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  1. #1
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    Remeber the "how much should I get paid" thread?

    I was involved in a "how much should I get paid for running a website" thread a few weeks ago. A few people were lined up against me they didn't agree with my goal to be paid the equivalent of a decent tech job ($70K) to run my site.

    kuro5hin is apparently having a similar quandry:

    http://www.kuro5hin.org/story/2002/6/17/23933/5831

    He's pretty frank about his expenses; he says he has a good hosting deal, his code is open-source, and all material on the site is user-contributed. But he wants to raise $70K for his expenses, which is mostly his salary. And he's apparently halfway there after a couple of days.

    It's interesting that he mentions that he has about 350,000 unique visitors per month. I'm not exactly sure how he derived that number; he either multiplied his daily uniques by 30 or he's going by his "total unique sites" number in his log analysis program. But that's about 2.5 times the size of my site using the latter method of counting.

    One line from his plea really stands out to me:

    An unfortunate fact that probably bears mentioning is that there were 341,018 unique visitors last month. If every one of them kicked in a single dollar, not monthly or annually but one time, we'd be set for approximately the next four years, and you wouldn't have to read any of this.

    Now charging someone $1 to view a site doesn't seem to be worth it. I don't think I'd pay that unless I was a real "regular" at a site, and with such fees, I'd be hesitant to visit any new sites. However, imagine if each unique visitor paid just $0.05 for unlimited viewing of a site for a month. That's not all that much to ask, is it? I probably only visit 20-30 sites regularly each month, and I can certainly afford to kick in an extra $1.50/month.

    For K5, that would give him $17K/month, or $200K/year. I'm sure he could live with that.

    For me, that would give me $6600/month, or 80K/year. I'd take that in a hearbeat too.

    I've always been skeptical of micropayments. I know that I would never pay "by the page", because it would make every click into a financial decision. Yet if that decision was that I'd have to pay $0.05 per month to a site, and this payment would happen automatically, I could definitely live with that. I'd even pay an extra $0.01 per payment to finance the micropayment system (20%).

    I'm just amazed that a monthly unique visitor is not worth $0.05 a month to someone. I'm not making anywhere near $0.05/visitor/month right now -- in fact, in May, I made $600 from ad networks on 120,000 unique visitors, which is $0.005 per unique visitor per month.

    Now I'm just waiting for the chorus to chime in, "people aren't paying you for your traffic because they aren't making any money from it, etc." Yes, you're right from that point of view, but is it true that $0.005 is the most that a unique visitor is worth? Or is it just that someone hasn't figured out how to make money from advertising to those visitors yet?

    I would strongly consider assigning all my impressions to an ad network right now for $0.05 per monthly visitor, in exchange for them showing them as many banners as they want (so long as the banners don't abuse the visitors). Considering that each unique visitor views 24 pages on average per month, that's 24 chances to sell them something.

    If anything, I think that must show that there is definitely room for improvement here, and that we are probably very close to the bottom.

    Ralph
    Last edited by Ralph Slate; Jun 21, 2002 at 05:19.

  2. #2
    Your Lord and Master, Foamy gold trophy Hierophant's Avatar
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    $.05 isn't really worth it once you take fees, expenses and taxes into account.

    You will need to process that by credit card. If you use an online merchant provider such as Authorize.net, you will have to pay close to 5 percent or more. Since money gets rounded up, you will be paying 20 percent. Add to that any sales tax your state charges on servers. That would actually round up to another 20 percent. So now you are paying 40% in taxes and fees for a 3 cent profit. This doesn't even mention chargebacks which are very costly. If someone doesn't like your site, they can demand their money back. Of course it is only 5 cents but you have already paid 1 cent to the provider and 1 cent in tax and you must refund 5 cents so now you lost 2 cents. But they haven't charged the chargeback fees yet. Many providers charge $25.00-$50.00 dollars per chargeback. If you upset a bunch of spiteful visitors you could go bankrupt really fast paying out up to 1040 percent per chargeback whether you win it or not.

    You are correct in that many sites are not worth a subscription fee for. However if I were to pay for a site, I would rather pay a decent fee so the site could expand. I do subscribe to some sites and pay between $9.95 and $19.95 a year for them. That is a good value and it hasn't stopped me from finding new sites to visit. You have to remember that out of every 100,000 websites out there about 990,000 are hobby sites where the person doesn't even care if they make money.
    Wayne Luke
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  3. #3
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    C'mon, think outside the box a little bit... I'm not saying this is possible today. I'm saying that if this was possible, it would make a lot of "semi-pro" sites (including mine) very happy. Although my site is no Yahoo, 130,000 different visitors a month isn't something to sneeze at, especially for a site that isn't featuring nude photos of Anna K, or illegal MP3s.

    Although you may pay $20/year for your favorite sites, if all sites cost $20/year, how many would you subscribe to? Probably far less than you use today for free. So to me, that's not a good solution to the problem because it turns the internet into a giant bookstore rather than a giant library.

    Ralph

  4. #4
    Your Lord and Master, Foamy gold trophy Hierophant's Avatar
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    Actually, I do think out of the box. I would like to see content aggregators which would actually provide the solutions you are talking about. Maybe not five cents per visitor but better than .005 cents per visitor.

    These aggregators would sign up sites very much like the cable companies due today and then their customers would pay for that content.

    One such aggregator exists today. It is geared for children and provides a safer environment for them to surf the web in while giving the parent control over what they see and do. The site charges $3.95 a month for up to three children and $1.00 for each additional child. I am a subscriber and it allows my children to do things that I wouldn't allow them to do otherwise.

    If the aggregation was done on a large scale, say like 1000-5000 sites in a package for a reasonable price, then it would be worthwhile. I mean who visits more than a few hundred sites a month anyways. I know I visit 4 sites on a daily basis and do a little research occasionally. Mostly though my time is spent using email and reading various email lists that I subscribe. The only service I use from Yahoo is their Groups. If they started charging $19.95 a month to continue being a member over XX number of groups or something like that I would gladly pay it because they aggregate billions of pages of content.

    These kinds of charges haven't killed television. More people receive TV transmissions today via Cable or Satellite than by RF antenna. You can get TV for free but it is more difficult to get what you want. I think the same issue will apply to the Internet. I mean think of what can be done if people actually have a little money to invest in their sites.
    Wayne Luke
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  5. #5
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    We need to get further out of the box. Cable TV subscription fees don't make up the majority of the revenue of the cable channels. Advertising does. Internet advertising is the pits right now, I don't want to charge subscription if it means only making 10% more than I'm making now but denying my content to 90% of the world.

    Cable works because there are a finite number of channels. The concept of aggregating the channels (via the cable company) is a big barrier to entry though; how many cable companies carry all possible channels? That gives the big cable companies too much leverage to use against the channels, and puts them in a position where the big cable companies make money on both ends -- by charging the cable stations for "placement" on their system, and by charging the cable customers for access to the cable.

    With so many websites out there, I think it is impossible to group any of the second tier sites. If it was possible, then the aggregators would use their leverage to drive down the amount paid to the sites, under the threat of "if you don't like it, then we'll drop you, and you can get paid $0 instead". The loss of a single site out of 1000 wouldn't hurt the aggregator at all, but it would kill the site.

    Plus, if you happen to visit sites that are members of multiple "content group" packages, you'd have to pay multiple times. This isn't optimal.

    The web didn't turn out to behave like TV as far as advertising goes (although everyone tried to make it so, with CPM rates, etc.). I don't think the subscription model should be based on cable TV. It should be much more free-form, allowing a site to set their own rates, and allowing them to get paid based on their popularity.

    Ralph


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