10

What is the source of income for a website like SO?

I read this blog entry.

Now I have this question. How do websites earn money without ads. I see SO doesnot run more ads. But how do they earn that much.

Is ads the only source of income for a website or is there any other source of income?

4
  • 2
    If I recall correctly one of the advantages to getting reputation is to get rid of ads. This means that all those finding answers here are those who actually see ads.
    – user1249
    Mar 15, 2011 at 7:11
  • 2
    I know this has been moved from programmers, but its still in the wrong place. There are loads of questions like this on webmasters (webmasters.stackexchange.com); and if not there as it questions the whole SO ethos then meta SO (meta.stackoverflow.com) is a better place. Surely?
    – amelvin
    Mar 15, 2011 at 12:02
  • 1
    @amelvin All meta sites get attention from SE employees (and Jeff actually answered already). There's not much benefit in moving this to Meta.SO.
    – Adam Lear StaffMod
    Mar 15, 2011 at 12:54
  • is there some sort of bug here. I'm shown as being the "asker" of this question when I definitely didn't write this. i provided one of the answers.
    – Sameer Parwani
    Mar 31, 2011 at 2:05

7 Answers 7

Reset to default
10

See:

What is Stack Overflow's business model?

4

SO actually has ads. You get to see less of them when you get more reputation.

But, since many readers come form Google or don't have many reputation, the income is guaranteed to come nevertheless.

4

SO probably doesn't make money - yet - it certainly doesn't cover the staff costs or Joel wouldn't need to sell bits of it to investors.

It does run some ads on SO and the career site did bring in some money - but a company is valued on it's future earnings. Imagine a day in the future where you go to SE to find the answer to any question in the same way you go to google to search for a web page - how much would that visitor traffic be worth!

SO has a number of advantages over most 'if you build it they will come' websites. It has minimal server costs compared to wiki/youtube and low staff costs since content is user generated. Plus a high level and very well defined customer set - if you want to advertise cookware then cooking.so or bikes on bicycles.so is a lot better targeted (read more appealing to advertisers equals higher rates) than a general pop-up ad.

And although visitor numbers to Facebook look impressive - the average stackoverflow users are likely to have bigger credit cards than the 12year old girls on social network site of the day (tm)

18
  • 10
    It's not worth anything unless you have a way to convert it to income.
    – Robert Harvey
    Mar 15, 2011 at 6:09
  • 4
    That is a terribly mercenary attitude. I bet your mother would disagree that financial reward is the only measure of worth. (I bet she didn't raise you for the money ...)
    – Stephen C
    Mar 15, 2011 at 6:17
  • 2
    @Stephen: That is not the supposition here, nor does it address the question asked.
    – Robert Harvey
    Mar 15, 2011 at 6:18
  • 5
    You are saying that a site like SO does not have value / worth if it cannot be converted into income. I'm saying that is incorrect. Websites don't need to earn an income to be worthwhile ... or to survive. Some high profile sites are run solely on donations, and donated effort.
    – Stephen C
    Mar 15, 2011 at 6:50
  • I agree with Stephen. Wikipedia, anyone?
    – Fanatic23
    Mar 15, 2011 at 7:56
  • 1
    @Robert / @Stephen it can still have commercial value if it doesn't make money YET - Boeing is still worth money the day before it sells the first 7E7.
    – Martin Beckett
    Mar 15, 2011 at 17:22
  • @Robert You don't have to "have a way" to convert it to income. All it takes for it to be worth something is for someone to think some way exists. And that worth may turn into a purchase if a buyer thinks they know what that way is -- regardless of whether it works or not.
    – Nicole
    Mar 16, 2011 at 20:58
  • @Renesis: This is all very nice, but the question is about income.
    – Robert Harvey
    Mar 16, 2011 at 20:59
  • @Robert - er - I may have misunderstood then, but I was responding to your comment about "worth".
    – Nicole
    Mar 16, 2011 at 21:01
  • @Renesis: "Worth" is the word Martin used in his answer.
    – Robert Harvey
    Mar 16, 2011 at 21:12
  • @Robert Harvey - The answer talks about the "worth" of the web traffic, and it is hard to think of web traffic as having (for instance) benefit to the community. On the other hand you talk about the "worth" of a website ... and that's an entirely different kettle of fish! Now, I would accept that you meant to say "economic worth" or "financial worth". But you have yet to clarify your comment to this effect. The question and answer may be about income, but your comment is plainly not. (At least ... plainly to some people.)
    – Stephen C
    Mar 17, 2011 at 0:23
  • @Robert Harvey - And the fact that you haven't clarified your comment suggests to me that maybe you don't think that non-economic worth should be a consideration. (And I am including ostensibly commercial sites like SO here ...)
    – Stephen C
    Mar 17, 2011 at 0:28
  • 1
    @Stephen: To clarify my comment, I am talking about income.
    – Robert Harvey
    Mar 17, 2011 at 2:50
  • @Robert - in other words - "It's not worth any income unless you have a way to convert it to income."? I assumed a different meaning since that statement seems self-evident.
    – Nicole
    Mar 17, 2011 at 16:31
  • @Renesis: It's not evident in Martin's answer that he addresses the issue of earning income, which is what the question is actually about. Why are we still confused about this?
    – Robert Harvey
    Mar 17, 2011 at 16:35
3

Their prime goal is to build a community of experts and enthusiasts around certain subjects. Third parties will then pay for access to the community of experts and enthusiasts. For example, the main Stack Overflow site now has a careers/jobs section that Stack Overflow profits from.

The founder of Stack Overflow talks about the revenue model around the 18 minute mark of the second video on this page: http://techcrunch.com/2011/03/13/founder-stories-spolsky-startup/

3

I can think of a number of models:

  • Income from general advertisements.

  • Earn income as a broker for other service providers; e.g. a paid job ads or work wanted service.

  • Income from third parties as a "platform provider".

  • Income from software licensing.

  • Income from user subscriptions.

  • Income from user pay-per-view.

  • Income from user donations.

  • Site is cross-subsidised from some other activity.

  • Site is run solely on donated resources and effort; e.g. Groklaw is a good (and worthy) example.

And there are doubtless other variations, depending on exactly what the website does.

In the case of SO, I expect they are also (to some degree) living off money provided by investors ... though this will only be in the short term. The long term plan will be to turn a profit.

2

Jeff Atwood's "The Vast and Endless Sea" gives you a small glimpse at how the StackExchange makes money.

Pay us $129 a month (and up), and you too can create a hosted Q&A community on our engine -- for whatever topic you like!

4
  • 5
    That was StackExchange 1.0, which no longer exists.
    – Robert Harvey
    Mar 15, 2011 at 6:13
  • Whoops... then my bad.
    – shovonr
    Mar 15, 2011 at 6:19
  • That model was pretty limited. I think they are holding something with programmer's related communities. They are going to reach 2M users per day very soon on SO.
    – user2567
    Mar 15, 2011 at 6:58
  • @shovonr, I guess they found that that model didn't work. Probably because you need a critical mass of users before you want to pay.
    – user1249
    Mar 15, 2011 at 7:13
1

Completely aside from the ads or any form of income, consider this:

Things have value because people consider them valuable. Not because of income or assets, but because people's consideration

You invest $1,000,000 today in a website which is receiving 25 million visitors and valued $XX million based on some computation that this is what it is worth to be able to reach this many people.

One year from now, the website gets 50 million visitors. Valuation increases by 100%. Your shares are now worth $2,000,000, even if the site hasn't made a single cents of income.

As an institutional investor, if you are confident that valuation will increase as popularity increase (which is almost a given because money reflects the amount of attention something attracts), and that popularity is increasing on such a great trend, making a small investment worth a few million dollars is reasonably safe.

Another thing you might want to look into is the earning potential of recruitment ads. I remember Joël mentioning on his blog, back when he was blogging, that his job board (on the blog Joëlonsoftware, not the much larger one on SO) was bringing in over a million USD in less than a year and that the jobmarket website business was worth $2bn overall.

Building expert communities on every valuable subject under the sun, they are creating a potential worth which is literally mind-boggling. Fast forward a few years. Insane numbers of users debating in just about any subject under the sun. Start linking all this together. Users start connecting up on a number of different subjects, and progressively, you enter within the realm of social networking on a scale large enough to eat up Facebook.

The potential is huge.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .