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Community Building and User Generated Content Forum

The financial side of running a forum
I know, I know, it's about love not money

 7:03 pm on May 13, 2004 (gmt 0)

When you run the forum how do you pay the bills? Can anyone here offer some guidance of the costs associated with running a/their forum?

Bandwidth costs? Ever get burnt on bandwidth overuse charges? How do you deal with bandwidth usage issues?

Anyone ever do an opportunity cost analysis, the old 'the value of my time'? I know: Forget it if that is how I am thinking....

Anyone incur legal costs? For what? How much?

Anyone pay for software or installation? Regrets? Did you get what you paid for or is free just as good?

Does AdSense really pay the bills?

What are the other 'hidden costs'? Unanticipated costs?

Is there a turn around point?

What do you consider to be the return on your investment?

Yo! Brett! Care to weigh in?



 9:41 pm on May 13, 2004 (gmt 0)

After 5 long years it's only now that our online community is starting to make a profit.

The turning point for us arrived about a year ago when the technology and procedures for mini-payments arrived (not quite micro payments as we charge 2.50 a month for enhanced membership).

With the demographic of our members, credit card payments were never a realistic solution, but with the advent of premium rate text messages (SMS) and Premium Rate IVR calls we can now collect the charge using a mechanism most of our members are very familiar and confortable with.

We've spent quite a lot on software/hosting over the years (including a $2000 upgrade to our chat/IM software yesterday) so it's not been a cheap hobby.

Our current revenue streams include:
Enhanced Membership Fees
Banner Advertising (Fastclick)
Google Adsense

We're really hoping upgrading our chat platform (to include video chat) will add a fourth revenue stream to the list.

Rough Costs
$100/month hosting * 4 years
$900/month hosting * 1 year (I must have been mad that year).
$1000 1st purchase of chat software
$2000 upgrade of chat software
$1000 web design (in the early days, we do it in house now)
$50/month payment processing

We're beginning to look at using some of the traditional advertising methods soon which will probably be our largest single investment yet, I guess thats a different post though.

PS don't forget there's much much more to an online community than just forums.


 9:48 pm on May 13, 2004 (gmt 0)

<Delete> Was feeling lonely and uninformed, so posted lament, only to see that I was informed while typing my lament ;-).

Wow! Now that was responsive! Thanks for the thoughtful input!

Anyone else?


 10:47 pm on May 13, 2004 (gmt 0)

You got off cheap over there Widey. The biggest expense here, has been legal related. Take your bills and multiple times 10.

Bandwidth can be a KILLER expense if you become successful. You need to shop for the right host. It is probably the most important task you will perform to run a forum.


 10:53 pm on May 13, 2004 (gmt 0)

We're lucky in that Ireland isnt quite as litigious as the US.

It's something the country seems to be actively working on though.

I wouldn't be surprised to receive the first legal threats when we introduce the video chat.

Any tips?


 10:54 pm on May 13, 2004 (gmt 0)

<- moving to Ireland! lol


 11:02 pm on May 13, 2004 (gmt 0)

Legal? How so? Yahoo stock message boards see a lot of activity and zero censorship. If legal were really an issue, you'd think they shut down their message boards..


 11:03 pm on May 13, 2004 (gmt 0)

My guess would be your legal problems are inversely proportional to your budget.


 11:08 pm on May 13, 2004 (gmt 0)

I dunno. I've been on usenet for quite awhile (12-14 years) and I haven't seen much in the way of legal issues.


 11:17 pm on May 13, 2004 (gmt 0)

>>The biggest expense here, has been legal related.

Brett, are you willing to elaborate a little? (obviously not mentioning names or specifics).


 3:20 am on May 14, 2004 (gmt 0)

Anyone incur legal costs? For what? How much?

Yep. Errr..no. I was more or less sued...ended up being the 'webmaster/seo' for their website. Think 'average Joe' and add some money, say a million or so?

I just told the lawyers I'm just a stupid webmaster who is very good at getting top stuff in the SE's. That was practically the truth. They wanted to sue me...I told them I wasn't out to make money..which was the truth. They had me and I knew it. No need for more lawyers. I asked them what they wanted, they told me and I gave them an even better deal..and they loved it. Sometimes playing nice beats litigation.

I ended up losing money on the deal.
Reason? Over bandwidth.
Cost? $130 US.
Front page of the local paper for the whole deal?
People are still calling...(Priceless)


 4:05 am on May 14, 2004 (gmt 0)

Legal issues, ah i know this one from experience. People want their details kept private and not disclosed. Ive had many companies come towards me wanting things done, removed and 'paid' for. Freedom of speech isnt always free :)

The most expensive cost for me is bandwidth.


 4:06 am on May 14, 2004 (gmt 0)

Widey: Would you mind giving me the address to your Web site?


 3:36 pm on May 14, 2004 (gmt 0)

Bandwidth/hosting are major costs for any successful forum. You'll probably have to move to a dedicated server with a hefty bandwidth allotment if you achieve any measure of success. I can't imagine the bandwidth needs of forums that allow user uploadable images, avatars, graphic sigs, etc. - it must be staggering. I've got a forum that's in the 400GB per month range with fewer graphics than this one. About the only way to deal with bandwidth issues is to minimize your requirements and find a hosting plan that works. Needless to say, "unlimited" bandwidth plans are not always what they appear to be.

Legal is one of those things like medical expenses - you may have none, or you may get clobbered. I've had people threaten to sue because a forum thread was ranking higher than their own website. (They couldn't believe that we didn't specifically target their company name to siphon away their traffic.) I'm currently working a problem with hackers/spammers that may force ME to sue to get ISPs to disclose details ($5K to get the ball rolling). I guess having an attorney as the site owner/operator could help in this area. ;)

Software is your smallest expense. Powerful packages like phpBB are free, and even more powerful commercialware like vBulletin costs a couple of hundred bucks. Installation is quite simple, but hiring out shouldn't cost much either.

Allow for mod benefits. We've just ordered nice quality logoed polo shirts for one set of forum mods. Not a huge expense, but these people keep things running and shouldn't be forgotten.

TIME is the biggest cost, though it's hard to monetize.


 6:29 pm on May 14, 2004 (gmt 0)

Maybe the legal costs is persuing people stealing & rebroadcasting information from Webmasterworld.


 6:38 pm on May 14, 2004 (gmt 0)

>> low for mod benefits. We've just ordered nice quality logoed polo shirts for one set of forum mods. Not a huge expense, but these people keep things running and shouldn't be forgotten.

rogerd that's a great idea :-)

Marketing Guy

 3:32 am on May 15, 2004 (gmt 0)

I've had people threaten to sue because a forum thread was ranking higher than their own website.

Yeh been there too! Makes it worse that the thread wasnt exactly singing their praises. ;)

My bandwidth costs aren't too extreme - most of the traffic to the site via the content part and not the forum - so Adsense covers it nicely.

I would guess as well that click through rate on content pages is higher than forum ads, so creating a content site to host Ads and such could be a good way to go about financing a site (at least covering basic costs).

In terms of legal costs - mentioning any specifics about companies, etc is a minefield - I almost got burned for defending a users right to post their opinions on my forum. I ended up swallowing my pride and backing down and fortunately my hosts ate their own legal costs and didn't pass them on to me, which they were within their rights to do.

Unforeen legal costs can be crippling (for any business, not just forums) so it's best to go in prepared and outline exactly what you can and cannot allow on your forums.



 7:51 pm on May 15, 2004 (gmt 0)

Webwork asks:
When you run the forum how do you pay the bills?

My initial plan was to make money through user subscriptions and advertising.

Then, I started selling widgets.

That came in especially handy when the various forum software packages failed and I had no forums. Widget sales, plus other non-forum related services, keep things afloat.


 7:01 am on May 16, 2004 (gmt 0)

A way to offset the cost of a forum is to join affiliate programs. ;)



 5:12 pm on May 17, 2004 (gmt 0)

Testing is really the key for any kind of ad-based revenue stream. I'd recommend installing a decent rotating script and test AdSense, CPM ads, CPC ads, and affiliate links or banners.

Sometimes its hard to predict which approach will be most profitable. The rotation itself should help, since visitors will get fatigued and clicks will decrease if they keep seeing the same ads over and over.

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