Although the golden glow of Internet companies has been tarnished recently and many are now historical footnotes, some businesses are actually making money online, particularly in the business-to-business arena. For e-businesses that offer products and services to consumers, the jury is still out. Books, CDs, software, computer hardware and travel services sell well, but the bottom line is that no one is getting rich.

One prevailing Internet myth--now debunked--has been that once people discover your website, the money rolls in. As many failing companies now know, it's hardly that easy. Hundreds of thousands of e-commerce websites are already online. Getting people's attention requires plenty of advertising, unless your website is branded with a name like Disney or Barnes and Noble. Even then, there's a rough road ahead. Don't count on your site becoming the Times Square of the Internet unless you really work at it. But you can make money in cyberspace, particularly if you run a lean operation. Here are three ways businesses generate income.

Selling Products Online

Thousands of e-stores now thrive on the Web, providing people with a way to purchase goods and services electronically. For small businesses, the Internet can deliver a global market. Depending on which survey you believe, that may be more than 350 million people, with another 500 million Internauts projected over the next few years. If the demographics of the online community match your customer profile, that's a lot of potential new business that could translate into serious money. While the potential is there, however, challenges loom large.

First of all, how do your potential customers learn about your website? That can be difficult given the amount of online clutter. To attract customers, you have to aggressively market your website. While guerrilla strategies keep costs down, running a promotional campaign, buying ads (either in print or online), and sending out press releases is costly.

Second, what kind of products do you sell? The answer is critical, because online shoppers are reluctant to buy big ticket items, such as furniture. The exception seems to be computer equipment. What's selling well? Airline tickets, hotels rooms, music CDs, books and software--commodity items that are already familiar to people. While online sales are growing rapidly, it still represents a small percentage of sales in the real world.

Remember, it takes time for people to adopt new technology and modes of transactions. Many people remain reluctant to give out their credit card numbers over the Internet. The automatic teller machine wasn't an overnight success either. But most analysts project healthy growth for online sales, especially as security issues are addressed.

The poster child dotcom business, Amazon.com has a lot to teach aspiring Internet entrepreneurs. Yet despite their huge product inventory, convenience and customer service, the company continues to lose millions of dollars and has seen a precipitous drop in the price of its stock.

Advertising

If you've spent any time online, you've undoubtedly seen advertisements plastered all over the Web. Companies large and small pay for ad banners and links to their websites from other companies' websites. Advertising rates vary wildly, depending on the site and its audience.

What determines which sites attract advertisers? Sites whose audience demographics match those of the advertiser's customer base. For instance, if your company sells telecommunication services to businesses, you want to pitch your message to executives who making decisions in that area. If that's who regularly visits your website, it becomes a prime candidate to sport an electronic billboard for a telco. To put it bluntly, you're selling eyeballs to an advertiser. The more targeted your audience is, the higher rate your site commands.

Once again, the demographics of the Web are a key factor in determining whether this strategy will work for you. It's vital to understand who uses the Internet and who visits your site. Although computer technology makes it possible to gather some very specific data about site visitors, some demographic information is best gathered by asking for the information. That's why many websites require you to register. They're trying to figure out who you are.

Few sites can survive from advertising revenue alone. The amount of money spent by companies to advertise online palls in comparison to what is spent for other media buys, like radio and TV. With the current economic downtown and death of many dotcom companies, online advertising has declined dramatically. Although online advertising is expected to rebound, most of the revenue goes to a handful of large sites. Small publishers have to divide the proverbial crumbs.

TRY THIS... The Resource Center at Internet ad agency Double Click offers a wealth of information for aspiring Web publishers.

Subscriptions

Some websites now charge subscription fees, starting as low as a few dollars per month. Subscriptions can be on a monthly or yearly basis. One newspaper that does this, The Wall Street Journal, charges US $29 a year for it's print subscribers and US $59 for nonsubscribers.

Subscriptions, however, run contrary to the brief traditions of the Internet, where most information has been free. According to a survey from Jupiter Communications, a majority of respondents claimed that they were unwilling to pay a monthly fee for website access. Apparently they don't perceive enough value from the experience to pay for it, at least not yet. That could change dramatically as multimedia hits the Web. But some information, even text, does have value and some people are willing to pay dearly for it. Lexis, a legal online database, charges $2.00 per minute. While incremental billing isn't practical on the Web right now, it soon will be.

For a look at e-commerce trends, visit Activ Media and CommerceNet, an good resource for Internet business.

The Internet is still in its infancy, an unexplored territory with great potential and few rules. Despite uncertainty and high risk, opportunities abound for electronic entrepreneurs.