Back in 2006, my buddy Mike Davidson left ESPN.com to launch a citizen journalism product called Newsvine. Newsvine encouraged folks to write articles for the site, and in a novel twist that differentiated it from most blogging and community-oriented sites of the time, it actually paid its users to do so. In fact, it still does. Newsvine was acquired by MSNBC.com in 2007, and it continues to pay 90% of the advertising revenues on pieces written back to their authors.
I thought it was brilliant, and since that time, I’ve always had a feeling deep down that all social media ought to work this way. Think about it: what would Twitter be without your tweets? How useful is Yelp without your reviews? Maybe — just maybe — as social media companies become profitable, they should be sharing some of it with their users. After all, without them, they’d be nothing as companies.
I know, I know. It’s utopian and idealistic and there are a million reasons why it wouldn’t work for this company or that company, but I still can’t help feeling like it’s the right thing to do. So, I did it.
Or rather, we did it, on Lendle, the e-book lending community I co-founded earlier this year. Each time a member lends one of their Kindle books to another, we credit their account a small amount. When they’ve reached $10 in earnings, we send them a $10 Amazon gift card. Most Lendlers spend their gift card on more Kindle books, which they in turn list on Lendle, and the cycle repeats itself. The incentive encourages the purchase of more books, which means in the end, it’s good for everyone: Amazon makes money, book publishers make money, Lendle makes money, and even Lendle users make money. Since we started this at the end of May, we’ve given out $10 gift cards to hundreds of users. We’ve had dozens of folks make over $100, and a handful make over $500.
It hasn’t been all roses, though. As with anything innovative, there will always be a group who resist change. For us, that group has been small, but vocal. People simply aren’t used to the idea of a site that pays them to use it, and we sometimes encounter a healthy degree of skepticism. People want to know what the “catch” is (there isn’t one). Worse, some folks’ motivations change, and we end up with users who aren’t lending books for the “community” of it, but rather simply to make money. We started off giving users a flat rate for any book they lent, but we later decided a variable rate (where the value for a lend is based on that book’s sale price, supply, and demand) was more fair and more sustainable for us. Predictably, some users loudly complained that they felt we were no longer giving them enough free money. They’d come to expect a payout for lending their books, rather than seeing it as a nice bonus that Lendle offers over other e-book lending sites (and frankly, most social media).
For the most part, though, users have been thrilled to see any kind of return on their use of the site, and we love being able to do it. Like I said, it just feels right. We recognize that Lendle would be nothing without people who are willing to lend books, so why not share a portion of our profits with them?
What do you think? Should social media pay you for your contributions? Foursquare’s potentially making a ton of money off your checkins — do you feel like they’re giving you enough value in return? Facebook is raking in advertising dollars based on your personal information. Should they be sharing some of that with you?
I think the answer is probably case-by-case, but I know that as someone who runs a social media site, it sure does feel good to give back to the community that keeps you in the black.
Great idea, I think it will take alotnto catch on with the big players these days, but it’s a great goal. The web (people) need to act more human and less like corporations with regardsnto profits. There is money to be made by ‘nice’ companies, like yours.
I’ve seen a few different communities fail and I think that money does an interesting thing to people. If money is being exchanged to use/contribute to the community, people start to demand that the service meet their needs more accurately.
I think that when there is a free service, people have other motivations for using it, and thus take the good with the bad.
Hey Mike: Thanks for the thoughts! Just to be clear: both Newsvine and Lendle are free to use.
I think you should pay me to read this article.
Great idea, It’s brilliant how money gets recycled. It would be great to see how it works with other business models.
An interesting idea. Certainly it is the case that users make a social website (whether it is a fancy ‘Web 2.0’ site, or an old fashioned forum). And, I can certainly see the point, that if you are making money from your users, then you should be willing to give some of that back.
But I can see a few different problems (which probably can be worked around or ignored as preferred), and would be interested in knowing how you dealt with them.
The first comes down to privacy, I’ve never used an Amazon gift card, but I have to ask, does it require a physical address? Are the gift cards linked to the account on your site, that you give them to, and can either Amazon, or yourselves, connect the dots? (Can you see what people bought for example?)
How do you deal with people internationally (actually, I’m not even sure if your service is available internationally)? Do you care about taxes or similar, or is that 100% up to the individual?
I was going to diverge and discuss whether users should have any influenced on the running of social websites. I was going to recount the story of a forum that once practiced a form of participatory democracy, but then stopped (the owner declared the experiment a failure after a number of years). But I think that it would be too off topic…
Michael: To your questions, Amazon allows us to send gift cards directly to an email address. We currently send cards to the address that people sign up with.
As far as I know, our affiliate account doesn’t tie a purchase to an email address. I’ve looked — someone else asked a similar question — and can’t find out where they do, if they do. I can’t speak to how much Amazon can track or if they do at all but if they can/do, it’s probably for the usual: Targeted recommendations, etc.
You’re on the right track with how we deal with international users — Amazon doesn’t allow lending internationally so we don’t really support international users.
Mike Davidson from Newsine would have to chime in with how they deal with it on their end. I seem to recall that they just didn’t make the same offer for their international users, but I honestly don’t remember and wouldn’t bet on that being the right answer.
Patrick: It’d be even better if Amazon offered Kindle specific gift cards. We could make a stronger argument about giving back to authors if they did, but it seems like a lot of people use them for books anyway.
With that said, one of the reasons we pay out in $10 increments is that $10 won’t buy much more than a book, these days, so we think it encourages a re-investment in books and our service.
If you think about it the whole thing ultimately discourages the purchase of more books.
And the only winner really is Lendle on diminishing book sales and the person who lends the book without having to pay in the first place.
I don’t think you can call it a win/win
Stephie: Okay, I’ve thought about it, and I’m not quite sure how we’re discouraging the purchase of new books.
Perhaps you could elaborate?
Given that Lendle relies on book sales (people can’t lend books if they don’t buy them) I’m not really sure how it would be in our best interest to discourage them, or how that would count as a “win” for us.
Please, more.
Michael: At Newsvine, we require international users to fill out different forms (we require all payees to fill out appropriate tax forms once they reach $600 in earnings… per U.S. law).
The question is, where does the money come from? I presume more advertising. So essentially the user is getting paid to view sites with more advertising.
Reading this, and hearing the reactions to those your paying out of kindness just so reminded me of this parable: http://bible.us/Matt20.1.NASB
I’m sure all of us are guilty of it sometime in our lives, but aren’t people envious because of your generosity!!!
I was gonna agree with with what @STEPHIE said
until I actually went to lendle.me and check out the FAQs. The fact that you can only lend a book once, and you have to add books to be able to borrow more make it useless for people who only want to borrow but not lending. In other words, it does encourage buying. Great idea!
I am happy when reading your blog with updated information! thanks alot and hope that you will post more site that are related to this site.
Not a very good presumption, I’m afraid. We’ve been very clear about the fact that we pay for this feature with the proceeds from our Patrons program. (The site is free, but we offer extra features for those who pay a one time $25 fee. That money then goes to keep the site running and, of course, paying out for lends.)
We do have advertisements (though, Patrons don’t see them) but not many at all, and essentially the same number that we had when we first started running them.
Why should someone pay for social media at all? I’m fine with ads all around my SM actions
I am happy when reading your blog with updated information! Great idea, It’s brilliant how money gets recycled.
Great that you raised these thoughts. I am convinced that social media platforms will need to look for alternative models in the future to remain attractive.
Live like a greek. Don´t think about money!
Whoever comes up with a brilliant new idea that combines extra benefits for the user with a successfull overall concept will be the next rising star in social media…