Money Makes the Web Go Round

By David Berkowitz 

Want to stick it to The Man? You can even make a few bucks in the process. First, you've got to understand who The Man is and why you'd want to stick anything to him.

Past contenders for the title of "The Man" included Bill Gates, Steve Jobs, and Janet Reno. Today, we have a new contender, the riverboat captain of the e-commerce river Amazon.com: Jeff Bezos. 

In Internet legend, Bezos was at some cocktail party in the Silicon Valley of the Damned four years ago when a lady friend approached him and said, "I know how you can make a whole lotta money and eventually be named Time Magazine's Man of he Year."

Bezos, in his legendary reply, said "Et tu, Brute?" And the rest is history. 

Bezos went on to pioneer Internet affiliate marketing, while his lady friend, utterly dejected, hitchhiked to Manhattan and became known to the patrons of 42nd and Lex as "Silicone Allie." What Allie inspired has had an immeasurable impact on e-commerce.

Old way of e-commerce: Go to popular dot-com store. Buy product. Dot-com store gets all the money. You get product. Everyone is happy.

New way of e-commerce, thanks to Jeff and Allie: Go to favorite non e-commerce Web site. Click link that takes you to dot-com with hidden reference number from original site. Buy product. Referring Web site gets commission (usually 5-20%, depending on program and product), dot-com store gets rest of money. You get product. Everyone is happy. This is the heart of the affiliate networking scheme. 

After Amazon found some success with affiliate networking, other big e-commerce sites followed suit. The idea makes sense; small-time site owners do all the marketing and lure in the customers for a small commission. It's a low-risk situation for the e-commerce companies since there are no costs up front. 

At first, this worked out really well. The small fish in the World Wide Waterfront could say, "Look, Ma! I'm an Amazon affiliate!" It made them sound important, give them ego boosts, and compensate for their small domain sizes. Everyone wanted to be a slave to Amazon.

Then someone woke up and realized that if all these sites referred the visitors to Amazon, visitors could just as easily go to Amazon directly the next time they wanted to buy something. The middlemen were humbled. Bezos's colonial dream lost its glory. Everyone was getting kind of bummed, except Janet Reno who secretly exclaimed in her private chambers, "I am still The Man!"

I’m not an Internet historian, so I can’t really grasp the sequence of events, but sometime between Jeff Bezos’s cocktail party and Roseanne posing nude for Playboy (those have to be related somehow), the affiliate program evolved to the point where you don’t even need a Web site to make money off e-commerce. 

That was Vstore’s contribution to the industry. Vstore enrolls a number of retailers (or in their cute jargon, “Vtailers”) who list their products in some big database. Amateur entrepreneurs can then select products and build Vstores to either link to their own Web sites or use as freestanding sites. If the Vstore owner convinces all his friends and Web site visitors to make purchases through his store, he’ll rack up a few bucks from sales commissions. 

A bunch of other sites followed Vstore’s lead (or maybe they came first; I told you, I’m no historian). Calypso established itself as the cute Vstore. Addashop and Affinia developed other models. Pop2It had an interesting idea of having the stores pop up in separate windows, but you need a degree in calculus to understand their Web site. A startup company, Pop-Up Shop, is trying the separate-window approach with a more user-friendly style. 

The hook with all of these sites is that they’re not for Consumer Reports readers. Those guys can go to comparison shopping sites like Mysimon.com, where customers without any store loyalty can peruse how much products cost in a generally hearty number of participating stores. There are other sites like Hagglezone and Nextag where you can bargain for lower prices. These are all the antitheses of shopping through affiliate sites.

So, how do these affiliates make any money? Convenience. You might be preparing travel arrangements on a Web site, and you’ll find a link to a store for luggage and toiletries. It’s the notion of stocking chewing gum next to the checkout registers: “Hey, while I’m here, I might as well.” 

Does this mean these sites are making e-commerce more accessible, or is it pure greed at its worst? I can’t fully pick a side. 

On one hand, I hate being pelted with better offers, new products, and quick ways to lose a few bucks. You could liken these programs to visiting a friend to pick up a few recipes for onion dip, and before you get the recipe, your friend ends up selling you serving dishes, cookbooks, and onion-patterned neckties. You'd be lucky to remember why you went there.

On the other hand, these affiliate shops could be put to good use. If I’m shopping for computer paper and a special offer comes up for printer cartridges, I’d be very inclined to buy the toner if I was running low. I’d be even more inclined to buy if I knew my commission was going to some worthy cause, like the girl scouts, the Red Cross, or Eminem’s legal defense fund. 

Regardless of your opinion, affiliate network sales are growing exponentially, with some industry analysts estimating they’ll become the primary channel for e-commerce in the future. Before that happens, expect them to evolve further so that they’re more focused on benefiting consumers and less hell-bent on trying to make everyone a quick buck. 

At least one thing will remain constant: Janet Reno will always be The Man.

  Dave Berkowitz is the visionary founder of Trafficzine.com, a collegiate entertainment e-zine.  He has recently branched off from serving as Trafficzine's Editor in Chief, Business Manager, and Webmaster to work on projects with Menus.com, Takeoutmusic.com, and most recently Broomecloset.com.  His passion is writing.  Whether it's children's stories, technical reports, reviews, satirical columns, or even cover letters for faxes, he takes great pride in the power of the written word. 

What next?

• Subscribe to the WebWord.com Usability Newsletter

• Read another article: Managing User Expectations

• Recommend this article to a friend.

• Visit the Moving WebWord index!