Error 402: Where’s The Crowd To Fund This?
from the if-enough-of-you-fund-this,-the-series-will-continue dept
As our Error 402 series continues, I swear that eventually we’re going to get to some of the more promising models and stuff that actually has been working in some cases shortly, but we’re still covering some of the stuff that hasn’t fully panned out (or, has only panned out in limited setups). For this article, though, we’re going to cover a few models that have worked for some, but not broadly enough to be super successful for most content: crowdfunding, affiliate ads, and data sales.
I would put these in a hybrid category, in which they really have worked out great for some sites, if they meet certain criteria, and not so well for lots of other sites that don’t meet those criteria, or that think that because other sites have done it, they can do the same.
The first of these is traditional crowdfunding, the kind made popular by sites like Kickstarter and Indiegogo. While neither were focused on journalism, both have (and still do) support some journalism operations. About a decade ago there were attempts to create journalism-focused crowdfunding platforms. Most of them are now gone. A decade ago we experimented with one, BeaconReader, which helped us raise over $60,000 that we could use to focus on our reporting over the fight for net neutrality.
Beaconreader was designed to be a cross between Kickstarter and Medium. You could both crowdfund and publish on the site. Unfortunately after a few years it went out of business, as did others like Contributoria (which was a part of the Guardian). There were also high profile initial successes, like The Correspondent, which raised an astounding $2.5 million in a month to open a U.S. bureau to go with its Dutch operation. Except, that ended in disaster. In that case, there were complaints about funders feeling misled during the process, while the Dutch entity had much more limited U.S. expansion plans than were implied.
But, the larger issue seems to just be the periodic nature of traditional crowdfunding. It’s useful for a one-off “big project.” To fund a specific project for a specific period of time. An album. A video game. A movie. Perhaps a specific investigative report. But it’s much more difficult to run an ongoing project with crowdfunding, because it’s just so unpredictable going forward. There’s less that’s sustainable about it.
This is where more periodic crowdfunding offerings (things such as Patreon or Substack) have found more success for ongoing projects. That’s not to say there isn’t a place for crowdfunding. I still think it has real promise, but it has to be used appropriately: for one-off projects, or maybe just to get something new launched that then has an ongoing revenue model.
Next up: affiliate ads and links. These have been around for quite some time, and can work very well. The quintessential example is The Wirecutter. This deep dive review site made its name in creating exhaustively deep reviews on all sorts of things, with a final “single top recommendation.” And it basically made its money on affiliate links to the products mentioned in its reviews. That was decently profitable by all reports until the NY Times bought the site, diluting the brand and the quality of its reviews.
Of course, the success of that site also lead to a phalanx of copycat sites, and now there are just way too many Wirecutter wannabes, all hoping to get by on affiliate link revenue. And, thus, as with so many things that are successful when used in one way, affiliate links have basically become the realm of spam sites and garbage sites. They can still be useful in certain contexts, like Wirecutter, where an element of trust has been built up, but they fail in cases where people are just trying to cash in and play search engine optimization games to try to get a cut of clicks.
As such, there are plenty of sites that still do affiliate links, and there was a time we experimented with them here, but all in all, they feel kinda questionable on a news site, and seem to only make sense directly on review sites.
The final area I’ll mention, just because it does exist, at least for a little while longer: data sales. This happens on certain websites. There are data brokers who request that you plug in some code so that they can track users on your website and aggregate them with other websites, and have a more granular picture of people who are surfing the web.
I am aware of other content websites that have made a fair bit of money from such services, to the point that the publisher of a fairly well-known site recommended I talk to them, saying it could really generate revenue. I spoke to them for a while and just kept asking how it wasn’t a violation of the privacy of the community here, and kept getting told it was fine because the identifying data was “hashed.” But also, that because other sites would use the same hash so they could get an accurate picture of how people surfed across websites.
When I pointed out that this seemed to pretty clearly violate our privacy policy, they said that it was no problem, and I could just update the policy. And that’s the point I stopped responding to their emails.
I think those businesses are not long for this world in an era of the GDPR and the CCPA/CCPR in California and (hopefully) more laws targeting data brokers directly. But I did want to highlight that this is the way some content websites have monetized in the last decade.
At this point, though, I’ve covered a lot of the historical landscape, so I want to dive a little deeper on some of the more successful and interesting models that are working for some sites today, and whether or not those are more broadly applicable, before then taking everything we’ve learned to date, to explore some potential new (and hopefully better?) models.
Filed Under: affiliate links, crowdfunding, data brokers, error 402, journalism, monetization, web monetization
Comments on “Error 402: Where’s The Crowd To Fund This?”
One can only hope the databroker model crashes. Can’t happen too soon.
Crowdfunding has a tendency to reward those who are already at the top. There are, of course, exceptions to that, but they are just that: exceptions.
Even when you are publishing really good high quality content, it’s extremely hard to get people to comment on your work. It is exponentially harder to get those same people to share it on social media. Harder still is to get people to help fund your operation through, say, a subscription.
In my experience, I’ve had Patreon and Ko-Fi for years now. I’ve only ever had one person buy me a Ko-Fi and one person (an acquaintance of mine) subscribe to my Patreon. It is thrilling that I got anyone at all to help with the funding of the site (all the expenses go towards server costs at this point). At the same time, it’s infuriating to all involve to know that the revenues, mixed with Adsense, isn’t enough to pay for server costs still (and I did get a good deal on that).
I think what people envision with such systems is that all it takes is someone to produce some decent quality stuff and the money rolls in. The problem is that those viewpoints are typically skewed to the handful of people who have experienced overwhelming success. Most people don’t hear about the ones that spent years making great content and still never managed to take off (and I’m sure there are loads of examples of that out there).
I know when I speak to others on the stuff I do, there’s plenty of people who think that I just need to tweak one little thing. One little adjustment and I’ll see my stuff take off like no tomorrow because making it big is just plain easy on the internet. First of all, being successful is NOT easy. Second of all, a lot of the ideas I get are really off the wall and not workable.
For example, one person I spoke to said that if I stop writing about technology and write more about murder, the audiences will come rolling in because that’s where the interesting stuff is. Yeah, that’s a bridge too far for me. I’m not pivoting to that.
At the same time, it’s not like I haven’t been trying stuff, either. Last month, I finalized a massive design change for my site to have a “more modern look”. I’m also working on transitioning to talking about newer video games as well (which will take time, unfortunately, thanks to the pricing of modern games). So, I’m adapting the models regularly to basically rule out all logical options that “might work” that I “might have overlooked”. I mean, I already got frequent original reporting down pretty well at this point, so that’s definitely not the problem here.
Still, try as I might, crowdfunding is an extremely difficult thing to get these days. I think a major problem is that some people out there would look at a project like mine and say, “well, I don’t know that person very well, therefore, no, I won’t fund it”. Because of things like that, it makes it harder to grow my own journalism project which initiates a vicious circle to no fault of my own. While I wouldn’t say that is the sole reason, I suspect it’s a contributing factor.
I think that ultimately speaks to your point that crowdfunding tends to benefit a small handful of mega projects. It’s why you have millions go to Star Citizen while many other creators out there don’t even see a single penny. Even if a large project winds up being a scam, people throw money at it anyway because it seems to be popular more than anything else. The wealth gets concentrated to a small set of projects when it should be more evenly divided out to several projects.
So, crowdfunding is, indeed, great for a handful of people at the top. For the rest, you are grateful to get mere pennies for your efforts because that counts as extremely lucky.
AI was a mistake.