Figuring out the Money part
Published: 03/25/2010 09:03 a.m.
Smashing Magazine is one of the top web design blogs and web design news sites out on the web. This past week, they did something a bit radical. They pulled down all of their site's content for 24 hours to sell a $10 e-book. In their plea, they explained that, while they aren't going out of business, they were in need of some financial boosting. While I like the risk they took, I do not have any sympathy for their financial woes. It's their job to figure out the money part, not mine.
Smashing Magazine is a great resource and their content certainly has value. They run advertisements in their header, sidebar, and in the list of content. But, from their actions this week, it seems that they were not making ends meet so they could continue providing great, valuable content. Pulling down the site to gain some quick cash was their solution, and they pulled on people's heartstrings with a "if you like our stuff give us money" plea. This created some debate among their readers and fans whether this was good or not.
The Community UproarOne side argued that "They have great stuff! Isn't that worth a measly $10 you cheap bastard?" The other side came back with "If they are going to be pulling the 'beg for money' crap then I will go elsewhere." I don't want to get involved in that kind of debate, which merges economics, emotion, and loyalty. Instead, I'd like to look at what I think caused this eruption in the community.
I believe the core knowledge of a business should be the "making money" part. In other words, it is up to Smashing Magazine (or any website) to figure out how to make enough money to survive and profit. There are several models, including advertising, subscription, products, consulting services, try-then-buy, and countless others. Figuring out which of these to use and how should be at the core of the business.
Smashing Magazine seemed to have chosen advertising, but it sounds like that was not working. So, they took a risk and then tried to sell a product. This abrupt change in money models, combined with the hostile nature of holding the site's content ransom for a day lead to the strong feelings in their audience. They gained many supporters who generously made a donationpurchase. They pissed off a few other people, which may affect their traffic and possible ad revenue.
Learning from SmashingI like that they took a chance, but I don't think it was a good one. They transitioned the burden of figuring out the money part from themselves to their audience. As a member of that audience, this wasn't something I wanted placed on me. I will continue to happily use the site, and if they sell something I really want I will buy it. But, I really hope they don't try something like this again.
Furthermore, I hope other web businesses can learn a lesson from Smashing's example. The money part is up to you. If you can't figure that out, you don't really have a great business. You may have great content and a great audience, but keeping that going usually costs money. Without figuring out the money part, you may not last very long.
Figuring out the money part earlier probably helps, but it's not the only solution. Ze Frank did a daily web show for 6 months before he found a successful financial strategy (or so it seemed). Merlin Mann gives away a ton of free content and makes his cash on speaking fees and book deals. The free stuff and the paid stuff are connected somehow, and it's Merlin's real job to make sure that connection is working.
I don't write to profit financially. I don't run ads or anything like that, but I certainly think this site has made a difference in my current employment. I find the effect of one on the other very interesting, and will hopefully continue to learn from it.