Revenue Share - the next webmaster economy?

Recently I’ve noticed an emerging new trend online - revenue share as a business model applied to forums, blogs, and news communities.

The idea is simple - whatever advertising revenues the site earns is split with the active community members.

The most common way this is set up is via contextual advertising accounts, such as Google Adsense, where a generic ad type is displayed, with the publisher ID being dynamically assigned between site owners or members who actually created the pages.

Web 2.0 has been predominately funded by VC cash flooding into new projects, much of it laughable junk, while others have been great ideas who eventually find themselves sacrificing original ideas in order to squeeze returns back to the original investors.

Revenue share is a different model that empowers a core ideal of the internet as a democratic communications channel, and if revenues are shared democratically, then you have a potentially very powerful system at hand.

The problem is that any web project involves costs, but with so many established webmasters online able to leverage their assets towards revenue share if they choose, I think this is an economic model that is going to become increasingly popular.

The revenue share model

Revenue share isn’t a new idea - About.com has been running it’s own form of revenue share with topic editors for years, but is performance based - so if you fail to attract the right amount of traffic and monetisation, you may be dropped as an editor.

The popular and high profile DigitalPoint webmaster forums applies the next level of the model - revenues from Google Adsense clicks are simply awarded accorded to activity, with thread starters earning to right to earn from the discussions they start.

It is this model that revenue share seems to be following most. And in a Web 2.0 world of User Generated Content (UGC), communities which offer the potential for members to earn from their contributions provides a hook to entice visitors to become members, and members to become active contributors.

Another advantage of using third-party contextual advertising programs - such as Google Adsense - to provide earnings from revenue share is the reliability of the payments to members.

For example, betlik was a forum that saw exponential growth while promising revenue share paid direct by the site administration. However, the first two sets of owners found themselves unable to organise payments, despite that webmasters had bought and shared domains and websites on the promise of their revenue share earnings. The betlik forum was then taken over and merged with The Online Developer, which uses a much more reliable, and fairer, revenue share via Google Adsense.

Benefits & hazards of revenue share

Community sites can provide an interest both intellectually and emotionally, but it can often take a lot of encouragement to get people to join and have these interests served. Offering a revenue model provides a financial incentive that can sweeten the interest in signing up.

Therefore when so many community sites are springing up everywhere, revenue share as a business model could help provide a competitive advantage over similar community sites.

This is especially as while there are some webmasters who are very good at revenue generation, there are a larger number who are not, but may be compelled to join revenue share sites in order to share in their success.

The site owner benefits in terms of returning traffic and encouraging members to be active at content generation - while the members benefit in being a part of a community they may enjoy while even getting paid to enjoy it.

However, communities are dynamic places and often through successive stages of growth communities can end up losing key members if these stages prove turbulent - something many people who have ever been a member of online communities will no doubt have seen.

The danger here for the revenue model is that active members may be very unwilling to lose their access to potential revenue streams, and unless copyright is specifically ceded to the community owner then such members probably have every right to demand the removal of their content if revenues cannot be claimed.

Some webmasters may immediately consider added clauses claiming ownership of member contributions, but in doing so should be very aware that historically this has proven very damaging in the past. Microsoft’s MSN communities and Yahoo! Groups used to make similar claims, namely as a process of overall legal protection, but doing so led to extensive complaints and webmasters such as myself left to set up our own sites with greater controls on the wider internet.

How to add revenue share to your site

As the popularity of revenue share as a potential business model has increased, so have developers provided tools, and some of the most popular software publishing platforms already have modifications freely available to make implementing revenue share a relatively simple and painless affair.

• vbulletin revenue share mod
• Wordpress revenue share plugin
• phpbb revenue share mod
• SMF revenue share mod
• Joomla revenue share extension

Established sites running revenue share models

There are a growing number of sites applying revenue share models - a number of these are already falling apart because they’ve failed to sustain momentum enough to cover site costs, or else the site owners have simply moved on.

However, there are some established community sites which have been running for over a year and have implemented revenue share as a model.

The following are some of these, providing the name in a hyperlink, with business sector:

• DigitalPoint [Webmaster]
• NamePros [Webmaster]
• The Online Developer [Webmaster] (formerly betlik)
• TotalWebTalk [Webmaster]
• HTTPPoint [Webmaster]
• IDN Forums [Webmaster]
• The Finance Forums [Finance] (high keyword value?)
• Simpy [Social Bookmarking]
• Tagtooga [Social Bookmarking]
• Pro Gamer Forums [Gaming]
• The Sand Trap [sport]
• The Rant [sport]
• ProMobileTalk [cell phones] (ringtones clicks?)
• Blogger Party [blog hosting]

The future of revenue sharing?

There are bound to be a larger number of websites that attempt revenue sharing and fail, simply because they fail to make critical mass before the costs of investment outweigh the benefits and interest in running them.

However, I think the revenue share communities that are already establishing themselves are the trailblazers in a new internet economy - one where the webmasters take back control of the web from VC’s and corporations, in order to demonstrate that the web can work with democratic ideals core to founding principles, while still maintaining a viable business model.