Back to Basics with this Lil' Internet O' Ours. Part 1

I've been involved with the Internet since 1999 (some call it the stone ages of the Internet!) and I have seen it evolve into this new and fancy web 2.0  that we have now with Youtube, Google,Twitter, Facebook and so on. How exciting! ...sigh... The thing is through all this you get  to a point where it feels like everyone knows about the Internet and web-services just like you until someone asks you what you think is the most basic of all Internet related questions. You see; I had a conversation with a potential website design client just a few months ago and had a very interesting, if not educational, conversation about the Internet and website hosting.  

I had just finished explaining the proposal for the website design work and the hosting that would come with it to the gentleman when he asked the following questions:

1. So what exactly is this domain name here? My business (name) is already registered and sorted with my accountant and Companies House why should I pay out again?
2. Why should I pay for hosting? The Internet is FREE and for everyone worldwide. Who does it belong to that I would need to pay them every month? Surely no-one owns the Internet?
3. I like the fact that I will only pay you £---- as a one off and improve my business prospects over last year when I paid £----- and almost broke the bank. This should sort me out!

You... whaaaaaat????? No joke people, apart from thinking to myself that for question 2 above I could suggest annual payments over monthly payments, I was stunned! and... flamixed...is that a word?  Anyway my no.2 brain went into gear and  I realised that this was going to be an educational as well as a business situation. I mentally stepped back and tried to debunk all the conceptions and misconceptions I had held about this gentleman and his business. His business was a very big player in his industry which is probably why he took longer than his competitors to get online as he had been satisfied for too long and got behind a little bit. From my perspective his was a contract to die for, but hold on a minute, are we sure HE knows what he is buying and paying for here?  Versus what he would like to get?
With all this happening my business brain (which has the enthusiasm of a 7 year old at Disney World) was screaming at me to sell website design, website hosting, overcharge on the domain name, sell my SEO service and enroll him as the lucky-to-be-first member of my never-seen-before Internet Marketing program called How to Use the Internet To Dominate Your Local Market and whatever else I could come up with impromptu...

Wait, did you just say $$$ dollar $$ signs  to yourself there? Well, why don't you come back for part 2 as I explain how a mature Internet marketer such as myself handled this situation? I was thinking of making this one article buy my business brain, (remember the 7 year old at Disney?) is thinking 7 parts to this so come back tomorrow for more.