Internet Entrepreneurs Blog

Another revenue stream to consider for your data ranch is the subscription model. While the idea itself is straightforward (users pay to access your content) the implementation requires careful thought.

First off, consider the useful timeframe for your online information. Will the content be constantly updated like a magazine or is it more static like cheat codes to popular video games? If it’s the latter you’ll want to skip shorter, cheaper subscription options since the user will only need to access the information once. On the other hand a free trial period may make sense if your content sees frequent updates.

If you’re unable to offer a free trial for your information, you should at least offer free samples. These samples could consist of low-resolution thumbnail images or, in the example of video game cheat codes, the codes to a few moderately popular video games. Don’t give away the farm (or data ranch, as it were) but do give your customers an idea of the quality of your information.

In the same vein, it’s important to keep as much information publicly available online without weakening the value of the subscription itself. In the example of the video game cheat codes you could build your website such that anyone could read and review information about the games but only subscribers would be able to view the codes. This gives you good search engine exposure while saving your most valuable information for paying customers.

Data ranchers can at times become greedy with subscription services and it’s important to resist this temptation in the name of a great customer experience. How many times have you wanted to start a free trial subscription but balked because it required a credit card? Or even worse, once you’re willing to purchase a one-year membership you find out that it will be auto-renewed at the end of the year, regardless of your desire to continue. If your intention in adding a requirement like this to your subscription plan is to trick folks into paying for something they don’t want or need then it’s a bad idea.

Finally, implementing a secure online subscription system is not a trivial operation and it will require some fairly sophisticated programming. Fortunately there are online services that can help you manage your digital content for a small fee. My favorite is PayPal’s instant payment notification service that gives subscribers instant access to digital goods upon successful payment.

Subscriptions can be a good way to monetize your online content. Building a successful subscription website takes planning and preparation

Another way data ranchers get paid is through a model I like to call “pay-to-post.” Using this model, users pay to have their information listed on a website, usually in hopes of selling something or gaining new business. This is a pretty simple concept so I won’t belabor the point; instead I’ll walk through some examples of different pay-to-post systems.

Perhaps the originator of the pay-to-post model is the granddaddy of e-commerce, eBay. Sellers pay an upfront fee (usually just a couple dollars) to list their items on the auction site, then pay a percentage of the final sales price, assuming the item sells. eBay quickly added pay-to-enhance options to give sellers more exposure (more photos, bold item listings, etc.). Obviously the model works well for eBay and nets much more than an entirely ad supported auction website might.

Employment websites like Hotjobs and Monster.com also utilize a pay-to-post model. Here the hiring company pays a fee to list a job opening on the website for a specified amount of time (usually 30 days or until the position is filled). An important part of this model is the recognition of customers’ willingness to pay. These sites could have chosen to make listing jobs free while job seekers (applicants) paid to apply online. Obviously in this case employers have a greater ability to pay for such services but it is important to consider which side should pay in any pay-to-post business model.

Outside of e-commerce juggernauts like eBay and Hotjobs, even niche sites have found customers willing to pay to post content online. Consider Safarium.com, an online vacation rental by owner listing service. Vacation homeowners pay to list their properties online in hopes of finding renters. Safarium also employs a pay-to-enhance model, offering property owners additional photos, premium placement, etc.

Directory websites like real-estate-agents.com offer to list business contact details for a fee. These sites are not unlike online versions of the yellow pages and most offer some form of pay-to-enhance options. The effectiveness of a directory website listing is based entirely on the quality and quantity of customers who view the website, and in the case of many sites, the return for business owners is not always positive.

Pay-to-post is certainly an effective model for generating online revenue and should be considered by any internet entrepreneur starting an online business. Up next: pay-to-view.

One of the more specialized forms of data ranching is the consumer review website where users are asked to post their opinions about various subjects and items. Everyone has an opinion and it is quick and easy for members to add their thoughts and ratings to consumer review websites.

Consumer review websites use the wisdom of crowds to create a resource that simply could not exist without the internet. Forums and IM simply offer new ways for individuals to communicate; e-commerce websites are catalogs with a few new bells and whistles; blogs are simply magazines produced by the masses. But aggregating opinions and packaging the group consensus is a new idea altogether, made possible almost entirely through the distributed nature of the internet. Consumer review websites add transparency to industries that were previously closed to outsiders, tap the powerful wisdom of the crowd to create new knowledge, and give a voice to previously unheard consumers.

A base of information is needed to kick start any consumer review website. That is, the basic info about which your users will be adding reviews will need to be in place

So enough with the theory behind data ranching and user-generated content, how do folks go about making money from this type of operation? One of the most obvious ways that data ranches cash in is through selling advertisements.

There has been an explosion in online advertising in the last few years and it’s easy for anyone to put up a web site and start cashing in on pageviews. For data ranches that are more information-based (rather than community based) it’s fairly easy to generate click-through rates of around 1% or more. Community-based websites, on the other hand, typically see many of the same users day after day who are therefore more de-sensitized to ad content leading to much lower click-through rates. In a sad twist of irony sites with sub-par information and content actually see the highest click through rates.

Beyond the type of data ranch you manage (information or community based) and the quality of your information, the subject of your website will often dictate just how much revenue you can expect from advertisements. Just like a real ranch makes more money raising cattle than chickens, different subjects will net higher ad rates. The classic example of this is mesothelioma lawyers paying $50 per click for client leads while most websites are lucky to get 50 cents per click. I’ve seen this with my own sites with a site about camping seeing CPMs (revenue per thousand impressions) roughly twice those on my mountain biking website.

As an added bonus there is anecdotal evidence that placing ads from Google’s Adsense program will actually lead to a page being indexed in Google’s search engine much sooner than pages without those ads. I’m working on an unreleased website right now that is not linked anywhere online yet the google bot crawled it within days of domain registration and just shortly after placing the Google Adsense code on my pages.

Advertisements are certainly the first form of revenue any data rancher should consider in monetizing his or her website. Up next I’ll discuss some alternate methods for bringing your data to market and cashing in!