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Ask YC: What do you think of my revenue sharing startup?
5 points by rksprst on May 26, 2008 | hide | past | favorite | 8 comments
This is not my main focus, but is launched since we managed to do code it (in php) in only two days (my "main" startup is coded in asp.net and I haven't done anything in php in over a year so this was a fun project to do some simple php again).

The main idea behind it is revenue sharing for game guides. Users spent hours writing game guides and then sites (which I won't name) make money off those guides. We want to share the ad revenue with the users that do all the work.

Any comments, ideas?

Here's the URL: http://pwnguide.com/



I think you should do a little bit of research into motivation and the way trivial rewards effect returns. People don't actually behave the way you think they do.

An interesting experiment in the field involved asking people on the street to assist in changing a flat tire.

When simply asked for help, the response was pretty high. A significant number of people helped.

When offered a small cash payment (a few bucks), the positive response rate dropped dramatically.

When the cash payment was raised to something relatively sizable, like $50, the response went back up to about the same as just asking for help.

I won't try to explain this phenomenon (though I think there's the obvious fact that being paid a few pennies is far less satisfying than helping someone out of the kindness of your heart). I believe the fundamental reason every single revenue sharing business has failed to take off (a few minor successes excluded) is because they fail to accept this bit of humor nature. It's a pretty fundamental flaw, so it really ought to be taken into account.


I basically agree with you, just I'm not sure which revenue sharing businesses are doomed and which are not. AdSense is obviously far from doomed. eBay is in the revenue sharing business as much as a game guide sharing site would be. What is the reason they succeed while others fail?


I think those are a different model, but your bringing them up has put things into a really interesting light for me.

It's the difference between a feudal system or a sharecropping system and owning your own land (but generally having to go through the commodities market to sell your goods--you still cut someone in on your profits, but you decide just about everything else about your business). And maybe that's actually why "revenue sharing" sites fail. Sharecropping worked for years...until something better came along. So, maybe the sharecropping age of the Internet never really came before an economy of independent production arrived, and so maybe it'll never happen on a large scale.

It's also based on the, probably incorrect, notion that there can only be so many "destinations" for any particular type of information or good on the Internet. As search gets better, as the semantic web grows (slowly, ever so slowly), and as the Internet population grows ever more diverse, it seems likely that the idea of a "destination site" will seem rather quaint. So, destinations that allow people to sharecrop on their real estate are probably doomed to fall under the onslaught of independent farmers.

Of course, the analogy could be flawed.


Yea, I agree with those problems. That's why the approach we took with this idea was launch really early and get feedback from the community to see what changes need to be made and in which direction we should take the site. (i.e. we thought that the best way to solve these problems is to let the community guide us)

So far, we've had positive feedback from users who said they would post their guides on the site and others saying they want game reviews as well. We'll have to wait and see if that feedback actually translates into action by those users to register and post guides.


Be suspicious of feedback, as well. Sometimes users don't actually know what they want. As Henry Ford said, "If I had asked people what they wanted, they would have said faster horses.”

While I'm certain that there is a business model for revenue sharing out there that'll work, so far it has not. The people who want to make money on what they write put it on their own blog or website (generally) and the people who want the little moment of fame do their work for the largest community available (or the one that serves their little niche best). It seems like the happy medium is impossible--either you're paying them a pittance or you're not, as there's no way you can pay them the $50 option as in the experiment--the solution might be to make it possible for people to make more than they could make on their own even if you're taking a cut. Proving that to them might be hard, and it might still lead to less actual contribution from users than just asking for help.

But, I dunno. You'll have to experiment and find out. This is a case where measurement is going to be absolutely vital. You need to know when you're doing something that works 5% better, so that you can do more of it--and if the returns start diminishing, you need to be able to find the next biggest contributor to positive outcomes so you can keep cranking up the next best thing until you're either successful or you know you can't win.


It's a good idea. I like it. Also, I'm pretty sure "imappriately" isn't a word. Check your FAQ :P


Thanks! Fixed.


Amazing how this is so similar to our own startup (fairsoftware.net). Online collaboration with revenue share is happening.




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