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T O P I C
The free ride's over, folks
January 7th 2001, 13:09 CET by Andy

The big gaming issue at the moment is the lack of advertising available to web sites. It may not sound too serious, but as ad revenue has been the only income for most content/service sites for their entire existence, they now face major problems. It's no exaggeration to say that a lot of sites could be forced to shut down.

Three months ago, Express.com kicked the chair out from under GameFan and left more than 40 sites dangling. The next month, Snowball restructured its hosting/advertising business and gave a load of IGN.com/Vault affiliates the boot. Last week, CNET announced that its Gamecenter Alliance will end within the month, and UGO.com started trimming affiliate payments down to a reported $1 per thousand ads served.

Discussions here in the past have looked for someone to blame for the lack of advertising, but that's not much help anymore. It's clear that the problem is almost entirely due to companies just not wanting to advertise on gaming sites, and that's nobody's fault.

So is there a solution? Well, a big fat NO is going to bring this topic screaching to an untimely end, so let's opt for YES and see where it takes us.

You know what's coming next -- the solution is for sites to switch to a subscription model. Not great news for visitors, agreed, but if you've got a better idea then let's hear it. [Waits patiently, drumming fingers on desk.] Nothing?

In lieu of any more visitor-friendly options, Jakob Nielsen, a consultant and writer on "web usability", offered some advice that games sites may like to take notice of. (Have a look at Nielsen's bio to decide if you trust his judgement.)

Offering free services on websites is not a sustainable business model, nor is advertising, which doesn't work on the Web. Most Internet companies are now pursuing an enterprise strategy to make money, but they'll soon begin turning to individual customers for revenue as well.

2001 will be the year that website operators come to their collective senses and start charging customers for service. Given that this will be a difficult change (users have become quite accustomed to getting services for free), I do not predict that most websites will be charging by the end of 2001. What I do envision is the revival of the paying-customer concept as a Web business model.

For gaming companies like GSI, which have alternative income sources (software, content licensing and investment) subscription isn't likely to happen any time soon. For online versions of print magazines, the same applies, as well as for e-tailers which also offer editorial and features.

But for sites that are content- or service-driven, providing news, articles, p/reviews, interviews, play guides, demo and patch downloads, etc, charging people for access is the only realistic solution if, and when, advertising dries up even more. (And to stray from the point for a moment, how long will it be before indie sites stop hosting those huge 50Mb+ demo/patch files and leave developers or publishers to deal with that expense themselves?)

Subscription offers a proportional and sustainable source of income. The more people accessing the site, pushing up running costs, the more money there will be coming in from subscription charges. And for as long as people want to access the site, there will be money there to finance it.

Perfect?

No, not quite. There's a crucial flaw...

Unless all games sites decide to charge for subscription at the same time, someone has to make the first move. And what happens then? Yep, visitors run off and find another site, and the one trying to charge goes bye-bye.

Last month, CombatSim.com started charging $3.95 for access to its articles and forums. Apparently the site had reached 14 million monthly hits, amounting to over 500Gb of wallet-draining bandwidth. According to Douglas Helmber, who publishes CombatSim, "hundreds of people" have already subscribed.

And not surprisingly, the site-vs-site politics have already started.

SubSim Review editor Neal Stevens wrote an article falsely accusing Helmer of "pulling the plug" on CombatSim.com, then talking of a recent "tapering off in Combatsim's content" and describing the move to a subscription model as a "trick".

Dan Crenshaw, president of SimHQ.com, told me: "I used to write for COMBATSIM.COM and their demise was inevitable due to poor management." (Which may well be true, I'm not disputing that.)

You can imagine the sniping that would start if, for example, Blue's News began charging for subscriptions and Voodoo Extreme didn't. Or how about the posturing we'd see from GSI if another hosting network charged its visitors a monthly fee?

So will the subscription model work? Or is there a better option that nobody has thought of yet? Seeing as this is the last paragraph, I guess it's over to you...
C O M M E N T S
Home » Topic: The free ride's over, folks

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#1 by "Frain"
2001-01-07 13:19:15
frain@bigfoot.com
Well, it seems the whole commercial part of the internet is falling to pieces. All those .coms, now the advertising networks...it seems that after all this money has been pumped into the internet start-ups and nothing came back, people start to realize that the internet's not what they thought it was.

Frain

P.S.: ha-ha, pianist<i><b></b></i><i></i><i></i>
#2 by "Gibbo"
2001-01-07 13:25:07
bgibson@zipworld.com.au
It seems to me that it may soon be time that publishers and maybe even developers start to take a financial interest in large fan sites such as Unreal Universe for example. These sites serve a great purpose to the publishers, free (well currently) publicity, and publicity of the best kind, Word Of Mouth.

Rewarding sites dedicated to a title of theirs which serve a high number of hits, with a sponsorship model similar to what is available at the time, so if it is $1 for 1000 hits, offer $2 for 1000 hits.
This way the site is kept afloat, offers an incentive to the developers to create a great site rather than a good site and the publisher also gets to run banner adds of their product line.

There would be an issue on how long to support the site fo, say there is no sequel, why would they spend their money supporting a site which only supports a community which generates no money for them. And what about the mega sites like Voodoo-Extreme, Blues and ShugaShack.

Either way, a way to start off the topic<i><b></b></i><i></i><i></i>
#3 by "spackbace"
2001-01-07 14:07:24
brian@cc.gatech.edu
third!!

Anyways... I think the advertisers just dont know how good they've got it.  Getting payed on a per-click basis is, simply, nothing short of an asanine business model based on crack babies.  Any other mode of advertising (TV, radio, highway billboards, 7-11 bathroom stalls) has to pay simply to have their advertisement shown and displayed to the public.  This shouldn't be any different on the internet.  If a certain site is getting 14 million hits a month, a company should pay accordingly to have their banner ad displayed to those 14 million people -- not based on how many of those people click the ad and buy their shitty ass product that very second while their cookies haven't been erased yet.
#4 by "WarrenMarshall"
2001-01-07 14:15:34
warren@epicgames.com
Frain (#1):
it seems that after all this money has been pumped into the internet start-ups and nothing came back, people start to realize that the internet's not what they thought it was.

I'm not sure that so much, as it's "not what they wanted it to be".  A cash cow.

I don't have any suggestions beyond the subscription model ... but I don't see that working personally.  There's just too many sites out there and if they all go subscription, that will lead to price wars.  "Why should I pay you $15 a month?  I can get the same info over there for $10!  Oh, but look at that site!  First month free!".  Everyone will undercut each other until it's barely worth the bother to collect the subscription money ... that's assuming they can get EVERY site to do it because, as Andy said in the topic, nobody wants to be first.

Gibbo (#2):
Rewarding sites dedicated to a title of theirs which serve a high number of hits, with a sponsorship model similar to what is available at the time, so if it is $1 for 1000 hits, offer $2 for 1000 hits.
This way the site is kept afloat, offers an incentive to the developers to create a great site rather than a good site and the publisher also gets to run banner adds of their product line.

There would be an issue on how long to support the site fo, say there is no sequel, why would they spend their money supporting a site which only supports a community which generates no money for them. And what about the mega sites like Voodoo-Extreme, Blues and ShugaShack.

That's just a whole can of nasty worms that I don't think you want to open.  I can only imagine the squabbling and bickering that would ensue if the developer supports one site over another, or stops funding a site because they feel they don't get enough hits anymore, or they don't want to do a sequel and  don't want to support a fan site for that game anymore.  Ugh.  I can just see the messageboards lighting up with threads about how so-and-so developer shits on their fans.

The other problem is that then fan sites turn into what most mods have become: hopeful stabs at a cash windfall.

---

Warren Marshall
Level Designer/Programmer/Corporate Shill
Epic Games (www.epicgames.com)<i><b></b></i><i></i><i></i>
#5 by "The_Punisher"
2001-01-07 14:25:55
mario_lowang@hotmail.com
Who gives a rat's flying funk anyway??? The pianist ? Nah, he's just a crackerjack with foreskin. I WANT all these sites to just vanish the fuck away. There are way too many anyway. You want variety ? Go to China.

I will NEVER pay to read sites. I don't even have a credit card so how the funk would I even try even if I wanted to, which I don't - and don't foresee changing that opinion.

There are just too many sites that are good and are free, and always be that way. In fact to a large extent most really good sites are free and "hobbyist" type ones anyhow. It's when these grow large and see the opportunity to make big money through different means that it all goes downhill.

Let them all die and suffer in the process. Funk right off you greedy cants, I say.
#6 by "The_Punisher"
2001-01-07 14:35:05
mario_lowang@hotmail.com
this is a test:

WHAT THE FUCK WAS THAT ???????





{bitch.ho.cunt}
#7 by "The_Punisher"
2001-01-07 14:38:31
mario_lowang@hotmail.com
wow that was awesome......
my mind tried to subconsciously censor my writing.
as punishment i just hit my head against the wall..... HARD!!!!
#8 by "spackbace"
2001-01-07 14:47:06
brian@cc.gatech.edu
"flying funk", "funk right off", and "greedy cants" ?


keep bashin
#9 by "spackbace"
2001-01-07 15:01:45
brian@cc.gatech.edu
and.... its 9:00 am.  I've been up since 11:00 am yesterday.  I also just finished watching "Bad Boys", starring will smith and martin lawrence.

Avoid this movie at all costs.  It sucks worse than down on a donkey's dick.


<trin> down's gay
#10 by "EvilAsh"
2001-01-07 15:06:45
evilash@eviladam.com
Seriously..  it serves many of the sites right . too many sites were made up from the get go with one purpose.. We want to be the next Blue News or Voodooo Extreme or Shugashack.. We want to make money..

Well if you know the history of those 3 sites.. they were fan news pages. there was no focus on making money... They sort of fell into it.

There were sites like annihilated.com that in its hey day were hugely popular.. and this was a fan site.  And people said.. I can do that I can make bazillions. Well folks the free ride is over.  It takes a special site to be developed to get the hits and traffic to make something.. but the internet was best when people made sites. for fun.

Fan sites that are made cause they are "FAN" sites.. not Commercially disguised Fan sites.

And Thats the reality many people need to realize. If my articles were that good.. that they guarnered such a reaction.. I wouldn't be working for a web page.. I would rather work for a magazine.

Hey were is Steve Bauman.. lol. go to evilash.planetcrap.com    Read my article on the Art of  Reviews.. I want to see what you mad hatters on planetcrap think.   Thats a separate segueway  so I apologize. :)

I really have no sympathy for a site that was developed in the last year with only thought.. make money off of gaming news and fan excitement.

good Riddance to bad rubbish.
#11 by "1"
2001-01-07 15:15:46
primer55@g33k.net
Personally I'm glad to see it finally revealed that living off of web-ads isn't going to cut it. There's always been something about the idea that I never liked, I can't describe it well — but I know I didn't / don't like it.

I also feel there are just way too many gaming websites. I don't think much will be lost with the closing of some of these sites, as the high-quality sites -- the ones run by people who really like what they're doing -- WILL remain afloat. Those that are run half-assedly, by people who were only doing it for the ad revenue, they'll die — and rightly so.

_1!
#12 by "The_Punisher"
2001-01-07 15:48:22
mario_lowang@hotmail.com
where is the latest crapspy anyone??
url ?

ps:it MUST be a http download not ftp....

thanx i.a.
#13 by "AshRain"
2001-01-07 16:13:01
ikhier@wish.net
For people who are wondering what will happen if a subscription model will be established. You already know.

It's going on for several years now. With the XXX sites.

If gamesites start to charge money you will get the same situation as currently with the XXX sites. Sites with best content will charge money. Dozens of small sites with minor/bad/little content but which are free. And most importantly sites with hacks for paid sites! What's going to stop people from hacking memberships of a gamesite? They do it with the membership XXX sites and I see no reason why they shouldn't do the same for membership gamesites.

So if you are wondering what will happen. Look at the current state of XXX sites and you know.
#14 by "RyslinANDIndigo"
2001-01-07 16:16:27
ryslinmoon@yahoo.com
i remeber those days of good content <by your own standards> good information<again use your own standards> and niftyly quick loading times .. then again downloading a wav took FOREVER so..
i remeber some of the first Simcity 2000 sites...


mabey if they become FAN sites again we might see the rebirth of a few of the older ones...or perhaps to restrict bandwith...on those sites that do get alot of hits<i remeber those days as well>
you get an error saying come back later this site is WAY popular.. why did they start allowing huge bandwith drains when noone could honestly pay for it.

heres my concern
with the increase of broadband..fullband..and evernet
is everything going to be like cable?
where you pay for content sites ...and then there are the outlying "rouge" stations/websites?
#15 by "The_Punisher"
2001-01-07 16:33:05
mario_lowang@hotmail.com
[14] RyslinANDIndigo

"heres my concern
with the increase of broadband..fullband..and evernet
is everything going to be like cable?
where you pay for content sites ...and then there are the outlying "rouge" stations/websites?"
----------------------------------------------------------------

maybe, so you better choose sides right now before it's too late. that way we know where you stand. it's a war and we need soldiers. we need ppl with t3's and access to 0 day warez and guns and porN and.......... whoa - getting myself ahead of time there.....

let's be on the same team and fight this EViL empire!! i MEAN it!!
#16 by "Intaglio"
2001-01-07 17:22:30
eric@gurutech.org
Did anyone ever think that maybe its not the business model thats killing gaming news networks, its the idea behind it? Gaming websites, in my opinion, are HOBBYIST activities, not cash cows. If I started making model airplanes as a hobby, got a small taste of money through it, dedicated my career to it and then realized I wasn't making enough money to pay the bills, I would probably pursue something else rather than brainstorm new ways to live off making model airplanes. It seems to me that any business model involved with running a gaming website for a living is inevitably going to fail, and those that don't are flukes.
#17 by "Speed"
2001-01-07 18:06:35
speed@pandora.be
It's been a while, but again a topic that I find interesting at Planetcrap ;p

Gaming sites asking money for their content to their readers. What a laugh ! If you want to make money then make content-deals with some of those stupid portal-sites. They pay big bucks for being able to take over good content (that's one of the things how Gamespot makes money).

Banner ads don't bring in money. At least not enough to pay a sbig taff of editors who have to write new content each day.

Conclusion : Fuck the big networks ! Anyone that doesn't see it coming that the internet doesn't earn anyone big bucks (except for some investors that are smart enough to play with stocks) is a plain fool. No gaming site can earn money when they have a complete staff and still give everything for free or have nothing to offer next to a bit of content (which they don't sell to portals).

I must agree with what most people have said here by now : sites that have bussiness plans to keep themselves running and "earn big buck" isn't worth staying alive in my opinion.

Fragland started up as the first online gaming site in Belgium by 2 volunteers that liked gaming, and has grown out to become the biggest in Belgium, and the only one worth mentioning internationally seen (ok, Gamespot Belgium is known aswell but that's a different story) and we still haven't made our jobs out of the site, still don't earn any money with it ourselves, and we still do it out of the love for gaming. Anything we might earn from the site goes straight back into it.
That's the way a site has to be run, and this kind of "bussinessplan" is the only one that can't fail in my opinion.

Other sites that want to make money have to have alternate ways like (as said before by someone else) selling software, magazines, ...
The internet can be used as a kind of advertising machine, but certainly not as a money cow.

btw : pay-per-click is hilarious. Any site that has a pay-per-click system better close their doors immediately since those guys are plain stupid.
Most sites are on a pay-per-pageview system where they get money based on the amount of times their pages/banners are being loaded (not clicked through)
Also don't confuse hits with pageviews. 1 pages that gets loaded is several hits (except if the page consists out of 1 pure text/html-file and no graphics what so ever)

Greets,

Speed
Fragland.net Editor-in-Chief
http://fragland.net
#18 by "Shaolin_Monkey"
2001-01-07 18:07:53
shaolin__monkey@hotmail.com
I agree with spackbace. I think advertiser's should pay based on how many people see the ad, as opposed to how many people click it, like everywhere else. I don't really now the feasability of this, but I'm pretty sure sites would make more money.
#19 by "Barneyque"
2001-01-07 18:25:08
barneyque@hotmail.com
<b>#18</b> "Shaolin_Monkey" wrote...
<quote>I agree with spackbace. I think advertiser's should pay based on how many people see the ad, as opposed to how many people click it, like everywhere else. I don't really now the feasability of this, but I'm pretty sure sites would make more money.</quote>

OK, now here's the tricky part.  You want advertiser's to pay based on people seeing the add. How are you going to verify that the ad has ben seen?  I certainly don't look at many, over the years, I've simply become blind to them, they don't exist to me.  Craig could put a big giant add box right in the middle of the crapspy message interface, wrapping my text around it as I type, and I STILL probably would not be able to tell you anything about the add if questioned after I hit submit.

So, how do we know an ad was seen?  Well, someone clicking on it seems to be a pretty good indicator.

You claim your pretty sure sites would make more money, well Duh!, of course they would, but for how long?  That money comes from somwwhere, and that somewhere is running out of cash. That is the problem with the networks.  It's not a problem of sites making money, they will make money as long as someone gives it to them.  The networks are working from a dwindling supply.

Personally, I don't think anyone should get money based on sending an add to my browser, I just don't see them, it's a wasted impression. I should be sent a big ugly "wasted ad" cookie by the ad gods so those who pay the bills know I'm not worth it. It should contain info to the extent that 'this guy is ad blind, no pay for you'.<i><b></b></i><i></i><i></i>
#20 by "Barneyque"
2001-01-07 18:52:06
barneyque@hotmail.com
Not all websites need to go to a subscription model.  Some, quality sites could probably survive on advertisers money, but currently, it's far to diluted.  The cash is being spread far and wide there's lots of it out there, but it's being spread so thin, it has no power.

Currently, there are too many websites trying to live off of a finite resource.  Only the top of the top should be in the queue for the cash. There are many on the gravy train that should not be, they will die, they deserve to die.

Supply and demand.  We are in what I would call a hyper oversupply situation. When that happens, the low hanging fruit is going to get picked off. Just becase someone decides to open a website, does not mean there is a demand for it.  Yet people are still doing it. I think I can pretty safely say, that the gamming world's websites pretty much have everything covered.  Anyone opening a site today, has to ask themselves, why am I doing this? What is missing that I plan to add?  If they are honest, they will not proceed. If they are still dreaming, they will probably fail if they gain enough hits that the hosting fee's are not covered by their allowance.

Advertisers up to this point, in a mad rush to collect eyeballs, have not been very smart with their money up to this point. That is now changing. We will end up with fewer sites, but they will probably be quality, and all the shit, and redundant sites will become add free hobby sites, or die.

Lets stop all the doom and gloom talk, this is a perfectly normal thing to happen, and we will all be better off when process goes full circle.

Subscription sites may carve out a niche for themselves, but I highly doubt it will become the norm, as I said, we are in an oversupply situation, and there is no need to pay. People will go elsewhere.

I personally don't see a problem.  Not everyone has the right to be an add supported website just because they deciced to do so. It has to be earned somehow. Lets say everyone here on the crap decided to become auto manufactures.  Chances are, we would all fail.  That says nothing about the auto industry, but volumes are those of us who jumped in. We would have to be pretty stupid to even try it wouldn't we?  Well, websites are exactly the same damn thing, the difference being that the cost of entry is significantly lower, so that deludes us into believing we can do it. Just because some of us know how to construct sentences, does not mean we are all little profit centers. Starting up a small website is cheap, becomming popular, is also fairly easy. Maintaining a popular website is not cheap, or easy. This is the problem combatsim is having.  While they may be popular, and sucessful, they do not have the means to run such an entity.

Deciding to feed your faimly on a website unless you are the top of the top, in a recognized catagory, with a history of success is about the most iresponsible head in the clowds thing I can imagine.

Again, this is not a doom and gloom scenario, this is all perfectly natural competition, and not everyone will win.  The easy entry into this field is like a suductive drug that clowds one's ability to think straight, and like most mind altering drugs, you will eventually succome to it's power.

UGO has not yet come to the conculsion that the advertising model wont work. They have simply recognized that it needs to be tuned more.  Harvesting eyeballs for the sake of harvesting eyeballs is not good enough.  The focus needs to be on quality. When they can show that they have quality, adverstisers will again open up the wallet a bit.  

<i><b></b></i><i></i><i></i>
#21 by "paul"
2001-01-07 18:57:51
pbullman@webhitzone.com
Another solution would be this:
For free you get the top news stories, but for $5 every sixth months you get to customize how the news is presented + you get more news, etc.

The ads will show on both models, therefore sites will still have a similar income(provided ad sales do not drop even more)

- Paul
#22 by "paul"
2001-01-07 19:00:47
pbullman@webhitzone.com
Shaolin_Monkey:

Well it works both ways. CPM(paid ads through 1000 impressions) generally is opted by larger sites. But smaller sites(under 200,000k impressions per month) typically use Click Per Methods. Site advertising space is generally sold by agencies(and agents within that agency) therefore trying to sell per impression on a site which generates 40,000 impressions a month is nonsense.

- Paul
#23 by "SteveBauman"
2001-01-07 19:06:43
steve@manic-pop-thrills.com
Do you want mediocre crap for free or are you willing to pay for quality? You decide.

A few sites going pay will drive more traffic to free sites, but no site switching to a subscription model expects all of their readers to come over; if that did happen, they would be rich beyond their wildest imagination. They want 1%, 10%, whatever it takes to at least break even, which they're not doing today.

And they need to keep readers, and they need to spend marketing dollars to get new readers, and they need people in charge of doing this. They need to look at content in terms of months instead of days/hours (i.e. can they put up enough good stuff in a 30 day period to keep a subscriber from canceling that re-bill). They will become, in even more literal terms, online magazines... and maybe I'm horribly naive, but I truly believe it will make the content considerably better than it is today, and the good writers who create all of this stuff for you all to read will actually begin to make some money. Many websites aren't even paying for their content, and that's wrong; we push for the webmaster to make money, but what about their contributors?

But anyway, this is a panic over what may be a short-term dip in advertising. What web people haven't realized is advertising is cyclical; they expected it to continue to go up, up, up, and based their financial models on it. Now there's no VC money left for anyone building a service around advertising. This is why sites are failing; they can't secure any more cash to continue operating, and their burn rate is zapping their cash.

Magazine folks know advertising is cyclical, and we prepare for it. We make the majority of our year's revenue in the October-January time period, when there are more games on the market and more ads and more people in stores buying games and magazines. We then lose money or break even on every other issue. Hopefully you make enough in those months to make up the difference.
#24 by "SteveBauman"
2001-01-07 19:09:19
steve@manic-pop-thrills.com
Oh, and I do like the idea of splitting pay and free content, and while other sites in the past haven't had much luck doing this (ESPN.com, for example), now may be the time.

The problem is giving enough away for free to sustain traffic but not make it too much that subscribers don't see the value in the extras.

A site like Blue's or Voodoo Extreme could pull it off relatively easy, because they could offer their current services for free and offer reviews/previews/tips/interviews/forums at a cost. I should say deciding the split would be easy; actually being successful would be a challenge.
#25 by "Barneyque"
2001-01-07 19:14:26
barneyque@hotmail.com
I'm curious Steve, you may not be able, or willing to answer, and I'll understand that of course, but when considering the cash available to magazine's , I'm assuming their are three sources, ads, subscriptions, and retail sales.

I'm curious, would you know, and if so, be willing to reveal the ratio's those three items contribute to the total?
<i><b></b></i><i></i><i></i>
#26 by "BruceR"
2001-01-07 19:41:43
bruce@avault.com
Got to go with Barn on this one. There's always going to be a free Internet, and gaming companies in particular are going to need a way to access those readers. So there's still money to be made, just not enough to go around the way we'd all like.

The idea that seems to be running out its course here is not the free Internet site (I doubt Gamecenter/Gamespot itself is going anywhere, for instance), but the Internet advertising alliance. That's a completely different problem, frankly, from Combatsim.com, whose user growth apparently outstripped its ability to be maintained. It's appears to be a Hail Mary play from a site that was being crushed by its own user weight.

(Frankly, I can't see the business logic otherwise. If Slate, with the best editor in the States in Kinsley and all the money Bill Gates could throw at it couldn't make a free-to-subscription switch work, what chance does a game site have? The savvy thing to do, surely, would have been to keep they eyeballs on the free site, and suck them into a whole new pay-only section with radically new and exciting content. What is that in a combat sim context, I have no idea, mind you. I wish them luck, though.)

Seriously, though, Barn, are you any less "ad blind" when you read a newspaper or magazine? Or watch TV? And advertisers pay a lot more for those placements you don't really read.

BruceR
#27 by "BruceR"
2001-01-07 19:46:46
bruce@avault.com
Re magazines, Barney: for all those I've been involved with, retail sales are really just an attention-getter... you lose more than you take in. Ad revenue is great, but that depends on confirmed subscription totals. Which means it's all about your subscriptions.

Not that that's really relevant to the web, though, where creation/distribution costs are significantly lower in proportion. The radio/TV experience is closer: there's already free content and listeners... now how do you make money from a for-pay service like cable TV?


BruceR
#28 by "SteveBauman"
2001-01-07 19:52:26
steve@manic-pop-thrills.com
I'm curious, would you know, and if so, be willing to reveal the ratio's those three items contribute to the total?

I can't really give out the specific numbers, but we can sorta make them up. (Note: none of these numbers are even remotely applicable to our publication.)

Let's say ads average $5,000/page.
Let's say you sell 100,000 copies on the newsstand every month
Let's say you have 300,000 subscribers

Now we have a 180 page issue, of which 100 pages are ads.
At $7.95 on the newsstand, let's say we get $3/magazine.
Let's assume the average subscriber pays $20/year, so that's $1.67/issue.

Ad revenue=$500,000
Newsstand revenue=$300,000
Subscriber revenue=$500,000
Total revenue=$1,300,00

Of course to sell 100,000 on the newsstand, you need to put out about 300,000 issues (sell through is typically 25-35%). I don't really know a lot about print costs, but I think it's about $1.00/issue to print the magazine, CDs cost about .50/each and postage is about the same.

So in theory, using our example, you'd print 700,000 copies.
You'd dupe 500,000 CDs (all newsstand, most subscribers).
You'd mail 300,000 issues.

Print cost=$700,000
CD duplication=$250,000
Postage=$150,000
Total costs=$1,100,000

So you just made $200,000 on that issue (obviously this isn't including a ton of costs and who knows if the revenue projections are dead-on), but those costs are essentially fixed. If your ad revenue dips in half during an off month or your sell-through is off because you put some lame-ass game on your cover or your competitor got the best thing since sliced bread, there goes your profit.
#29 by "SteveBauman"
2001-01-07 19:56:51
steve@manic-pop-thrills.com
Seriously, though, Barn, are you any less "ad blind" when you read a newspaper or magazine? Or watch TV? And advertisers pay a lot more for those placements you don't really read.

How many people are going around saying, "Wassup" in the last year? How many people went out and checked out Nick Drake CDs after hearing that Volkswagen cabriolet commercial? How many people dool over Eva Savalot on 1-800-Collect commercials? How many people STILL think of being John Romero's bitch?

How many ad banners do you remember? Shocking the monkey, boosting your Internet connection... and?
#30 by "Barneyque"
2001-01-07 20:28:58
barneyque@hotmail.com
<b>#28</b> "SteveBauman" wrote...
<quote><quote>I'm curious, would you know, and if so, be willing to reveal the ratio's those three items contribute to the total?</quote>
I can't really give out the specific numbers, but we can sorta make them up. (Note: none of these numbers are even remotely applicable to our publication.)

Let's say ads average $5,000/page.
Let's say you sell 100,000 copies on the newsstand every month
Let's say you have 300,000 subscribers

Now we have a 180 page issue, of which 100 pages are ads.
At $7.95 on the newsstand, let's say we get $3/magazine.
Let's assume the average subscriber pays $20/year, so that's $1.67/issue.

Ad revenue=$500,000
Newsstand revenue=$300,000
Subscriber revenue=$500,000
Total revenue=$1,300,00

Of course to sell 100,000 on the newsstand, you need to put out about 300,000 issues (sell through is typically 25-35%). I don't really know a lot about print costs, but I think it's about $1.00/issue to print the magazine, CDs cost about .50/each and postage is about the same.

So in theory, using our example, you'd print 700,000 copies.
You'd dupe 500,000 CDs (all newsstand, most subscribers).
You'd mail 300,000 issues.

Print cost=$700,000
CD duplication=$250,000
Postage=$150,000
Total costs=$1,100,000

So you just made $200,000 on that issue (obviously this isn't including a ton of costs and who knows if the revenue projections are dead-on), but those costs are essentially fixed. If your ad revenue dips in half during an off month or your sell-through is off because you put some lame-ass game on your cover or your competitor got the best thing since sliced bread, there goes your profit.</quote>

Wow Steve, that's very informative.  I was just expecting you to post me three percentages numbers.  I feel bad that I don't have anywhere to go with all this information.

I have something cooking in my head still.  I'll come back to this and see if I can make any connections I want to comment on comparing to websites.

I did have a plan in mind, but when BruceR mentioned radio stations, that through me off.  It seems radio stations and websites make for a better comparison, and I may run with that highlighting the differences i.e. one being regulated and of a controlled number as compared to the free for all on the other side.<i><b></b></i><i></i><i></i>
#31 by "Barneyque"
2001-01-07 20:37:09
barneyque@hotmail.com
<b>#29</b> "SteveBauman" wrote...
<quote><quote>Seriously, though, Barn, are you any less "ad blind" when you read a newspaper or magazine? Or watch TV? And advertisers pay a lot more for those placements you don't really read.</quote>
How many people are going around saying, "Wassup" in the last year? How many people went out and checked out Nick Drake CDs after hearing that Volkswagen cabriolet commercial? How many people dool over Eva Savalot on 1-800-Collect commercials? How many people STILL think of being John Romero's bitch?

How many ad banners do you remember? Shocking the monkey, boosting your Internet connection... and?</quote>


Well, that was odd.  I could not figure out where you got that quote from.  It turns out, crapspy skipped post #26.  I had to delete the cachefile and reload the article to get it back. I'm glad you jumped on this, or I would have completly missed it.

As for my attentivness, I'd say I am more likely to notice an add in print than I am on a website.  For example, I'm looking to buy a table saw. I had been looking all around for info on websites and whatnot, but when the paper came in today, a flyer from sears that I would normally ignore, had a picture of a tablesaw on the front cover, and my subconcious vision clue'd me into it. So in that case, an add that I would have normally ignored, was triggered by a picture of something I just happen to be in the market for.

Now, the odds of me finding a banner add with a picture of a tablesaw, are pretty remote.  Most banner adds are very forgettable, and are all more or less the same size, in the same place on a webpage.  Over time, you(I) tend to ignore them. When I load up a site like blues, my eye's immediately jump to where I know the content is.  So without even trying, I'll not see whatever it is that's being advertised.

Print in my mind has a major upperhand when comparing directly to websites.

Just to be complete, TV, I hate to say this, because I know it's a groaner for some people, but I really don't watch much TV.  When I do, it tends to be The Movie Network, which has no mid program advertising.  But when watching normal television, yes, I guess I do watch the ads.

I have to go out, if any of this topic needs followup, I'll be back in about 1 hour.  :)

<i><b></b></i><i></i><i></i>
#32 by "Barneyque"
2001-01-07 20:37:42
barneyque@hotmail.com
PS, sorry about not doing more snippage on #30, I forget to do that sometimes.<i><b></b></i><i></i><i></i>
#33 by "dsmart"
2001-01-07 20:40:33
dsmart@3000ad.com
<b>WarrenMarshall</b> (#4):
<quote>Ugh. I can just see the messageboards lighting up with threads about how so-and-so developer shits on their fans.</quote>

heh, don't think its much different now anyway, so what have developers go to lose?
<i><b></b></i><i></i><i></i>
#34 by "dsmart"
2001-01-07 20:46:09
dsmart@3000ad.com
<b>SteveBauman</b> (#24):
<quote>A site like Blue's or Voodoo Extreme could pull it off relatively easy, because they could offer their current services for free and offer reviews/previews/tips/interviews/forums at a cost. I should say deciding the split would be easy; actually being successful would be a challenge.</quote>

But that would only work depending on how much info you want, the type and who you trust the most. If these two went this route, because they, more often than not, have similar content, they'd only kill themselves because whats missing on one, will most likely end up on another. And the funny thing is that, then, a site thats not charging will probably start getting increased ad dollars due to more people boycotting sub based sites. heh, that would be too funny in itself.

<i><b></b></i><i></i><i></i>
#35 by "SteveBauman"
2001-01-07 21:02:24
steve@manic-pop-thrills.com
It seems radio stations and websites make for a better comparison, and I may run with that highlighting the differences i.e. one being regulated and of a controlled number as compared to the free for all on the other side.

I'm not that up on radio, but based on what little I know I'd guess it's not a great comparison because the "bandwidth" for radio is subsidized by the government. You still need the broadcast equipment, i.e. the servers, but you don't pay for the allotment of airspace the FCC sets aside for you, which is quite unlike the expensive Internet bandwidth.
#36 by "Needle"
2001-01-07 21:07:57
mrklp@hotmail.com
I miss the days when fansites were run by... fans.  People who liked a game, or a genre or all games enough to dedicate their time (and sometimes a little of their own money) to running the site because it was their hobby and they found it fun.  I look forward to the day when all these gaming sites/networks have to close up shop because they aren't making the money they thought they would.  Serves them right.

I visit a lot of gaming websites but there's no way in hell I'm going to pay for any of them.  Not one.
#37 by "SteveBauman"
2001-01-07 21:09:53
steve@manic-pop-thrills.com
But that would only work depending on how much info you want, the type and who you trust the most. If these two went this route, because they, more often than not, have similar content, they'd only kill themselves because whats missing on one, will most likely end up on another.

Sure, but this is true for magazines as well and we manage to coexist. We have a lot of overlap of readers, and they're essentially getting the same information from multiple sources. We might all review Battlecruiser, but we'll try to show you how smart we are by using big words and acting all pretentious, CGW will try to convince you that it's racist and show off a terrible sense of humor with a pun-filled title, and PC Gamer will try to convince you how cool the writer of the review is by filling the review full of personal anecdotes. (Ooh, catty!)

And the funny thing is that, then, a site thats not charging will probably start getting increased ad dollars due to more people boycotting sub based sites.

Not necessarily. A paying subscriber is considerably more valuable to reach to an advertiser than a free one, because they're more serious, more hardcore... they're the trend setters and word-of-mouth starters.

You could give away a magazine and have a circulation in the millions but you end up charging lower ad rathers than a pay magazine with 1/3 the circulation because those 300,000 people are quality readers; they've made a bigger commitment and are considered more serious gamers.
#38 by "SteveBauman"
2001-01-07 21:13:09
steve@manic-pop-thrills.com
miss the days when fansites were run by... fans.

Well, we're not really talking as much about fansites as we are full-scale editorial sites, those that aren't devoted to single products.

Fansites shouldn't be viewed as money-making enterprises. They're really promotional tools for the companies. If the people creating fansites want to make some money, they should license their content (i.e. write previews and/or strategy guides) for editorial sites.
#39 by "SteveBauman"
2001-01-07 21:19:07
steve@manic-pop-thrills.com
If Slate, with the best editor in the States in Kinsley and all the money Bill Gates could throw at it couldn't make a free-to-subscription switch work, what chance does a game site have?

Slate tried it two years ago, as did ESPN. At that time they assumed ad revenues would be high enough for them to go back to beeing free and having lots of readers. But the times have changed.

Perhaps 20,000 paying subscribers (which I think is all Slate ended up with) + advertising could generate more monthly revenue than 1,000,000 people checking out ad banners and sucking up your bandwidth. I dunno.
#40 by "SteveBauman"
2001-01-07 21:24:05
steve@manic-pop-thrills.com
for all those I've been involved with, retail sales are really just an attention-getter... you lose more than you take in. Ad revenue is great, but that depends on confirmed subscription totals. Which means it's all about your subscriptions.

Advertisers really like higher newsstand sales because they represent readers they may not have reached the previous months. Newsstand buyers typically buy an issue every three months or so.
#41 by "Shaolin_Monkey"
2001-01-07 21:31:44
shaolin__monkey@hotmail.com
For which magazine do you write for, Steve?
#42 by "GeorgeBroussard"
2001-01-07 21:50:56
georgeb@3drealms.com
Maybe now sites will have to start working for a living instead of reporting news 2-3 times a day and making a couple hundred K a year :)

I think a lot of web sites are gonna be kicking themselves for not selling themselves a year or so ago.  The Internet goldrush is over and sites will start dropping like flies once people stop making phat lewt from them.
#43 by "BruceR"
2001-01-07 22:11:48
bruce@avault.com
Radio's a very apt comparison, actually: certainly more so than magazines. The comparator to bandwidth isn't space on the spectrum per se, but broadcast reach, a factor that increases linearly with money spent.

And naming a couple ad campaigns you remember doesn't mitigate that fact that of the 100-plus  ad placements in various media you've seen so far today, you'd be lucky if you remembered one of them.

As for Slate, reaching only 20,000 people while paying the salaries of some of the most influential journalists in the business (Kinsley, Weisberg, et al) would be an unworkable business model no matter what you tried, even now.

I say it again: the real problem we should be focussing on is how to make advertising alliances work, not game sites. Big difference.

BruceR
#44 by "BruceR"
2001-01-07 22:26:38
bruce@avault.com
By the way, read the whole linked article, not just the part that's quoted. Neilsen, who is assuredly not an idiot, believes the free system may not be sustainable in the long run, but also cautioned the paid-web revolution that is needed to fix that dilemma can only take place if micropayment schemes can become a practical reality. He doesn't say anything about subscriptions (which I am humbly suggesting are more a sign of desperation than any business acumen).

Now, micropayment's a completely different beast. How the web would look if that could be implemented... well, all bets are off, for reasons hinted at in the comic strip Neilsen links to, in turn.

BruceR
#45 by "SteveBauman"
2001-01-07 22:38:37
steve@manic-pop-thrills.com
Radio's a very apt comparison, actually: certainly more so than magazines. The comparator to bandwidth isn't space on the spectrum per se, but broadcast reach, a factor that increases linearly with money spent.

Well, okay, but I was thinking of it from a cost perspective, not one of reach. Radio is regional as opposed to international, though I suppose it's gone to more of a television model when purchasing syndicated programming, mixing local, regional and national advertising.

But if you're talking purely about reach, it's generally agreed that each issue of a magazine passes through three hands before ending up landfill. So a magazine with 400,000 in circulation regularly reaches as many as 1.2 million unique people/month (which is probably more than most gaming websites; they have some difficulty measuing uniqueness). However, advertisers don't pay for ads based on reach; they like pure, raw, measurable numbers, not potential ones.

And naming a couple ad campaigns you remember doesn't mitigate that fact that of the 100-plus ad placements in various media you've seen so far today, you'd be lucky if you remembered one of them.

That's mainly a failure on the part of the creative people of creating a compelling advertisement. You can say the same for the lack of remembrance of banners, but trying to create a 460x68 square doesn't give you much room for creativity. You can come up with more effective advertisements but most are contrary to the nature of the web. Interstitials are more effective, as are pop-ups, but they're annoying because readers are in control of their experience online, hence they want to be in control of whether they see an ad or not. When they click an article, they expect an article. They can turn a page in a magazine, they can turn off the TV, but if they click on an article and an ad is crammed into their face, they get pissed.

I say it again: the real problem we should be focussing on is how to make advertising alliances work, not game sites. Big difference.

It all comes down to how presenting advertisements that are effective at getting the attention of the person browsing... without trying too hard to get their attention. It's a neat trick if you can pull it off.
#46 by "Craig"
2001-01-07 22:39:19
craigl@globalnet.co.uk
<b>The_Punisher</b> (#12):
<quote>where is the latest crapspy anyone??</quote>
<a href="http://www.planetcrap.com/crapspy/">http://www.planetcrap.com/crapspy/</a>

<b>Craig</b><i><b></b></i><i></i><i></i>
#47 by "SteveBauman"
2001-01-07 22:42:33
steve@manic-pop-thrills.com
Now, micropayment's a completely different beast. How the web would look if that could be implemented... well, all bets are off, for reasons hinted at in the comic strip Neilsen links to, in turn.

I think people would micropayment themselves into bankruptcy.

I still wonder if subsciptions would work if they were integrated into your ISP bill. You'd subscribe to X services and pay for it in one lump sum rather then seeing 10 different charges. You could get the "Gamer" package that gives you, say, combatsim.com and bluesnews.com and gamespot.com for $10/month. I suspect few people know how much they pay per month for HBO, but they do know their cable bill is $80/month (or whatever) and they get lots of stuff, some free some pay.
#48 by "llamasex"
2001-01-07 23:23:12
llamasex@yahoo.com
>And naming a couple ad campaigns you remember doesn't mitigate that fact that of the 100->plus ad placements in various media you've seen so far today, you'd be lucky if you >remembered one of them

Only because NIKE hasn't made web ads
#49 by "dsmart"
2001-01-07 23:28:57
dsmart@3000ad.com
<b>SteveBauman</b> (#37):
<quote>Not necessarily. A paying subscriber is considerably more valuable to reach to an advertiser than a free one, because they're more serious, more hardcore... they're the trend setters and word-of-mouth starters.
</quote>

Yeah, you're right. That makes sense I guess

<i><b></b></i><i></i><i></i>
#50 by "None1a"
2001-01-07 23:59:44
none1a@home.com
<b>SteveBauman</b> (#45):
<quote>That's mainly a failure on the part of the creative people of creating a compelling advertisement. You can say the same for the lack of remembrance of banners, but trying to create a 460x68 square doesn't give you much room for creativity. </quote>

That's becuase they aren't trying any more. Most have simply desided the best way is to trick the person into clicking with some stupid little game (punch/shock the monkey), a fake error message, or telling them they are a winner (no idea what that one goes to). A smaller newpaper/phone book ad isn't much bigger then most web ads, and many of them work just fine.

Ok lets throw out phonebook ads since if your looking there your already looking for a service. Now take the smaller newspaper ads, many offer a discount for that day/week/month what ever or are cut out coupons. That's an ad that would work rather well on a gameing or other focused web site (a 5% or 2 dollor off offer for say EBWorld on a banner at VoodooExtreme is going to grab some ones attention rather well). Hell a lot of companies do promotions like these around the holidays (or freeshiping promotions), yet none advertise where they'd more then likly work really well. <i><b></b></i><i></i><i></i>
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