eBay shows how to recession-proof Web 2.0

I was reading Steve Rubel the other day and he said beware of the Web 2.0 business dependency on advertising for revenue.

So, I started thinking “how do you recession proof your business model?” Well, what happens when you aren’t working anymore, or you don’t have enough money? Well, last time around more of us bought more stuff second-hand off of eBay and Craig’s List instead of buying new stuff from retail stores.

Time to call eBay and find out what they are up to. I’m sitting with Greg Isaacs, director of eBay’s developer’s program, and Ali Croft, tech PR manager, and they are showing me a whole bunch of ways that a blogger or a Web 2.0 site could diversify their income stream and be ready for a recession, or another tech bust, should one come.

For one, they have an affiliate program. Add a little box to your blog and if someone finds something there that they buy, you get 40% or more of the eBay revenue they collect.

Little trick of affiliates? eBay pays more as your readers buy more. Hack? Join a bigger network and your fees could go WAY up! As I build a network I’m going to be using this big time as an incentive to get lots of small bloggers to join up. Since most bloggers have micro audiences, this will be increasingly interesting to a lot of bloggers.

But, for Web 2.0 companies? Well, you can build in eBay auctions into your business plan. Look at Mpire’s site, for instance. They are using eBay’s APIs to mashup items from eBay with their own data. If you buy something off of this site they get a cut from eBay.

One thing that’s changed since the last time I talked with Greg: they don’t charge developers fees anymore. So you can try out their APIs without paying anything. You have to join two things, the developer program and the affiliate program, but they are free to join. Lots of tutorials and getting started guides.

Is this paying off for Web 2.0 businesses? Well, I tried to get him to explain how much, say, FatLens (a Web 2.0 site that sells tickets, some of which come from eBay) was getting paid by eBay. He declined to disclose that. So, I asked him “in general, how much could a company make?” He said he has some businesses that are making more than $100,000 per month in revenue.

How are you diversifying your revenue streams?

Comments

  1. Hey, I’m a “small blogger”, and would love to “get a cut” – but how many “small bloggers” have the ability (time, expertise, energy) to take advantage of the eBay APIs?

    Build an infrustructure to allow us small bloggers to easily (as easy as a WordPress Plug-In) take advantage of joining your network, and this revenue stream, and then you’ve given me an incentive, and you an additional revenue stream (I assume you would get a cut of my cut – but that’s ok – you made it easy for me to get my cut. Part of something is better than nothing from nothing.

    Make it happen, Robert, and I’ll sign up. I only get about 650 page views a week, plus the 80 odd people that get my blog via RSS. This is a hobby for me, not a business – so if you can make it still SEAM like a hobby, but find a way we both profit, I’m in.

    Rob

  2. Hey, I’m a “small blogger”, and would love to “get a cut” – but how many “small bloggers” have the ability (time, expertise, energy) to take advantage of the eBay APIs?

    Build an infrustructure to allow us small bloggers to easily (as easy as a WordPress Plug-In) take advantage of joining your network, and this revenue stream, and then you’ve given me an incentive, and you an additional revenue stream (I assume you would get a cut of my cut – but that’s ok – you made it easy for me to get my cut. Part of something is better than nothing from nothing.

    Make it happen, Robert, and I’ll sign up. I only get about 650 page views a week, plus the 80 odd people that get my blog via RSS. This is a hobby for me, not a business – so if you can make it still SEAM like a hobby, but find a way we both profit, I’m in.

    Rob

  3. Greetings,
    Errrrgh… I hate it when they trot out the ‘some companies are making $100K/month’ line. The affiliates who are making that kind of money are spending $75K/mo. (or more!) on buying low-cost keywords.

    The idea is that if you spam a few thousand words at $0.05/keyword/click, you’ll get some amount of users through your link. As long as your per-keyword costs are low, the response amount can be miniscule and you’ll still get a large total number of clickthroughs.

    Then, if the clicking-through user buys something off eBay in the next 7 days (ignoring what happens if they go through someone else’s affiliate link) then you get 40-55% of the eBay revenue for that purchase. This is often $1-$2 per.

    So yes, if you have $75K to spend on massive wide-scale advertising, you can make a $25K profit per month. However, like with many things, it takes spending money to make money.

    Your average blog isn’t going to see much more income from eBay affiliation than Amazon affiliation. In fact, the Amazon affiliates may see MORE because a personal recommendation, along with a link, probably drives more immediate purchasing behavior.

    I like eBay a great deal. I used to work for them (via the purchase of PayPal), I still have a decent egg of eBay shares, and I work on an open source app (can we say ‘rich client’?) that interacts with eBay regularly trying to make it easier for end users/buyers to interact with eBay. (No, it doesn’t use the API, because eBay still refuses to allow sniping software access to the API, and my software also allows users to snipe.) Despite all that, I don’t think bloggers stand to gain much from the affiliate program.

    For companies, that’s a different issue. Most web 2.0 companies are already gambling their lives on the (volume * adclicks) scaling. Including the (volume * eBay ad clicks) scaling isn’t a bad idea, certainly, and the new affiliate mode works in favor of that because of the carryover of bids. It used to be that the person had to buy WHEN they clicked through your link, and the item that they went to. Now they extended it to within 7 days, and anything on the site, so it’s a lot better a deal.

    Anyhow, I *do* like the affiliate program, but I *wish* they’d stop talking about the ‘high end’ of affiliates without making it clear how much those high-end affiliates have to SPEND to get that income. In the end it’s about your profit, not your income.

  4. Greetings,
    Errrrgh… I hate it when they trot out the ‘some companies are making $100K/month’ line. The affiliates who are making that kind of money are spending $75K/mo. (or more!) on buying low-cost keywords.

    The idea is that if you spam a few thousand words at $0.05/keyword/click, you’ll get some amount of users through your link. As long as your per-keyword costs are low, the response amount can be miniscule and you’ll still get a large total number of clickthroughs.

    Then, if the clicking-through user buys something off eBay in the next 7 days (ignoring what happens if they go through someone else’s affiliate link) then you get 40-55% of the eBay revenue for that purchase. This is often $1-$2 per.

    So yes, if you have $75K to spend on massive wide-scale advertising, you can make a $25K profit per month. However, like with many things, it takes spending money to make money.

    Your average blog isn’t going to see much more income from eBay affiliation than Amazon affiliation. In fact, the Amazon affiliates may see MORE because a personal recommendation, along with a link, probably drives more immediate purchasing behavior.

    I like eBay a great deal. I used to work for them (via the purchase of PayPal), I still have a decent egg of eBay shares, and I work on an open source app (can we say ‘rich client’?) that interacts with eBay regularly trying to make it easier for end users/buyers to interact with eBay. (No, it doesn’t use the API, because eBay still refuses to allow sniping software access to the API, and my software also allows users to snipe.) Despite all that, I don’t think bloggers stand to gain much from the affiliate program.

    For companies, that’s a different issue. Most web 2.0 companies are already gambling their lives on the (volume * adclicks) scaling. Including the (volume * eBay ad clicks) scaling isn’t a bad idea, certainly, and the new affiliate mode works in favor of that because of the carryover of bids. It used to be that the person had to buy WHEN they clicked through your link, and the item that they went to. Now they extended it to within 7 days, and anything on the site, so it’s a lot better a deal.

    Anyhow, I *do* like the affiliate program, but I *wish* they’d stop talking about the ‘high end’ of affiliates without making it clear how much those high-end affiliates have to SPEND to get that income. In the end it’s about your profit, not your income.

  5. The real dirty little secret of sites that sell advertising is that too many of their CPM’s come from teens and India.

  6. I recently dropped the e-bay affiliate program along with about 50 others. The reason: One million page views in the last 12 months and not one red cent in my pocket from e-bay or any of the others I dropped. I’ll stick with Amazon and the few others that actually earn money for me.

    And some advice for bloggers looking at affiliate plans. If the retailer is using an ad company to manage their affiliate plan you’ll probably never earn enough money to ever meet their minimum payouts. I was in some of the affiliate programs for five years and never made a dime.

    So who pays their bills? Google and yahoo if you have enough traffic. Payperpost.com is another good place to do business and I’ve been getting monthly checks from http://www.altmedia101.com for over a year.

  7. I recently dropped the e-bay affiliate program along with about 50 others. The reason: One million page views in the last 12 months and not one red cent in my pocket from e-bay or any of the others I dropped. I’ll stick with Amazon and the few others that actually earn money for me.

    And some advice for bloggers looking at affiliate plans. If the retailer is using an ad company to manage their affiliate plan you’ll probably never earn enough money to ever meet their minimum payouts. I was in some of the affiliate programs for five years and never made a dime.

    So who pays their bills? Google and yahoo if you have enough traffic. Payperpost.com is another good place to do business and I’ve been getting monthly checks from http://www.altmedia101.com for over a year.

  8. Greetings,
    I thought I’d point something else REALLY important about eBay’s affiliate program.

    Unlike AdSense, it’s not pay-per-click, it’s pay-per-ACTION (signup, bid, buy, etc.) taken by the clicker. Eventually most online advertising is going to go this way, because it’s the only way to somewhat avoid the click fraud issues.

    It introduces seller-fraud issues, where the sellers under-report their income, etc., but that’s why Google has their Checkout mojo working… So they can have an eye into the actual sales numbers. I can even imagine Google tying use of ‘Pay-Per-Action’ to using Checkout for said actions. Advertisers want PPA because it’s fraud-resistant (not -proof, of course), and so they’ll get more real bang for their buck. ‘Having’ to use a checkout system like Google’s isn’t much of a restriction…

    How long before Microsoft realizes it needs a payment mechanism (ala Checkout or PayPal) in order to compete in the future of the online ad biz?

  9. Greetings,
    I thought I’d point something else REALLY important about eBay’s affiliate program.

    Unlike AdSense, it’s not pay-per-click, it’s pay-per-ACTION (signup, bid, buy, etc.) taken by the clicker. Eventually most online advertising is going to go this way, because it’s the only way to somewhat avoid the click fraud issues.

    It introduces seller-fraud issues, where the sellers under-report their income, etc., but that’s why Google has their Checkout mojo working… So they can have an eye into the actual sales numbers. I can even imagine Google tying use of ‘Pay-Per-Action’ to using Checkout for said actions. Advertisers want PPA because it’s fraud-resistant (not -proof, of course), and so they’ll get more real bang for their buck. ‘Having’ to use a checkout system like Google’s isn’t much of a restriction…

    How long before Microsoft realizes it needs a payment mechanism (ala Checkout or PayPal) in order to compete in the future of the online ad biz?

  10. eBay shows how to recession-proof Web 2.0

    Robert Scoble sat down with Greg today to talk about how developers can use sites like eBay torecession-proof their businesses models with affiliate revenue, so they aren’t so dependent on advertising revenue. Friday afternoon moment of levity (any re…

  11. Hmmm…based on these comments seems Scoble didn’t have much business depth to think to ask the hard questions. Looks like another hype post.

  12. Hmmm…based on these comments seems Scoble didn’t have much business depth to think to ask the hard questions. Looks like another hype post.

  13. So I went out to FatLens and looked at their site and was like ‘eh’ fairly unimpressed. I’m looking for a brief education here from you Robert (not a pointer to a thousand other sites)…What is a “Web 2.0 site/company/page”? I just don’t know what that is.

  14. So I went out to FatLens and looked at their site and was like ‘eh’ fairly unimpressed. I’m looking for a brief education here from you Robert (not a pointer to a thousand other sites)…What is a “Web 2.0 site/company/page”? I just don’t know what that is.

  15. Oh, I didn’t say that FatLens wouldn’t be useful. Just not in the market for that stuff right now. I was just puzzled as to what makes that site Web 2.0. The interface was ho hum, usability just OK, and no really great wow features. That’s all. Thanks for the pointer.

  16. Oh, I didn’t say that FatLens wouldn’t be useful. Just not in the market for that stuff right now. I was just puzzled as to what makes that site Web 2.0. The interface was ho hum, usability just OK, and no really great wow features. That’s all. Thanks for the pointer.

  17. @11 Aren’t there a plethora of those types of sites out there? StubHub comes to mind, just off the top of my head. FrontRowTickets.com. What am I missing about FatLens that I can’t get from these other sites?

    What YOU may think is a cool concert another may think is lame. For example, John Mayer concerts bore me to tears. A Springsteen concert, on the other hand….

  18. @11 Aren’t there a plethora of those types of sites out there? StubHub comes to mind, just off the top of my head. FrontRowTickets.com. What am I missing about FatLens that I can’t get from these other sites?

    What YOU may think is a cool concert another may think is lame. For example, John Mayer concerts bore me to tears. A Springsteen concert, on the other hand….

  19. So let me get this straight, the failsafe backup-plan for Web 2.0 alien-lifeforms is to tinker with eBay affiliate MLM ‘dimes-to-riches’ scam de jours?

    Cue up the blinding-light-from-heaven epiphany here…

  20. So let me get this straight, the failsafe backup-plan for Web 2.0 alien-lifeforms is to tinker with eBay affiliate MLM ‘dimes-to-riches’ scam de jours?

    Cue up the blinding-light-from-heaven epiphany here…

  21. eBay shows How to recession-proof Web 2.0

    Prolific blogger Robert Scoble sat down with Greg Isaacs from the eBay Developers Program this week to talk about how web-based businesses, particularly those affiliated with Web 2.0, can use sites like eBay to recession-proof their businesses models s…

  22. [...] Robert Scoble, autor do livro Naked Conversations, e Steve Rubel, profissional de comunicação e estudioso das redes sociais como mecanismo de transformação do marketing, da mídia e das relações públicas, também se debruçaram sobre a questão e a conclusão a que chegaram, para os blogueiros e donos de páginas pessoais de plantão, é que diversifiquem suas fontes de receita. Não utilizem tão somente banners e afins como única fonte de rendimentos no site. [...]

  23. Did anyone ever recession proof their income with ebay?

    Luckily for over 20 years our company keeps our incomes recession proof with Real Estate and Venture Capital.

    If anyone is still searching for recession proof income and you have a strong business background you might see if you qualify for a nationwide Partner position at http://RaleighCapitalAdvisors.com

  24. Did anyone ever recession proof their income with ebay?

    Luckily for over 20 years our company keeps our incomes recession proof with Real Estate and Venture Capital.

    If anyone is still searching for recession proof income and you have a strong business background you might see if you qualify for a nationwide Partner position at http://RaleighCapitalAdvisors.com

  25. I belong to the eBay Developer Program and it is also a great way of generating affiliate income in conjunction with the eBay Partner Network
    The software I developed and use is ez Affiliate Website Builder.

  26. I belong to the eBay Developer Program and it is also a great way of generating affiliate income in conjunction with the eBay Partner Network
    The software I developed and use is ez Affiliate Website Builder.