racoma.com.phJ. Angelo Racoma on technology, economics, writing, problogging, and getting things done

Later this week, I’ll be launching a team blog focused on lifestyle matters (announcement to be made this Friday). It’s not a niche blog, but rather a blog about the bigger picture (for some reason, niche blogs aren’t working well for me, and I think big blogs are a better business model in some cases). One of the come-ons for my writers is a revenue-share scheme, on top of a fixed monthly salary, their own AdSense channel, and ad sales commissions. However, it will not be like what other networks may offer, which are revenue shares out of gross revenues/proceeds of the blog. Revenue share will be *net* of costs–which are mostly blogger wages, and not much of hosting fees.

When I started problogging, one of the first groups I joined paid their writers by revenue share. There was no base salary, so you’d better wish the blog started to earn soon so you get your share of the pie. But being new blogs, we were made to understand that we couldn’t expect revenue to be good in the first few months. But still, it was interesting since all the blog’s ad revenues are to be distributed among bloggers up to a certain ceiling, after which, the blog network and the bloggers will split the revenues 50-50.

Sounds like a pipe dream, doesn’t it? I wondered how the network would be earning money if all the proceeds below a certain amount go to the bloggers. Factor in hosting fees and other incidental costs, and surely the network would be in the red. This meant they were probably optimistic that each blog would be earning in the thousands of dollars, so they can get a decent share.

However, it was a pipe dream indeed, as one of the owners of another network that took me in told me. The first few months, the blogs didn’t earn much. AdSense revenues were dismal, and other link/ad sales were nil. Maybe it was because of the niche. Or maybe it was because the sites weren’t marketed well.

So was I still worried I wasn’t earning anything from those blogs? Well, by that time I had already joined another blog network–smaller, but with more focused efforts (and bigger pay, too). But I was still wondering if I could get a share from the blogs, and if the owners are earning from these at all.

Then surprise of surprises, the blogs were sold, one by one. I hear they fetched quite high prices in the market, too.

And I hear that the network had been divesting itself of blog properties time and again. They built them up, and they sold for a profit.

So that’s how they earned. And that’s how they could afford to give too big a revenue share to their bloggers. I guess they weren’t rooting for monthly revenue earnings much, because they know they could sell the sites for 10, 50 or even 100 times the monthly revenue.

So then, if you ask me why I’m only sharing *net* profits with bloggers instead of gross? That’s because I intend to run the blogs long-term, and I’m not in the business of build-and-sell. I want to grow with the blogs, and I want my writers to grow with the blogs, too.

But still, a revenue share is a good idea to entice bloggers to write for you. That’s why I’m also allowing my bloggers their own AdSense channel on their posts, and even commissions on direct link/ad sales.