It will be a different story for his 17-year-old daughter, however. Anderson has not yet mustered the courage to tell her that she won't be able to call her friends back home in Wisconsin without paying by the minute.
"I expect there will be a potential backlash once the realization hits," the 41-year-old systems administrator said with a nervous laugh. "One of these days we'll have to deal with it."
So will millions of other people who have come to depend on online services and content as they realize the inevitable: The free ride on the Web is coming to an end.
Some denounce the Net's move toward subscriptions as the death of the first mass medium founded on democratic principles, a digital utopia where social, economic and geographic differences posed no barriers to the open flow of information. Others are more pragmatic, saying it was Pollyannish to have expected the Web's content and services to remain free forever--especially after the Internet bubble burst.
Either way, the introduction of charges may fundamentally alter the course of the medium. This evolution could create a new kind of digital divide linked to one's ability to pay for information and services, giving rise to virtually gated and balkanized communities throughout cyberspace.
"People have gotten used to free information. Schools, low-income people, job hunters--information will be dried up for them," said Jim Carrier, director of Tolerance.org, a Web site run by the Southern Poverty Law Center in Montgomery, Ala. "That's not to say the marketplace wouldn't work, but clearly the promise of the Internet is the democracy of ideas. That becomes less than ideal when some of your best information must require a credit card."
What people like Carrier fear is control of the Web by a handful of megacorporations capable of handling such diverse issues as security, privacy, speed, scale and copyrights in millions of transactions per second. Though countless companies from the New and Old Economies will prosper in this new landscape, many Internet veterans see two familiar names emerging as dominant players: AOL Time Warner and Microsoft.
Both are among the few media and high-tech companies powerful enough to take over large segments of a wholly commercialized Web, though each arrives at this juncture from vastly different origins: one from media and the other from technology.
AOL Time Warner derives its strength from America Online, the largest paid membership on the Internet, and from the massive wealth of content from Time Warner. Microsoft has unrivaled expertise in controlling the software consumers and businesses need to use services and buy products while navigating the Web.
"AOL Time Warner and Microsoft will probably take over some 70 to 80 percent of everything--Web access, Web usage, whatever," predicted Ken Lim, chief futurist of research organization Cybermedia Group and a former employee of Apple Computer and NASA. "An element people are touching on is that it's not the content that's important--it's the functionality."
Giving revenue away
One popular conspiracy theory holds that sites are already preying on the addiction of their followers, hooking them on free services only to start charging when they seem indispensable. Although that may be true in some cases, many large Web companies would rather keep their sites free--they just haven't figured out how to make money that way.
Through woeful miscalculation or a belief in their own hype, many leading dot-coms assumed that a limitless supply of advertising dollars attached to traffic would keep them profitable. Following that strategy, the major portals became locked in a multibillion-dollar war to acquire the highest numbers of visitors, often by buying other sites for little more than their traffic figures.
The result was a kind of gargantuan pyramid scheme that continually raised stock prices based on traffic counts, making money for investors until Wall Street realized those numbers weren't translating into meaningful revenue. As the Internet economy was squeezed last year, a wave of online publishers began to rethink the free philosophies that drove the Web's growth for so long.
"If you give away something for free, it's a bad thing. There's no profit, and you can't take clicks to Safeway," said Yobie Benjamin, distinguished fellow and general partner at Ernst & Young. "We knew that, yet we persevered in our stupidity."
Many companies are quietly making moves to rectify that situation. Bigstep.com will start charging this month for its Web-hosting services in three packages ranging from US$9.95 to US$34.95 per month, likely beginning a trend that will affect all small businesses online. Also this month, LookSmart will begin selling prominent placement on its Internet search directory, following a controversial path charted by GoTo.com.
About.com, another search engine and a subsidiary of magazine publisher Primedia, plans to charge for some of its e-mail newsletters--a form of online communication that free-Net proponents have long argued is key to ensuring the open flow of information, bypassing copyright laws if necessary. In Primedia's case, newsletters targeted at specific industries ranging from Cable World to Soybean Digest could soon be available only for a fee.
The trend toward subscriptions may even rescue that much-maligned species known as the dot-com start-up.
In the next few weeks, a company called Talaris plans to offer a fee-based Web service using Sun Microsystems' Java technology. Similar to long-term plans by Microsoft, the Talaris service would act as a kind of virtual assistant that handles multiple tasks such as scheduling a business trip complete with airline, hotel, restaurant and rental car reservations--updating them all automatically in the event of a last-minute delay.
"Lots of companies went too far down the road in giving things away for free and found that they couldn't charge later," said Kevin Werbach, an industry analyst with EDventure Holdings and a former Federal Communications Commission attorney. "Anyone who thought the Web would somehow change the laws of economics was deluding themselves."
Publications that have already begun subscription fees include Encyclopaedia Britannica and magazine Salon.com, which now charges for premium sections and sells readers an ad-free edition. Hollywood trade publication Variety.com started charging for articles it previously used as bait for online subscriptions.
Far more controversial is a plan by eBay to begin charging subscription fees of US$4.99 to US$15.99 a month for popular auction software that helps sellers present offerings and manage sales. The move has been met with particular acrimony because eBay's unique person-to-person business relationships have fostered its reputation as the first true Internet marketplace, grown organically by an egalitarian online community.
Companies are also experimenting with various ways to present these new bills to customers, including "micropayment" charges ranging from US$0.10 to US$10 per click applied piecemeal for specific content. Earlier this year, Amazon introduced a new payment method tied to its one-click payment feature that lets Web sites such as SatireWire and the SETI Institute (search for extraterrestrial intelligence) solicit small donations from visitors on a pay-per-view basis.
This may be just the beginning. In the future, executives and analysts say, a variety of free and subscription models will coexist. Some compare the emerging medium to television as it evolved when cable was introduced, eventually leading viewers to pay for some channels while watching others for free.
"You'll see these blends where those that value their time rather than their money will pay for an ad-free publication," said Jonathan Zittrain, executive director of the Berkman Center for Internet and Society at Harvard Law School. "All these models can make your brain hurt really quickly, but this is the sort of thing that people who have MBAs and such will put a lot of work into."
The cost of price tags
Some newspapers are reconsidering online subscriptions, raising the specter of what some in the publishing business call the "90 percent order of magnitude." That equation is based on the experience of The Wall Street Journal's online edition, which purportedly lost 90 percent of its readers when it began charging a monthly fee.
After the initial traffic shock, The Wall Street Journal Interactive went on to become one of the few subscription sites considered a business success. Since then, other sites have weighed whether they, too, could survive if only 10 percent of the people using their services were willing to pay for them. Those that do decide to charge usually offer at least some content and services for free as an enticement.
"It's an old, old model that venture capitalists used to use," said Clay Shirky, a partner at VC firm the Accelerated Group and a veteran Internet analyst. "Let them onto the front porch for free, then charge them for coming into the house."
This tactic, like so many other standard online practices, was pioneered by the pornography industry. The adult business may further provide a blueprint for profitability for the mainstream entertainment industry, which hopes to cash in on movies and music once high-speed connections pervade the Internet.
Public demand for broadband would create opportunities to charge consumers in a variety of ways for services. In addition to imposing fees for viewing or hearing copyrighted material, companies could charge for premium software, fast network connections and other technologies needed to experience multimedia entertainment online.
Such businesses go beyond charging the consumer, potentially creating new middleman industries that could do everything from providing complicated micropayment systems to licensing and aggregating professional sports events. RealNetworks has already struck deals with the National Basketball Association and Major League Baseball, possibly positioning itself to provide on-demand Webcasts similar to cable TV's pay-per-view boxing matches or TiVo's recording of personally programmed events.
"If you look at this history of any media, there's always been a blend of ad-supported and consumer-supported revenue," said Mark Hall, vice president of programming and marketing for multimedia company RealNetworks. "The larger point is you see people moving in that direction, and that is something that's always going to happen."
Until then, companies can build lucrative businesses by charging for services that have nothing to do with content, such as instant messaging, Internet telephony and high-capacity e-mail. Some companies even charge to remove features from services, rather than add them. Juno Online Services' free Net access, for example, carries prominent ads that can't be removed. People who use the free service often grow irritated with the ads and eventually pay for a premium service to avoid them.
"Marginal costs will be the true determiner of whether something's free," said Jordan Rohan, an equity analyst at Wit SoundView. "People give away things that don't cost them a lot."
Others agree that companies are looking to provide services compelling enough for consumers to buy, suggesting that the demise of the free Web goes beyond finding replacements for ad revenue.
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