There’s a great conversation at WPMU.org about how to make money using WordPress MU – James starts by noting that advertising doesn’t cover the hosting costs for a massively successful site, and goes into the various other ways in which they derive revenue, including selling extra features to paid users and selling custom plugins (that are not released under the GPL). In response, Jason acknowledges that WPMU is inherently costly to run and agrees that there must be a revenue tsream, and then goes on to argue that WPMU is really a service, not a product. Therefore to make money with WPMU, he reasons, you must provide a value-added service relative to the big free hosts like wordpress.com – such as custom themes. James replies with a lengthy argument defending the decision not to release plugins under the GPL.

I don’t have much to add aside from noting that since themes have long been released without GPL, there’s no reason that plugins should be any different, especially with themes like Thesis which are “frameworks” that really blur the line between a theme and a plugin. The same can be argued for Prologue, which I use as the front end to my WPMU install at Talk Islam. The “core functions” of WP are never used in themes or plugins, so I don’t think that argument applies (think about it – why would you want to duplicate core WP functionality? why would you even need to?)

Of course, part of the problem for monetization is that you are a victim of your own succcess. James’ monthly costs for the Edublogs network are assuredly far greater than mine for Talk Islam – I can only aspire to a fraction of his success (especially since I am not running Talk Islam as a business. not yet anyway). As such Talk Islam has only a handful of user blogs – most of the activity is on the front page (where the Prologue theme gives it a dynamic, Twitter-esque feel). My goal for Talk Islam is to incorporate the Buddypress functions and ultimately create a framework for a “community platform” that would be in a sense the successor to the Daily Kos style blog community, replicating many of the features but discarding things that are broken in my opinion (such as the way the recommended diaries list is dominated by a clique of the same voices and the same topics, with very rare original and fresh perspectives). It should be noted that Shai Sachs, a very talented Drupal hacker, is working on a drupal-based blog infrastructure project for the progressive political blogsphere, but I personally believe that wordpress MU is a better platform. With Talk Islam as a prototype, we can envision a package that already includes the buddypress integration and standard theme for frontpage and user blogs that an aspiring admin could simply download and have ready to go out of the box.

The real question for monetization is the scale. How many WPMU installs are on the scale of Edublogs? Very few, I wager – but there are probably thousands like mine where the entire install can be run off a standard Dreamhost account. At that scale, Adsense ads can indeed cover hosting costs and even a modest profit on the side – not enough to pay rent, but maybe enough for cable television. Or a Starbucks addiction.

I think therefore a model for monetization presents itself. Instead of trying to monetize a single WPMU install, you monetize a packaged installation that you distribute. That installation can have Adsense code sharing so that half the revenue from ads goes to the package developer (or all if the installer doesn’t have an adsense account, there would be a box for them to paste their adsense publisher ID if they have one). For any given WPMU install the revenue will be quite modest, probably on the order of a few dollars a month. But suppose that the package was installed a hundred times? a thousand? Especially since it isn’t you who are paying the hosting fees, its the person installing the package.

Of course this means we have only punted the monetization issue downstream. But for a small WPMU site operator, recouping hosting costs is a lot easier than for a big operation like Edublogs. Users can be asked for donations, charged fees for extra features, etc just as James and Jason described in their posts. These revenue sources will be much more lucrative at the smaller scale.

As a business model, none of the above really helps James out, unfortunately But then again, what if individual schools ran their own WPMU microsites using Edublogs software? (actually, they do.) In a sense the strategy above can be leveraged regardless of your size. All things considered, I’d rather be in James’ position of being too big

Post from: meta BLOG

monetizing WPMU

This intriguing article for web entrepreneurs has a lot of useful information in it – particularly the interesting metric for assessing a companies value: 10 x (revenue – cost). However, in the course of the discussion he also makes an intriguing point about Google:

Google has one incredibly amazing business – keyword advertising. It relies on its own search service and deals with other search services and content partners for the audience that drives the keyword business. If you stripped that business out of Google, you’d probably have a business that has gross revenues of $20bn, net revenues of $13bn, and operating profits of $8bn to $10bn. That business is worth the approximately $100bn of market value that Google has right now. Everything else is valued at zero because it has a lot of costs and no revenue. Could Google unlock a lot of value by giving up on everything else they are doing? Maybe not, but they probably wouldn’t lose much value either. I am not suggesting they do that, by the way. But again, I just want to make a point.

That’s a fascinating point. It should be noted that everything Google does that isn’t directly related to search and advertising is essentially a distraction, and that shows: Feedburner has been moribund after it’s acquisition, YouTube can’t make a dime, and Gmail for all it’s wonderfulness is still labeled as beta. Even properties that are actively innovating, like Google Maps, Picasa, and Blogger, are still not earning any revenue for Google and are being actively competed against by Microsoft and open source software.

Of course, what would happen to all those projects if they weren’t subsidized by the web advertising business? In some ways, their very presence forces the competition to innovate. But in the looming economic clouds ahead, maybe the golden era has ended and everyone, even Google, has to abide by the rule that cash flow is king.

(via retweet of @TimOreilly from @JoeTrippi)

Post from: meta BLOG

should Google spin off it’s advertising business?

At RWW, Bernard Lunn asks readers to suggest a revenue model for Twitter, that satisfies two criteria:

1. Do not irritate/interrupt the user and even occasionally add value to the user.

2. Provide a value proposition that is so compelling that even conservative buyers give it a try.

There’s actually a fairly simple solution that meets the criteria above, and it relies on a relatively new feature that Twitter introduced primarily for the 2008 presidential elections: selling ad space on topics pages. The common topics pages are candidate-specific ones like “Obama” or “Palin” but there are also new topical ones being generated such as “Muslim” or “Colin Powell“. Note that these topical pages, unlike the candidate pages, are dynamic and fade into and out of existence based on the real-time activity of twitter users, so these truly are a snapshot of current discussion rather than any kind of archive or comprehensive index. There’s even a “tag cloud” at the top of the main election page that shows what the current topics are and the topicscan be filtered by candidate (for example, “Obama and muslim“)

These topics and candidates pages are election-centric for obvious reasons, but there’s no reason that they can’t be expanded in scope, analogous to the breadth of various topics at alltop.com. The crucial difference here however is that the content is entirely user-generated tweets rather than RSS feeds of news and blogs, and is presented as a real-time “river” of information.

So, then, how to monetize? Simply, to imitate Google, and sell ad space on the topics pages. Twitter could even partner with Google or Yahoo and share the revenue. Imagine a partnership with google, for example: adwords purchasers would buy ads for specific keywords, and if/when those keywords become Topics at Twitter, their ads would display. Likewise, contextual ads based on the real-time river of tweets for a given topic could also scroll by in the sidebar, or appear interspersed.

The point here is that Twitter has created instantaneous portals for the hottest topics of the day, and what makes it so useful as an end-point destination for websurfers is that the twitter users are generating the content, providing both links and commentary. So, the real estate created by these topics pages has real value for advertising, as long as it is contextual and targeted. But targeting is easy because instead of having to analyse the entire webpage (as Adsense does at present), the contextual algorithm has a head start because of the topic itself. Then the remaining contextualization can be done on the river of tweets for fine-tuning. This should ensure better relevancy and higher click-through overall.

Post from: meta BLOG

A revenue model for Twitter

Michael Arrington advises bloggers to turn down venture capital buyouts of their blogs. I don’t think hi advice – sound as it may be for the bloggers at his level – really has any bearing on blogs in the long tail, which is of course where most blogs (and Techcrunch readers) are. While I don’t have much comment on the dynamics of money and politics that he describes, the following did leap out at me as somewhat relevant to bloggers of more humble station:

When you stop seeing other blogs as people you admire and want to discuss things with, and start to see them as your competitor, your brain shifts and you stop linking the way you had previously.

Luckily, the newbie bloggers are there to fill in the links when they’re needed. That’s why, if you are a mid-level blogger, you are likely courted by the bigger blogs looking to get your support. If you know what’s going on and are willing to play the game, you can see your blog rise very, very quickly. Choose the wrong blog, though, and you may find yourself alone and lonely in your forgotten blog.

As an aside, when I see a young but promising blogger, I’ll start linking to him or her constantly to build them up (others, like Winer, Scoble, Jarvis and Rubel did that for me). The goal is to help move them up to a position of influence as quickly as possible.

The problem here is that even if every A and B list blogger were to pick a handful of blogs to promote, the result is simply vaulting those blogs into the B and C list. An ecosystem develops in which the top tier relies on the second tier as a filter for news, info, and blog topics, and the second tier relies on the third, etc. so that you have a constant filtration system going on. By the time the process completes, you have only homogenized news at the top tier (which is where the vast majority of blog readers spend their time).

There really is no way for a truly diverse churn of ideas to filter to the top because of this structure. What’s needed instead is for the long tail to become more self-organizing. One of the strongest tools in the toolbox are blog carnivals, which operate as a link exchange. I took the idea of a blog carnival further, actually, and launched a “real-time” carnival for the Muslim blogsphere called the Carnival of Brass. The point here is to use social bookmarking technology from del.icio.us to create a “badge” that adds new links constantly. I describe the idea in more detail in the Carnival of Brass FAQ and there is no reason that a similar system would not be effective in the techsphere, otakusphere, or any other niche blog community.

Ultimately, a newbie blogger (like yours truly) isn’t going to make it to the big leagues without an A list sponsor. And that solution doesn’t scale. Rather than chase after the A list traffic, and the big money at the top, the best route to blog success is to grow your audience from within your niche, mining the long tail for eyeballs. Slow and steady over a period of years will definitely bring results, and perhaps not a windfall valuation but certainly incrasing and steady income from ads and affiliate programs. That’s the reality for most of us, though watching the blog gods up on Olympus certainly makes for fine entertainment.

Post from: meta BLOG

blogging for dollars

Fascinating numbers via Bernard Lunn at RWW about the true market share threat to Google of a Microsoft-Yahoo merger:

Email is 49% of Impressions. Portals and Search Engines is 10% by contrast. This is some free data from Nielsen-Netratings. click on Top Site Genres.

56% is Microsoft and Yahoo combined market share of webmail. Gmail is down at 7%. This data is via Fred Wilson’s back of envelope calculations.

And as far as email goes, Lunn notes that Hotmail is a dying joke and that Yahoo’s email product is superior:

Hotmail has lagged terribly. Most people who used it would not return, I cannot imagine who would switch (an AOL user maybe) and most people already have email. So it is a lost cause. One major reason it lagged IMHO was Microsoft fear of cannibalizing Outlook. So they won’t offer the features that users want that both Google and Yahoo have been rushing to fill. Yahoo is reputed to have the most “Outlook-like” interface and that matters massively to people making the switch.

Microsoft will probably do the smart thing and let the Yahoo team run with email. Hotmail will die as a separate brand, eventually.

It should also be noted that Yahoo acquired Oddpost in 2004, which is now the foundation of their webmail platform (and note, Yahoo mail didn’t spend long in beta, unlike Gmail which embarrassingly remains in beta mode even after the official launch in 2005.

Yahoo’s email is superior to Gmail in almost every respect except for chat integration and email conversation grouping. Yahoo’s feature set includes disposable email addresses, drag and drop, and tabbed viewing. As Lunn notes, the potential for monetization is there, both in displaying standard contextual ads as well as the option to pay Yahoo $20/year for increased storage and ad-free viewing. But what about email search?

Yahoo’s email search is truly innovative. When you type a search term, a separate pane open up and gives you additional search refinement options. Click on the thumbnail below to see how it works:

Here’s a closeup of that search pane:

It’s amazing how functional and useful this is after a while. It’s also easy to see how this could be a vector for additional monetization. It’s not hard to see how Yahoo could place ads below the preview pane and search-specific ad results in the search refinement pane, even for paying customers like me (free Yahoo mail puts ads at the top of the page, and inserts text on outgoing mail in the footer but obviously this hasn’t impacted their market share.)

And as for integrated chat, since MS messenger and Yahoo Messenger already talk to each other, we can expect that the mail client won’t be static on that front either.

So, 49% and 56% indeed. It’s not hard to see why Microsoft is going after Yahoo, or why Google is afraid.

Post from: meta BLOG

email the google-killer?

Darren at ProBlogger has a great roundup of advice on ideal ad placement to maximize click throughs when using Google Adsense. Probably the single most important point he makes is that content placement is just as critical as ad placement. After all, if you design your site around your ads, you won’t have many readers. The content is why people read your blog; the ads should be visible but not the main focus.

I’ve learned a few things about ad placement by experimentation. Of course your mileage may vary, but here’s what works for me.

1. Image ads convert better than text.

An image has something to show, and is easier to see. Whereas text ads must be read, visual ads present themselves more naturally to the eye. They are also colorful, and often animated. In addition, the entire image area is clickable, unlike the relatively small region on text ads (a change made by Google to reduce click fraud).

2. Trust the algorithm, don’t blacklist.

It’s tempting to cull certain ads from appearing if you think they are way off-topic (or outright annoying). But there’s method to the madness. I’ve found that if I start excluding URLs for certain advertisers too aggressively, my CTR drops pretty dramatically. The adsense algorithm learns over time, so you need to let it learn what ads work and which don’t. That requires patience. The longer you have ads on your site, the better the matching will be.

3. Bigger is better.

This is a fairly obvious one. A banner (768×90), wide skyscraper (160×600) or medium rectangle (300×250) is always going to attract more attention. It’s also worth mentioning that these larger formats are the ones with more color, animation, and even video and user interactivity, all of which get the reader’s attention.

4. Complementary, not competitive location

This is one of the more important (and subtle) issues. I go against the grain in that I believe it’s unwise to put ad units within a block of content. There are several distinct regions or “content elements” within a post: the post itself, the comments, header, footer, navigation, etc. It is easier on the reader when ads are placed interstitially between these content elements. The placement of ads should complement the reader’s visual flow, being visible but not smack-dab in the middle of the natural path that the visitor’s eyes follow.

I am also skeptical of heat maps that purport to tell you where a user’s attention is drawn first, or lingers, because I think that what matters more is the reading trajectory over the page. It’s critical to keep content elements along that reading trajectory, and any ad units on the page should be adjacent to that trajectory, providing an easy “on-off” side-trip from the main path. I think of this as rest stops on an interstate – the best ones are the ones where it’s easy to exit the highway, take a break, and then get back on easily – that way there is minimal interference to the journey. A reader visiting the site is a traveler in much the same way.

I’m no expert by any means (and I make about $.25 a day from Adsense, because none of my blogs are highly-trafficked). However I do want to mention my own blogs as examples of the guidelines above in action: City of Brass and Nation-Building, both hosted on Blogspot. As you can see, they have a wide column of 300×250 medium rectangle ads down the right side. There is also a 768 banner at the bottom of the page. I may experiment with a half-banner in the upper right corner as well, but the main idea is that the ads are large and to one side, leaving the content area almost entirely whole.

Another point to make is that I use the old template system on these blogs, not the new blogger version, because I find that it affords me more control. Most of the sidebar widgets available on the new beta system are useless for my purposes and would only eat into available ad space on the sidebar. It’s really just an ad-bar attached to a single-column layout, not a genuine sidebar – some of the content like links to my archives, etc that would normally go into the sidebar are now actually at the bottom of the page.

Post from: meta BLOG

guidelines on ad (and content) placement