Cit Media

David Carr (NYT): Dirty Job, but Someone Has to Do It - New York Times. Go to a nondescript office building on the East side of Manhattan, down the hall to a door already in the clutches of a fake dismembered hand, and you will find the newsroom of The Smoking Gun. The take-no-prisoners Web site at thesmokinggun.com is in the midst of spilling affidavits in a Texas polygamy case and recently pushed The Los Angeles Times to retract a major article about the murder of Tupac Shakur by pointing out that it was based on fake documents.

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New York Times: Citizen Huff: According to one person who was briefed on discussions but was not permitted to speak for attribution, the company has at least looked at the value of the site if it were put up for sale, and a figure around $200 million was used. That would put the price at more than $50 for each visitor, a high valuation. Using the site’s internal figures, 14 million unique visitors for the most recent month, the price would be closer to $15 for each user.

Even at $15 per user that’s still many millions — and it’s all built essentially on the labor of others who’ve volunteered to post their thoughts for no compensation. They have their reasons, including the site’s growing influence and their own vanity. Will they still volunteer their labor when just a few people get rich from it?

I admire what Huffington has done in many ways. I do not admire business models like this.

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In a brief but illuminating email thread leading up to a small conference on Friday in LA, we’re looking at key questions about citizen media’s future. One, obviously, is sustainability, which we all agree is key. Another participant in the discussion asked:

WHY do we need to expect individual initiatives to be sustainable? Is there not merit in the launches of serial enterprises, sequentially launched, within communities, with new ones imparting new vigor, skills and maybe even new goals?

Or, conversely: Is there merit in traditional news organizations anteing up some support for CitJ ventures to build a community information architecture?

My response:

Sustainable does not necessarily mean profitable, or long-lasting. An individual effort is sustainable as long as the person wants it to be, and that’s entirely fine.

I’m interested in seeing that communities have sustainable journalism and information ecosystems, not necessarily in the survival and profitability of individual ones. But institutional knowledge and historical/factual context do matter — and if each new entrant makes all the same mistakes someone else did 10 years earlier, that’s not especially helpful.

I still believe, even now, that traditional media remain in the best position not just to seed these ventures — internally as well as externally — but to make them a linchpin in their own long-term viability.

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(This is the tenth in a series of postings about citizen media business issues. See the introduction here. All of these entries are considered to be in “beta” and will be revised and refined as they find a home on a more permanent area of the Center for Citizen Media web site. To that end, your comments, additional examples, and criticisms are welcome and will be invaluable contributions to this process.)

Regardless of whether you sold ad space, referred people to buy things at Amazon, or hawked a couple t-shirts, as soon as you make money through your website, the government considers you to be in business. Except in rare circumstances, that makes you responsible for reporting income, and paying taxes.

If you are the business’s only owner, you are operating as a sole proprietor (assuming you haven’t formed a legal business entity like a limited liability company or corporation). If you own the business with someone else, you are considered to be in a partnership.

Net income from sole proprietorships and partnerships is taxed as part of the owners’ personal gross income (the income is “passed through”). For IRS purposes, you are responsible for paying self-employment tax (social security and Medicare taxes that add up to a little over 15%) and for filing section SE and section C of your 1040 income tax return if your business revenue less expenses amounts to at least $400. This minimum is good news for small projects, which are exempt from paying and filing if their net income totals less than $400. Partnerships must also file a yearly informational return (form 1065) that says how finances were divided. As with any other income tax, there are likely to be state requirements as well.

An invaluable resource for these matters, the Citizen Media Law Project has recently launched the first sections of its Legal Guide.

“The guide is intended for use by citizen media creators with or without formal legal training, as well as others with an interest in these issues, and addresses the legal issues that you may encounter as you gather information and publish your work online…[it] covers the 15 most populous U.S. states and the District of Columbia and will focus on the wide range of legal issues online publishers are likely to face, including risks associated with publication, such as defamation and privacy torts; intellectual property; access to government information; newsgathering; and general legal issues involved in setting up a business.”

The currently available sections are titled “Dealing with Online Legal Risks” and “Forming a Business and Getting Online“. The latter contains a wealth of national and state-specific information about issues such as taxes, business creation, legal documents, and nonprofit status-an idea that appeals to many citizen media types.

While the term “nonprofit” is sometimes used informally to refer to any organization that does not seek to make money or simply does not turn a profit, the legal definition is a little more complicated. Legal nonprofits are typically corporations that have applied for and are granted tax-exempt status with the IRS for federal income tax purposes. Depending on where it was incorporated, an organization may also be granted exemption from state income taxes.

The fact that corporations, not individuals, are granted tax exemption will probably be a deal breaker for most. Forming and maintaining a corporation requires a burdensome amount of time and paperwork, a host of legally required formalities, and in some states, prohibitively high fees. The Citizen Media Law Project section on How to Start a Business can give you a good idea of what goes into this process.

One way to get many of the benefits of being a nonprofit without all the work is to find a fiscal sponsor. Some organizations will extend their nonprofit status to groups or even individuals whose activities are within the scope of the sponsor’s purpose. This typically involves donations or other transactions going through the sponsor, who keeps a percentage (or charges a periodic fee), before untaxed money is passed along to you. One example of this is Fractured Atlas, which offers sponsorship to artists, acting similarly to PayPal in the way it accepts donations and charges administrative fees to withdraw.

Keep in mind that nonprofits are still responsible for paying taxes on “unrelated business taxable income.” The IRS considers this to be revenue received from any business trade or activity that is ongoing (one-time events, even if they last a week, are ok) and not substantially related to the organization’s charitable purpose. Generally speaking, a good way to gauge whether something is unrelated is if the only reason you have to call it “related” is that the revenue it generates will be used to further the organization’s cause.

Selling ad space is usually taxable, but underwriting or sponsorship-when a company donates money and is simply recognized as such by way of a logo or neutral text acknowledgement-is usually not. Most merchandise income will be taxable unless the sales come from a one-time special event or if the products being sold are directly related to the organization’s purpose (CD copies of your podcast are ok, but not a branded keychain). Affiliate income would almost never be considered related, but donations from the public would (both for you and for your donors, who can write it off of their own personal income tax). Please note that due to the room for interpretation the IRS leaves, there are exceptions to all of these rules. For more detailed information on unrelated business income, including dozens of examples, refer to IRS Publication 598.

If you still have questions about taxes, want to learn more about forming a business, want some examples of fiscal sponsors, or want to research these topics in more depth, much more information can be found at the Citizen Media Law Project. Moreover, you may well need the advice of a tax professional such as a certified public accountant.

(Ryan McGrady is a new media graduate student at Emerson College where he is studying knowledge, identity, and ideas in the information age.)

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(This is the ninth in a series of postings about citizen media business issues. See the introduction here. All of these entries are considered to be in “beta” and will be revised and refined as they find a home on a more permanent area of the Center for Citizen Media web site. To that end, your comments, additional examples, and criticisms are welcome and will be invaluable contributions to this process.)

Over the past few months, the Citizen Media Business Issues series of posts have taken a look at several possible business models/sources of revenue that a citizen media outfit may want to explore. Hopefully they were informative. I should reaffirm that all of these entries are still, as the top of each states, in “beta.” If you have noticed any errors, omissions, or if you have anything at all to add, please leave a comment or send an email to me.

Those models that have been explored here—affiliate programs, memberships/subscriptions, branding/promotion/support, merchandising, donations, and ad space—represent what appear to be the best options for citizen journalists at the moment. It is not an exhaustive list. For example, pay-to-blog services such as Pay-Per-Post were intentionally omitted. These companies will compensate bloggers for writing favorable reviews about particular products or services. While this is a way to make a few bucks and “monetize” your blog, it certainly is not journalism, and it raises far too many serious ethical concerns to merit a recommendation.

Chances are good that you already have an idea how each of these would play out on your site, but if one doesn’t jump out at you, how do you decide what the right first step is?

The elements of creativity and customizability are substantial enough in each to limit how accurate general recommendations can be. By and large, finding the best fit will require a little experimentation. Playing with different approaches and tweaking their presentation can be very beneficial and you may notice that small changes can make big differences. A caveat: good experimentation does not include signing up for and implementing every single source of revenue at once or overloading a page with ads to see where they are most profitable. Also, it’s probably a good idea to let your readers know what you’re doing and why you’re doing it. A simple heads up that you’re selling ad space or introducing a paid ad-free subscription plan to recoup your losses in time or money can go a long way in gaining their understanding (not to mention feedback).

There are, however, a few generalizations we can make based on your personal technical savvy and available time as well as your site’s content and number of readers. [Note: If you don’t know how many readers you have, Google Analytics provides a free, easy-to-implement statistical system that should give you all the information you need (more on these in the upcoming post on search engine optimization)].

AFFILIATE PROGRAMS

These are especially useful if you sometimes discuss products or services that people might like to buy (have you ever a received a query to the tune of “where can I get…?”) Affiliate links don’t take up space on your page unless you use them like advertisements, so are not intrusive to your site’s visitors. In fact, you can format the links like any other such that some readers may not even realize they’re there unless they click to find out more information on whatever it is you’re discussing. These programs require very little technical know-how to set up or maintain, only requiring a special URL. Also, they can be effective for any traffic level.

Avoid this technique if you want to preserve a solid sense of perceivable objectivity. You are, after all, getting a cut if someone buys the product you discuss. Also avoid if you think you may be tempted to write about things just so you can throw in an affiliate link.

Disclosure is essential in any case: Make sure people know you will be getting a cut of the sales price.

FULL MEMBERSHIPS AND PARTIAL-ACCESS SUBSCRIPTIONS

This is only for sites with very unique content that people would be willing to pay for. Subscription models can be lucrative in the rare instances they work, and while larger reader bases can better withstand the blow to reader numbers such a system inevitably brings, extraordinary content may enable such systems to work with small numbers.

In general, it may be best to avoid this. A transition from open content to a full or partial-access structure rarely works, though adding paid areas for highly valuable content is less intrusive than going all-pay. People are used to being able to find the information they want on the web without subscription fees, so there has to be a compelling reason for them to pay. Starting a site with a subscription model is also difficult because it’s hard to get enough people interested and because the word-of-mouth marketing that the web generally relies on never has a chance to occur. Also avoid if you don’t have significant web programming expertise or resources to hire someone who does.

EARLY EDITION AND AD-FREE SUBSCRIPTIONS

Ad-Free versions recommended for high-traffic sites with users who read often or extensively. Early edition recommended for sites with unique, anticipated content. These are typically used in combination with some other revenue stream. While still occasionally utilized successfully, these were more popular a few years ago. Since then, people have grown adept at simply tuning out ads and—again—finding the content they want for free when they want it.

Avoid if, similar to the other subscription models, you don’t have significant web programming experience. These systems require a lot of time and work, which may cancel out whatever reward they carry. Also avoid if you plan to increase advertising to steer people towards an ad-free version.

BRANDING, PROMOTION, AND SUPPORT

This is recommended if your career could benefit from having other people see your writings in ways that enhance your stature. Academics, lawyers, and scientists all utilize this approach to promote themselves in a manner similar to the way they would when publishing a journal article. Blogging can be a natural, even fun, extension of your professional career. You don’t need a great number of readers to make it worthwhile. Exposure to just a couple potential clients and increased Googleability can go a long way.

Not all publicity is good publicity. Making yourself look bad either through your writing or through a poorly-designed web site (such as one that’s chock full of intrusive ads) can be equally detrimental to your career. Avoid if you don’t think you really have the time to commit to doing it right.

DONATIONS

Recommended for non-profit organizations or sites where hard work is clearly demonstrated. Donation buttons often make a great supplement to other sources of revenue, but are perhaps most powerful when they are used pointedly instead of ads. These can be successful with any amount of traffic, but probably most effective on sites with devoted, regular readers. Donation buttons are extremely easy to set up, requiring as little as a PayPal account.

Avoid if you already have a lot of advertising on your site—you run the risk of looking greedy. Also avoid soliciting donations to the point of panhandling or pestering readers.

MERCHANDISE

Recommended to those with loyal reader bases, arts-oriented content, or clever ideas for branding or products. Plain white CafePress items with your site’s name on them don’t hurt, but they probably won’t do much for you. Merchandising, even through a service like CafePress, does require a modicum of technical savvy—enough to make your design look good, anyway. However, once established, such shops require little time to maintain. One of the greatest benefits of merchandising is its tendency not to be intrusive. Branded products sold on the site they’re promoting look less like advertisements and more like content—they can even give one a sense of being “in on” something people get excited about (excited enough to buy a t-shirt). If your products or brand is strong, merchandising can be successful with any size readership.

While offering a t-shirt or bumper sticker is a pretty innocuous, avoid the temptation inherent in automated shops like CafePress and Zazzle to put your site’s name or a basic logo on every one of the hundreds of products available.

AD SPACE

Recommended to those who have a little technical knowledge to make ads look neat. Advertising is the most intrusive of all those business models discussed here, but also often the most effective. The level of intrusion increases as you move from text ads to image to video to Flash to anything with sound. Similarly, the intrusion varies with the size of the ads and their placement. While it’s hard to say which of these business models would be the most profitable for you, advertising will usually be the only surefire means to generate some income—even if it’s pennies—regardless of readership. Financial success will, however, be directly variable with traffic.

Avoid anything that pops up, over, or under. Everybody hates them. Avoid random ad placements—think about how the site will look. Content readability/enjoyability should be your focus. Every ad takes something away from your image.

Summary:

(Ryan McGrady is a new media graduate student at Emerson College where he is studying knowledge, identity, and ideas in the information age.)

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Microsoft’s Offer To Buy Yahoo For $44.6 Billion is likely to turn in large part on whether the founders, who still hold a great deal of stock, go with their investors who want to take the money and run. I’m betting they will, reluctantly, though I still believe Yahoo could have a great future as a stand-alone company. More than almost any other Web company, Yahoo understands aggregation and the best of bottom-up media. Microsoft barely has a clue.

But Google is getting pretty worrisome in its own way — too big and powerful to trust. We need large and small counterweights, and perhaps a Microsoft-Yahoo combination will be one of them.

It’s worth noting, meanwhile, that the offer of slightly less than $45 billion isn’t much higher than ExxonMobil’s 2007 profits. The juxtaposition in today’s NY Times, below, is pretty startling.

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There are plenty of reasons to wonder about citizen media’s business model. One, which I’ve talked about many times here and elsewhere, is the tendency of site owners to rely on free labor. The method goes roughly this way: “You do all the work and we’ll take all the money, thank you very much.”

People do things for many reasons, but it’s always about getting something of value back. The value may be a psychic reward of doing something good for someone else. It may be ego. It may be money, or the ability to save money. In community-driven websites it may be contributing a tiny bit of effort to something that gives the overall community, and thereby individuals, great value. Usually it’s a combination.

But when the big money starts to flow to a few who are leveraging the work of the many, a disconnect emerges. And that’s why I’m so bothered by part of an announcement of some interesting new features that will give users or reddit, a news-recommendation site owned by the parent company of Wired magazine, new ways to help each other understand the news. reddit is refining the process in a smart way, by dividing the recommendation system in ways — assuming it works — to make it better and, perhaps, more reliable.

There’s no sense of whether the “private” and “restricted” section of the site, in which the Chosen will presumably elevate the content because they are doing things better, will have any stake in the outcome beyond being given more responsibility. I hope so, and we’ll know more when the features roll out more widely.

What really bugs me most in the reddit blog posting about the changes is the following:

Right now we really only have English and German, but if you would be generous enough to translate reddit into another language, please email feedback@reddit to offer your support.

As usual, if you’re interested in working on reddit, please email jobs@reddit and describe what a badass programmer you are.

Read it again. You are invited to translate the site into another language, because you are such a generous person. If you are a badass programmer, however, you are invited to apply for a job and make some actual money.

I like reddit a lot, and think it’s doing some terrific work with community-driven news. But this request goes beyond the pale.

Conde Nast, a privately held empire that owns some of the most profitable magazines on the planet, paid a bundle for this site. It can afford to pay for translations.

If you are generous enough to do this kind of work for free, please consider doing instead it for a nonprofit site of some sort. Please don’t be giving away your time to mega-wealthy media barons.

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(This is the eighth in a series of postings about citizen media business issues. See the introduction here. All of these entries are considered to be in “beta” and will be revised and refined as they find a home on a more permanent area of the Center for Citizen Media web site. To that end, your comments, additional examples, and criticisms are welcome and will be invaluable contributions to this process.)

The most common way for a website to earn revenue is one of the most traditional forms of monetization: selling advertising space. This process has gotten much easier in recent years with the rise of ad networks like Google’s AdSense and AdBrite. The ease, scope, and effectiveness of ad networks may make them attractive for many citizen journalists, but they are not the only form of advertising available to you. Affiliate programs and merchandising are two other routes that may be even more profitable to use instead of (or alongside) ads from a network.

Once you determine what type of ads you’ll display, be sure to consider how your readers will see your ads (both in terms of effectiveness and the level of intrusiveness). Consider also how advertising may affect your journalistic integrity and your appearance of objectivity, as well as your legal obligation to disclose that you are being paid to promote or review a product, should you ever choose to engage in that kind of activity.

AD NETWORKS

Ad networks are companies that arrange many deals with many advertisers to display ads all over the internet. They are typically very easy to sign up for and implement and some even integrate automatically with certain blog-hosting sites. Blogger, for example, allows you to put an AdSense sidebar on your blog with a few clicks.

CPC vs. CPM

Ad networks make deals with advertisers on a Cost-Per-Click or Cost-Per-Thousand basis. These rates of payment are often abbreviated CPC and CPM (M being the Roman numeral for 1,000), respectively.

With CPC ads, which will probably be most common for smaller outfits, you are paid a certain amount each time somebody actually clicks on the ad. You are paid nothing just for displaying CPC ads, and whether or not the click results in a sale is irrelevant. Unless you use a network like CrispAds that uses a fixed amount per-click, you will be paid a percentage of whatever money the network has worked out with the advertiser.

CPM ads are just based on the traffic. If you get 20,000 hits and each visitor is shown 1 ad, you’re paid for 20 thousands. Obviously, CPM ads will only be attractive to owners of sites with heavy traffic or those with low content or keyword “profitability” (see next section).

Relevance and Keywords

Some networks like AdSense and Vibrant Media use a program to “crawl” the content of your page to find information for which it can display an appropriate ad. For example, if you have a post that mentions taxes, you may see an ad for tax software or services next to it.

Others, like CrispAds, rely on keywords you provide. The benefits of using keywords are reliability, consistency, and control. Ads based on keywords are static; they don’t change even when your content does. Perhaps the most important reason to use keywords is being able to assess and capitalize on “keyword profitability.” The idea of profitability in this sense refers to the likelihood that your typical readers would be interested in buying or learning more about the products associated with a given keyword (and thus the likelihood that they will click).

For example, if you write a technology blog, you may want to use the keyword “iPod.” Using this keyword would be attractive for at least three distinct reasons, all of which suggest more clicks or more revenue for your site:

• Because your readers are the sorts of people who care about music and technology, they are likely to want an iPod.

• iPods are items that many people shop for and buy online anyway (as opposed to, say, furniture).

• iPods are hot commodities. Sellers of products that exist in such highly competitive marketplaces often will pay higher ad rates.

On the other hand, unvarying keywords do not allow for an ad on the latest trend, movie, magazine, or service you just happen to write about that isn’t covered by your keywords. A crawler would find that text and may have an ad ready for it. If you take the same technology blog on location to a video gaming conference, it will probably start to attract video game search engine traffic. People who are reading for the video game content may be much more likely to click an ad that a crawler finds (perhaps relevant to a particular game or gaming console) than they would an ad for an iPod.

Note: Using the video game example, you may want to supplement your ads with a button for a user to actually purchase the discussed video game using a site like Amazon.com. That way you can bring in revenue either for the ad or for the sale. You can find more information on affiliate programs like that offered by Amazon in this earlier post.

Google AdSense

The biggest of the ad networks, Google AdSense utilizes Google’s searching (crawling) technology to display relevant ads based on the content it sees on a given page. After you sign up, you are given a wide range of ad types from which to choose. They vary based on format (text, image, or video) and size (horizontal banners, vertical “skyscrapers,” squares, etc.) Text ads are further customizable by configuring colors to match the layout of your site. AdSense then supplies you with JavaScript (a Web programming language) for you to copy and paste into your web site’s code. When a visitor accesses your page, the JavaScript searches your page, compares what it finds with the AdSense database of advertisements, and displays the contextually relevant ads it finds.

AdSense also offers “AdSense for search,” which takes the form of a Google search bar. When a user uses it to perform a Google search, you make money on the ads that are displayed alongside the search.

AdSense offers both CPC and CPM ads. Like other networks that offer CPM, in order to display any in that category your site must be approved (based on content and traffic) by the individual advertisers. Google does not publicize a flat percentage of revenue that it pays out, but it does make detailed statistics available to allow for you to determine when and how much money came from which ads.

While AdSense’s average payment per-click tends to be lower than that of other networks it has a higher click-through rate (the percentage of page visitors that click on an ad) due to the success of the crawler in displaying highly relevant ads.

CrispAds and Sponsorship

CrispAds is an advertising network specializing in blogs. Instead of using a crawler or search engine to select ads based on the current content of your website, you submit keywords when you sign up which determine the ads displayed.

CrispAds not only displays text ads based on your keywords, but also puts your page into its database of blogs for advertisers to consider for sponsorship. If a company’s marketing department decides that they like your blog, they can sponsor you for a month at a time, displaying their graphical ads in the same place where your text ads were (the code does not change).

Being sponsored directly by an advertiser has advantages and disadvantages. On the one hand, you set your own advertising rates and therefore have the opportunity to make more money with sponsored ads than you would otherwise (this is, of course, dependent on the size of your readership). On the other, while the individual sponsoring companies may take your keywords into consideration, CrispAds will no longer display ads based on your keywords once you have been sponsored. It is possible that the shuffled ads based on keyword may be more appealing or more relevant to your readers and therefore earn more clicks than the ads displayed by your sponsoring company.

For text ads and any ad for which you have not set the rate yourself, CrispAds pays out 70% of what they make from the advertiser. This appears to be the highest publicized rate of all the ad networks (tied with BlogAds), although CrispAds does not have quite the same size advertiser base as other networks, such as AdSense. With fewer ads to draw from, there may be less chance for variation and relevance.

One advantage of CrispAds is the ease of payouts. Whereas AdSense requires $100 to accrue in your account before sending payment, CrispAds will send any amount over $5 via PayPal.

BlogAds, Flat Rates, and Hives

One of the older networks, BlogAds, now operates on an invite-only system. This site is designed for blogs with focused content, accordingly requiring bloggers to describe their work by choosing no more than two categories (for example, “gossip” and “politics”). Advertisers targeting niche markets use these categories in combination with traffic statistics to choose particular blogs to sponsor.

Instead of CPC or CPM, BlogAds users charge for a fixed duration of time displaying ads from a particular marketer. Starting at a minimum of $10, a company can choose to buy a week, two weeks, a month, or three months worth of time for its text, image, or Flash ad (which go for more, but bloggers can choose to not offer).

You are supposed to have an invitation from another BlogAds user in order to sign up, but you can also send them an email describing your blog and expressing interest. If they see a demand for a site like yours, they will contact you. Just signing up/applying does not guarantee you an account, however. The ideal candidate has a sharp focus on one topic or community and a sizable readership (all of those listed currently claim at least 3,000 ad impressions/week).

While the number of categories you can select is limited, you may be a part of as many “hives” as you want. Hives are groups of similarly-themed blogs that cluster to provide a convenient way for advertisers to market to many sites at once instead of picking one at a time. They also exist to group around features that BlogAds categories may not cover (like “bargain ads” or “Oregon progressives”). Hives are run by individual users who may accept or deny applications for inclusion.

One of BlogAds’s major draws is its high payout rate. For every $10 an advertiser pays, the blogger collects 70%, whoever invited/referred the blogger gets 5%, if the ad was purchased through a hive then the hive administrator receives 5%, and BlogAds keeps the rest.

While not available to smaller outfits, BlogAds is an appealing choice both for its lucrative rates and, perhaps most notably, its simplicity.

Pheedo and RSS

Pheedo specializes in RSS text ads. Noticeably missing from several of the larger ad networks is the ability to display ads inside feeds. Pheedo capitalized on the resulting demand by using technology to place ads at the end of posts, appearing at intervals you define (i.e. after every post or every three posts). While focusing on RSS ads, Pheedo will also give you code to place on your regular blog pages as well. The on-site ads are less flexible than many others, but may be worth considering for the sake of ad consistency if you like Pheedo for RSS ads.

As opposed to using a crawler or keywords to select relevant ads, Pheedo allows you to browse and select exactly the ads you want to display. This process allows for greater precision, but it is time-consuming and assumes that you have a certain amount of marketing savvy and knowledge about your readers.

Pheedo pays out 65% of the revenue they make from advertisers.

Vibrant Media, IntelliTxt, and Inline Popovers

IntelliTxt, an advertising service designed by Vibrant Media, takes further the idea of keywords. Instead of using keywords you submit to gauge which ads should be displayed, it scans the text on your page for keywords advertisers have chosen. When it finds one, it double-underlines it and scripts it so that when a reader’s cursor moves over it, an advertisement (text, banner, video, or interactive) springs up.

While “inline popover” ads such as these may succeed in achieving a higher click-through-rate (the percentage of readers who click an ad), they are commonly seen as a nuisance not far removed from their pariah cousins, the popup ads. Some, like Engadget’s Ryan Block, declare them to be even worse because “at least [popups] can quickly be cleared out with an alt-F4 / Apple-W.”

One problem with these that you’ve probably experienced is encountered when trying to scroll up or down on a page that uses inline popovers. The ads that spring up due to inadvertent mouse rollovers block the text you want to read and sometimes even play distracting sound or video.

Most importantly, inline popovers blur the lines between advertising and content, therefore putting your journalistic integrity in jeopardy. Your readers should be able to expect that the words they’re reading have not been commercially influenced. People who aren’t vetted web surfers may not even consider double-underlined links as somehow separate from your own regularly-underlined hypertext. This could lead readers to feel deceived, thus resulting in decreased ad clicks and, most importantly, decreased readership. Perception of your site could further be hurt by people’s memories of unwanted inline linking being associated with (and abused by) adware/malware.

Yahoo Publisher Network and Adobe Acrobat

YPN, currently (still) in “beta,” offers contextual text ads very similar to those from AdSense. It also, like Pheedo, enables you to include ads in your RSS feeds. YPN is one of the larger ad networks and deserves attention, but the feature that makes it most unique right now is its recently announced integration with Acrobat PDF files. This, of course, allows you to offer good-looking PDF documents without losing ad revenue for content viewed offline.

AdBrite

AdBrite caters more to regular websites than blogs, but is compatible with both. In addition to text, banner, and inline popover ads, AdBrite offers some more unique (though often aggressive) formats including InVideo, BritePic, and full page interstitial ads.

InVideo and BritePic are services that place ads on the top of your displayed media files. Additionally, a menu is accessible on the bottom of each that allows for social media features. For example, the “share” button acts much like that found on YouTube videos. When someone displays the video on another web site, it links back to your page and all clicks on advertisements displayed are credited to you regardless of where it is posted.

Interstitial ads—or “intermissions” as AdBrite calls them—are full-page URL hijacks that display an ad from another site before redirecting back to your site. You have probably seen this type of ad in use on many popular sites like the New York Times or The Internet Movie Database. Typically it will work such that when a user attempts to access your web site (or clicks a link on your web page to another section of the site), a full-page advertisement takes over their browser with a small-print link to “skip this ad” or “continue to [your site's name]” before the content they asked for appears. These ads are considered intrusive enough that many pop-up blockers have incorporated tools to filter them out and automatically jump to your destination page.

AdBrite doesn’t supply you with ads from a database, but rather facilitates transactions between you and advertisers. You tell them where on your page ads will go and, generally, how much you want for that real estate. Advertisers can then browse the different options and may choose your space for text or banner ads depending on which you are accepting. In most instances, the rates are determined by auction. Advertisers bid on your space and you are paid one cent more than the second highest bid. They also provide you with a “your ad here” image that gives potential advertisers a link right on your web site through which they can buy ad space.

You set the rates for all ads. Generally, the more intrusive the ad, the more it pays you. Accordingly, interstitial ads allow you to earn the most revenue. Bidding for interstitial ad space starts at one cent per view, as compared to banner ads, for which the bidding starts at ten cents per thousand displayed.

PRIVATE SPONSORS

While ad networks are by far the easiest way to make money from ads on your web site, the biggest profit margins come with private sponsors. This is the more traditional method of obtaining advertisers—getting them yourself. You might go about doing this by taking the statistics for your web site (site traffic, reader demographics, content, rankings on sites like Technorati and Alexa, etc.) to various companies, bringing along a detailed map of where you want the ads to go. By cutting out the ad network middleman, you have a lot more work to do, but you keep 100% of the revenue. Unfortunately, this is only going to be a viable option for those who already have a substantial readership. Companies with advertising budgets rarely give time to small sites. If you are just starting out or do not have a lot of traffic, an ad network is probably a better bet for you.

WARNINGS

Click Fraud

You may be tempted to click your own ads, launch a program to click them automatically, have your friends click the ads, or otherwise manipulate the advertising system to make more money. This is called “click fraud,” and should definitely not be attempted. When an ad is clicked by a person with no intention to buy the advertiser’s product, it still costs the advertiser money. Advertisers in turn become angry with the ad networks (or you, if you’re sponsored directly) and may take legal action for damages. Lane’s Gift and Collectibles, for example, sued Google for failing to filter out click fraud (see the final order about the settlement here). If you’re suspected of click fraud as a publisher, all of the ad networks have provisions to terminate your account and you may face legal action (Google successfully sued AdSense publisher Auction Experts, Inc for $75,000 in click fraud damages in 2003).

Integrity

Too much or inappropriate advertising is one of the biggest turn-offs on the web. Think about how likely you are to take seriously any site that bombards you with popups, tries to install mystery software, presents ads as if they were unbiased content, or showcases the ads more than the content. While a lot of people know that ads are what make great free content possible, they have less and less tolerance for pushy or intrusive tactics. They also know that if they don’t like what they see at one site, there are probably many alternatives.

It can be difficult to present your ads in such a way that they are profitable while at the same time maintaining or increasing your reader base and looking professional. You may need to work by trial and error, but striking a balance is possible.

SUGGESTIONS

• Don’t overdo it. Too many ads can make your look sloppy—or worse, greedy.

• Don’t use inline popover ads if you can help it. The threat to reader trust is too great.

• Don’t try to deceive or trick your readers into clicking or viewing an ad. Without their trust, your site is nothing.

• Don’t feel like ad space is your only means for revenue. Affiliate programs, merchandising, and donations are all worthwhile alternatives or supplements.

• Do experiment with placement and format of ads to strike a balance of profitability and aesthetics. If you cannot find this balance, err on the side of aesthetics and usability.

• Do think about what your readers would most like to see ads for. This usually results in the same answer to the question of “what are my readers most likely to click on?”

• Do remember that ads in RSS feeds, PDF files, videos, and images are pretty uncommon. Think about the extent to which you want to look different in that regard.

(Ryan McGrady is a new media graduate student at Emerson College where he is studying knowledge, identity, and ideas in the information age.)

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 (This is the seventh in a series of postings about citizen media business issues. See the introduction here. All of these entries are considered to be in “beta” and will be revised and refined as they find a home on a more permanent area of the Center for Citizen Media web site.   To that end, your comments, additional examples, and criticisms are welcome and will be invaluable contributions to this process.)

Call it a “tip jar” or whatever you like, but citizen journalists should not rule out getting donations as part of a business model. This generally involves a form on the main page (or every page) of your web site that allows readers to donate however much they think your journalistic efforts are worth.

Other than requesting that readers send checks through the mail, use of PayPal’s “donate now” buttons is perhaps the easiest way to allow users to give.  For example, Ed Cone uses this by way of a subtle “help a brother out” donation button on his blog’s sidebar.  Because of its simplicity and ubiquity on the internet, readers may be more inclined to donate if you make it easy for them with a PayPal form. Money you receive from donations accrues in your online PayPal account, from which you can request a check or have it transferred to your bank account.  For the service, PayPal charges a transaction fee of $0.30 plus 2.9% of the amount received.

On his blog Among the Trees, Environmentalist Eric Baerren uses not just a PayPal donation button but also a banner from Blog Patron.  Blog Patron is similar to PayPal in that it’s a money transferring service, but instead of the range of services PayPal offers, Blog Patron’s primary feature is the “recurring donation.”  The site manages people’s donating, allowing for contributors to set up a repeating schedule of donations.  For those who give to one or more organizations on a regular basis, this is a useful organizational tool.  More importantly, by providing people with the option to repeatedly donate, it has the potential to bring in a steadier revenue stream using the same logic as a subscription system (for more information on subscriptions, see this earlier post). Blog Patron charges a fee schedule that tends to be a little higher than PayPal’s: $0.25 per transaction plus a flat 4.5% transaction fee.  Also, Blog Patron only accepts credit cards (no bank transfers or transfer of funds already in your Blog Patron account).

For those with a specific monetary goal in mind (or an arbitrary estimate of how much you’d like to raise), ChipIn provides a free widget that displays the cliché fundraising thermometer along with information about where the money goes, number of contributors, percentage to goal, and the contribution deadline, if applicable.  It also allows you to enable supporters of your cause to display your widget and raise money for you.  Sam Mayfield and the Center for Media and Democracy have a blog that covers their trip to Ghana to help the area’s first and only community access television station.  They display the ChipIn widget prominently to raise money for travel and equipment costs.  ChipIn doesn’t actually collect the money, but rather redirects users to PayPal for payment (standard PayPal transaction fees still apply).

Earning revenue through donations can be difficult, especially if you fail to consider carefully the presentation of the solicitation. On one hand, aggressive or sloppy solicitations can look unprofessional or greedy.  On the other, if the link is too subtle, people might not notice it or think it important. Remember that your number one priority is to gain and keep readers. If you provide a quality service, you may be rewarded.  But if you pester, panhandle, or ask for donations while at the same time bombarding users with advertisements, you may turn many people off.

Creativity in your presentation goes a long way. Michael Fortin has a tip jar in his blog’s right sidebar with the text “Enjoy this blog? Buy me a coffee or a drink. May I suggest a venti Starbucks dark roast coffee for $3? Or choose any amount you wish to tip” and a link to donate via PayPal. This friendly, no-pressure approach to soliciting donations may prove valuable to many.

One of the most successful and unique applications of the donation system can be seen at OhMyNews, a South Korean news site with the motto “Every Citizen is a Reporter” (note: the link is to the English version).  With the vast majority of its content coming from citizen journalists, OhMyNews reimburses writers of articles that meet certain standards.  On top of this reimbursement, contributors are able to receive tips from appreciative readers.  According to Don Lee of the LA Times (courtesy of Global Tech Forum), “Kim Young-oak, a Harvard-trained classics scholar, holds the record: More than $30,000 poured in after he wrote an article questioning the logic and wisdom of moving the nation’s capital outside Seoul.”  To keep the site going, OhMyNews keeps a portion of the donations.  In a recent talk at UC Berkeley (as covered by The Tyee), founder Oh Yeon-ho mentions that content-related income accounts for 20% of the company’s revenue. 

Another possible approach is to ask for donations instead of displaying ads and make it clear that donations are what makes it possible for the website to run ad-free. Whether you use this method or not, describing exactly why you ask people to give and explaining where the money goes—in other words, transparency—is key for building trust, which is necessary in matters of money.

Suggestions

• Do explain to readers exactly why you ask for donations and where their money will go whether hosting fees, travel expenses, morning coffee, or even reimbursement for time spent.

• Do be careful not to appear greedy by asking for donations amidst an assault of other advertising.

• Do be as creative as possible in your methods.  As seen in the example of OhMyNews, a donation system can even add value to the reader.

• Don’t pester your readers by hounding them for donations or trying to make them feel bad for not donating.

 

(Ryan McGrady is a new media graduate student at Emerson College where he is studying knowledge, identity, and ideas in the information age.)

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(This is the sixth in a series of postings about citizen media business issues. See the introduction here. All of these entries are considered to be in “beta” and will be revised and refined as they find a home on a more permanent area of the Center for Citizen Media web site. To that end, your comments, additional examples, and criticisms are welcome and will be invaluable contributions to this process.)

Once you have a decent readership or a clever idea, you may want to start merchandising. When successful, selling merchandise on your site not only brings in revenue, but also can be valuable marketing for the site.

One simple way is to take your logo or design idea to a local shop that makes t-shirts. You can make a batch of 20 or so, take a picture, and display the picture alongside a PayPal button on your web site. Once a reader sends payment through PayPal, you package and ship the shirt to them. Creative Commons, for example, raises some funds via a store on its site that displays available t-shirts, stickers, and buttons. Interested supporters are taken to a form to enter their shipping/contact information, then directed to PayPal for payment.

Beyond PayPal, you can create an eBay, Amazon, or Yahoo store, making your merchandise searchable and opening it up to a much larger audience. While PayPal charges a fee per transaction (link to fee schedule), a “Basic” eBay store starts at $15.95/month (plus traditional eBay transaction fees), Amazon WebStores are $59.99/month, and a “Starter” Yahoo store goes for $39.95/month. While they provide many features that may be great for those looking to jump into e-commerce (for example, the ability to set sales tax rates by area [owners are still responsible for paying their own taxes, if applicable…more on this in a later post]), these store-hosting services are probably more than any citizen journalist would need. Nevertheless, you can read some pretty decent reviews and comparisons of these services here, here, and here.

While making and shipping products oneself is theoretically simple, it can be time-consuming in practice and requires at least a small up-front investment. For many site operators, an online branding service may be more attractive. Sites such as CafePress, Zazzle, Spreadshirt, and PrintFection allow you to put the graphic or text of your choice on any one of hundreds of different products like t-shirts, posters, hats, mugs, and key chains. As everything produced by these companies is made-to-order, there are no overhead or set-up costs unless you choose one of their premium services, which usually isn’t necessary. They will also take care of credit card processing, shipping, and customer service. CyberJournalist, a blog about how technology is changing media, has a CafePress store that’s a good example of the variety enabled by this sort of production.

All of these mass customization sites are pretty easy to set up: upload your designs, type in your text, select the products you want to sell, tweak the look of your presentation, and integrate it with your site. The biggest technical challenge for you will be the formatting of your graphics to look how you want them to look on the product (dark-colored clothing, for example, present some challenges). It’s easier to do these things now than it was in the past; most, if not all, of these sites offer some good tutorials and templates.

CafePress is the ten-ton gorilla of custom merchandising. It offers one of the wider assortments of products, but in the free “basic shop” only one version of each product is allowed. An example of a basic shop is the one set up by phpthrowdown, celebrating a recent events by selling a commemorative “Yeah, I got what it takes” t-shirt. For $6.95/month you can sign up for a “premium shop,” allowing you unlimited product designs and better shop customization/organization. While other sites offer somewhat similar services without charging, CafePress does have an advantage in traffic. All of these sites have a marketplace in which people search for designs. If your product could stand alone—if it’s not just a logo that people who don’t frequent your site won’t recognize or care about—it could very well bring in revenue (and perhaps readers) via people’s search results in the CafePress marketplace. A good example of a citizen media site using CafePress is iBrattleboro. The local Brattleboro, Vermont, journalism site runs a shop offering a wide range of products with clever little descriptions like that from a logoed infant creeper: “Babies love Brattleboro, too. Crawl around in style!”

Zazzle has no monthly fee for any of its services, but it’s somewhat more difficult to integrate with your site and you have no way to remove its giant corporate header from your presence on its site. Instead of stores, it hosts “galleries” and provides you with a “Flash Panel” for placement on your page. The Flash Panel is a bright, sometimes gaudy, scrolling display of your products that links readers to your gallery. One of the best features of Zazzle is its product API, which allows your readers to do some of the customization. Perhaps best illustrated by the Zazzle-supplied example, License Plate Shirts, the API allows you to create a template with placeholders for dynamic text or images. Zazzle also boasts the friendliest return policy (the “Zazzle promise”). While this doesn’t appear to directly affect you, the seller, remember that experiences your readers have with your products (and the companies that you have service them) can hurt you.

Spreadshirt, founded in Germany but with a growing US service, looks like a solid option for those with a European presence. Its services and product offerings function very similarly to CafePress, offering good integration with your web site and a tiered account system. As an example, the online windsurfers’ community iWindsurf has a store just offering a couple t-shirts. Merchandising may be particularly successful for community sites like this since members are likely to associate the site with their identity and thus more likely to want to brand themselves as such. For $10/month, a premium membership allows for removal of all Spreadshirt ads, better branding, and special sales tools like “limited time offers.” One of the major drawbacks is in the Spreadshirt payment system, which mails checks only on a quarterly basis, much less frequently than the rest.

PrintFection is the youngest of these four custom merchandisers, but it offers a lot. For starters, it’s selling a basic white t-shirt with a custom design for $2. The company also has advanced integration and design customization features, the ability to remove PrintFection ads, no limit on product offerings, and no account status that requires payment for an upgrade. When thinking about how the products could reflect back on you, the issue of quality probably comes to mind. A frequent suggestion in merchandising forums and comparisons is to buy a comparable t-shirt or other product from each company and judge for yourself. If not for the fact that it offers a lot of features at no cost, PrintFection may be a good place to start simply because they’ll sell you your first shirt for $2.

The major drawback to using one of these custom merchandisers versus the traditional route of producing and selling products yourself is the payout. These services all use a base price per product that you can then mark up as much as you want. A basic white t-shirt will generally have a base price of about $13. If you sell such a t-shirt on your blog for $15, you will be paid $2.

On top of revenue from sales, almost all of these sites offer some kind of affiliate program through which you can earn an additional percentage, often even when referring people to your own store (for more information on affiliate programs, see this earlier post).

For a more varied comparison of these sites, the T-Shirt Forums is a pretty active message board dedicated to such topics.

The world of mass customization is broader than just clothing and doodads. Some authors are turning to sites like Lulu.com for publishing books and other media. Lulu makes it easy to create not just a book, but handouts, brochures, DVDs, and CDs. This opens the possibility to make paper copies of a series of news stories you’ve written, CDs for your podcasts, DVDs for your videocasts or event footage, or a booklet made up of words taken from your blog archive. These services work much the same way as the merchandisers above in that you determine your profit margin above a base price and have several options for customization. Mia Garlick of Creative Commons conducted an interview with Stephen Fraser of Lulu in 2006, which covers much of how the site works as well as licensing options.

Another merchandising service that may come in handy for journalists who use photography in their work is DigiBug, a company that allows you to sell prints through your site. Using DigiBug API, sites like the Pan-Massachusetts Challenge are able to sell photos in various print options and even create separate price lists for different events or categories.

While doing all of the production, marketing, packaging, and shipping may yield a better profit margin, sites like CafePress give you an easy way to make some extra revenue. Even when the branding service takes a large portion of the profits, $2-$6 is not such a bad return on something that is pure promotion for your site.

(Ryan McGrady is a new media graduate student at Emerson College where he is studying knowledge, identity, and ideas in the information age.)

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