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

A lot of people are trying to make a good living off of blogging, but sad to say, most are not successful, at least in terms of being able to monetize their blogging activities enough to quit that day job.

Sadly, most think that blogging is easy money. But that is not the case. Blogging is hard work–or at least it involves a big amount of effort in writing, marketing, planning and even socializing. Most people would not get that, and think that the fact that you’ve opened a blog, put in some ad units, and posted a few posts would already make you rich.

But I’ve come to think that the age of monetizing blogging purely for the content may not exactly be the best business model (or at least the one that earns the big bucks). It’s not that publishing as a business, per se, is no longer good. For me, blogging is just what it is: a medium. Blogging is not the ends, but rather it is a means.

That’s why it’s a medium.

There are several ways of earning from blogging, and it will be very fruitful if you get it right. But the big money could be somewhere aside from directly earning from one’s blog. Think of marketing. Think of networking. These days, people are able to generate sales, business leads, consultancy jobs, and other such opportunities because of their blogs.

Think of it this way. You can build up your profile online through your blog. Show people how good you are at what you do, whether it’s a skill, profession, or other business that you do. And the opportunities will come. Be a Joel Spolsky. Be a Jeff Atwood.

An example: a blog network can earn more from blog-related consultancy services, or from selling books, or from selling software than from ad revenues. Besides, writers are expensive. But if you’ve built a good product (software, etc.) or service, then they will pay for themselves, and will give you good money down the road.

Blogging is a medium, and not the end-all be-all of things.

I was a resource person this Tuesday afternoon at Y4IT, where gave a 30-minute talk about IT entrepreneurship. Great thing about these events is not only do you get to learn stuff, but you also get to meet great people. Today I met Atty. Denny Roja of Acuity Ventures, who gave an interesting presentation on venture capital funding. His presentation came after mine. I was supposed to leave already (busy, busy, busy), but when I saw his first few slides I got hooked.

He gave tips on how to pitch ideas, which business plans VC’s like to support, and other options to pursue for funding.

Perhaps one of these days I’ll get to pitch some ideas to Atty. Roja. Who knows? One of my proposals might get accepted.

If you watch local (Philippine) television you would be bombarded with regular messages explaining some discrepancies in data gatherings for ratings in certain towns. Here’s my take on the ratings game, as posted on the Blog Herald.

[I]t dawned upon me that the reason behind all this fuss is money. For us consumers ratings could simply be indicators of how popular a television (or radio) channel or network is, for a given time of the day. However, for the network and for the media industry, ratings represent pricing power. For media that are not able to count exact “hits” or “page views” ratings are used as an indication of popularity and reach. This translates to how much the television network or station can charge advertisers, particularly as they price ad spots on cost per thousand pairs of eyeballs (or impressions, if that’s a better term).

Check out the BlogHerald editorial to see how I think this affects us, as bloggers.

Close to a decade ago, several of my dad’s high school friends who migrated to the US came home to the Philippines for a reunion of sorts. They were here to introduce a new web-based business system they were part of, called SkyBiz. This was actually a multi-level marketing system for selling web space and web builder packages (remember, that was the late 1990′s; think Web 0.9). We bought in, thinking of the great opportunities. I was, after all, techie-oriented. Dad was business-minded (ten years after, we’re a little of both!).

It turned out the business was a scam–a classic pyramid scam. True, a great number of MLM and direct-selling based businesses are legitimate (and big business worldwide), but this was just not one of them.

Distribution of $20 million dollars in consumer redress will begin in the near future for victims of SkyBiz, an alleged massive international pyramid operation based in Tulsa, Oklahoma. The money for consumer redress is part of a settlement between the pyramid’s promoters and the Federal Trade Commission, which charged that their scheme violated federal laws. The settlement also bars the defendants from participating in pyramid schemes in the future, and bars them from misrepresenting business ventures. It bars one defendant from engaging in any multilevel marketing programs for life and bars three others from engaging in multilevel marketing programs in the for periods ranging from seven to 22 years.

I had actually forgotten about this for a few years, until I got curious about my online dealings in the past and Googled up a handful of names I could remember. SkyBiz was one of them. And the first few results were about the class action suit for SkyBiz. So I signed up. I couldn’t remember our actual account numbers and names, but the people over at the law firm were glad to help us get our needed information (we gave our full names, addresses, telephone numbers at that time, and the few keywords we recalled from our account names).

I then shelved the idea of receiving funds from them since we were advised it might take long to process.

So I was surprised to receive email just a few minutes ago that the SkyBiz Redress program was already sending out funds in the form of Mastercard debit cards. I’m not expecting a big amount, but the thought of justice being served, and that we were part of some benefits package, is comforting. I’m thinking the refund amount would at least cover for some hosting/domain expenses, and hopefully a full tank (or two) of gas!

But it’s in US Dollars, so I do hope establishments here won’t have a problem processing transactions with the card. Nonetheless, I do hope we get our cards soon!

My brother B.A. ran into some persistent callers a few months back, and he found out these callers were part of MLM business trying to recruit him. I advised him that there are legit MLM businesses, and I’ve actually tried these (another company, not SkyBiz), and there are scams. I posted a couple of comments because the comment thread had turned into a flamewar zone, I had to intervene (supposedly neutral, but hey I’m opinionated).

I quote a paragraph I wrote there. This is how I do business, the Web 2.0 way.

True, business almost always entails networking. But some people misconstrue “networking” to be the ol’ pyramid/binary type recruitment where you have to recruit at least two people, who would have to recruit two each and so forth. To me, networking means connecting to people, and connecting people. You don’t necessarily have to have business dealings with anyone. But the fact that you’re connecting–as friends, associates, business partners, colleagues–builds up your reputation and your network of people. You will almost always find people to help you out this way.

If any of you guys are part of the redress program, congrats! Tell me if you’ve received your gift cards already.

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.