Secrets About The Internet and Money

The internet is a wild and wonderful place, a virtual web of communities and information galore!  It is also a very predatory and dangerous place if you do not use some common sense in your dealing with others online.

I belong to a message board community - mainly as a lurker - that is going through some tough times this week.  In a nutshell, the owner of the site formed an LLC and incorporated the site.  In addition, she had been asking for donations to help make the site run and make improvements.  The site also displayed ads.  She always said she took a small payment from the site as it was her full time job, so no secrets there.  But, the SHTF when some of the administrators in the group started investigating the costs, the income, the LLC, and so on.  They discovered operating costs were lower than they had been told, that the owner was collecting the ad money for herself and using the donations for site improvements, and many took exception to the LLC.   While I can see their concerns on some levels, I also don't understand how anyone within the community thinks they have a right to tell a site owner how they can run their site or how much they can pay themselves.  

Turns out there are many naive people out in internet land who don't understand how things are run.  So as a community service I am going to reveal some badly kept secrets here.

1.) Secret #1 - Using a pseudonym does not protect yourself from litigation.  Many people think that if they post under a clever pseudonym they can say and do whatever they want online and not be held accountable.  That is not true.  With tracking, IP addresses, etc., anyone can be found.  As the owner of a very popular discussion forum with controversial topics, it was vital for the owner to protect herself legally.  The LLC was 100% the right thing to do.  Yes, it does turn the "community" into a business, but that is just the way of life.

2.) Secret #2 - Every webpage is owned by someone.  In the example I cite above, the group was appalled that someone would dare to try to take ownership of "their community."  But the fact remains that someone always did own that community.  Someone bought the URL.  Someone used their Google Adsense account to place ads on the site.  Someone set up the technical aspects of it.  Someone put their neck out on the line from a legal aspect.  Period.  Too many people get vested in online discussion groups and suddenly decide they have an ownership stake in it.  Guess what... they don't!  Every website is owned by someone (or by a company or organization) and, like it or not, they can make the rules.  If the members of the group don't like the rules, they can leave and stark a competing site.  Free enterprise, baby!

3.) Secret #3 - If you see ads on a site, it is making money.  Now don't get me wrong, some sites make more money than others.  At the Single Saver I limit my advertising to just a few private ads a month (at the most) plus the little picture ads you see in each post.  My site is small and my ad income is very small but that is fine with me... my goal with the site is to cover my expenses and so far I have been able to do that.  But, on the same token, a big site with many hit and page views can easily make thousands a month (and yes, I am a little envious of those sites)!  In the example above, the group discovered that the owner made roughly $12,000 in over 14 months from their advertising.  The owner paid herself that money, which came to about $850 a month (before taxes).  The group was outraged that she made so much money, but if you ask me $850 a month (before taxes) isn't much to live on.  Plus, it was her site and she had every right to take as much or as little of the procedes as she wishes in my opinion.  Sadly, people seemed genuinely shocked that the site owner was making money off of the ads - so for those who don't already know, please understand that if a site is displaying ads, the owner is making money.  It might be $0.10 a day or $100 a day, but money is being made.  We blog owners don't put ads up for their pretty looks!   :)

4.) Secret #4 - Donate at your own risk.  A lot of bloggers have a "donate here" button on their site.  It isn't something I am fond of, but to each his own.  There is nothing wrong with donating if you feel the content has enriched your life in some way.  After all, the blogger is providing content to you free of charge.  Just know that when you donate to a for-profit website, that money is not tax deductible to you.  Even if the site owner claims the money is going to charity, you still can not claim it as a charitable deduction.  And even if the site owner claims that money is going to a charity, you have no way to verify that their story is true.  The internet is full of liars and scammers.  That donation could easily be funding their next ski trip or paying their mortgage that month.  So donate at your own risk, knowing the rewards and the risks.  In the example I have been citing, the members of the group were mad that the site owner kept saying the site needed donations in order to keep making the necessary improvements, all the while she was collecting ad revenue and pocketing it.  While I understand their point there, they also need to remember that they got a free service that they enjoyed, they were not forced to donate, and the owner did indeed use the donations to improve the site so they got their money's worth.  If they are to be mad at anyone, they should be mad at themselves for being so trusting as to not look at the big picture (ads, requests, etc.) before donating.  The site is ranked around 17,000 in the entire United States and has thousands of members, so it should have been obvious that the ad revenue should have been pretty high and that the site wasn't about to crumble into bankruptcy anytime soon.  So, as another lesson... buyer beware when donating to anyone, especially on the internet!

I hope this has opened your eyes to some of the ways of the internet, especially concerning how money is made.  I don't want to turn you off from the net.  Rather, I want you to see it for what it mostly is - a business opportunity where money is made and fraud can happen.  As in real life, always be aware of the environment around you!  Even the best online community is still motivated in some way by money.  And there is nothing wrong with that!