
A jar full of fail: Why tipping and donations don't work on the Internet - andrewmayne
http://monetizethis.info/post/461613405/a-jar-full-of-fail-why-tipping-and-donations-dont
======
sounddust
There are a lot of things in this article I disagree with.

1) Wikipedia doesn't have 5 billion unique visitors (there are only 1.6
billion internet users in the world). And they only put up banners asking for
money when they need it, not all the time. So both variables in coming up with
the "$.00124/visitor" estimate are incorrect.

2) Tax deduction does not make something cost-free. For most people, a
donation saves them nothing (since they use the standard deduction) but even
for those who itemize, it only saves them the tax they would have paid on that
income, not the income itself.

3) Tipping doesn't have to create price uncertainty. As someone who has tried
the donation model, it's clear that if you set the price of a donation (such
as placing a banner that says "Give $5 now"), that's the exact amount that 90%
of people will donate. So in essence, you _do_ get to influence what the
perceived value of your site is worth.

4) The article claims that in order to orgs like NPR to succeed on the
donation model, they have to have federal grants and corporate sponsorship,
etc. But this argument ignores the low barrier to entry (and low cost) of
online content; it's not a valid comparison.

5) The article also mentions that those orgs can succeed because they offer
physical goods and imply scarcity, but there's no reason that a donation-
accepting site could do those as well.

~~~
zackattack
With #1 the point is that although tons of people use Wikipedia, only a
microfraction of em donate. I, for example, have gotten tons of value out of
it yet have never given them anything. I think that they should petition
universities for sponsorships.

I just donated $5 because I realized how ridiculous my lack of patronage is.

~~~
derefr
Don't feel bad about not giving them money—they need to be free to read to
sustain the level of net-positive impulse-edits they get (similar to how
chewing gum needs to be at the checkouts of grocery stores to sustain its
level of purchase.) Encouraging Wikipedia's free use, as a side-effect, makes
more people likely to edit it, and thus makes it more valuable.

~~~
jrockway
_chewing gum needs to be at the checkouts of grocery stores to sustain its
level of purchase_

I don't chew gum anymore, but when I did, I always got it from the chewing gum
aisle. It's cheaper there. I'm sure I'm not the only one who figured this out.

~~~
derefr
I don't know how your grocers work, but mine just scan the UPC that comes as
part of the product's packaging—and that's the same no matter which aisle you
picked it up in. (You could just as easily bring something in you bought
_outside_ the store and "buy" it again.) Or do you just mean that the aisle
section has larger bulk versions of the same gums?

~~~
jrockway
Different UPC numbers for the same thing. Yup, really.

------
URSpider94
As a loyal NPR supporter, I feel that I have to correct the complete mis-
representation of NPR's funding presented in this article.

It is true that NPR received a generous gift from the Kroc family ($200
million in 2003, [http://www.washingtonpost.com/ac2/wp-
dyn/A6973-2003Nov6?lang...](http://www.washingtonpost.com/ac2/wp-
dyn/A6973-2003Nov6?language=printer)). However, in that same year, NPR's
operating budget was $100 million. Assuming a generous 5% utilization of that
endowment, that would only pay 10% of the budget.

In fact, NPR's web page states that it receives a little under 10% of its
annual budget from "major gifts," while nearly a third (the largest single
fraction) comes from pledges and annual memberships. (see
<http://www.npr.org/about/privatesupport.html>)

I guess your statement that listener donations are "a fraction" of NPR's
operating budget is true. One third IS a fraction, after all. But to say that
NPR "really doesn't need your money" is a gross factual error.

I, for one, would like to see you post a correction.

~~~
andrewmayne
You're right in that the Kroc grant doesn't cover them forever. That wasn't my
point.

I think NPR is a very well run organization. When they received the Kroc grant
they used it to expand and increased their annual budget by 20%.

Coming from the non-profit world, this is a sign of an efficient organization
that is very good at raising money. When given a giant bequest, they increased
their budget.

We could debate what "need" means, but a non-profit that can increase its
expenditures by 20% in one year and easily cover it doesn't "need" money in
the same way other charitable organizations I've worked with do.

FYI: The page you link to lists the average for all public radio stations in
general. It's not a specific breakdown of NPR or NPR member stations.

------
psyklic
I'd guess that tipping is mostly a socio-cultural thing -- it is expected; it
would be considered rude not to. In addition, peer pressure is a factor --
unfortunately, I doubt that I would tip as high as I do or as often as I do if
I didn't have other guests at my table.

Online, you just don't feel bad if you don't tip -- there is no peer pressure
and no expectation. So, of course it doesn't work out.

------
jrockway
I'm pretty sure that people tip at, say, coffee shops because they don't want
to put the change back into their pocket. When people buy coffee with credit
cards, they don't tip. When they buy with cash, they tip with whatever coins
are left over.

(I was told once that this was rude, so I just stopped tipping for coffee all
together. If I'm going to be rude, I might as well keep the money for myself.)

~~~
MartinCron
I think the notion is that the tip should more closely parallel good service,
so if you get just $.08 back and drop that into the tip jar, what is the
message being sent, that you just don't like carrying coins around?

After getting to know some people in coffee shops and how they do rely on
tips, I've started tipping around $1 per drink unless something's really wrong
with the place. I do that regardless of paying cash or credit.

~~~
jrockway
These coffee shops should just charge a dollar more. I do not shop around for
the best price on coffee. I want good coffee.

The time I was yelled at, btw, was for giving 3 quarters as a tip for a $3 cup
of coffee. "It would have been more polite" to give a whole dollar, and not as
change, but as a dollar bill, I was informed (by some other customer). OK, but
I don't have another dollar bill, and I really don't care to carry around
those three quarters...

I did try for a few days to have an extra dollar and tip with that (carefully
saving up the change for use in wishing wells)... but nobody said thank you or
anything, so I gave up. If I have to go to a lot of effort to give someone
money and they don't care, eventually I am going to get tired of doing it. And
I did. (Did one person ruin it for everyone? Yup.)

~~~
lsc
now, I don't work retail myself, so I don't know for sure, but I imagine that
it's pretty easy to turn the change into bills if that is what they want; I
mean, they need the change anyhow, right? I mean, turning one denomination of
currency into another is a large part of the job. and the register is right
there, right? and .75 seems like a reasonably nice tip on a $3 item,
especially if they aren't taking it to your table or what have you.

so, I guess, what credentials does that other customer have? E.G. why are you
taking their seemingly unusual tipping advice seriously?

I mean, personally, I almost always dump the change in the tip jar, but if I
like the place and the change seems like a small tip I drop in another buck. I
guess I'm cheap 'cause I don't usually tip more than that at 'to go' type
places.

~~~
jrockway
_what credentials does that other customer have? E.G. why are you taking their
seemingly unusual tipping advice seriously?_

Good question. I am pretty good at ignoring people online, but not so good at
it in real life.

------
hy3lxs
A counterexample is Causes on Facebook, a for-profit entity which utilizes
social pressure to drive donations to nonprofits and has its own successful
"tip" system.

<http://www.facebook.com/causes>

~~~
andrewmayne
My post was about using this model to support blogs and podcasts. Not bona
fide charitable organizations. I actually have experience in doing successful
online fundraising for those kinds of groups.

~~~
hy3lxs
Agreed, I thought it would be interesting to mention the tipping strategy that
the for-profit entity Causes uses at the same time they are helping out
nonprofits.

------
timwiseman
_The moment you put the donate button on your website you’re calling yourself
a charity case._

This line caught me. Yes, if you put a donate button you are drawing a
parallel between yourself and a charity case if not outright calling yourself
one.

But if you put a tip button on it is a very different situation. That is more
comparing yourself to say a skilled hairdresser (it comes to mind since my
step mother is one) where the end user is thanking you monetarily for the good
work that you have done and expecting it to encourage you to keep doing good
work in the future.

~~~
andrewmayne
I hear you, but we all have a pretty good idea how to compensate hair dressers
and waiters. We also agree that there's an implicit contract that tipping is
part of the transaction.

When was the last time you tipped the producers of your favorite television
show?

~~~
timwiseman
An interesting comparison.

I've often been interested in how some things get chosen for tipping and other
things not. I think one of the criteria is how convenient it is to actually
tip. It would be hard to tip the producer of my favorite television show,
effortless to tip my waittress. I think the other criteria is how personalized
the experience is, in most things we tip for we are receiving a very personal
close to one-one interaction.

But I think most blogs come closer to the waitress side than the television
side. At least on blogs set up to receive them, it is relatively easy to tip
(though I think it can and should become much easier in the future!). And the
experience can be fairly specialized (I tend to read niche technical blogs
rather than mainstream news ones), and fairly personal. After all, if I leave
a comment on most blogs, I have a pretty good expectation that author will
respond directly and intelligently to me. If I write a letter to the producers
of a tv show, I might, if lucky, get a form letter and maybe a glossy photo of
the cast back.

As to whether there is an "implicit contract" to tip bloggers, I think that
particular piece of society is new enough that those rules are still being
established.

------
cookiecaper
I think it's about context, really. At a restaurant or hairdresser, you
already expect to pay and you already have money out. It's usually not too
difficult to slap on an extra few bucks for the waiter. (The tipping model
makes much more sense at a restaurant, by the way, where there a lot of people
involved in your food prep, not to mention the food cost, vs. a barber where
the one person cuts your hair and takes you to check out, and they take turns
as broom jockey.)

If I want to "tip" Wikipedia, for instance, I have to go find my credit card,
type in lots of numbers, possibly setup an account, worry about the individual
handling of my card information by Wikimedia, etc. That's way too much effort
for drive-by donations a la those at the restaurant.

I assume that's what tipjoy and some of these other startups set out to fix. I
don't think simplification of and success by tipping is particularly a lost
cause, I just think that it wasn't easy or prominent enough. Was there a
browser extension? If I only had to enter my info once, and there was a button
on my browser where I could send any registered site a tip while I was on the
page without any special effort, I think I would be prone to tip more often.

By the same token, I think that you're much, much more likely to make some
money if you follow the more conventional "x costs x, please pay me" model,
even if you surreptitiously proliferate content outside of the paywall to
increase exposure.

------
vinhboy
I tip out of fear.

~~~
andrewmayne
Always the best motivator.

------
blasdel
Using the NPR model is pretty despicable if you're getting funding through
more traditional means too.

For instance, Jesse Thorn (who's background is in public radio), asked for and
got $15k in public donations to fund the first season of his web series:
[http://www.kickstarter.com/projects/1136753854/put-this-
on-s...](http://www.kickstarter.com/projects/1136753854/put-this-on-season-
one) — the problem is that his show _is itself advertising_ — NPR does pledge
drives to avoid ads, and here he is using the same mechanism to fund the
production of commercials!

------
Jeema3000
I think the main problem may actually be in not setting a price. If you don't
specify any price whatsoever, people will be more reluctant to donate because
they'll be worried that their donation will be perceived as too cheap, so
instead they just choose to remain anonymous and donate nothing at all. On the
other hand if you come right out and say 'even a dollar is a welcome
contribution!', then who knows...maybe people will only donate a dollar, but
maybe a lot more people will donate too...

------
almost
"Makes the donation essentially cost free to the donor via tax deduction."

You what now? Either the US tax system works in some very weird way or that
doesn't make any sense.

~~~
smanek
Pretend I donate a hundred dollars to NPR. I get a tote, mug, and some other
stuff that I might value (i.e., otherwise purchase) at $50, but is nominally
valued at $10.

I then get to deduct $90 from income on my tax return, and assuming I'm in a
high tax bracket, I get to pay about $30 less in taxes.

Hence, I effectively donated $20 - while the recipient effectively received
$90.

Not quite cost free, but not terrible. And yes, I know it's cheating to deduct
the 'value' of the gifts - but it's the only semi-reasonable thing I can think
of.

~~~
lsc
yeah, you can save a lot of money cheating on taxes if you don't get
audited... but I don't think NPR is selling a more effective means of cheating
on your taxes.

I think that the mooch bait is much more about having a way to show off "I am
a generous and wealthy person, and I gave to this worthy cause" much like
tipping heavily when you take your co-workers out to lunch. I mean, I don't
really need another bag.

------
knowtheory
Incidentally, higher tipping rates, and more honest behavior appears even in
the presence of PICTURES of faces. Sure a live human is much more effective at
applying social pressure, but that doesn't mean that the internet is helpless
on this front (hell use an animated gif).

~~~
andrewmayne
Good point. They've done studies where just eyes draw on a tip jar get more
donations.

------
chipsy
"Set your own price", on the other hand, seems to be a model with multiple
success stories. It has the good vibes of donation, while also having the
carrot of a specific item for sale at the other end.

Plus, you can use the data as a starting point for future pricing.

~~~
andrewmayne
Do you have some examples of where that's actually worked in a significant
way? I'd love to do a follow-up post of counter examples.

------
johnohara
Anybody know approximately how much is donated to OpenCourseWare for the free
content they provide?

------
anonjon
_The little donate buttons we were supposed to click on to support our
favorite bands as we gave the finger to the RIAA never panned out. It turns
out we really were just cheap bastards that didn’t want to pay for music after
all._

This is tangential and potentially destructively off-topic, but when exactly
did music become something that we all _need_ to pay for?

It seems to me that historically music has been something that people have
done in addition to whatever it is that they do for their day job. (You sing
while you are doing chores or you sing and dance at the pub at night).

When did we become this grotesque soulless crippled race of humans? It seems
that there has been a proliferation of a myth that you need specific musical
talent (and anointment by a benefactor) to create music. Why is this? It
clearly isn't true... If we are all such cheap bastards, why don't we make our
own damn music and give the RIAA the finger in that way?

I almost feel like there is some sort of institutional loss of music from our
culture that almost warrants 'music theft' and is the real reason that people
have been so reluctant to pay for their albums. It is as if everyone can make
music, but there is some societal obligation that forces the majority of us to
believe that we can't.

(Bonus: Why guitar hero and not a guitar? The guitar is cheaper...)

But please, feel free to ignore. Something about that phrasing simply rubbed
me the wrong way and I felt the need to rant.

~~~
teeja
Historically, the people who made 'good' music -- by which I mean music that
has been replayed and/or re-released for decades or centuries -- made music
FULL-TIME, not as a hobby. The same is true today of people who have the time
and talent to do filmscores (which will, again, be heard for at least
decades.)

Making music that will last, not just confection, is a very intense activity.
It is always technical, requires staying aware of the competition and staying
ahead of it. It's a full-time job.not a hobby. I'm not arguing that good music
is 'elite' music, but that _most_ lasting music is good in direct proportion
to the energy used creating it.

This would be common sense in most areas, but many people who don't make music
somehow get the astonishing idea that good music is 'easy'. Look at any
recognized 'genius' composer or singer/songwriter and count the number of big
works they wrote that have lasted once the confection has faded away. The list
is nearly always small: competition is fierce.

If listening to throwaway confection satisfies, what the here-today gone-
tomorrow bands create may satisfy many consumers. Yes you'll find exceptions,
but the bulk of music which is art, not just product, isn't made by weekend
warriors. Like great furniture, great sculpture, great architecture, great
anything: it needs support.

~~~
anonjon
But the majority of music that people listen to today _is_ throwaway
'confection'.

The fact is that in our current system, people who produce music of genius
quality starve, while the people who write about big booty women and bananas
become super rich.

The problem is that the act of making music fulfills a basic human need. It
isn't about making good music or making a song that will last for the ages. It
is more like the need to have sex, make out and go dancing.

I just think it is incredibly sad that regular people can no longer compete
with the mass market saturation of spun-sugar-pop-music. If we look at market
trends it would appear that all music should be pitch-corrected, re-mixed,
stamped onto plastic disks, and played as background noise to a music video.
I, personally, reject the market trends as I know there is something much
deeper that I actually need.

------
Devilboy
I still hope that <http://flattr.com> can prove otherwise

~~~
FluidDjango
Maybe I'm just slow, but this is the first I've seen of Flattr. Model is quite
intriguing, but the question is how to get enough awareness/visibility to both
"donor" users and "recipient" users. Anybody knoow long have they been out
there or what sort of adoption curve they're experiencing?

