At the Xanadu project during the years 1989 through 1992, sometimes the question would come up about the feasibility of (what we would today call) search engines. At other times, we would discuss possible revenue models for the future world of hypertext. At that time, I argued (convincingly to many, I regret) that search engines were impossible, and that advertising was not a workable revenue model. In both cases, the core argument was simple, and, I felt, solid:
For a company to run a search engine, it would have to individually acquire disk space that was proportional to the total disk space used by the sum of all other players. If there were multiple competing search engines, they would each need to do this. This seemed obviously impractical. Although I knew storage would continue to get cheaper at an exponential rate, this didn't seem to me to invalidate the argument, since it would also be cheaper for everyone else.
When advertising was proposed as a revenue model, I argued for the inevitability and unsolvability of what is now known as "click fraud", as well as ad-blocking services such as today's Adblock. The one form of advertising I thought was sustainable was product placement ads, where the advertisment is woven into the content, such as the famous "Reeses Pieces" in the E.T. movie. (If I were being paid for this statement by Hershey or Steven Spielberg, which I'm not, then it would serve as a good example of itself.)
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