- How does it work
PayPerPost connects people who want to promote their web site and want links pointing to their web site with bloggers who will provide that service. The webmaster describes what page they want linked, the text that should be used, the tone of content they want and the price they're willing to pay for each link. If a blogger is interested in the subject they can write a piece of unique content, put a link or two in it, and get paid for it.
- Why I like it
This is a purely digital play that connects two hungry markets. It is a very creative idea that's easily implemented. A web site, and some promotion is all that is needed to make it work. It is a novel idea that (currently) serves a low competition niche.
I have personally used PayPerPost for one of my web sites. the bloggers generated good content with exactly the links I wanted. But, I had issues with the site's ease of use, implementation, and pricing structure. Overall, it's a great idea that needs to be evolved.
Apparently I'm not the only fan of PayPerPost. They landed a $3 Million venture round this month (10/2006) from several VC firms. Draper Fisher Jurvetson was among them - and these guys know what they're doing! DFJ has invested in web monsters like Overture, Technorati, TagWorld, Feedburner, and Skype.
- Market
The PayPerPost market is people trying to SEO their site. Their secondary market is people who want to get paid to write in their blogs.
SEO'ers are accustomed to paying for performance. They are trained that links from blogs are good for SEO. They are easy to find.
A blogger that wants to make money off of their blog? Never heard of that! The viral nature of blogging easily gets the PayPerPost name out to the blogging world. These types are also easy to find!
- Where's the beef
PayPerPost makes their money when webmasters publish their "opportunity" for bloggers to write about. They charge a one time $5.00 posting fee (that price was recently redued from $10, which was reduced from $25). Then, they charge a 25% transaction fee for each posting made.
It's difficult to ascertain a ball-park figure for how much money PayPerPost is actually making. This is because their revenue model is not straight forward. Each advertiser will pay $5 to post the opportunity and vary the number of possible posts, and the price per post. This in turn varies the amount of money PayPerPost makes from each advertiser conversion. Also, They have a lot of blogger traffic going to the site that does not give them money.
But, it's safe to say that when you can get away with charging an inital fee, plus a transaction fee as high as 25% - and then combine that with a 7,317 Alexa rating (approx. 20,000 visitors per day) - you're making some cashola. Although they specialize in user generated content, they don't have a lot of it on their site. That means their Alexa rating is created by people using the service - not reading about it.
- Marketing
Blogosphere!? Duh.
When you combine the blogoshpere and a tranche of venture capital, you attract traditional media. As I'm writing this blog in my home office, I received a promotional email from PayPerPost stating that they are being interviewed for an article in the magazine Business 2.0. Oh, sometimes timing is perfect...
- Dangers
Barriers to entry are low. This is an idea that could easily be knocked off. There is no secret sauce here. They are merely connecting two hungry groups of people. This is perhaps why they acted so quickly to land venture capital money. It will allow them to grow quickly and become the undisputed king of user generated content. Anybody that wants to get into the game must deal with a 500 pound gorilla.
- Summary
PayPerPost is a creative Internet business model. It is completely web-based. It is "at the right place, at the right time, with the right platform" as Tim Draper of DFJ puts it. They've found a way to separate people from their money, and make them downright happy to do it. I'd say - that's a winner!
Labels: business models