How do websites and TV channels make money?

[twstedlogic]

Hi. It's basically all advertising but the way they make money from advertising is complex. For example, as with any site or tv channel the basic aim is to get the attention of large amounts of people. The more members facebook has, the better for them because the more of a following a certain product has the more they can charge from companies to advertise. Example: If a lot of people watch a certain show or read a certain newspaper then companies would pay a lot more to gain access to those people. Basically, socializing is the reason people are on facebook, but facebook can charge companies in order to gain ACCESS to that audience. The more people are on facebook, the more they can charge.
Similarly, the way they charge for ads is probably dependent on how many people there are on facebook, and how many connections (friends) there are. Because that helps facebook and those companies in finding out where to place their ads. The things I post on my friend's wall and stuff like that might reveal a lot of information about my interests and that is helpful for companies because now they can specifically target a facebook member or a whole group and show them products/services they would specifically be interested in. If I were on facebook but had absolutely no friends or activity, it would probably be a lost cause to advertise to me. Basically, they probably charge different amount of fees for advertising to different users/groups depending on how big that person's network is. There is a term in sales called lead generation, which basically means FINDING customers who might be interested in or be able to afford your product. Thats what facebook does for companies. Obviously, exactly what their model is is a bit of a mystery but since the customer (you) have to pay nothing, most of the revenue comes from advertising. Conversely, if people started leaving facebook, their revenue from advertisements would fall drastically. The more members and more connections between people there are, the easier it is to reach customers with specifically targeted ads.
On facebook, finding out how many members there are is pretty obvious. For tv shows, they basically do surveys (ask a bunch of people) and then they use statistical techniques and estimate how many people are actually watching. For example, lets say I conducted a survey among 1000 people, and 500 of them watch LOST. They basically estimate that if for every 1000 people 500 watch the show, then for a total population of 300 million, there must be around 100 million viewers, accounting for age, access to a tv, geography etc. Its not completely accurate but thats how its done and its a good estimation. Nowadays, they probably have more advanced techniques of monitoring things but usually they estimate these things using statistics.