It boils down to one thing. Online advertising revenues - and that is still the bulk of what Yahoo makes its money from - are flatlining. Those of us who urged Yahoo to get off their brains and move faster towards a subscription model similar to that which makes AOL so profitable, and those who urged companies like Yahoo to use their stock to buy something tangible (like a piece of another media empire), have been vindicated. But in the long run, Yahoo may be proven correct in deciding to chart its own course.

As Yahoo moves at its own pace towards implementing more subscriber-only features, it will face a steady chorus of moans and groans, as the "unprofitable" customers Yahoo "fires" will undoubtedly squawk. Many will have a hard time digesting the news that what was free will now cost them money (or else). Hindsight is 20-20, but it may be more proof that the dot com boom's "new orthodoxy" - growth towards ubiquity via free distribution, then "monetize eyeballs later," has serious disadvantages.

Then again, there are powerful advantages to doing it this way. Companies of all shapes and sizes seem to have loss leaders designed to get their products into the hands of so many people that it becomes a standard. Palm, for example, is going to redouble its efforts in getting more low-end Palm mobile devices into the ordinary consumer's hands, which analysts say is a roundabout way of going after the corporate market to challenge the high-priced RIM Blackberry. One supposes that the path towards monopoly is often an unprofitable one... but companies seek to follow this path because of the rewards that come at the end.

So the problem with "monetize the eyeballs later" really boils down to "how the monetizing was conceived": through advertising. There are still services out there – excellent, fabulous services - which became ubiquitous through free distribution. In a desperate bid for profitability, they are now pestering us with advertising. Gator, the password remembering tool, has gone this route. I hope they will rethink it, and charge a fee instead. The advertising money just isn’t going to pay their bills, and forcing us to see the ads just annoys us. By contrast, a free message board software company, EZBoard, has recently gone to a fee-based model (which it's cleverly calling EZBoard Community Supporter). For a low fee, I can (a) get the advertising off our message board while continuing to enjoy its powerful customization and frequent product upgrades; (b) do something about that helpless feeling of standing by and watching another good technology company go belly up; and (c) get some icing on the cake: a few premium features.

Whoever said that advertising should always be the tradeoff? I wouldn't consent to having a yammering idiot bother me on the bus with his strange theories about armegeddon, in exchange for free bus fare. On the other hand, in the online spaces where people are searching for and discussing specific products, topics, and needs, advertising is often welcome. If advertising was not of any interest to anyone, of course, there wouldn't be any advertising. What you've heard is true: the future of online advertising is vertical. That means trade publications, vortals, online communities, newsletters, message boards, and keyword-based searches all have a potential affinity with an advertising model.

The answer to the revenue problem facing Yahoo and countless others seems pretty straightforward, and it’s already happening based on market forces of supply and demand. Companies with powerfully useful services can simply start charging fees for them. If Gator - which I now find invaluable for logging me into the 15 or so places I need to log in with various user names and passwords everyday - tells me the service will cost $29 for a lifetime license or $10 a year, I will shell out in a heartbeat in exchange for the convenience the service offers. If they tell me it's worth a lot more than that, I will more than likely tell them to take a flying leap.

Consumers will become "trained," as it were, to recognize the need to pay for software and online services just as they pay for any other convenience or tool. Those who devalue the advantages of being wired or completing a needed task with a helpful tool can simply be left behind; it's that simple. In this society, many people (and not rich ones either) are willing to pay almost any premium for convenience. $100 would probably pay for a full year of "Yahoo Whatever." I bet some people spend $100 a year on Glade Plug-Ins.

Recently, I checked my email and looked at stock quotes through my Yahoo! account using my mobile phone. It wasn't all that much fun, but it might have been important to me. If I don't have a Yahoo! account, I can't do it - not nearly as easily, not in the way that I want to with data I've already entered in. If Yahoo makes me pay for a premium login "or else no Yahoo on your phone," I'll probably pay. You can get AOL on your phone, too. How much does it cost to subscribe to AOL for a year? $240+? That's a long way from free.