Do you remember GeoCities? When it was acquired by Yahoo! in 1999 for $3.5 billion, it was the third most-visited site on the World Wide Web.
There probably was never a completely clear business model behind GeoCities. Originally it was a free content hosting system. Users could create “homesteads” within specific neighborhoods (with names like “CapeCanaveral” and “EnchantedForest”) without registering new domain names. The building tools were rudimentary but clearly effective-- at its peak there were more than 38 million individual sites registered.
When Yahoo! tried to monetize the service, users found alternatives such as facebook.
ZDNet editor Rupert Goodwin commented: “It was a fascinating experiment...I think GeoCities was the first proof that you could have something really popular and still not make any money on the internet.”
What is, perhaps most interesting, is that Google launched its “Sites” product in 2008, only one year before Yahoo! closed GeoCities in the US. The underlying concept is surprisingly similar. The business model of free site hosting fits within Google’s larger “All the world’s information” business model and facebook’s purely ad-driven model. Perhaps the problem was not the GeoCities business model; perhaps it was the Yahoo! business model.