Penny Arcade Shooting For A Crowdfunded Ad-Free Website

from the working-for-the-readers dept

Wed, Jul 11th 2012 12:51pm — Zachary Knight

Ever since the internet became a thing, websites have funded their operations primarily through advertising placed around the content they publish. Unfortunately, this business model is not particularly liked among those browsing the web. It's not just the web surfers who hate this way of doing business either. Many website operators merely tolerate advertising as a necessary evil, something that must be done in order to continue publishing the things people love. So, is it even possible to operate a popular website without running ads alongside the content?

Enter Penny Arcade, home to one of the most popular web comics on the entire internet. Early in its life, it operated solely on the donations of its readers. As it grew, it transitioned to a more traditional ad-based model. Now, the creators want to return to that idyllic era of a user funded site via Kickstarter. And they're doing it with a hilarious video, showing off their personality (which is always a good way to connect with fans). More seriously, they talk about why they are considering this form of funding when advertising is the norm:

Would scouring ads from Penny Arcade, with everything that entails, be something you'd be willing to reach into your pocket for? The more we considered it, the more we agreed it might just be. Not only would you no longer have to look at advertising when browsing Penny Arcade, but not having ads would create a chain reaction that would lead to a bunch of other interesting stuff. Without the almighty "pageview" to consider, why not populate the RSS with full comics and posts? Why not enable and even encourage apps, first and third party, for people to read it however they damn well please?

Basically, it frees them up to do a lot of things that advertising has hindered in the past. Think about this. Currently, they believe they cannot offer full comics or articles in their RSS feeds because doing so cuts into ad revenue. They cannot allow the use of 3rd party comic readers because doing so may eat into ad revenue. They cannot offer their fans the experience they deserve because they fear that doing so eats into ad revenue. But if ad revenue is no longer a consideration, all these features (and more) are back on the table. If this Kickstarter succeeds, they will no longer need to worry about making advertisers happy and can focus on making their fans happy.

The campaign is not without its critics, though. In fact, there are already several arguments against what Penny Arcade is doing here. The first argument is the idea that the Penny Arcade crew doesn't really need the money because they are already successful. We have seen this argument made before. But just like that situation, crowdfunding is not just about raising money: it's a way to connect with your fans and let them get invested in you and your work.

Another common argument is that this Kickstarter campaign violates Kickstarter's own rules. Specifically, critics claim that it violates the rules against using Kickstarter to fund ongoing projects, or projects without an end. This might seem like a good argument against it, but if it truly did violate Kickstarter's guidelines, it wouldn't have been approved. Additionally, Penny Arcade is producing a product with these funds. They are producing a year's worth of content that would not have been created without it. So, there is a product goal here.

Something else that isn't quite a complaint about the Kickstarter campaign but more of a sustainability question is that of non-paying readers. This campaign is not just a benefit for backers. All changes made to the site and its operations will be available to all readers. Some claim that because of this free-rider problem, the ability operate under this model is not sustainable in the long run. However, we have seen many areas where this is not the case. On Twitter, Gabe compared this campaign to that of NPR fund-raising drives. We know that the vast majority of public radio listeners do not pay at pledge time, but the stations are still able to raise the majority of their funds from those who do. Another great example comes from free-to-play video games, in which the majority of players will never spend money. Many of these games are still able to make a profit operating this way.

Regardless of the complaints, this is a really bold move for any major brand to make. If they succeed in raising all the money needed to run ad-free for a full year, we will be able to return in a year's time and gauge its success. If they don't succeed, then it will be business as usual and we will have to watch for further funding experiments. Hopefully, we will see the former and that success will spark a new wave of advertising-free content publishing.

At the very least, this is a reminder that we're seeing new business models pop up all the time. Some people claim that advertising is "the only" business model online, but clearly that's not true. That doesn't mean that this or any particular Kickstarter campaign will always succeed -- but that's true of any business model. What Kickstarter allows, however, is the rapid prototyping of a business model like this, and that's really disruptive.

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Filed Under: advertising, crowdfunding, membership drive, web comics
Companies: kickstarter, penny arcade

29 Comments

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Jacob Blaustein, 11 Jul 2012 @ 1:01pm

While this is big and looks more than likely to succeed, please talk about OUYA next.
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Lozine, 11 Jul 2012 @ 1:17pm

It's probably going to succeed, but ads are the only way people can help out a site who cannot afford to pay.
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Anonymous Coward, 11 Jul 2012 @ 1:22pm

Re:
is this the gaming droid you've been looking for?

More at 11
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Anonymous Coward, 11 Jul 2012 @ 1:36pm

Re:
"It's probably going to succeed, but ads are the only way people can help out a site who cannot afford to pay."

Unless there is major demand, which a site like kickstarter conviniently offers on the bases of whether the funding target was reached

Theres no harm in trying, two birds with one stone, and none of the negatives.

Although a company would truly have to provide what they promised to the best of their ability, otherwise good luck with the next kickstarter

Giving away (or major discount)a the product to the first ?few 100 who sign up first, regardles the amount of money contributed is another way to go, like that you get a quick startup on kickstarter, someone who actually wants your product and has a vested interest in spreading the word...........the snowball effect
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Logo, 11 Jul 2012 @ 1:39pm

PA is the only site where I find the ads to always be relative to me and interesting. I have actually clicked on a few ads I've seen on PA before because they're games that interest me.

It's amusing that the one place I like the ads is trying to get rid of them.
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Anonymous Coward, 11 Jul 2012 @ 1:41pm

That remark makes a lot of sense!
Not.

It's probably going to succeed, but ads are the only way people can help out a site

Is logic not your thing, or is the piss-poor English grammar the problem?
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Anonymous Coward, 11 Jul 2012 @ 1:41pm

Re: Re:
Thinking on that some more, no, better to have a set amount on a donation before you recieve a free or discounted product, otherwise opportunistic scoundrels will wise up and be on the lookout for free stuff.......and some probably wont give two shits about the product while those that do are beaten by the early opportunistic bird

But, not too high
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Anonymous Coward, 11 Jul 2012 @ 1:43pm

Re: Re: Re:
Another good thing about kickstarter, its not a loan that you have to recouparate in order to pay back, pure profit from the get go
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Anonymous Coward, 11 Jul 2012 @ 1:46pm

Re:
Agreed

Will definatly be looking out for how OUYA works out
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Anonymous Coward, 11 Jul 2012 @ 1:49pm

Re: Re:
^^^^^
Mostly curiosity then to own the product

Will this open the floodgates, if the product proves capable? I hope they do a good job
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Anonymous Coward, 11 Jul 2012 @ 1:51pm

Re:
I like MA better, personally :)
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Patrick (profile), 11 Jul 2012 @ 1:55pm

I feel the same way
Mike and Jerry have a stated policy of only allowing ads on their site for games/products that they enjoy and would recommend. I have actually discovered games through their ads that I would have missed. I hope they find a way to replace that "feature" if this Kickstarter succeeds.
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E. Zachary Knight (profile), 11 Jul 2012 @ 1:58pm

Re: I feel the same way
I believe they will still plug games through their comics and blog posts.
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E. Zachary Knight (profile), 11 Jul 2012 @ 1:59pm

Re:
Working on it. We weren't expecting it to explode in popularity that fast.
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mudlock (profile), 11 Jul 2012 @ 2:04pm

Ads in RSS
What's stopping them from putting ads in the RSS?

I follow plenty of comics that pull the full comic AND ads in the RSS feed, and I've never understood what it is that stops the others from doing it.
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Anonymous Coward, 11 Jul 2012 @ 2:13pm

I don't think this is to risky at all.
Look Google did it(in their own kind of way) and brought in more eyeballs, which meant more people getting their ads, more people signing up for adsense, more people being part of the "Google Ecosystem".

Penny Arcade have an opportunity here to create the "Penny Arcade Ecosystem", instead of trying to attract advertisers, they should be focusing in attracting people, because people gives you the leverage to negotiate with the advertisers.

Penny Arcade can have paid subscriptions where those people will never see a banner, but won't be immune to product placement, they can create a store front for others, so when they are selling their stuff you get a cut and they get ads(ok I know I am cruel), they can create tools for others to share Penny Arcade stuff easily, this is where the old media sucks they don't understand the concept of "ecosystem", they don't understand how all connects to bring in the money.

Don't get rid of the ads, don't do only ads, get subscriptions, make VIP chatroom for others, create tools that others can use, and keep them coming back to your place.

I don't think there is a "single business model" for the 21th century, there are several income streams that are possible.
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Anonymous Coward, 11 Jul 2012 @ 2:17pm

Re: Re:
When you say "we"????? :)
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E. Zachary Knight (profile), 11 Jul 2012 @ 2:25pm

Re: Re: Re:
The Techdirt crew of course.
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Chosen Reject (profile), 11 Jul 2012 @ 3:09pm

In before paywall bob
I find this fascinating specifically because of the freeloader issue. Every good/service for sale has "freeloaders" in a sense. That is, some people who are willing to pay more for a good get it for less because most people aren't as willing. These project gets PA closer to charging the correct amount per person. People willing to pay a lot get it, people not willing to pay a lot can either pay the $1 pledge or none at all. It's not so much that people can now freeload from PA (many probably already were with adblockers), it's that PA can now get the maximum revenue each reader is willing to give.

It may be that the getting the max per reader is less than advertising, it may be that it the max per reader is greater than advertising revenues. This is a cool experiment and makes it different than a simple paywall.
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Androgynous Cowherd, 11 Jul 2012 @ 3:59pm

Price discrimination
Some claim that because of this free-rider problem

What some call a "free-rider problem" others would call "an opportunity for nearly perfect price discrimination" -- apparently including Chosen Reject, though he didn't use quite those exact words.
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Alana (profile), 11 Jul 2012 @ 4:27pm

Re: Re: Re: Re:
Hereafter known as the T-Crew.
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Anonymous Coward, 11 Jul 2012 @ 6:42pm

Re: Re: Re:
If they make good, it's only a matter of time before someone conquers the logistics of a modular, forwards compatable, standardized, console shell system that anyone can produce "slot in/slot out" hardware modules for, and anyone can design games and applications for, and easily gets crowd sourced funding to do for consumers (and the environment) what none of the current console industry would dream of doing.
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Liz (profile), 11 Jul 2012 @ 8:44pm

Re: Re: Re: Re:
It is an interesting concept. And I haven't seen a $99 gaming set since the NES. I just hope the OUYA doesn't turn out to be another Phantom console.
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Joel, 11 Jul 2012 @ 8:57pm

Re:
I agree, it is funny. In the past the PA guys have talked about how they are pretty picky about ads, only accepting them for things they already play and would recommend (i.e. Dungeons and Dragons products, WOW, etc) or for upcoming things that they would like to play when they are released.

Which as you noted, ends up with ads that do a pretty good job at targeting their users. (A far better job than the ads on most websites IMHO)

I remember back before they had ads, and the big uproar about adding them. Which I guess shows I'm old ;-)
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IronM@sk, 11 Jul 2012 @ 10:11pm

Hilarious?
I'd hardly call that video "hilarious." In fact, it wasn't even interesting. I only watched it all the way through on Zac's recommendation. Now I just want 6 minutes of my life back.
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the cleptoid, 12 Jul 2012 @ 4:27am

problem is if people think the video is funny then humour takes a dive at their place.

success because if they are this dull, all the time, then their possible audience is massive.
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Niall (profile), 12 Jul 2012 @ 5:02am

Re:
You have to remember that ads are built on the idea that only some people pay (attention to) them. Then there are all the people who adblock. So there are already 'freeloaders' that are being 'paid for' by others. That's the way business works. In the end, someone pays for anything available, and the chances are you yourself pay something for something, somewhere. But you don't have to micropay everything you do/look at.
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Niall (profile), 12 Jul 2012 @ 5:52am

Re: Re: I feel the same way
Yes, but you might miss those. It's a good point.
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Jeffrey Nonken (profile), 12 Jul 2012 @ 1:20pm

I regularly read a number of webcomics (um, about 52 in my active list right now... I've made a frames-based web page to keep track of them all).

Some of them are bigger and more established than others. The more established ones tend to have payment systems and ads and so on already set up and running. But occasionally one of the smaller ones will ask for money. Usually very apologetically, usually for anything from help with this month's rent to a new Wacom tablet to tuition for art classes. Always in exchange for something, even if it's just an extra day's comic for every so many monetary units raised. And every time I've noticed the result has been more commissions than she can do in a year (took her three months to get to mine) or a more powerful model computer than they'd dreamed of getting. Or enough extra to pay his mum's rent as well as his own, in full. I don't remember ever seeing the World Disorder Fund anything less than �10 over his asking amount. All followed by total flabbergast and profuse thanks.

I think people are inherently generous when they can be, and when they have reason to be.

This effort may or may not work; too many factors to be sure. But I think it has a very good chance.
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