A Completely Transparent Explanation of the Economics Behind Running a Pop-Culture Website
We’ve written fairly transparently about the advertising on this site in the past, but I have always been reluctant to go all the way because, for a site runner, it feels like walking around the Internet naked. On the other hand, I have never really seen this done on the Internet before (at least not with a decent-sized site), and I thought it might be instructive to other site runners on independent sites (I’m sure there are a few remaining. Hi Slashfilm! Hi FilmSchoolRejects!) or, more likely, expose just how terrible I am on the business side of things.
Today, I am going to do a full accounting of a sample month on Pajiba so that everyone understands how a website like ours works behind the scenes. To be honest, I am also hoping a few of you will consider turning off your adblockers once you have a better understanding of how a site like this works, even if that means (unfortunately) occasionally dealing with a bad ad, or an obnoxious redirect on your mobile phone.
For the record: We cannot control those ads. We’ve written about that issue before, but basically: A malicious spammer injects their sh*tty little redirect ad into an ad network after the network has already been approved. We have no realistic way to ban those ads — we just have to wait for Google or another ad network to find it and filter it out. In the meantime, we have to answer to angry readers and deal with another round of people who decide to install an ad blocker, which is bad for us and the ad network, even though neither the ad network nor the publisher (us) benefits financially from the sh*tty ad. These are called programmatic ads and are a problem that hopefully the ad industry figures out how to solve before we all go under. It’s very similar to the problem that some advertisers face right now because they don’t want their ads on Breitbart and although they have tried several times to block their ads from appearing there, the ads continue to sneak in, much to the dismay and sometimes horror of the advertiser.
It’s a flawed system, but right now, it’s the only one with which we can work. Other entities — like Medium.com — have attempted to create new models but, so far, they have failed. And as nice as our core readers have been historically in offering to donate or fund a Patreon, it’s not a realistic possibility (as I’ll explain below), because it takes more money to run a site like this than those methods could provide even for a very lean, inexpensive, efficiently run site like ours.
So, here’s how it works:
We run ads on our site (as those without adblockers are aware) and we are paid for them based on pageviews (and not, as many believe, based on the number of ad clicks). Ad networks generally pay on a CPM (cost per impression) basis. In other words, we’re paid a certain amount for every 1,000 pageviews. We currently receive around 4 million pageviews a month. If we have a really good month and a couple of posts go viral, we might hit 5 million pageviews, but our traffic has been fairly consistent for the last five years or so.
For a big site that can afford to sell its own advertising directly, maybe they earn $10, $15, or even $25 per 1,000 pageviews. That would be awesome! We are not a big site with a direct sales team. In terms of traffic, we are solidly middle of the road (but our readers are more passionate and engaged). We earn closer to $.20, $.30 to $.50 per 1,000 pageviews, keeping in mind that only those pageviews without an ad blocker will count. So, if we get 4 million pageviews a month, and 40 percent of those pageviews come from those who use ad blockers, we are only paid for about 2.5 million pageviews.
How does that shake out? I’ll tell you exactly how that shakes out. Here’s how it went in February, which — admittedly — is one of the worst months for ad rates. In fact, the entire first quarter is miserable every single year and has led to very difficult and unfortunate decisions in the past where we have had to downsize.
We use a number of ad providers. For instance, the banner ads you see above and on the right on your laptop (and the little banners below the logo and below the header image on mobile) come from a mix of two programmatic ad networks. The little video ads that pop up within the content also come from one of those ad networks, as do the ads that show up on images.
It’s all programmatic advertising: Meaning, those ads are generally served based on user interests (which makes it doubly difficult to block those ads, because one reader who loves jewelry in Sacramento is being served different ads than another reader who wants a new pair of jeans in Minnesota).
Ads within the comments come from Disqus. They’re programmatic, too. They recently began to require that publishers either run ads or pay for the use of Disqus. It’s caused some sites, like Slashfilm, to move to Facebook comments. We have a really healthy and boisterous Disqus community, so I would obviously rather not move away from Disqus. For a while, we ran display ads within the comments. We found that they were really cluttering up the comment flow, so we switched and now you see that little video ad above the comments, which is more eye-catching, perhaps, but less intrusive than within the comments.
Meanwhile, we also run Zergnet ads below the articles and on the sidebars.
We earn a very modest amount from Zergnet and Disqus, but for a site like ours, every little bit matters.
Finally, if you read articles on Facebook from your phone, you will see Facebook’s ads within the content. I like those ads because they load super fast and I don’t have to do anything to set them up. (Sethitor Note: Dustin didn’t have to do anything because I had to do a lot of backend scripting, you’re welcome.) They just appear! (Sethitor Note: YOU’RE WELCOME!) They also pay better, not to mention we don’t have to pay server costs because content served on Facebook via your phone is not actually coming from our server.
There are also video ads — you probably see those on a lot of sites right now, and they pay well. However, they really only work on scale. They’re also annoying. Occasionally, we’ll add a pre-roll ad to a trailer, which requires readers to watch an ad for 10-15 seconds before watching the trailer. However, we usually only net $3-$5 total on one of those, so it’s hardly worth the effort and annoyance. If we were a much bigger site, that metric would be quite different so, in a way, it’s to the benefit of our readership that more intrusive ads are not worth it for us to run.
Anyway, I don’t think we are allowed to report what we earn from each ad network (Sethitor Note: ayup), but I can report that, in February, we earned just over $10,000 in revenue from all the ad networks, combined.
Cool, right? That’s a nice tidy sum, huh?
Where the Money Goes
A good deal of that money goes to the writers. In February, we paid 15 writers (and one copy editor) exactly $7,000 (we also paid around $500 in a one-time cost to buy the staff T-shirts). You can break that up among 15 writers any way you’d like, and you can see that none of them make much money writing for this site.
Different sites do it different ways, but in general, we have two kinds of payment structures. Some writers are paid per post, while other writers — usually those who post daily or more regularly — are paid per month. In general, they are paid based on a couple of factors: How many times they post, and how many pageviews they generate. It’s a very unscientific method but, and some of the writers themselves may not even know this, we do keep track of every writer’s pageviews. On the whole, what they earn generally breaks down to around what they generate in revenue for the site, give or take. If a writer generates 10 percent of the month’s pageviews, they earn around 10 percent of the revenue. It doesn’t work out that way every month, but over the course of the year, it generally evens out, although paradoxically, it’s often the shorter, celeb-driven posts that allow us to pay for the longer, thinkier pieces. THE INTERNET, right? But we try to have a nice mix of the two.
In either case, I try not to focus too much on pageviews themselves, and try to focus most on the contributions the individual writers make to the community. In general, I rely on myself to generate revenue through pageviews, which may mean writing eight posts a day on some days, and three on other days. I prefer the writers to be themselves and create an audience rather than cater to one. There are no post or traffic quotas or anything like that here. In February, for instance, I generated 44 percent of the traffic, because that’s what was necessary in that month. When the other writers are humming, or ad rates run higher, I try to lay back and focus more on back-end stuff. Or I spend more time on a longer piece (today, for instance, an old post kicked up some traffic on Google, giving me time to write this post).
Meanwhile, another $500 or so goes to server costs and a separate Amazon server that hosts images on high-trafficked posts so the site doesn’t crash if something goes viral. (Sethitor Note: and other tech stuff Dustin don’t understand.)
So, after writers and server costs, that leaves around $3,300 in “profit.” Some of you may not know this, but the site is co-owned by myself and Seth, who also runs all the IT on the site and handles our taxes, etc. (Sethitor Note: HI! Also legal stuff. Legal stuff is the worst.) We have an arrangement where I earn approximately the first $4,200 in profit of every month, and Seth and I split anything over $4,200 a month. Sometimes, we don’t make $4,200 a month, in which case Seth gets nothing. Sometimes, we earn more than $4,200 a month, so Seth gets half of everything over $4,200. Some years, he makes a few thousand dollars. (Sethitor Note: Seth likes those years.) Some years, he earns bupkus. Those years suck. (Sethitor Note: Seth likes those years less.) Those usually happen because I am bad at keeping costs down (sorry, Seth!). (Sethitor Note: It’s ok, as long as you keep at least one of the twins fed. They know which one I’m talking about.)
If every month were like February, Seth would end the year with nothing and I’d end up with around $40K. Fortunately, over the course of the year, I do a bit better than that, but never enough to say, “Fuck you, I’m rich!” I won’t be buying a retirement home anytime soon. But I live in a relatively cheap state, I work a second job, and my wife works full-time in the non-profit sector so, combined, we do fine despite the expense of three kids. (Sethitor Note: You could always lighten the food intake of one of the twins. They know which one I’m talking about.)
Meanwhile, the other writers here have other jobs that provide the majority of their income. That’s really the secret to why we have managed to survive for 13 years: Our writers are paid, but none of them write here because of the money. They write here because they seem to love it, the reasons for which I will never be able to appropriately express my gratitude. Despite better job offers and offers to buy the site, I also continue to do this because I love it. Like everything in life, it’s a trade off, but, hopefully for all of us, it’s one that is worth it. I’d much rather work 60 hours a week doing something I love than working 40 hours doing something I hate. (Sethitor Note: preach!)
Why Patreons or Donate Buttons Would Never Work
This is perhaps the question we get asked the most: Why not start a Patreon or add a donate button? Simply put, it’s because a site of our modest size could never realistically (or consistently) collect even the minimum of $10K a month we need to keep the site going. Yes, we have a lot of very passionate, lovely, amazing readers who might chip in $5 here or $10 there, but that would never add up, because the deep dark secret about most sites is that a lot of the traffic doesn’t come from regular readers. About 50 percent of our traffic comes from drive-by readers: People that find something on Google, or that stop by once because of an article they saw on Facebook or Twitter. Those people would never contribute to a Patreon or donate via Paypal, and why should they pay for their occasional visit?
We do have another 50 percent of readers who stop by frequently or semi-frequently, but how many of those readers would honestly pay for something they have been getting for free? It’s like the T-shirt thing: Vocal, passionate readers are always asking for T-shirts, but how does that actually translate in the real world? To a few hundred T-shirt sales, at best. Given the margins on those, it’s often not even worth the effort of setting up a store. But we do (or in this case, Castleton does) because it is freakin’ cool to wear a Pajiba T-Shirt. (Buy one!)
Likewise, we could do, say, a subscription model where you could pay to read the site without ads. But on a site like ours, it would cost way more to set up the infrastructure to create that system than we’d earn. (Sethitor Note: Also, I just don’t wanna set up that kind of infrastructure because I hate changes to the backend. Ask Dustin, he’ll tell you. I could do a whole other post on website technology and my hate and the flames…) Maybe we could earn $2000 a month, tops, but it would probably cost $20-$30K just to set that up. For a site that earns $10-$13K in revenue per month before expenses, we’d never even be able to afford it.
The Take Home
Maintaining a pop-culture website is a delicate balancing act, especially for independent sites that don’t have corporate backers to cover the costs of lean months or inject the capital necessary to ramp up the number of daily posts. We would love to try different models but, thus far, we have not been able to locate one that works better than this. Unfortunately, that means taking heat from readers and commenters because sometimes an annoying ad that we can’t prevent — nor profit from — slips through. It’s embarrassing for us and it hurts a user experience that we try with our content to make as pleasant as possible. But until the ad industry figures out a better way, unfortunately, it’s all we have. That said, I appreciate all of you who read the site daily, weekly, or even monthly, and I appreciate even more those who disable their ad blockers. (Sethitor Note: Ditto. I also appreciate, as I hope you all do, the amount of honesty and transparency Dustin gives you. This sh*t is his heart and soul, y’all.)
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