Tuesday, April 30, 2013

Traffic ≠ Revenue

You've probably heard that ComicsAlliance is shutting its doors. Not because the folks working on it wanted to quit, but because site owner-AOL decided they didn't want to support it any longer. You can find plenty of condolensces and messages of thanks going out to the crew who worked on it. You can add mine among them, but that's not what I'm writing about here.

According to this report, the closure isn't performance related and site traffic has been "better than ever." No one has offered an official explanation, but that's kind of a moot point anyway because there's really only two reasons why AOL might decide to shut ComicsAlliance down.
  1. Strategically, the site wasn't bringing in the type of users AOL wanted to attract as part of a broader strategy.
  2. Tactically, it wasn't making money.
Often, when I see/hear that a restaurant has shut down, someone remarks their surprise because "it was always crowded; they had tons of patrons." Which may well be true, but if you charge $5.00 for a meal and it costs $6.00 to make it, then you're losing money and you'll have to close shop. Traffic does not necessarily indicate revenue.

I don't know what the CA writers were getting paid, what advertising costs were, etc. so I can't speak to whether or not they were actually making money, but why would a business close down a part of their business if it were profitable?

Well, there are actually other reasons. One of which might be something called opportunity cost. AOL has to devote some resources towards funding CA. But what if they did some math and determined that they could devote the same amount of money towards a different venture, but make MORE money? Let's say that, after everything is paid for and all revenue streams are accounted for, ComicsAlliance made $1.00 in profit every day. What if AOL figured out that an ActionFigureAlliance site would make $2.00 in profit every day? Wouldn't it make more sense to run that site instead of CA?

It's possible, too, that AOL doesn't want to run sites like CA at all any more, and just focus on... something else. They've been struggling for years, trying to find a new outlet/identity for their business and I think a lot of people are surprised to hear they're even around any more. (I overheard someone logging into their email account recently when they got a "You've got mail" audio message. When I noted that I hadn't heard that in a long time, the response was, "Yes, I know I'm a dinosaur! Shut up!") It could be that AOL is trying something new from a more strategic perspective. I don't know what that might be, but if it's a radically new direction for them, it makes sense that they want to focus their energies on that new direction without having to worry about now-legacy sites like CA.

Personally, I'm inclined to think it's strictly a money thing. Frankly, there's just not a lot of money in comics. You can ask almost anyone in any level of the business -- creators, publishers, distributors, retailers, journalists... -- very few people are making a mint off this. Many (most?) have other sources of income to make ends meet. Even before Marvel was bought out by Disney, they were making 1/3 of their money from movies and another 1/3 from licensing; they formally stopped identifying themselves as a comic publisher back around 1999. Almost everyone is in comics, first and foremost, for the love of the medium. So it wouldn't surprise me to learn that CA just wasn't making very much money for AOL.

I'm left wondering if any big corporation like that can maintain a comic/geek themed news/commentary site for very long. Or will they all be a series of blogs written by one or two people? No judgement involved, just something worth keeping in mind, I think.

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