A jar full of fail: Why tipping and donations don't work on the Internet(monetizethis.info) |
A jar full of fail: Why tipping and donations don't work on the Internet(monetizethis.info) |
1) Wikipedia doesn't have 5 billion unique visitors (there are only 1.6 billion internet users in the world). And they only put up banners asking for money when they need it, not all the time. So both variables in coming up with the "$.00124/visitor" estimate are incorrect.
2) Tax deduction does not make something cost-free. For most people, a donation saves them nothing (since they use the standard deduction) but even for those who itemize, it only saves them the tax they would have paid on that income, not the income itself.
3) Tipping doesn't have to create price uncertainty. As someone who has tried the donation model, it's clear that if you set the price of a donation (such as placing a banner that says "Give $5 now"), that's the exact amount that 90% of people will donate. So in essence, you do get to influence what the perceived value of your site is worth.
4) The article claims that in order to orgs like NPR to succeed on the donation model, they have to have federal grants and corporate sponsorship, etc. But this argument ignores the low barrier to entry (and low cost) of online content; it's not a valid comparison.
5) The article also mentions that those orgs can succeed because they offer physical goods and imply scarcity, but there's no reason that a donation-accepting site could do those as well.
1.) I didn't say Wikipedia has 5 billion uniques. I said it gets 5 billion visitors. In ad sales a visitor is different than a unique. I changed it to "visits" so avoid the confusion.
2.) Tax deduction makes the perception of something's cost free.
3.) If you can still get a product without paying for something (i.e. tipping) the price is either what you ask for ($5) or nothing. That's the definition of price uncertainty.
4.) I pointed out the problem in using NPR as a model. Federal grants and family endowments are not the best model for a blog...
5.) A donation accepting site can suggest scarcity, but the questions is how compelling will it be? PBS and NPR offer content in a very limited channel space. Most blogs and podcasts do not.
Best,
Andrew
Source? I was under impression that a visitor means a visitor and a visit means a visit. Surprised to see it being used the other way.
Tax deduction makes the perception of something's cost free.
That's just a baseless statement. I can find you any number of people who don't perceive that way. Who are the people that bear the perception? What is their percentage among the populace? How do you know the answer?
Your math as it stands is impossible, and you're still using it to support your argument. Even if you assumed every internet user in the world uses Wikipedia, that means that the average donation per user would be 0.003875, more than 3 times your estimate. With more reasonable math (and taking into account that Wikipedia does not fundraise 24/7 and is not aggressive) you can see that the average visitor is likely to donate an order of magnitude more than you're claiming.
I just donated $5 because I realized how ridiculous my lack of patronage is.
I've donated a ton of my time to improving Wikipedia, so don't feel the least bit of guilt about not giving them money. If anything, they should be paying me!
It is true that NPR received a generous gift from the Kroc family ($200 million in 2003, http://www.washingtonpost.com/ac2/wp-dyn/A6973-2003Nov6?lang...). However, in that same year, NPR's operating budget was $100 million. Assuming a generous 5% utilization of that endowment, that would only pay 10% of the budget.
In fact, NPR's web page states that it receives a little under 10% of its annual budget from "major gifts," while nearly a third (the largest single fraction) comes from pledges and annual memberships. (see http://www.npr.org/about/privatesupport.html)
I guess your statement that listener donations are "a fraction" of NPR's operating budget is true. One third IS a fraction, after all. But to say that NPR "really doesn't need your money" is a gross factual error.
I, for one, would like to see you post a correction.
I think NPR is a very well run organization. When they received the Kroc grant they used it to expand and increased their annual budget by 20%.
Coming from the non-profit world, this is a sign of an efficient organization that is very good at raising money. When given a giant bequest, they increased their budget.
We could debate what "need" means, but a non-profit that can increase its expenditures by 20% in one year and easily cover it doesn't "need" money in the same way other charitable organizations I've worked with do.
FYI: The page you link to lists the average for all public radio stations in general. It's not a specific breakdown of NPR or NPR member stations.
Online, you just don't feel bad if you don't tip -- there is no peer pressure and no expectation. So, of course it doesn't work out.
(I was told once that this was rude, so I just stopped tipping for coffee all together. If I'm going to be rude, I might as well keep the money for myself.)
After getting to know some people in coffee shops and how they do rely on tips, I've started tipping around $1 per drink unless something's really wrong with the place. I do that regardless of paying cash or credit.
The time I was yelled at, btw, was for giving 3 quarters as a tip for a $3 cup of coffee. "It would have been more polite" to give a whole dollar, and not as change, but as a dollar bill, I was informed (by some other customer). OK, but I don't have another dollar bill, and I really don't care to carry around those three quarters...
I did try for a few days to have an extra dollar and tip with that (carefully saving up the change for use in wishing wells)... but nobody said thank you or anything, so I gave up. If I have to go to a lot of effort to give someone money and they don't care, eventually I am going to get tired of doing it. And I did. (Did one person ruin it for everyone? Yup.)
1. to look generous/wealthy in front of peers (and to feel generous/wealthy)
2. in the hope that staff will be more friendly/helpful/ won't spit in your coffee.
I think you could apply 1 on line by letting people give you a name to credit publicly for the donation. (let people give you a name; some people don't want to see their real names online)
Applying 2 generally means implementing logins and some sort of 'freemium' model.
This line caught me. Yes, if you put a donate button you are drawing a parallel between yourself and a charity case if not outright calling yourself one.
But if you put a tip button on it is a very different situation. That is more comparing yourself to say a skilled hairdresser (it comes to mind since my step mother is one) where the end user is thanking you monetarily for the good work that you have done and expecting it to encourage you to keep doing good work in the future.
When was the last time you tipped the producers of your favorite television show?
I've often been interested in how some things get chosen for tipping and other things not. I think one of the criteria is how convenient it is to actually tip. It would be hard to tip the producer of my favorite television show, effortless to tip my waittress. I think the other criteria is how personalized the experience is, in most things we tip for we are receiving a very personal close to one-one interaction.
But I think most blogs come closer to the waitress side than the television side. At least on blogs set up to receive them, it is relatively easy to tip (though I think it can and should become much easier in the future!). And the experience can be fairly specialized (I tend to read niche technical blogs rather than mainstream news ones), and fairly personal. After all, if I leave a comment on most blogs, I have a pretty good expectation that author will respond directly and intelligently to me. If I write a letter to the producers of a tv show, I might, if lucky, get a form letter and maybe a glossy photo of the cast back.
As to whether there is an "implicit contract" to tip bloggers, I think that particular piece of society is new enough that those rules are still being established.
If I want to "tip" Wikipedia, for instance, I have to go find my credit card, type in lots of numbers, possibly setup an account, worry about the individual handling of my card information by Wikimedia, etc. That's way too much effort for drive-by donations a la those at the restaurant.
I assume that's what tipjoy and some of these other startups set out to fix. I don't think simplification of and success by tipping is particularly a lost cause, I just think that it wasn't easy or prominent enough. Was there a browser extension? If I only had to enter my info once, and there was a button on my browser where I could send any registered site a tip while I was on the page without any special effort, I think I would be prone to tip more often.
By the same token, I think that you're much, much more likely to make some money if you follow the more conventional "x costs x, please pay me" model, even if you surreptitiously proliferate content outside of the paywall to increase exposure.
For instance, Jesse Thorn (who's background is in public radio), asked for and got $15k in public donations to fund the first season of his web series: http://www.kickstarter.com/projects/1136753854/put-this-on-s... — the problem is that his show is itself advertising — NPR does pledge drives to avoid ads, and here he is using the same mechanism to fund the production of commercials!
You what now? Either the US tax system works in some very weird way or that doesn't make any sense.
I then get to deduct $90 from income on my tax return, and assuming I'm in a high tax bracket, I get to pay about $30 less in taxes.
Hence, I effectively donated $20 - while the recipient effectively received $90.
Not quite cost free, but not terrible. And yes, I know it's cheating to deduct the 'value' of the gifts - but it's the only semi-reasonable thing I can think of.
I think that the mooch bait is much more about having a way to show off "I am a generous and wealthy person, and I gave to this worthy cause" much like tipping heavily when you take your co-workers out to lunch. I mean, I don't really need another bag.
I'm kind of having a hard time taking anything else this author says seriously when he also says that.
Plus, you can use the data as a starting point for future pricing.
This is tangential and potentially destructively off-topic, but when exactly did music become something that we all need to pay for?
It seems to me that historically music has been something that people have done in addition to whatever it is that they do for their day job. (You sing while you are doing chores or you sing and dance at the pub at night).
When did we become this grotesque soulless crippled race of humans? It seems that there has been a proliferation of a myth that you need specific musical talent (and anointment by a benefactor) to create music. Why is this? It clearly isn't true... If we are all such cheap bastards, why don't we make our own damn music and give the RIAA the finger in that way?
I almost feel like there is some sort of institutional loss of music from our culture that almost warrants 'music theft' and is the real reason that people have been so reluctant to pay for their albums. It is as if everyone can make music, but there is some societal obligation that forces the majority of us to believe that we can't.
(Bonus: Why guitar hero and not a guitar? The guitar is cheaper...)
But please, feel free to ignore. Something about that phrasing simply rubbed me the wrong way and I felt the need to rant.
Making music that will last, not just confection, is a very intense activity. It is always technical, requires staying aware of the competition and staying ahead of it. It's a full-time job.not a hobby. I'm not arguing that good music is 'elite' music, but that most lasting music is good in direct proportion to the energy used creating it.
This would be common sense in most areas, but many people who don't make music somehow get the astonishing idea that good music is 'easy'. Look at any recognized 'genius' composer or singer/songwriter and count the number of big works they wrote that have lasted once the confection has faded away. The list is nearly always small: competition is fierce.
If listening to throwaway confection satisfies, what the here-today gone-tomorrow bands create may satisfy many consumers. Yes you'll find exceptions, but the bulk of music which is art, not just product, isn't made by weekend warriors. Like great furniture, great sculpture, great architecture, great anything: it needs support.
The fact is that in our current system, people who produce music of genius quality starve, while the people who write about big booty women and bananas become super rich.
The problem is that the act of making music fulfills a basic human need. It isn't about making good music or making a song that will last for the ages. It is more like the need to have sex, make out and go dancing.
I just think it is incredibly sad that regular people can no longer compete with the mass market saturation of spun-sugar-pop-music. If we look at market trends it would appear that all music should be pitch-corrected, re-mixed, stamped onto plastic disks, and played as background noise to a music video. I, personally, reject the market trends as I know there is something much deeper that I actually need.
I don't think it takes talent to make music. It takes talent to make good music. Talent is something I believe in rewarding.
so, I guess, what credentials does that other customer have? E.G. why are you taking their seemingly unusual tipping advice seriously?
I mean, personally, I almost always dump the change in the tip jar, but if I like the place and the change seems like a small tip I drop in another buck. I guess I'm cheap 'cause I don't usually tip more than that at 'to go' type places.
Good question. I am pretty good at ignoring people online, but not so good at it in real life.
I don't chew gum anymore, but when I did, I always got it from the chewing gum aisle. It's cheaper there. I'm sure I'm not the only one who figured this out.
2.) Every charity makes it a point to spell out that donations are tax deductible. The reason is to make the donation appear cost-free.
If they do, they're engaging in fraud because deductions aren't credits.
Seriously - what is the basis for your claim as to their intent?
I think that it means that I get to deduct it from my taxable income, just like my mortgage. It's a deduction (unless I'm subject to one of the various phaseouts or am better off with the standard deduction).
Do you think that people think that the $5k standard deduction reduces their taxes by $5k? (I forget the exact amount because I itemize.) If not, why do you think that they're confused by the phrase "tax deduction"?
There's a huge difference between a tax deduction and a tax credit. I suspect that most people who pay taxes understand it.
If you think there are legions of taxpayers who don't get this, you are mistaken.
Imagine that you meet a person who is terribly confused about logic and evidence to a point where he takes any random anecdote or even a lack of one and reinterpets it as data backing his preconceived notions. Now imagine trying to set this person straight and help them out of this trap. Do you think he would resist the change and take it as a personal affront? Well, there is always a slight chance that it will help.