The Web and the Internet began to really heat up and receive significant media exposure starting around 1994. Initially, the Web started as a great way for academics and researchers to distribute information; but as millions of consumers flocked to the Internet, it began to spawn completely new business models. Three good examples of innovative models include:

  • Amazon - Amazon (which opened its doors in July, 1995) houses a database of millions of products that anyone can browse at any time. It would have been impossible to compile a list this large in any medium other than the Web.
  • Ebay - Online auctions make it easy and inexpensive for millions of people to buy and sell any imaginable item. It would be impossible to do this at a reasonable cost or in a timely manner with any medium other than the Web.
  • Epinions - Thousands of people contribute to a shared library of product reviews. One of the Web's greatest strengths is its worldwide view and collaborative possibilities.
These different business models are all visible to anyone surfing the Web. One of the most interesting behind-the-scenes business models that the Web has created is called the ASP, or Application Service Provider. ASPs are a completely new way to sell and distribute software and software services. Although ASPs were possible before the advent of the Web, the Web makes them so easy to create that they have proliferated hugely in the last several years.

The ASP model can be extremely appealing to businesses -- especially small businesses and startups -- because it can drastically lower the costs of software and services. In this edition of HowStuffWorks, we will look at the ASP model from top to bottom so you can understand it completely. You will learn how it works, why it evolved and why it is becoming so popular.