When Ironminds magazine founder Andy Wang realized last May that advertising revenues were never going to support his online brainchild, he decided it was time to make his money the old-fashioned way — he decided to beg for it.
Wang signed up for Amazon.com's new Honor System, an online payments service that allows magnanimous surfers to send in amounts as low as $1 from their credit cards to sites that enlist in the service. Within two weeks of signing up, Wang says, he received $1,000 in donations from the magazine's fans.
That's hardly the fruit of a good pre-2000 IPO, but it's still cash, and Wang says the money so far has been enough to help him offset some of the costs of running the site, as well as to help him get started on his newest venture, an alternative weekly newspaper in New York City.
Perhaps more importantly for idealistic young publishers like Wang, the donated money also showed how much the magazine meant to its fans.
"For two years, all these readers knew we were putting in this time and energy, and that we weren't making any money," Wang says. "They really wanted to help."
Rebirth of Niche Sites?
Like scores of mini-virtual telethons, sites like Wang's around the Web are signing up for person-to-person or P2P payment services like Honor System and PayPal and beseeching their readers to put their money where their mouse is.
While so far the amounts raised by most of these sites are hardly enough to pay for server space, some say the trend toward small online payments through services like these may presage the beginning of a rebirth for online content, particularly for smaller, niche sites.
"These P2P systems are ideal for niche sites where you've really developed a strong grass-roots culture," says Avivah Litan, a vice president at Gartner Group, a Connecticut-based research firm. "It is quite possible that this will make them a viable business."
Another site pursuing cyber-largesse is Plastic.com, the content community site that has won numerous plaudits for its unique blend of journalism and interactivity, including this year's Webby Award in the print + zines category.
While Plastic's parent company Automatic Media announced in June that it was shutting down its pioneering sites — which included the ever-popular zines Feed and Suck — Plastic has managed to hold on for the time being, thanks in part to the company's direct appeal to the site's faithful.
Who's Your Pal?
While Amazon's service has attracted some attention and boasts a potential user base of 32 million Amazon customers, the undisputed current leader in the P2P space is PayPal.
Started by 33-year old Peter Thiel in 1999, the service took off when it became the payment system of choice for eBay users, a stroke of luck that sent the company's growth rocketing. Nearly 15 million users transferred an estimated $3.5 billion through the PayPal system this year. Now the company is actively seeking to expand its service into new areas such as online donations and boutique stores doing business online.
Meanwhile, the potential for profits has caused other companies to jump into the fray with online payment systems like Citibank's C2it service.
What does all this mean for the future of online content? These so-called wallet systems, Litan says, "are the only viable alternatives for the future because they make it so easy for people to exchange small amounts of money."
That is very good news for people like Andy Wang who are hoping that online content even has a future, and that it may be profitable.