The monetization of crowds

There’s money in them thar Interwebs! The only real question is how much. People have been trying to figure out the answer to this for some time now, and a result, the means keep evolving.

One of the early methods was borrowing from the old “brick-n-mortar” business model of selling advertising space on your website. That could be fairly lucrative for really popular sites, but not so great for the average Joe who gets perhaps a few family members checking their site per week. And after a while the advertisers began to realize that the Internet offered more options than the physical world. Rather than throwing their money at a “virtual billboard” they figured out they could pay for just the people that saw the ad and responded. Pay Per Click was born, and even the really popular sites made less money, while advertisers could focus their expenses better.

I think iTunes was the next evolution–not so much in content delivery, but in paradigm shifting. Consumers used to buying bundled content (ie. CDs) for a set price could suddenly buy just the individual songs they liked for a much lower price. This also got people increasingly used to buying creative content online. Amazon helped, but only in pushing the concept to a larger audience, not for anything particularly revolutionary. They’re still primarily a logistics retailer.

But the latest generation of monetizing content is really starting to look interesting. Much of it I’ve only recently become aware. A few highlights:

YouTube: Everyone knows YouTube, and everyone has been using it to get free content. Evidently, however, there is a strong advertising model behind YouTube–enough that YouTube is able to reward content creators who consistently get the views. There are artists who are able to make a living posting content. And not all of it is entertainment, either. There are people who evidently make a living buying things online, making a video of the “unboxing”, and giving evaluations.

Kickstarter: This includes other sites such as GoFundMe and Indiegogo, but they’re all largely built around the same concept: define a project, set a goal, push for supporters to pledge money, and use that money to complete the project. The genius here is that supporters can pledge as little or as much as they want, while the project organizer can offer incentives to convince supporters to pledge more and to tell their friends. Best of all, if the project doesn’t bring enough pledges to meet the stated need no one pays anything. The down-side is that you still don’t have any real guarantee of getting what you paid for.

I’ve participated in four Kickstarters. One didn’t reach the funding required and I paid nothing. Of the three that funded, one has failed to deliver the promised product. One that did fund delivered as advertised, and the other I have no doubt will, as the author has had a successful project previously and communicates frequently on the status of the project. I’ve also participated in one Indiegogo that delivered as advertised.

Patreon: This site is similar to Kickstarter and the like, but focuses more on the content producer than individual projects. Here you can pledge a certain amount of money per content item, or per month, or who knows how many different configurations. Different pledge levels can bring additional perks or content. I know of one author who gathers pledges by the month, but promises to deliver a certain amount of content in that time period. He’s not getting rich, as his current funding level is about $50 a month. YouTube star Peter Hollens, on the other hand, accepts pledges by the video and promises certain things depending on how much is raised per video. At the moment he has pledges to provide about $7200 per video, though I’m sure he divides that several ways, as he uses professional videographers.

Deviant Art: Similar to Patreon, but more focues on providing a community for artists, this site deals primarily with graphic arts (I may be wrong on this, but that’s what I’ve seen). The difference here is that there are different kinds of “currency” involved. There are social “brownie points” one can use to give various artists encouragement and/or increased status, and then there is a point system that roughly echoes real money. You can buy points using PayPal, etc., and use it to buy downloads or prints, commission art, or support specific artists. Some artists can make decent money, and many use the site to supplement their income, communicate with their fan base, build support.

This are a few of the opportunities out there that I’ve noticed. In all cases, quality counts. Those who can provide solid quality content while presenting a friendly, consistent face behind their work, coupled with decent business skills tend to do better. Michael J. Sullivan, who ran a Kickstarter project I recently pledge in, is an excellent communicator. He interacts with his fans regularly through a variety of sites, so he had a pre-built base for his project. Peter Hollens likely gets most of his attention through YouTube, but has learned how to channel them to his Patreon account to get more direct monetary support.

But one thing some of these sites have the ability to do (if savvy producers know how to leverage it) is to build their fan base into a community that rewards one another by their support. For example, in Sullivan’s recent Kickstarter there were various levels of support one could pledge to, which provided increasing benefits the more you paid. But built into the campaign were incentives that no supporter would likely be able to accomplish alone. For example, if the project hit a certain level of support the author promised to improve the print quality of the finished books in various ways. Hit another level and everyone would get free ebooks of some of his other works. Hit another level and the ability to order special t-shirts would become available. To my knowledge no one shelled out the entire $10,000 to reach another of these levels just to get the t-shirt, but as an ad hoc community we collectively reached that goal, and all benefitted as a result. We weren’t just supporting the publication project, we were helping each other out and coming together as part of something bigger than any one of us. There was a certain energy about the whole thing. And Sullivan was always there, feeding that energy with encouragement, amazement, praise, and updates on the stats (we were, for example, the third-highest funded publishing project in the US when it all was done). It was…fun!

On the other hand, the one project in danger of not fulfilling its promises is an example of what not to do. They tried to communicate at first, publishing four project updates. But then…nothing. They have five days remaining to meet their obligation and, while I’d be okay with a delay if they’d say something, I’ve heard nothing. I participated in this project to help out my neice, who was involved, but I’m sorry to say that even if I still get what was promised I will not be supporting any more projects by that particular creator again.

It’s fascinating to watch how Internet business models continue to evolve. Of course we usually only hear the success stories, never the failures. My own blogging and book reviews as part of Amazon’s affiliate program has to date netted me exactly nothing. My brief attempt at an online store lost money (but helped position me to grab onto another opportunity in the brick-n-mortar world that has been a real blessing, so no hard feelings there). But I’m certain there is money to be made out there. One just has to find the right niche to fill.