Earning revenues when everything is FREE

owen87owen87 subscriber Posts: 4
edited April 2007 in Grab Bag
Hello fellow startupnationers,
Here`s a question I have been pondering over these few days,
How do websites/businesses such as Friendster, eBay, YouTube and Startupnation earn their revenues when everything is FREE? It seems that starting these kinda business up is kinda hard as I think that revenues will come in only after there`s a certain amount of online patrons through advertisments earnings.
I understand that these businesses earn their $$$ through advertisements (correct me if I`m wrong). Do they have any other ways of earning $$$? I was thinking of starting a similar kind of business but just couldn`t figure out how are we going to profit initially. I hope that there`s some experienced people can answer my queries. Thanks!!!

Comments

  • owen87owen87 subscriber Posts: 4
    Oh I see. Ya... Its kinda scary if you don`t convert. You will keep on pumping $$$ into the business without making any $$$.
  • owen87owen87 subscriber Posts: 4
    Haha. Is Jeff & Rich around? Maybe they can share their experiences about how they started SUN initially.  
  • iouone2iouone2 subscriber Posts: 14
    I think this discussion is missing another major factor. Not all those "everythings free" and "we earn money from advertising" sites started small. These are business plans run correctly (if still providing the service and getting the advertising dollar) or not (if dieing and soon to be gone).You can start a business in more than one way.You can buy or make something, then resell it.You can make a plan based on the habits of people and sell the plan to investors. For example (completely made up numbers)A new company named Yippee.com is going to position itself to take over Google. The company owner or directors would make a plan based on calculations of previous companies expenses in the industry. They might determine the following... For one year of operation. Technical hardware      $  50KTechnical workers         $100KAdministration costs      $100KFree stuff programmers $100KMarketing on/off line      $150K Total                                  $500KRevenues from current competitors are $5.5 Million.Yippee.com plans to take 10% of the share. That`s projected income of 550K. There will be 50K in profit the first year. With in the business plan it would state the next milestone and when all investors should expect a return.So not all businesses start small. They might start big and pray for a big payoff.
    iouone22007-4-17 14:1:16
  • owen87owen87 subscriber Posts: 4
    Thanks! That was a wonderful advice, Iouone.
    For my situation, I trying to start a small internet biz without much investment put in as my biz partner is quite good with the internet stuff. Initial start-up cost would be the hosting, domain etc. We are planning to let it be a free service for a few months to draw traffic, but I`m afraid that when we start to charge $$$ for this service via the internet, there might not be people there anymore. Since everyone is giving free service, it seems like we are on the losing side.
    Overall, I think this internet service we provide is quite unique and there would be acceptable demand. I guess we just need to START IT UP!!!   
  • ToddFToddF subscriber Posts: 3
    Well revenue can be generated from banner impressions which equates to usage. Of all the sites listed I found it funny you didn`t list craigslist which has no banners and costs nothing, yet is worth A LOT of money because of the user base. Google had the same principle, no ads but millions of users. I think a lot of these sites you see that are free have an initial startup cost but once they`re up and running cost little to maintain because the users are generating the content so the only real costs involved are bandwidth and hardware, which now-a-days is relatively cheap.  
  • owen87owen87 subscriber Posts: 4
    Yup! I agree with Todd. Maybe a premium service is workable. Ya craiglist is really simple yet generating alot of $$$.
  • BrutusBrutus subscriber Posts: 2
    So, if I have an idea for an advertising revenue based website, how do I start putting together the numbers?  How many visitors should I expect (how do I find out my competitors numbers?)?  How much ad money can I generate (how much do my competitors generate?)?
    Thoughts? 
    Thanks!
  • MrbusinessMrbusiness subscriber Posts: 8
    Great post thanks.  Got me thinking!
  • BrutusBrutus subscriber Posts: 2
    So I know that Craiglist would be worth a lot of money because of the user base but it was mentioned that they "generate" a lot of money.  My thought was that they could make some dough if they were to sell it.  How do they generate money?  
  • BrutusBrutus subscriber Posts: 2
    I just checked out the article link you included in the post.  Amazing!
    Brutus4/21/2008 12:33 PM
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