Search with ads is a profitable business, even if you're small. All those little guys, such as Lycos, InfoSeek, and DuckDuckGo are modestly profitable. Search ads are inherently more valuable than most other ads, because they're displayed when the user is actively looking to buy something. Most other forms of advertising are annoyances.
The economics of the search industry are strange. Google pays Apple to be on the iPhone. Yahoo pays Mozilla to be on Firefox. Microsoft has their own browser, which comes with Bing as the default. Search as a service thus has negative value. Google is like the Jewelry Channel, which pays cable companies to get a channel. On the other hand, ESPN and HBO charge cable channels; the money flows the other way.
The economics of the search industry are strange. Google pays Apple to be on the iPhone. Yahoo pays Mozilla to be on Firefox. Microsoft has their own browser, which comes with Bing as the default. Search as a service thus has negative value. Google is like the Jewelry Channel, which pays cable companies to get a channel. On the other hand, ESPN and HBO charge cable channels; the money flows the other way.