Generation Cash - The rise of revenue sharing?
December 7th, 2006 by Stefan JuhlRevenue sharing is definitely an interesting area for sites based on user generated content. And yesterday Trendwatching.com published a new issue of their trend briefings - this time entitled “Generation C(ASH)“. Their trend briefing is focused around revenue sharing on online medias based on user generated content.
They expect that revenue sharing will be a big theme for online media in year 2007. And I do agree with them on revenue sharing being something on the rise. But as well as there’s some great opportunities in sharing the revenue, there’s also some potential issues. Here’s some pros and cons of revenue sharing from the top of my head.
Pros of revenue sharing
- Users are more likely to continuously contribute with content
- Users are more likely to tell others about the site and help the content go viral
- Users are more likely to link to the site, which will increase (search) traffic
- It can easily be done by rotating users Adsense ID’s etc.
Cons of revenue sharing
- Increased risk of users submitting copyright infringing content
- Risk of users getting disappointed because of too high earning expectations
- Some users can’t resist to submit huge amounts of content, which might not be of the best quality
- If it doesn’t improve traffic enough to compensate for the revenue being passed on, the site will lose money
- Takes a lot of administration to pay people directly
If you’ve got more ideas of pros and cons of revenue sharing, then feel free to tell in the comments.
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Posted in Link Building / Bait, Monetization, Viral Marketing |
December 7th, 2006 at 6:49 pm
Not sure about it being a good strategy. Squidoo is a prime example of this.
Once you introduce money into an equation where passion was originally the driving force, it can ruin the community.
As far as starting with that model off the bat? I don’t know. I’m skeptical about it only because it’s a logistical mess and only the superstars get money worth mentioning. Somebody might come up with a good solution though.
December 7th, 2006 at 8:47 pm
Yes Markus, I believe it’s pretty sure that when the less earning users - which will probably be more than 80% - realizes how little they get paid versus the time spent, they’ll very likely stop contributing.
So to make it a success it’s necessary to have a solid model.
The Youtube thing of only doing revenue sharing with the “top contributes” / broadcast networks etc. is maybe a good model. Time will show..!
December 12th, 2006 at 12:05 am
Nice write up Stefan - one more thing to add to the pros:
- It’s a nice marketing message
Our pitch goes something like this: why would you ever leave a review on Amazon where 1) they own your review; and 2) they keep all the revenue associated with that review - when you can post it on RIA where you own it, and you can make money.
Also, i’m not sure why everybody cites Squidoo as an example of a failing site. They have fairly big traffic if you believe Alexa / Compete, and they have been showing up in our log files as a driver of traffic. Squidoo looks to be doing fine to me.
December 14th, 2006 at 3:34 am
Is there not a real danger her that Google could turn around and be the revenue share bank? For instance many people have a Google account of some description so Google knows who you are. Google could then say - we’ll offer publishers a way to share revenue with any registered Google user that posts content to your site. It’s not inconceivable that they’d offer a “mini-publisher” account specifically around UGC. But then would it really matter to the publisher? As long as the publisher keeps making money I doubt they’d care. Lawrence might even like being able to get out of being in the middle.
December 14th, 2006 at 9:43 am
Lawrence, I think that the Squidoo is referred to as a failure because many expected more. It seems like they’re mainly getting attention from webmasters / SEO’s that just wants links or even use it for parasite SEO. Whether or not Squidoo failed should depend on the goals they had set.
John, I think that Google has already entered this with their Adsense API which I believe Lawrence actually uses for RateItAll.