Web sites today generally make money by selling advertising and by charging money to other Web sites for a high-profile link designed to funnel visitors to the paying site. But several recent reports challenge that figure, suggesting that it's wildly inflated because it includes a vast amount of noncash barter arrangements. In addition, since January the price of Web banner advertising has been steadily decreasing, which has translated into less cash for those selling advertising. Advertising rates, typically expressed as cost per thousand, or CPM, have plummeted on the Web. There's no question that there are a lot of sites up right now that are sucking air.
Sites give up the ghost all the time, of course.
In April, for example, BigBook, an interactive Yellow Pages directory that was once the model Web company, sold its directory site to GTE, after its incoming cash couldn't keep up with necessary expenses. While there is actually a little more advertising out there, the growth in advertising hasn't kept pace with the growth of the Web. Sites are constantly adding Web pages, but the number of ads available for those pages isn't keeping pace. The vast majority of advertising on the Web is for other Web-based products. There are two basic reasons people advertise a Web site on the Web.