How Does The Simple Dollar Earn Money? Some Notes on Do-It-Yourself Self-Employment

After some positive response to yesterday’s comments about an article explaining how I earn an income from The Simple Dollar, I decided to follow up and give the process a thorough description. Enjoy!

Quite often, when I tell people that I’m a full time writer, they’re surprised. They expect that by saying that I’m a writer, I write books (I have written two of them, with one in print and one forthcoming) and articles and that’s it – if I do anything online, it’s just promotional work for those books and articles.

That’s not the case at all. In fact, the majority of my income comes from The Simple Dollar – the books and articles I write are just continuations and further explorations of ideas I first touch on here.

How exactly does that work? Here’s the scoop on how I actually earn my income and how it all works.

How I Got Started
I didn’t start The Simple Dollar under the belief that it would earn me any sort of significant income. Instead, I started it because I love to write and I felt like the personal finance journey I was on – recovering from a nightmarish level of debt – was something other people were going through and could relate to.

Money was – and still is – something that’s difficult to talk about in the evenings when hanging out with my friends. People are generally uncomfortable revealing anything about their financial situation in social situations. I knew that, when I was going through my financial recovery, I did want to talk about it – but I knew that it was something of a conversational taboo.

At the same time, I love to write. I’ve written for my own enjoyment almost every day for more than a decade (and nearly approaching two decades at this point).

The two meshed naturally – I’ll just write about my money situation and share it freely with others. The internet provides a great forum for that. I didn’t really worry about income – I just started writing every day because it was fun. I put a few simple ads on the site, figuring I would just earn a few pennies from them, and I just wrote.

I started off with just my friends reading the site. I would link to other websites when I’d see an interesting article there and they’d notice, come visit, and sometimes become readers. They’d link to me. The Simple Dollar started showing up in Google search results because of the existing links and readers. More readers came in, and the snowball built.

Eventually, I had hundreds of thousands of readers a month, along with tens of thousands of people subscribing by email and RSS readers. With those numbers of readers came more responsibility – and more time. I started spending lots of time doing things like answering emails and approving comments and handling interview requests. At some point, the time investment I was making in The Simple Dollar needed to return a worthwhile income or else something had to give.

How do you transform that time investment into income?

Earning Income
Each time a reader visits a page on The Simple Dollar, they see a few ads. I make an effort to make them fairly unintrusive – when you first load up the site, for instance, you only see one ad, the one in the upper right. As you scroll down, you see a few others.

On other websites – as I’m sure you’ve noticed – ads can be a lot more intrusive. In general, the more intrusive an ad is, the more a website owner gets paid.

Here’s how “getting paid” works. Some ad broker – for many sites, it’s Google, but I’m transitioning to using Federated Media – sells some enormous number of ad views to ad agencies for specific campaigns. So, for example, Federated Media might sell 200 million ad views to American Express all at once. Since American Express is a large company, they want lots of ad views and don’t want to deal with hunting down individual sites that might display the ads, so they buy from an ad broker that does just that.

Federated Media, in turn, splits those 200 million ads among a large handful of sites they represent. For example, they might assign one million of those views to The Simple Dollar.

That’s where I come in. I go about my business writing good stuff that people want to read – just simply talking about money in a frank way and offering the money advice that actually works for me – and people then visit the site. Every time a person visits a page on The Simple Dollar, it counts as an ad view.

Over the course of a month or a month and a half, I’ll rack up a million pages viewed on The Simple Dollar from readers who come here to read what I’ve written. Once that’s completed, I’ve fulfilled my obligation to Federated Media and they then pay me my portion of what American Express paid them – the appropriate fraction of their total ad purchase minus Federated Media’s commission for handling it.

To put it in simplest terms, I earn a small amount for each page viewed on The Simple Dollar. It’s a tiny amount – a fraction of a cent – but if, over the course of a day, thirty thousand pages are viewed, that adds up to nine hundred thousand views over the course of a month. Even if I just earn two-tenths of a cent for each of those views, that’s still $1,800 per month. (I can’t actually disclose the true amount I earn per page viewed because of the contracts I’ve signed, but the numbers here are fairly realistic per campaign.)

I also earn a bit more from my book reviews, which I’ve been doing since the start of The Simple Dollar. Each book review includes links to Amazon because the pages about books on Amazon are usually pretty informative and interesting. However, if a person chooses to buy that book at Amazon after following the link there – or buy anything else at Amazon – I earn a small percentage of that revenue.

These things only work because I have a substantial amount of readers. When someone starts a website, the audience at first is just going to consist of family and friends – maybe a thousand pages per month. At two tenths of a cent per page, that’s $5 for the whole month – not worth the effort of writing a lot of posts.

What happens over time, though, is that a site that writes consistently good stuff slowly picks up more readers. The second month might see 1,500 pages viewed, then the month after that might see 2,500 pages. The rate will grow over time, in fits and starts, and so will the income.

It takes patience. It also takes the ability to write consistently well (not perfectly, but good enough to interest people) so that they’ll come back in the future. It also takes a consistent focus on a topic that people are interested in – if you just write about whatever interests you each day, you’d better be an exceptional writer or you’ll never make it.

Why Not Load Up With Ads?
As some of you might have already figured out, a site earns more per page if it’s loaded up with intrusive ads. The more ads a site owner can put on a page, the more they’ll earn from each person that visits the site.

So why not load the site up with ads?

In the short term, that works well. It earns you a big boost of income. If you double the amount of ads on a page, you double the amount you earn from that page (roughly), and thus double the amount you earn over the course of a month.

The only problem is that if you load a site down with ads, it becomes harder to read. It becomes less enjoyable to read. It goes from being something exciting and interesting to something that seems to just be attacking you with ads. And readers begin to go away.

Soon, you’re displaying less than half the pages you were once displaying, so you’re actually earning less than you were before. On top of that, you have substantially less influence as well.

The Value of Influence
Influence itself has a lot of tangible value. Here’s an example of how that works in my case.

For many years, I tried to get the attention of book publishers with a fiction novel that I completed in 1999. The rejection letters piled up, and many publishers didn’t even bother to respond. Only one publisher even nibbled a little bit, and then they rejected it.

Once The Simple Dollar became popular, book publishers started contacting me. One of the first ones was Adams Media, who worked together with me to build the idea behind 365 Ways to Live Cheap, my first book. Once that one was successful, several publishers contacted me about a follow-up and I chose the one that gave me the most creative control.

Why did this happen? Book publishers have direct evidence now that the things I write have an audience – a large group of people will come around consistently to read what I write. That influence led them to believe that a book written by me was worth investing in, whereas before I wasn’t worth the time of day to them.

This same principle holds true for magazine and newspaper articles, speeches, and other opportunities. There is additional value – and income opportunities – simply from having a large audience on The Simple Dollar.

“I Can Write Better Than You… So I Should Be Doing This!”
Yes, you probably can write better than I can – and good for you. But making even a small income from an internet site is a lot different than other avenues for earning income.

First, you have to have tons of patience. Your first few months are going to be incredibly lean. You’re not going to earn much at all at the start, even though you’re putting tons of time into writing worthwhile stuff.

Second, you have to write good content every single day. Writer’s block doesn’t fly here – if you have writer’s block, you can’t just choose not to write for a while until it comes back. It’s much like being a beat reporter – if you don’t make the deadline almost without fail, people will stop turning to you for the information they want or the entertainment they desire.

Third, you have to be selfless. The only thing that matters is the readers, period. When they read an article of yours, are they actually getting some value out of it? Here’s an example: linking to sites that are better than yours, even though it risks readers leaving to those sites and never coming back. In truth, though, you’re making an effort to link to the best stuff – the stuff that resonates with you – and bringing it to your readers, even if it means some risk to you. Sure, a few readers might leave and never return – but others will respect and value what you do.

Fourth, you have to be writing about something people care about from a perspective that’s either interesting or that they can identify with. Dooce is popular because she writes about something many people care about (parenting) from a perspective that’s interesting or identifiable, depending on who you are (self-deprecating and snarky). You have to have both elements – a topic that’s interesting to a lot of people from a perspective that’s interesting to a lot of people. Add on top of that the requirement to constantly write good content and blogging at a high level can drain any writer.

I’m not trying to dissuade anyone from earning a living doing this. It’s just important to note that these are the realities of the situation.

In Conclusion…
Yes, you can earn money from blogging, but it’s not as easy as just logging onto the internet and voicing whatever is on your mind. It takes patience, focus, passion for your topic, and some “short order” writing skill.

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