Avoiding The Content Apocalypse?

ObligatoryUserName asks: "Recently, a gaggle of Amazon Honor System, and PayPal logos (or cheeky text equivalents) have been proliferating on a number of great, beloved and/or famous/infamous web sites. While still other sites are turning to membership programs. The advertising model seems to have failed (or is in the process of failing) and according to yesterday's great interview, micropayments aren't going to work out either. So, I was wondering, how can we save these sites? Is the major cost bandwidth? (Sites with bandwidth sponsors seem, so far, less likely to ask for micropayments.) Is most of the money going to the salaries of content creators? If some non-profit organization or the government (as per PBS) were to pay for bandwidth for exceptional/popular sites, how much would it help?" It's a decent question, and one that I keep bringing up because a workable solution has yet to present itself. Before, the chorus was micropayments (as the minor chord chimes in with the yet-to-be-tested Street Performer's Protocol). With micropayments in doubt, what other routes can sites follow for the funding they need to exist?

Comments

What's the issue?

[The Good Reverend]

Though Paypal's been around for a while, Amazon's honor system is pretty new. They're popping up all over the place because they're new, and because a lot of site operators are just testing the waters. It doesn't hurt me to have a couple little logos on my site, especially if they might bring me cash to run the site. It's a free system to let users who are interested donate - of course it's popping up everywhere.

I think it's FAR too early to say that micropayments are a failure, and that we need to Save Our Sites. Most folks run sites out of love, and will continue to do so. Micropayments are just a way that we might be able to make some cash doing what we would do anyway.
The Good Reverend
I'm different, just like everybody else.

Mocking other media is the key

[grovertime]

As I am preparing to unveil on my own site in less than one month's time, it is time for the internet content sites to establish advertising or sponsorship in a similar manner as radio, television or print. That is, mixing content and advertising does not work. One most be of total focus, even if just briefly, for an advertiser to feel assured that their product, service or message is cutting straight through to the audience member. Why not more interstitial advertising that loads briefly (3 secs) while new content is freshly disseminated? Break up sections on a site with pointed, totally focused and focus-pulling advertising that is there and gone quickly? Prospective sponsors have responded very well for my upcoming relaunch and I expect it to be very, very successful.

1. 
   what the?
   

Fund Raisers

[psin psycle]

There is a local radion station that uses fund raisers to raise the money it needs to stay on the air. They figure it costs about $250 to stay on the air for one hour. Twice a year they spend 10 days trying to raise enough money to keep broadcasting for another 6 months. It is the longest run public radio station in Canada. (They only have about 1 commercial an hour... I do not think they are government funded) Their product is radio waves. Unlike the RIAA they have discovered that people really are willing to pay for content that they can recieve for free.

I usually donate once a year. I donate based on what I can afford. The first time was only $10. The next was $100... the next, who knows.

The radio station is at www.ckua.org. Please don't slashdot it unless you plan on making a donation ;)

Point being: Fund raising can be a good way to earn the money needed to stay in business. Ask for donations, and make it easy for people to donate as much as they can afford.

Banner ads

[Anonymous Coward]

Banner advertisers largely have themselves to blame. I've stopped clicking on banner ads, even ones that I'm curious about, because all too often, either:

(1) I'm bombarded with dozens of pop-up windows that won't go away, and I wind up either killing netscape, or in extreme circumstances, killing X-windows and logging back in.

(2) I get an incredibly complicated page loaded down with strange javascript and java things that crashes or hangs my browser.

Re:Banner ads

[sulli]

Don't forget:

(3) Banner ad leads to TCP_error or 404 or missing page or somewhere else.

Enough of these have reduced my click-throughs due to wasted time.

Advertising model is NOT failing

[NineNine]

The advertising model is NOT failing. What is failing is these top-heavy companies with huge staffs and outrageous expenses. Again, look at the porn industry. There is HUGE evidence there or advertising for revenue working just fine. That's because most people who run adult web sites run them aggressively, and keep costs low. You don't need hundreds of people to run a content web site, period. You don't need scads of marketing and other random management people. You don't need huge, glamorous offices in the most expensive real estate market in the world. You don't need TV ads.

Many excellent adult sites are bringing in VERY large amounts of purely advertising revenue. If non-adult websites would simply follow this business model (it usually takes them a few years to catch up), then we wouldn't see as many failures. Advertising works fine. There's plenty of room in the world of non-adult websites for ad-drive, content sites, if they are run with an eye on the bottom line.

Re:Advertising model is NOT failing

[baptiste]

Agree 100% I was chuckling today reading about various .coms laying off half their workforce. "We're still making $$ and plan to be around for a while but needed to preserve our capital, etc, etc" Since when does it take 100 people to run a website? Yes, the larger sites take a lot of people and bandwidth does cost money. But nobody said you had to hire dozens of people to do it.

Growth comes from making enough money to expand, not expanding fast enough to keep up with expenses. The latter will bankrupt you anyday (even after the Shrub sticks it to the poor slob with too much debt)

--

Re:Advertising model is NOT failing

[SetiMike]

Hey there's a good idea, I want to have 30 browser windows start popping up everytime I visit any web site. And half of the pop up windows start opening up other windows.

Seriously, how do people put up with that? My thinking is that a large portion of people visiting those sites must be waves of newsbies getting on for the first time. I guess some people must think the content is very good to put in credit card number and put up with all those windows of ads.

Re:Advertising model is NOT failing

[acroyear]

Growth comes from making enough money to expand, not expanding fast enough to keep up with expenses.

Nice quote. Trouble is that the "imagination" got away with the CEOs and VCs out there. They got their initial "hits" of advertising dollars and eyeballs and "customers" in many cases, saw a growth curve, and then expanded as if that growth curve would remain constant or even exponentially explode. After all, that's what happened to Apple, IBM, Microsoft, Compaq, Dell...

Only it didn't. It levelled off. In order to keep "growing", the .coms took part in major acquisitions (yahoo, altavista, excite) or expanded their categories of merchandise to the point of redicule (amazon). Yet the curves continued to level off. There just weren't all THAT many buyers out there for stuff they could get even easier the old-fashioned way.

Then the dumb competitors entered (did we really need 12,15,30 different online music stores, all dealing in the same stuff? Did amazon really have to enter that market as well?). Instant saturation to the point of uselessness. The entire world turned into shoeshops.

The only successes are the ones that stayed small, in terms of content and customer base -- "The Artist Shop", e.g., a speciality music store for discerning prog-rock listeners. Other successes are those for which the online catalog was merely that -- an online mail-order storefront that was an add-on to their real storefront.

Re:Advertising model is NOT failing

[jafac]

In many cases, staffs have grown largely because of the politics of business. Managers push for more people on their team, regardless if they need them; they can always be laid off later when the money dries up (sound familliar?). A larger team means more "status" for that manager, possibly higher pay, an easier job meeting performance numbers, etc.
A company that's overstaffed, is prepared, prepared for rapid growth. The tech industry expected rapid growth, because everyone knows that if you are first in the game, you have a much better chance of gaining dominant marketshare, and if you gain dominant marketshare, you have a good chance of acheiving a monopoly, and then, as Microsoft has demonstrated, you can pretty much sit back and rake in the profits. Microsoft was the model everyone expected Netscape, and all the other dotcoms to follow. Sure, there was bound to be blood at some point, but the risk was worth it, if you invested in a winner, you were rich. The effect was so profound, that even before the game started to play-out, money came pouring in. Everyone wanted to get rich from this "new thing". but the game hasn't played out the way people expected - I think that the conditions that led Microsoft to it's position are no longer there, possibly because Microsoft was able to head off these other companies (except for AOL). When it started taking longer than people thought for these companies to turn a profit, the money flow slowed, and the corporate bloat caught up with them - and it started a vicious circle, or death spiral.
Unfortunately, good companies with sound business plans and plenty of profit have also been bloodied in the process. Kind of sucks there. But I liken the stock market to the study of stampeding lemmings these days.

Re:Advertising model is NOT failing

[TOTKChief]

Ahhhh, but not every content business is like the porn industry. With porn, you have to pay:

• Talent.
• Photographers.
• Web developer/graphic designers.
• Site manager.

For me to be similar with our ezines, I'd have to pay:

• Our writers.
• Our editors.
• Web developers/graphic designers.
• Site managers.
• Marketroids.
• PR flacks.

With porn, once the image is captured, you're done. Porn talent can, er, display their wares anywhere they choose. My talent all get exclusivity clauses in their contracts, because our writers make our ezine. Also, except for sites focused around specific talent, I don't imagine that "viewers" want to interact with the talent. With writing, it's vitally necessary to the creative process.

I never thought I'd come to comparing my writers [as Chief Editor, I think of them that way, though I'm younger than almost all of them] to porn talent. I just hope like hell they don't find this thread...=)

--

Too Many Visitors!

[ps]

I currently work for a company that has several large websites. Our goal for last year was 300 million visitors. Unfortunately (!) we had 1.6 billion visitors. This nearly killed us. We had the bandwidth, but the *cost* of that bandwidth was huge. The ad sales just don't cover the costs.

How did we fix it? We haven't. The higher ups set the goal for this year of 300 million visitors (again). So we have to try to find a way to keep people away from the site, but not drive everyone away. It also means trying to co-brand with other companies (where they pay us), and not updating the content as much).

Oddly enough for today's climate, our eCommerce activities are actually making money, and keeping the rest of the sites afloat.

Will we be able to make it? We'll have to see...

Re:Colocation

[d.valued]

Still.. A LOT of smaller sites have to pay through the nostrils to get hosted.

Pipe costs less today than last year, granted, but offering up sweet MP3/Ogg Vorbis audio and glitzy, high-grade vids will still eat up bandwidth.

Sometimes, a back-to-basics approach is called for. Simplifying your index.html (getting rid of extraneous tags and fancy font calls) may be minor, but if you get a thousand.. ten thousand hits, those bits add up.

If you're in a major metro area, you could try DSLing your own personal web server.. if you're sure the provider is reliable (and you can afford the symmetric DSL rates... )

Still.. As with most things that are worth it, getting a website up, hot, and active takes money.

Right now, though, don't count on your website to be your day job (unless design, creation, and maintenance thereof IS your day job, in which case, bravo!)


Ruling The World, One Moron At A Time(tm)
"As Kosher As A Bacon-Cheeseburger"(tmp)

Confusion on Micropayments

[TOTKChief]

Ask most any content producer what they want to get paid with, and they'll reply, "Micropayments." But it's because we use the term the wrong way.

After carefully reading Clay Shirky's comments on micropayments, he makes sense: paying before you're sure about the quality of something is a bad idea. Even with a respected content producer, how are you sure that they will maintain standards?

Case in point: Tom Clancy. I haunt alt.books.tom-clancy, and much discussion has raged there about the declining quality of his novels. Some have stated that they will never again rush to their bookstore on release day and pay full price for a first-edition hardback. I am almost to that point myself--because the quality hasn't been maintained.

What most of us content producers want is to charge, but not charge highly. We can't do it with credit cards--most folks know about the charges there. [What, you think Visa stays solvent just with our high balances? =) I wish.] So "micropayments" is our answer, although the traditional micropayment method [pay $0.NN for my bit o' content] isn't really what we want.

Here's where we are probably going:

1. Maintain our public archives for N months--probably a quarter. IOW, you can see stuff from 01/2001-03/2001, but you're screwed before then.
2. Maintain our email lists as no-charge subscriptions for those who don't wish to pay. Place ads on those lists.
3. Offer access to six years of articles in the archives if you're a subscriber. [Cost: $2-5/mo. That range is broad because we haven't done market research yet.]
4. Offer ad-free email lists if you just want the straight poppo. [Cost: $5-10/mo, depending on the list, market research, and how much it costs us in lost revenue. We probably wouldn't seek to make up all the "lost" ad revenue--probably offer a break of, say, 20-25% over what we'd bring in with ads.]

If anyone has comments on this system, I'd love to hear them. Since we're an ezine, we can try to adapt the magazine business model to the Internet, all the while trying to kill the notion that information and storage are combined. My rationale on charging for archive access is just like asking us to store your old copies of Sports Illustrated--as long as you don't mind if we peruse the swimsuit issue. [Carol Alt: yowza!]

--

Follow the adult industry, as usual

[aiken_d]

If there's one thing history has shown us, it's that adult entertainment leads the way in both technology adoption and maxmimizing revenue. So let's look at the current state of the adult internet industry as a model for where everyone else will be in a couple of years.

The reason the adult industry is always ahead of mainstream industries is the complete lack of "wishful thinking" business plans. Well, that's not entirely true. How about, "the complete lack of funding available for 'wishful thinking' business plans"? There is nobody to give you $20 million in the adult industry; if you want that kind of money, you have to get it the old fashioned way: by earning it.

For that reason, bad ideas die quickly... whereas in the so-called real world, bad ideas can persist for years if the people responsible have the right connections and are good with powerpoint.

So let's move on to how people are really making money on the net.

The adult industry is stratified into two key market segments: pay sites and free sites. Pay sites charge membership fees, usually between $9.95/month and $29.95/month. The subscriptions are typically auto-renewing. General stats show an average of about 3 months/signup, or revenue on the order of $80/signup (gross).

Free sites act as feeders to pay sites. The sole purpose of a free site is to send traffic to one or more pay sites, in return for a percentage on sales. Free sites run banners for the affiliate programs they participate in, and want to minimize free pageviews before sending people to the pay sites.

See what's going on here? Pay sites don't *pay* anyone to run banner ads. It's a market solution, where free sites are constantly hunting for sponsors who have higher conversions, pay out more, etc. It is up to the free site to generate pageviews (preferably by good content and word of mouth, but all too often by spam and fraud).

However, free sites are really the entry level of the industry. There are a few that make some real money, but the fast majority make hundreds to the low thousands of dollars a month; not enough to support a real business.

Still, there are thousands and thousands of hobbyists making those hundreds to low thousands of dollars, and they in turn generate huge traffic volume for pay sites, where much higher revenues are concentrated among fewer players.

Why does it work that way in the adult internet? Because the people involved are running actual businesses that depend on cash flow and profitability.

What we're seeing in the mainstream internet is the crash and burn of the "lose money on every pageview, but make it up in volume" approach. And the "we'll lose a fortune, but people will really like our site" approach.

Bottom line: it costs real money to create (most) content, and it costs *real* money to operate a real business. That money can either come from the business itself (profitability), or from outside investors (funding, loans, selling stock). The first approach is what energy folks would call renewable; the second approach is basically just buying time.

The mainstream internet is already starting to evolve to more colosely resemble the adult industry. Community sites (like /.) can generate huge amounts of pageviews, and (hopefully) make money by getting percentages on revenue they drive to advertisers, either hard goods or for-pay content sites.

Cheers
-b

Re:Follow the adult industry, as usual

[acroyear]

Why does it work that way in the adult internet? Because the people involved are running actual businesses that depend on cash flow and profitability.

And because "adult entertainment" is a sure bet -- people WILL pay for it, especially if its served up in a way that maintains their privacy. They have for centuries; and they have for every new media since radio.

Nothing else available on the 'net is stuff that people, personally, absolutely will pay for. All you can do is hope. Trouble is that everything else people buy, they aren't (necessarilly) ashamed to buy in public.

You can buy CDs and VHS/DVDs in a store, with the gratification of taking it with you; the 'net can't do that. You can buy software in a store, and have the books with you right away, as opposed to having to read on the screen or waste 100s of pages of paper to print them. Books are the same way -- if there's a store that carries what you like on a regular basis, then you hit that store, and take it with you. Ditto magazines, newspapers, etc...nothing they have you couldn't get some other way.

Yes, you could get "porn" the old fashioned way, but you'd rather do it in total privacy and not deal with the anxiety of funny looks from people in or outside the "shop", or the postman delivering your "descrete plain brown wrapped package". Porn on the 'net is value added -- the value added is privacy in a form never before seen. No other market needs that particular "value added". The only anxieties 1) your sig-other looks at your visa bill, 2) your company actually looks at its web-logs, or 3) you do it so much that you exceed the download limit of your ISP, and they start charging $1/meg (back to said visa bill).

So the problem is that e-commerce will not and never will be the internet's true "killer app". Shipping costs and times are prohibitive compared to the convenience and experience of walking into a store and walking out with product, regardless of the extra availability of items online.

The "killer app" of the 'net is what it was made for -- communication mechanisms like slashdot and groups.yahoo.com and stuff like that. Only that stuff is so easy to make (relatively speaking -- especially with so much free software to build it on), nobody thinks its really worth paying for. Egroups, listbot, onelist all just finally (and cleanly) automated the process that majordomo and listservs have had (and that required a lot of "administration" for far too long) for years; my reaction was "about time".

The idea that free sites leads to pay sites in "information" sites just isn't going to work. People will too quickly content themselves with the free, because the "value added" from the pay site usually just isn't enough. As comment 19 states, most content out there isn't worth paying for.

"Net Taxes" won't work either, as it will create an entity like the ASCAP, which will unfairly redistribute its collected fees to the point that only a small portion of the sites out there will get a large portion of the cash, and most sites get nothing. ASCAP does exactly that with regards to all of its site-licensed based income like from broadcasting sites and stations, and public merchants. It goes to the top radio airplay artists, regardless of what the broadcaster is actually broadcasting.

Re:Compression?

[Jason Earl]

mod_gzip works with most non-ancient browsers, YMMV. Check it out

I've got an idea!

[Greyfox]

Bear with me here, OK?

Porn sites are the most profitable ones on the Internet right? Well what if every content web site also ran a porn web site on the side? Then the porn site could subsidize the content site.

Now I'm off to get my money's worth off http://www.slashdotporn.org... Mmm... Naked Cowboy Neal...

Content-Encoding: gzip

[yerricde]

HTTP already has Content-Encoding: gzip . But the bulk of HTTP transfer (on a kilobyte basis) is already tightly compressed (PNG and JPEG images; MP3 audio; Flash, MNG, and MPEG animations; bzip2 tarballs) so this will help only for HTML and MIDI.

It would obviously require a compatible browser

Or a compatible proxy. But AFAIK Mozilla and IE (two biggest browsers) already support it.

All your hallucinogen are belong to us.

Re:Colocation

[ScuzzMonkey]

I think you're pretty much dead-on with toning down the html--I've worked on bandwidth challenged sites where that has made a world of difference, especially on frequently hit pages.

As for DSLing your own personal web server, why not take it a step further--have a bunch of people DSLing your own personal web server.

Since the sentiment certainly seems to be there, and since distributed computing seems to be the order of the day, where's the Open Source version of Akamai type site load-balancing? It strikes me that there are a ton of geeks out there with relatively lightly used high-speed access lines, who totally love a lot of these sites that are going to have to fold if they can't get cheaper bandwidth. What's needed is a free software package that will allow those users to safely and easily mirror sites they support and a centralized setup to allocate requests to them based on traffic, location, and available bandwidth. Of course, the centralized server to distribute the load is still going to require a chunk of bandwidth, hardware, and support time, and probably rack-space at a co-lo, but with their own bandwidth payments reduced by load distribution, subscribing sites could afford to subsidize the solution by splitting those costs.

It could be that high-bandwidth line penetration is not yet where it needs to be to support many high-volumes sites, or maybe the owners of those lines aren't confident enough in the safety of their boxes to want to run the web services that would be necessary. And for database driven sites, it wouldn't work at all. But I think that the rapid proliferation of Napsterites, SETI@Home users and the like shows that it's at least possible to split up the work if you make it simple enough.

Re:Pledge Breaks

[Nexx]

...and on news today: /. DDOS took down a popular credit card gateway service for over two hours as affluent geeks tried to give money back to their beloved site, taking down vast majority of the eCommerce sites, sometimes forever.
--

Yes it is.

[achurch]

The advertising model is NOT failing.

A friend of mine who runs a fairly large website with advertising income showed me some numbers the other day. Between January and September of last year, page views did not change significantly, but advertising income dropped 70%.

How is this "not failing?"

--
BACKNEXTFINISHCANCEL