Sunday, July 02, 2006

Intelligent Monetization

I agree that the old subscription model is not the right way to go for a website that offers information that is freely published across thousands of other sites. Even if you are able to supply a service that is keenly organized and of higher quality than your competition you would still have trouble filling subscriptions. In the past users have been spoiled by high quality free content. (as it should be)

So monetizing through advertising is one of the few options that seems to be working quite well throughout the industry. I hear YouTube counts their daily profit on six fingers.

Gary Reid references the approach to monetizing an open source website by acquiring venture capital from your initial users. This isn’t a bad idea if you have a loyal user base but realize the legal and financial obligation that comes with such a model.

I can’t seem to find details of the TextDrive venture capital agreement. (I doubt they would publish that anyway) Never the less, I am interested in their repayment terms. I’m guessing they are using some form of long term profit sharing system. As a venture capitalist I would be very interested in such a system if I feel the company has a sustainable business plan.


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