Words    Words    Words

In response to our last business model post, Norgg asks an important question — why should an artist offer their own content for download on their lonely web page when they can be part of a much larger content distribution system like CDBaby (for musicians) or Lulu (for writers). This question is actually important not just with selling content online, but at some point in many of the income sources we outline in this paper.

In modern Internet business you have the opportunity to outsource many aspects of how you deliver content and products to your customers. Some solutions have become almost ubiquitous online — the number of people who accept Paypal for payments online probably far outnumbers the number who have their own credit card processor. While there are many legitimate concerns about Paypal and its ilk, it’s also an extremely convenient way to collect money. Beyond taking money for your products, you can even go so far as have others make those products for you — such as using Cafe Press to sell t-shirts, coffee mugs, and other merchandise.

At almost every stage of developing your business model — from selling advertising space to merchandising to creating a shopping cart system — it is important to examine your options and decide whether you want to outsource or “roll your own.” There are usually significant advantages and disadvantages to each approach. For example, if you had a webcomic and wanted to make t-shirts, you could purchase equipment to make the t-shirts yourself, pay a screen printer to do it, or use a service like Cafe Press. The first two require more time and money up front, which you might not have to spare. On the other hand, the former approaches allow you to exert more direct control over the quality and appearance of the product you sell.

Every time you’re giving up direct control of some aspect of your profit model, you’re probably also sharing a percentage of your profits. Paypal takes a percentage out of most transactions; the popular craft site, Etsy, charges a small fee each time you list an item for sale then takes a percentage of successful sales. At the same time, a site like Etsy gets many more visitors than almost any personal site could hope to achieve, and while that means more competition with other creators it also means more potential customers.

In many cases a hybrid approach is best. To return to the webcomic example used above, you might decide to use Cafe Press or a competing service at first to gauge interest in your t-shirts before deciding if you invest in the equipment to make them yourself. The independent music label Artificial Music Machine makes their artists’ albums available both for direct download from their website and from the popular iTunes music store. It should be noted their albums are cheaper when purchased directly and about twice as expensive on iTunes. We think this approach is a great one — it rewards fans for loyalty while simultaneously making the music available as widely as possible.

When doing your research, carefully examine the agreements you enter into with any of these services. Etsy, for example, has restrictions on selling items on more than one site — which could be a conflict with a roll your own shop. The nature of your content is important to consider as well — Paypal is notorious for shutting down the accounts of anyone who could be perceived as offering ‘adult’ materials.

We’ll revisit the question of whether to outsource or roll-your-own as it arises again in relation to future parts of this series. In our next part, we’ll examine another potential profit stream for your work.

Other posts:

The Artist Business Models series is based on a paper written by Reesa Brown and Kit O’Connell, with assistance from Steven Brust, Ken Brown, Deborah Ibarra, and many others. At the close of the series, the entire business model paper will be posted to Continuous Labs. The business model paper and blog posts are released under the Creative Commons Attribution Noncommercial 3.0 license.