Companies in this industry publish content on the Internet or operate websites designed to help people find content online. Major companies include Facebook, Google, and Yahoo! (all based in the US), as well as Baidu and Tencent (both based in China), DeNA (Japan), and NHN (South Korea).
Demand is driven by consumer and business needs for information and entertainment. The profitability of individual companies depends on their ability to deliver relevant information to consumers and to offer advertisers desirable target markets. Large companies enjoy economies of scale in marketing and in their ability to develop and maintain multiple websites. Smaller companies can compete by focusing on niche markets. The US industry is highly concentrated: the top 50 companies account for about 80 percent of revenue.
Sales of online advertisements account for just over half of US industry revenue; sales of digital subscriptions (access to databases, e-books, periodicals, and games) make up about 30 percent. The majority of advertising revenue (about 75 percent) comes from search and display formats, according to the Interactive Advertising Bureau and PricewaterhouseCoopers. Search revenue is recognized from the fees businesses pay Internet firms to link their company's site or name to a specific search word or phrase. Display advertising is the result of a business paying an Internet company for space to display advertising on its website; display advertising includes banner advertising, video, rich media, and sponsorships. Other sources of revenue include subscriptions and licensing of proprietary products to other sites.