Thursday, January 05, 2006

Revenue sharing and user-generated content

There seems to be a meme developing around the issue of how to reward users for generating content for your Web site, whilst simultaneously keeping enough revenue for yourself to make the site worth maintaining. Mike Arrington of TechCrunch reviewed Clipfire, a Digg-type service for finding deals on e-commerce sites, but has come under fire in the comments and by Pete Cashmore for not being hard enough on Clipfire's business model. Clipfire doesn't have one at the moment because it is allowing users to insert their own affiliate IDs in the URLs and skip away with all the revenue.

Many shopping websites have "affiliate" programs that provide the opportunity to earn commission by referring users to their website. Clipfire users are encouraged to find deals on websites with affiliate programs and include an affiliate ID in the links they post. If the deal is a good one, it will be "clipped" and show up first in search results, giving the poster a chance to earn commission.

Like the other critics of Mike and Clipfire, I think this is a wasted opportunity. It should not be too hard a technical problem to parse URLs submitted by Clipfire users to find the affiliate ID and insert Clipfire's own ID X% of the time. However, as Pete and others have pointed out, the "Digg of deals" market is saturated at the moment so it's understandable that the short-term focus is on attracting eyeballs with 100% returns to the user.

I'm sure the idea of revenue sharing has been around for a long time, but as far as I can tell it took off on the Web when it was introduced in the Digital Point forums by Shawn Hogan as a mod to the vBulletin system to share Google AdSense revenue. It spread like wildfire among forum operators, especially when someone got Google to give it the green light. However, forums are notoriously poor for monetising through AdSense so it is surprising that this technique has not been tested more in the wider Web, especially in Web 2.0 sites.

Tinfinger will be betting its business on the concept. For new contributors we'll share the ID impressions 50/50, and then introduce incentive schemes for good content that will tip the ratio in favour of the user... plus disincentive schemes for bad content that will push the other way. Unlike Jimmy Wales over at Wikipedia, I believe in people earning money for producing good Web content and I have no compunctions about building a profitable business around it.


Anonymous Anonymous said...

Paul, thanks for the review of Clipfire. I wanted to note that, at Clipfire, we are going out of our way to make sure that the users that find links get all the revenue from the click-throughs. I believe that since they found the deal, they deserve the credit.

When the time comes, we may decide to offer sponsored links that are clearly labeled as such. If Clipfire can deliver good deals to searchers and drive traffic to shopping sites, the revenue will take care of itself.

I think that sites such as Clipfire can profit from the service (aggregation, searching, etc.) and still give benefit back to the users for providing the content.

I agree that it is an interesting discussion and I hope we'll be able to find the right balance.

Kevin Carey

4:34 pm, January 10, 2006  
Anonymous Anonymous said...

Websites like, they provide cash back & it can be used by clipfire or any user to make this beneficial to them.

dealsway RSS feeds can be customized to get the cashback so this feature allows users/clipfire to insert their member id as part of dealsway RSS feeds and get the revenue back on their packet.

12:19 am, March 11, 2006  

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