This is the second part of a two-part blog. The first part looked at some of the more straightforward ways of making money online such as sales, fee-for-service, subscription and brokerage.
Advertising: This is probably the most common revenue model on the Web. Most sites that deliver their content for free make their money through advertising, in the same way that commercials pay for TV shows. A lot of online advertising, like banner ads, is annoying but relatively easy to ignore. This can be a problem, though: some kinds of malware (programs that will harm your computer) pretend to be pop-up ads because they know most people close pop-ups without thinking about it. When you click what you think is the red "Close" button, though, you may actually be leading you to a dangerous Web site or giving the malware program permission to install itself on your computer. When you want to close a pop-up ad, let the cursor hover for a moment over the red "Close" button before clicking: if it looks like a hand instead of an arrow, don't click it -- close the whole tab to get rid of it. (Also, never click any box in a pop-up ad other than the red "Close" button, even if it says "close" or something similar.) Even legitimate ads, however, can use deception. Because many sites that host ads are paid for each time the ad is clicked, sites use a variety of tricks to get users to click through, such as misrepresenting the ad link as something else. The worst example of this is what's called typosquatting, in which advertisers register for Web addresses that are very similar to popular ones, in the hopes that you will type them by mistake; if you misspell Wikipedia.org as "Wikpedia," for instance, you might well land on a site advertising all manner of things; in many cases, typosquatting sites contain pornographic material or malware. The best way to prevent typosquatting is to establish Favorites or Bookmarks for children's preferred sites, so they will not have to type the Web address. In some browsers the Address bar can be removed altogether; while it's not possible in Internet Explorer 7, in Firefox it can be done by clicking on View in the top menu, then selecting Toolbars and unchecking Navigation Toolbar. This is easily undone, however, so it's only likely to be effective with younger children.
Another concern is that ads may not always have the same kind of content as the sites they appear on; for instance, a site about computer games aimed at teens may have advertising for M-rated games. More serious issues can sometimes occur: for instance, in 2007 the Washington Post found sexually explicit ads on Neopets, a site aimed at young children. Though this is an extreme and unusual example, it's not at all uncommon for Web sites to contract out ad sales to a third party, which may not be as responsible as the site itself. For this reason, it's a good idea for any computer that will be used by a child or teen to have ad-blocking software such as Adblock installed on it.
Much of the online advertising aimed at children, however, can't be blocked because it's intrinsic to the site: many companies that sell products to children, such as snack foods and breakfast cereals, operate Web sites that provide gaming and entertainment and even entire virtual worlds to visitors. Today marketers are increasingly using these in conjunction with traditional advertising, using TV commercials to draw kids to the sites where they will play for an hour or more, constantly exposed to the company's logos and branded characters. There's very little that can be done to prevent kids from encountering this kind of advertising, though individual sites can be blocked if the amount of time a child spends on them becomes a problem. The best approach is to teach children as early as possible what the purpose of advertising is, and how things like branded characters and environments work. Teachers can do this through MNet lessons such as "Looking at Food Advertising" (Primary/Junior grades) and "You've Gotta Have a Gimmick!" (Grades 5 to 7). Teachers and parents can guide children through MNet's educational game Co-Co's Adversmarts: an Interactive Unit on Food Marketing on the Web, in which Co-Co Crunch, a fictional cereal mascot, shows kids the different ways advertisers use online environments to build brand awareness and loyalty. Children and even teens often have a hard time distinguishing programming and advertising, and branded Web sites take advantage of this by blurring the distinction: this program help kids recognize these sites for what they are, prolonged and interactive commercials.
Data mining: Of course, advertising is most effective if it reaches the right people. For that reason, there is a robust market in personal information online -- not just demographic information, such as names, sex and age, but more subtle things such as tastes and interests. If you're a member of a desirable market -- and youth, with few responsibilities, an increasing amount of direct and indirect spending power, and still-unformed brand preferences, are one of the most desirable markets -- then people are willing to pay a lot of money to know what you like and dislike. This is another way that sites that deliver their content for free can make money; Neopets, for instance, frequently offers its users "Neopoints" (the site's virtual currency) in exchange for taking surveys about such things as chocolate bars and breakfast cereal. This is a very effective and lucrative way of gathering marketing information about young people, which Neopets then sells to advertisers and manufacturers. This shows how important it is for children to develop privacy management skills early, before sites like this one can get them to develop the habit of giving out their personal information. As well, sites that use other revenue models sometimes make extra money by data mining: it's important to check the Terms of Service of any Web site to which you give your personal information or from which you buy anything (sites can track and sell your purchase history) to be sure it's not selling your data to a third party.
In some cases data mining can even happen due to oversight. This was one of the concerns the Office of the Privacy Commissioner had with Facebook: while users could employ the site's privacy settings to protect their personal information, those settings had no effect on the ability of third-party applications ("apps") could access their data. The OPC found that Facebook had too little oversight over the developers that created these apps, and so could not guarantee that users' personal data was not being compromised (some apps have also been found to spread malware such as viruses.) A recent news story showed the consequences of this: a recently-deceased woman's profile picture was appropriated for use in a weight-loss testimonial by one of the apps she had installed before her death. The lesson here is to remember that when you're using a site, there are often more parties than just you and the company that runs the site, whether it's a third-party developer for a site such as Facebook or Twitter or a third-party vendor on Amazon or eBay.
There are two Latin phrases that are good to keep in mind when using the Web: caveat emptor and cui bono. Caveat emptor means "let the buyer beware," and while in most countries consumer protection law has made this somewhat less essential it's still very much true on the Web. Any time you are considering giving someone money or personal information, you must be sure you know to whom it's going, what's going to be done with it and what guarantees you have that the deal you think you've made will be honoured. Cui bono is a question meaning "Who benefits?", and it's a useful thing to ask when using a site or service that's ostensibly free. Nearly everyone on the Web is trying to make money somehow, and if they're not open about how they're doing it, it probably means they're doing it in a way they think you'd object to.