Making Money with WordPress MU – Part Deux

Making Money with WordPress MU – Part Deux

Although I thoroughly enjoyed reading James’ article ‘The Edublogs Story‘ about profitizing WPMU, I felt it was, to quote James, “one of those ‘James comes out on top at the end’ posts” :) on a topic that could easily be expanded on in a lot more detail, coverage, discussion and left me feeling compelled to dive in to the topic of business/revenue models for the internet; specifically with WPMU.

First I would like to address what I found to be the most fascinating part of the whole article. That is, the comments left between Matt and James over the topic of open sourcing plugins which use core WordPress functions.

Matt: “insofar as the code links or uses any core WP functions it should also be GPL licensed.”
James: “Next post is about whether it’s OK to sell plugins.”

While I am going to initially sidestep this issue and touch on it later in the article, I would like to point out that in the end, Matt needs James and James needs Matt.  It’s a strange lovefest ;)

Why?

  1. Running a WPMU costs money. Maybe only $20 a month, maybe $800 a month, maybe $10k a month (dear god).
  2. With that being said, there are only two reasons why someone would start a WPMU community; To make money, or because they are amazingly generous (I am assuming you do not fall in to the later).
  3. Therefore, in order for the WPMU open source platform to succeed, Matt needs entrepreneurs like James (and you) to be able to generate money from their investment and in return, contributing back code, time, opinions, plugins, etc. to the WPMU platform/community at large. These are the people that actually drive the project and make WordPress bigger. Would a George Mason or a Cornell have a WordPress blog set up if it weren’t for people like James creating these unique business opportunities?

If no one is making money, then only a few of the generous people out there, are truly going to adopt it and use it.

So now the million dollar question is: How can I make a living using WPMU?

In business, there are ONLY 2 things you can sell.

1. A product.

A product is something tangible. It is made, produced, and sold. A product is a one time sale. A product has versions, serial numbers, warranties, recalls, upgrades, features.

2. A service.

A service is something performed. A service is non-tangible; you can’t carry a service around in a backpack. A service takes time, skill, and is custom or specific to certain needs. You usually pay on a regular basis for a service.

In the real world, these two concepts are very easily understood.  I buy a car (product) and then need an oil change (service). I buy pool supplies (product) and then need someone to clean it (service).  I buy an iPhone (product) and then sign up with AT&T (service).

On the internet, these two concepts get somewhat blurred.  For instance, a hosting company.  Product or Service?  Well what are you paying for?  The hosting company buys hardware and software (products) and then you rent those products and get on going service and support (service).  Therefore, this a service provided by the hosting company. How about Advertising?  Advertising is selling a tangible good, namely real estate.  So it becomes a product.  You are selling a spot on your site.  There is no service that comes along with that.

So in your business plan, (you do have a business plan right? There is a saying that goes “If you fail to plan, you plan to fail.” This might be your first problem), what are you attempting to sell?  A product or a service?

Now back to our original question; How can I make a living using WPMU?

WPMU is NOT a product, it is a service. Let me repeat that again because this is a very, very valuable point/lesson. WPMU IS NOT A PRODUCT, IT IS A SERVICE. Services cost money and are usually paid for on a regular basis, so why in hell are you giving it away for free??? (that should be my next article). Ever since Google, MySpace, YouTube, WordPress, etc. struck it rich, thousands of people now think that attempting to get millions of users on their service FOR FREE, will in turn be their lottery ticket.  Albert Einstein once said “Lottery is a tax for people bad at math.” If you are attempting to do this, the odds are NOT in your favor and my guess is that you will fail miserably, horribly, and every other synonym you can think of!

Why will you fail?

  1. Well for starters, what is actually your plan to make money? (back to a good business plan) Are you planning on:
    1. Receiving Donations – I think people are generally nice and will donate once.  But monthly donations?  Do you offer church blogs?
    2. Receiving Sponsorship – Also hard because sponsors sponsor in order to sell something. This is the advertising model taken to the extreme.
    3. Advertising – Business is a numbers game.  Every good CEO knows in the back of their head exactly how many clicks, views, leads, cold calls, etc. it takes to convert one sale.  If you are in the business of clicks/views, it takes a lot.  How many users do you think you need to build up enough views where it is going to be compelling enough for a company to want to pay you for your real estate? This is obviously the end game for many companies.  This is obviously successful for many websites.  In my humble opinion, you are playing the lottery.  I think you would be more effective creating a really compelling website which gets 100k’s views a day and advertising there rather than trying to sell a community of users. I won’t get in to that discussion, but think about it…
  2. Secondly, if you decide to go for the advertising model, I believe you are not properly estimating (back to a good business plan) what it costs to run a network with thousands, let alone millions of users.  Scaling a system like that is very hard, time consuming, and expensive.  Do you really want to get in to this type of business model?
  3. Thirdly, using WPMU, your service will always be second best.  You will never be able to outpace WordPress.com development, nor should you want to.  Therefore, you will never be able to have that new, fresh, news worthy, release.  You will always ride the waves of WordPress.  And the early adaptors to new technology will always want the free cutting edge WordPress version, not yours.
  4. Education and customer service on how to use the product.  Sure, if your service is free, then you really don’t have to actually ‘service’ the product, and sure, because there is a large community using WordPress, there is a TON of free information on the internet for your users to use, but the majority of internet going individuals, all of whom you want hosting with you, will not read the free information and not want to do the work that goes in to learning how to use the product (that is why they are paying you isn’t it?).  Furthermore who is your target audience or target market? (back to a good business plan).  Are you really attempting to market to the individuals that ARE savvy enough to learn how to use the product on their own? Does that make much sense? Won’t those users self host, or use WP.com?

So how can I succeed?

  1. Charge a small monthly amount for your service.  Hosting is not free, nor is your time running the service.  I find that the majority of people in this world do not mind paying $20 a month for help in upkeep and maintenance on their website.  And I would much rather run a community of 400 people paying me $20 a month, than 4000 people paying me nothing.  Let’s do the math.  Less aggravation with controlling and maintaining the platform and making $8k a month, or more aggravation, multiple databases, multiples upload directories, etc. and making very little, hoping someday to make it big.
  2. Because you are using the same exact hosting platform as many others including the original developers, WordPress.com, you need to have an added value service. An Added Value Service is a service that you add on to an already developed or stable service. In other words, what can you offer to your clients that no one else can?

That is it.  It’s that simple.  The difficult part is 1. Running WPMU successfully and 2. Figuring out what your added value service will be.

Let’s go over some added value services you could offer:

  1. Education.  The beauty of education is that is NEVER outdated.  Clients will always need to know how to use the newest web 2.0 service/product.How about doing a daily video tutorial (using Jing for free) on things your users can do with your platform?
    It’s easy enough to turn one of your WPMU blogs to a private setting so that only your users can view the blog.  Publish a video article daily.
    How about doing webinars?  Offer weekly webinars where your users can listen to you talk for an hour about the latest technologies?
  2. Support. I don’t believe forums are an answer to many, many people who have now found their way to blogging.  My dad now blogs, he has no clue how to find forums, navigate forums, read forums, diagnose problems, figure out how to do things.  But he does know how to send a quick email asking “What are tags and how should I use them?” How about taking the messaging system built in Buddypress and set up a backend tech support ticketing system?  I am sure that would be an added value that someone would be more than willing to spend some money monthly to use.
  3. API Integration.  Why not offer some services that other WPMU hots do not?  How about taking the prologue theme and developing a twitter like blog that actually connects and posts to twitter through their API?  Why not use LinkedIn API and Buddypress to create a business profile blogging system?

These are all fairly easy things to do to create a Value Added Service making it worth a $20 a month investment for someone to use your service.

Now I know some of your are saying to yourself, look at edublogs success.  They didn’t fail…

Well first of all, James and Andrew are very talented individuals. And have done one hell of a job managing and maintaining edublogs.  This is not easy to do.  Secondly, in my opinion, they run a bait and switch operation and I say that NOT in a bad way!  They suck you in with the free education blogs concept (also a great niche for blogging), understanding that many of their users are not going to know how to customize/run it and will need to hire them for their project.  If James, Andrew and gang were not getting paid to set up custom WPMU installs for clients, I don’t believe that edublogs, as a free service would have survived. (I could be wrong.)  Thirdly, James and Andrew sell products on the side, namely in the form of plugins which is a beautiful segway right back to where I started :)

Selling your work as a product.  This leads us away from the original topic of making a career out of WPMU, but a interesting topic nonetheless.

Let’s first start with Themes.  Now the way my partner and I have been able to stay in business with WPMU is by selling education (through webinars) and custom themes.  So a client will pay us $600 – $700 for a custom designed theme.  I believe this to be a common practice throughout the community.  Yet each theme uses “core WP functions.”  If you were to design a custom theme for a client, should you then open source that design?  What do you think your client would say if they saw their design open sourced for the community to use?  I have also seen many “custom” WPMU set ups.  That is how the owner has been able to distinguish themselves from above the crowd.  These custom setups usually are created using custom plugins.  Custom plugins that use “core WP functions” and are not open sourced.  So should you be able to sell plugins?  I can’t wait for James’ article! What do you think?