

Ask YC about timing: When to monetize your user generated content site? - nickb

Here's a hypothetical question... let's say you have a UGC site and so far everything on the site has been free but someone needs to start paying bills so you've been looking at various options. You can add advertising (like what many sites do these days), you can start charging for 'premium' features (the so-called freemium business model), or you can start requesting donations (wikipedia model). <p>Each of these different montization methods has its own pros and cons and each of them has a potential to piss of users and alienate them.<p>So the question that I have is: what is the best time to implement one of these features? Do you start charging/advertising from the beginning or do you wait for the community to grow on the completely free model?
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Shooter
I think that in 99.5% of cases you should start trying to monetize from the
very beginning, for three primary reasons:

1\. You're more likely to piss of customers if you introduce
advertisements/donation requests/subscriptions later than if it is there at
the beginning. People like to know what they can expect from a site when they
first start using it, and they tend to get very comfortable with a given
dynamic. I've been very surprised how offended/alienated people can become if
you introduce monetization later...people don't seem to understand about
hosting costs or time investments.

2\. You get the chance to see what is actually going to work for you before
you go through too many iterations of your idea. Maybe your initial focus is
not able to sustain itself...being able to adjust on the fly and experiment is
a key component of internet sites and your monetization strategy is definitely
something you can/should experiment with.

3\. People with something invested in your site beyond their content
contributions (such as donations/subscriptions) are more likely to give you
honest feedback about your site. You also tend to get more partner inquiries
if there is a visible monetization method (versus 'labors of love'.)

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waleedka
4\. If you put ads from the start, you get to design the Web site with the ads
in mind rather than adding them later in whatever space that happened to be
left empty.

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nickb
That's an excellent point. My follow-up question is: how easy/hard is it to
find advertisers for brand new sites? I know that AdSense wants you to have
100K uniques (or something like that)...

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brlewis
Adsense and adbrite have no minimum traffic requirements and cost nothing to
get started in. You just won't get a payment until you've accumulated $100,
which may take a while.

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rms
Adbrite has a minimum payment of $5, I got a payment of $5.36 from them
recently.

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simonw
Do what WordPress.com does - only show ads to people who come in from search
engines AND don't have a "I've been to WordPress.com before" cookie. That way
your regular users will never see an ad, but the people most likely to click
on ads (external visitors in "search mode") will. Make sure your regulars know
that this is going on though, or they may feel you are being dishonest with
them.

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Tichy
At a recent barcamp some bloggers mentioned something interesting: they treat
their visitors differently with regard to ads: the feed subscribers only see
ads on an article after a few weeks, whereas people hitting the blog through
search engines see ads from the start. Not sure what the right mixture would
be, but it's something worth to think about, I guess.

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nickb
That's very interesting! I find it interesting that you'd wanna show an ad to
a person coming from Google. Would you lose a possible registration/lead if
that person thought that there's too many ads on the site? What if you turn
this upside down and show ads to people who are already 'hooked' to your
product?

Definitely an interesting insight!

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thomasswift
I faced a similar question myself and decided to try adsense and adpinions, I
put up a little line saying basically if this pisses you off let us know. No
one really has, but I'm sure some find it bothersome. I am thinking about
doing the wordpress thing and not showing ads to logged in users. If you use
hard stats(pagviews,uniques, etc) to get advertisers you may not want to use
this method.

I think I am going to switch to a donation based way becuase people either
really see the value in my site or they don't and just leave anyway.

Great Question, I am interested in seeing what other say as well.

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brianr
You could also think of other ways to monetize your site/idea. Can you sell an
enterprise version to businesses? (i.e. Google Enterprise Search) Do you have
valuable information that hedge funds or someone else might want to buy? (some
of the specialized social networks do this.) Or anything else you can think
of... definitely more work than putting up ads, but it could be where the real
money is.

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nickb
Brian, excellent point. The gold is always in the data that you collect so
trying to sell/license the data is an option. The problem is that you need a
long(er) runaway to execute that strategy. You need some investment (maybe
even a large one) to sustain you while you're in the red.

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prakster
You ought to test all methods and go with what works. One of the beautiful
things about the Web is that it allows us to do that easily.

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satyajit
I was hoping to see much more discussion on this thred, but seems the thread
died about a year ago. W.r.t. donations, do you think that could be a
monetization biz model? Though, if I like a site, sometimes I buy their
premium service, not exactly because I need it, just to support them. Do you
think a site can be sustained on donation money like that?

