal competition?

8.                  E-COMMERCE.

  • Running commerce-enabled servers is an art, not a science.
  • Running an Internet-order business is not a hobby.
  • Build traffic through affiliate and co-branding/linking agreements.
  • Auctions have a lot of upside, if the business model is structured well.

9.                  SALE/USE OF PERSONAL DATA.

  • Personal data supports multiple uses: targeted email, targeted ads, matching across sites, richer one-to-one relationship with customers, better understanding of users.
  • Watch out for letting third parties get insight into this data.
  • Establishing privacy policies is very tricky.
  • Will Congress or the FTC change the rules?

10.              THINGS TO DO TOMORROW.

  • Build a community (user-to-user communications; virtual governance)
  • Turn your customers/suppliers into salespeople.
  • Contests and sweepstakes.
  • Identify and segment your users.
    • induce users to give personal data to provide custom experiences
    • offer loyalty programs
  • But, talk to your advisors before doing any of the above!

About the Speaker: Eric Goldman (formerly Eric Schlachter) is an attorney practicing cyberspace law with Cooley Godward LLP, Palo Alto, CA.  He also is an adjunct professor of Cyberspace Law at Santa Clara University School of Law.  Cooley Godward’s web page is located at, and Eric’s personal home page is located at  Eric can be reached at