Seeing as pixelmania has made its way into an article by the WallStreetJournal, I've decided to post one that I've been holding on to.
Students of history will remember the Dutch Tulip Mania that swept the country from 1634 through the beginning of 1637. At one point in time, a single tulip bulb went for the equivalent of 1000 pounds of cheese or even four tons of wheat. The rise of the tulip bulb made many rich but left many more financially devastated, and it took years before the market as a whole fully recovered. The beauty and curse of capitalism is that key players are people, who by nature are not rational, especially during a frenzy. We saw this same bubble mania take hold during Internet 1.0 in the late 90’s, and like tulip mania, many people made exorbitant amounts of money, but not without many more losing almost everything. Internet advertising successfully weathered the bubble. The value of the medium took a hit, but unlike tulip bulbs, it not only has value, but room to grow. Internet advertising has such upside remaining that even today’s feverish acquisition market is not indicative of a bubble. Then again, maybe it is…
While many of the activities seem bubblicious, perhaps none summarize the zeitgeist of the moment as well as Alex Tew’s Million Dollar Home Page. Not that Alex needs any more publicity as the student turned entrepreneur quickly parlayed a simple idea to help pay for school into a million dollar plus enterprise. By now, almost everyone has heard of the story. Student Alex needs a way to pay for school and knows that the answer lies with the Internet. His solution involved taking a simple homepage and converting it into one massive billboard where for a buck anyone who wanted to could buy space on the billboard. Think 468x60 only bigger, and instead of one advertiser, it’s more than the eye can see.
When I first learned of the Million Dollar Home Page, young Alex had already sold more than 600,000 pixels, and today, he’s assured of not only reaching his million pixel goal but surpassing. In a smart move, the college student showed he was a student of the Internet and decided to put the last 1000 pixels on eBay. Six days remaining on the auction and the price for the last $1000 worth of pixels is already at more than $30,000. If past human behavior is any guide, we can expect the final amount to more than double. (Note: the auction has closed, with the final price topping $160k - a 5x jump) If the homepage itself doesn’t qualify for bubble behavior, the remaining pixels surely will. Then again, perhaps not.
No less than two thousand copy cat sites have sprung up, but fortunately, none of them has caught on. Why fortunately? Because as clever and great as Alex’s Million Dollar Homepage, there is no actual business model. That’s not to say that the investment was a complete waste of money though as the two are very separate. Thanks to a good story, and really good timing, the million dollar homepage is really the million visitor homepage. This month, the site will see north of five million unique visitors and generate as many as ten million page views. At a $10 combined RPM, a site with those stats could earn $100,000 or more a month. It won’t top his $1.16 million gross revenue in five months, but given that he will almost surely generate 50,000,000 page views, what Alex has done is simply found a way to generate and monetize traffic.
The Million Dollar Homepage might just be a wacky idea that could only work on the Internet; or, perhaps it’s just the online equivalent to the vanity bricks, those pieces of concrete that people can claim so that those who pass over the area can read their inscription. They dot university walkways to libraries, and now, they dot the Internet. Whether it can be a sustainable business will depend on whether any underlying principles exist in the model. Were this truly the bubble days, people would flock to the copycats. Those flocking though aren’t the people buying the pixels just those looking for a quick buck but missing the story. And, unlike tulip mania, those looking to invest have a variety of options and the experience to look for some justifiable return. Anyone can create ad space, but not everyone can generate traffic. Is owning a block of pixels on the Million Dollar Homepage really akin to owning a piece of Internet history? Unlikely. It’s helped make a poor student wealthy and his site a blip on the radar, but not an unrational blip.
