# Train Terminals & Infinite Libraries Much of the internet relies on a very particular business model: pay-per-click (PPC). Advertisers pay search engines and content creators to direct traffic to their websites. This is the primary way that Google and Facebook make money, and, until recently, it was also the primary monetization model for content creators like the New York Times. The PPC business model has proved incredibly resilient, essentially becoming the financial cornerstone of the internet for the past 25 years. Companies that rely on PPC are collectively worth trillions of dollars. However, in the past two years, PPC has been falling apart. The average Google user spends nine seconds on the results page. They enter their query, hit "Search," and click one of the first results they see, typically from major, reputable content creators. Other times, they click on one of the paid ads near the top of the page. Google is incentivized to display highly relevant ads to increase clicks. For each click it generates for an advertiser, Google gets paid—so Google benefits. Advertisers benefit from the relatively cheap traffic Google sends their way. Content creators benefit from organic traffic on searches with few ads or irrelevant ads. Users benefit from Google’s incentive to display the most relevant results. Financially, it’s a win-win-win-win situation for Google, content creators, advertisers, and users. But this paradigm—make search, see ads—is broken. Generative AI causes users to spend much longer on search engine result pages (SERPs)—averaging 23 minutes on Perplexity! Few click through to other websites. Instead, the AI generates all the information a user needs directly on the search engine results page. Users are content perusing that content and moving on. **_Google is a train terminal, a place you pass through on your way somewhere else. Perplexity—and generative AI search—is an infinite library where the hours pass by and it’s dinnertime before you even notice._** I call this new internet **Web 4.0**. ## Monetization Breakdown The implications of this profound shift are clear: the PPC monetization model is faltering. This affects all major stakeholders: 1. **Content creators** will struggle to monetize their work without search engine traffic. 2. **Search engines** will have a harder time monetizing their SERPs without selling traffic to advertisers. 3. **Advertisers** will find it harder to get the traffic they need to sustain profitable businesses. The internet will adapt, and companies will find new business models that make sense under this paradigm. Let’s explore potential solutions, starting with search engines. ## Monetizing Infinite Libraries Google's business model is brilliant. It relies on a deep understanding of Google's strengths: 1. **Traffic:** As the front page of the internet, Google attracts countless visitors. 2. **Routing:** Google's purpose is to route those visitors elsewhere on the internet. Google’s most valuable commodity is its traffic. The highest bidder can get a portion of this traffic routed their way via paid advertising. What happens when factor #1 (traffic) is true, but factor #2 (routing) isn’t? The AI-first search engines of Web 4.0 aren’t built to route traffic. They’re built to generate excellent content and keep users engaged. Over time, these search engines will become destinations rather than stops on a longer journey. Eventually, they might even become the web itself, generating websites for users on demand (see Arc Search as an early example). This makes traditional SERP advertising irrelevant. Users don’t want to click away from the SERPs—they want to complete their task directly on the SERP. How, then, do you monetize them? ### Contextual Ads AI search engines could incorporate **Contextual Ads** by tying sponsored content directly into AI-generated responses. For example: When a user searches for “best Humphrey Bogart films,” the AI could include this intent: _As you generate your response, keep in mind that Gladiator 2 is now showing in theaters._ The AI would weave this intent into its response while noting that the answer is partially sponsored. A paid subscription to the search engine could remove Sponsored Responses. This approach would require rethinking ad exchanges and targeting methods. ![[SPONSOREDRESPONSE.png]] ### SERP Actions Web 4.0 search engines could allow users to take actions directly from the SERP. For example, after searching for “Humphrey Bogart films,” the SERP might suggest: “Gladiator 2 showtimes.” Clicking it would enable users to book tickets directly from the SERP. To facilitate this, search engines would need to enable businesses to create **on-SERP Actions**. Generative AI could simplify this by helping businesses describe the desired action and auto-generating the functionality. Examples of SERP Actions include: - Travel bookings - Content subscriptions - Product purchases Each action would be seamlessly integrated into the SERP experience, ensuring users never need to leave the platform. ![[GLAD2 1.png]] ## The Future of Web 4.0 Monetization The shift to Web 4.0 forces a rethinking of how the internet’s economic engine operates. While the traditional PPC model fades, new methods like Contextual Ads and SERP Actions represent promising alternatives. As search engines become destinations in their own right, monetization must align with user behavior, creating seamless experiences that generate value for all stakeholders. This transformation is not just about adapting—it’s about reimagining how the internet functions as a marketplace. The companies that can master this shift will define the next era of the web.