"The big news as far as gaming websites are concerned is the dissolution of the CNET Gamecenter Alliance, which is hardly a secret anymore. How does this affect Quarter to Three? Well, it cuts off our tiny revenue stream at the end of January. While it's true that we've just been getting started with this site and weren't really making much from it, it's easy to live with that if we can look ahead and see a brighter future. Right now things don't look so great.

"So what does that mean for our future? We really don't know. We both really enjoy running this site, but it takes a lot of time and it really has to be more than a hobby for us to continue it, at least as we currently do.

"So we're fishing around right now to see what opportunities are out there. Ideally we'd prefer an arrangement similar to the one we had, one that paid us a set CPM based on our traffic. That would allow us to focus on growing the site by doing what we know how to do best � create new and interesting content. We may look into selling our own ads, but this presents new problems outside the obvious difficulty everyone is having in selling ads now.

"And of course our position isn't unique. There are a lot of sites out there now looking for ways to be profitable � not because anyone at this point is convinced that websites are a way to easy wealth, but simply because they love running a site and they just want to get some kind of return from their effort. We hope that the web scene doesn't devolve into two kinds of websites: the huge sites like Gamespot and Gamecenter, and fan sites. We love fan sites, but we hope that there's room for small, professional sites too.

"So if anyone has any ideas, post them here."

Yikes! I just wanted to say that I really hope you guys don't shut things down. I really like the concept of QT3, and want to see it keep going. Best of luck!

Hope you guys make out ok. I really like the site you have going. Give me a shout if things turn bleak and hosting becomes an issue. I'd hate to see the site go away.

JT
Ianstorm.com
http://www.ianstorm.com/

Thanks guys. We're ok on the hosting for a couple of months. We paid for three months in advance.

We're better off than the large sites in some ways. There's no way that a network like Stomped will be able to sell 100% of their page views like they were doing with CNET. We're basically seeing the old CPM business model die, and nothing has replaced it yet.

I plead the fifth.

Everyone loves you guys (in a non-threatening, brotherly way) though, so I think you'll see it through.

wumpus http://www.gamebasement.com

I have heard a little about the breakup, but not the reasons why. Is this effecting the normal operation of GameCenter? And, out of curiosity, will Mark still be doing his weekly Game Spin there?

Zier

CNET dropped the Alliance to cut costs and to focus on selling ads for thier own properties, CNET and ZDNet.

The CPMs are depressed right now, and CNET was probably giving a lot of affliates a CPM that was higher than the actual CPM they were realizing when you consider that they probably didn't sell out their ad inventory. In other words, if the ad rate they were selling at was $10/CPM but they were only selling 25% of their ad space, they were getting a real CPM of $2.50.

You have to look at the banner ads being displayed. A lot of them are "house" ads, meaning they're promoting CNET or something that CNET has an interest in but doesn't get paid money for advertising. All the Neoplanet ads are house ads, for example. If you go to a UGO site, it's worse. They seem to display house ads most of the time.

CNET took on an enormous number of pageviews when they started the Affliate network. They agreed to pay the affliates for 100% of their pageviews at rates of $4-$5/CPM -- we got less because we're a new site. At the time, CPM ad sells were still going between $10-20 for big sites like CNET and the dot com collapse hadn't really happened yet, so there was still a lot of VC being spent by dot coms to advertise themselves. Life was good for websites.

As the ad money started to dry up, networks like IGN and UGO started to slash rates to attract business. This eventually forced everyone's rates down. Advertisers also slowly began realizing that no one pays attention to ad banners. So you really got a disasterous situation going -- too many sites competing for fewer and fewer ad dollars driving ad rates way down.

So the Gamefan network went belly-up. Then IGN laid off a bunch of people and told a lot of their network sites that they would no longer pay them. UGO discontinued free hosting. That gets us to here. CNET dissolves their network, UGO cuts CPMs by half, and no one's really happy anymore.

As to my Game Spin column, I think it's safe. After all, CNET just trimmed their budget by hundreds of thousands of dollars per month.

Sorry if this was longwinded.

I know that this may be out of your league, but the only thing i can think of is branded mechandise - mousepads, keyrings and the like.

And to be honest, i don't think that would work either. I don't buy stuff (the rate of the .au dollar doesn't help), and wouldn't know wether it's even profitable.

About the only thing we could sell on a continuing basis would be the games themselves. We can put a Compuexpert ad up like Rich Laporte has at Gone Gold. We'd get 10% of any sale and they generally have good prices and great specials.

But that wouldn't amount to much. Advertising revenue is really the only realistic revenue stream we can hope to tap into. We just need to figure out how to do that. Or figure out that we can't do that.

If only we were all independently wealthy.

It'll be interesting to see how the various sites weather this storm, and what sort of web is left when it's all over.

Sucks to be stuck out in the rain though. Hope QT3 can work something out.

http://www.penny-arcade.com/view.php3?date=2001-01-05

Heh. Heheheheheh. Hehehheheheheheh.

I don't mean to be brutal, but the VCs were going to wise up sooner or later. The current advertising model is horribly broken. Expect to see a lot more page-replacement ads (like TV commercials) and (shudder) pop-ups. Ironically the porn industry was way ahead of us on this front. Sad but true.

The laws of supply and demand come to mind, too. Anyone can run a gaming web site. What if every consumer was a producer? Traditional economic systems rely on a small number of high quality products being produced for consumption by a large audience. If everyone in the audience had the means to create a similar product-- well, that's what's happening right now.

wumpus http://www.gamebasement.com

Yeah, the ad model is broken because no one pays attention to them. I think advertising on the web itself is still a good concept, although it's hard to say at this point what a good measurement is (views? uniques? click-throughs?) and what a fair rate is.

Nine billion was spent online this past holiday season. That's going to continue to grow.

---

Quote:

Nine billion was spent online this past holiday season. That's going to continue to grow.

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"And so will the number of websites vying for that money. There's almost no barrier to entry, and a nine-billion dollar pie divided nine-billion ways isn't exactly appetizing."

Yeah, that's some of the problem, but I still think smaller, but better run sites should be able to attract more ad money than site of a similar size that aren't well run.

Of course there are barriers to entry. Anyone can start a game site, but not everyone has the wit or insight or contacts to make viewing it a worthwhile experience. That's why I'd hate to see this site go. I think you have a good basic model here. Everything is pretty short and sweet, with a lot of dry yet still easily-grasped humor thrown in. You are both good and funny writers. And there are alternatives for revenue. Some are experimental, and some may not be what you thought, but they are there. Banner ads were always doomed. I'm surprised it took so long for that to come clear, actually. I also personally think that CNET blew it by dissolving the alliance. They had a huge network built up out there that they could have used to promote themselves. Rather than use that massive resource as a testing bed for new advertising models, they just dhut it down. Now if they decide to test, they will have to spend lots more money rebuilding what they have destroyed. Clearly, the CNET people have never played any strategy games!

Wumpus wrote...

"I don't mean to be brutal, but the VCs were going to wise up sooner or later. The current advertising model is horribly broken. Expect to see a lot more page-replacement ads (like TV commercials) and (shudder) pop-ups. Ironically the porn industry was way ahead of us on this front. Sad but true."

The Economist has said for years that the porn industry was the most technically and comercially advanced segment of web business...

Agreed on the advertising model, I had always wondered how thousands of websites (most of which are junk) could possibly keep themselves financed with ads that nobody ever clicked on. It's a bizarre part of the whole dot.com vapour business.

I don't feel any pity for most of the junk sites out there that go out of business. They were just clogging up the Internet with their stolen articles, fabricated facts, and piss-poor writing. It's just too bad that a really good site like Quarter to Three is getting caught in the recession.

Since both of you (Tom & Mark) are writing for other sites/mags and Q23 has fairly low bandwidth & storage needs, maybe you could just keep running the site (with fewer updates) on someone's private account until you find another source of revenue? Or is Q23 alredy too big for that? Would be a shame to see it go down.

If either of you don't mind, how big exactly is quartertothree (in terms of bandwidth/disk space), and how fast has it grown?

I have no idea what our bandwidth and diskspace is, but our hosting costs are minimal -- something like $30 a month. We don't host patches or demos, so there's really nothing to download from our site besides screenshots.

The only real consideration that Tom and I have with running the site is the time it takes. It will be hard to work 8 hours a day writing stuff for other publications and then sit down to work on our site.

And Chris, most of the junk sites won't go out of business, because most of them weren't making money anyway. A lot will just continue to sit there with minimal updates. There are still plenty of places that will give you free hosting in return for putting up their banner ads.

Right now the model seems to favor big networks and hobbyists, though I have to think that the big networks are going to feel some hurt too. AOL probably has the best model. They get a fee up front, they know everything about their customers, and they can collect fees from funneling their customers to online shopping opportunities, or even take a share of the revenue generated by those online sales.

Q23 is one of the first browser windows to be opened and one of the last to be closed. (when i fininsh with Q23 its prolly past my bed time) But if my luck in the past few months is any hint both Mark and Tom will be hospitalized shorlty... nevermind the econmical problems.

Anyway, 2 of the things that keep PC's a cut above consoles is the ability to be expanded (often by players) and the online communites that spring up around games.
I was thinking that if someone as powerful as Cnet has probs selling ads then the guys who make mods and maps (or the ones hosting them) will too. This could mean alot less replayablity and smaller communites for our games. Which i suppose can be good and bad. They both mean that we might not get the same experiance with a games as we would of had if they came out soonner but that translates into gamers geting tired of a game quicker and buying more new ones; higer sales, more profits for developers.

What do you think?

"But if my luck in the past few months is any hint both Mark and Tom will be hospitalized shorlty..."

Yeah, but we can still update Qt3 from a hospital bed. :)

"I was thinking that if someone as powerful as Cnet has probs selling ads then the guys who make mods and maps (or the ones hosting them) will too."

I wouldn't worry about this so much, Shiningone. I think almost all mod and map makers do it for the love of the game rather than the money. AFAIK, very few modmakers go on to make money from their work. For everyone like Counter-Strike's Minh Le, there are hundreds of guys who will never see a penny.

As long as companies keep putting out games with open architecture, there will be fans willing to take advantage of it. As id has demonstrated and Valve has driven home, this makes good business sense. It fosters a loyal user base and gives a game retail legs it wouldn't otherwise have.

-Tom