Advertising is the bread and butter of most content-based websites these days, but many readers still view them as just a necessary drawback for the sites to continue running. Even widely popular sites like Penny Arcade rely on advertising for most of their profits ... but maybe not for much longer. The folks behind the video game culture webcomic recently started a Kickstarter campaign asking fans to donate money in exchange for removing advertising from the website and producing more comics and other content.
Penny Arcade's creators, Jerry Holkins and Mike Krahulik, are certainly no strangers to experimenting with new business ideas. Aside from being the source of a successful video game comic strip, their company has become a virtual empire that includes other webcomics, online video series, merchandise, a respected gaming news site, two annual conventions, a scholarship program, a charity organization, and even a video game of its own. As the site has grown, it's acquired more employees and office space to handle all these new projects, most of which are funded by advertising.
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But the duo's latest concept came more out of nostalgia for the site's early days when, following the end of the dot com boom, advertising dollars were scarce, and they were forced to rely on fan donations to stay afloat. The two looked at Kickstarter – which they'd both criticized in their comic, but also used to fund their second collectible card game – and realized it was a modern incarnation of their old business model.
"The word crowdfunding hadn't been invented yet; back then, people simply called it 'begging," Holkins explains on their Kickstarter page.
The Kickstarter campaign, named "Penny Arcade Sells Out," is essentially a way for the website to find out for sure if fans would be willing to support it in the same way as before, even though it's a much larger operation now. Like most Kickstarter projects, backers can receive individual rewards like autographs, passes to the Penny Arcade Expo, or tours of the Penny Arcade offices. Unlike most Kickstarter projects though, the company is mainly rewarding backers with a better website, filled with more content and fewer ads.
The Kickstarter page lays out several tiers, with different goal levels that alter the layout of the site as they're reached. The first tier of US$250,000 removes the main banner ad from the main page, while higher tiers either remove further ads or provide extra comics and other content. At $1 million, all ads would be removed from the website entirely. Penny Arcade has even promised a few secret rewards at other tiers in between and beyond; it just depends on how much money it receives when the Kickstarter campaign closes.
Holkins and Krahulik have noted that if the Kickstarter doesn't raise enough funds, then it won't be a problem, since Penny Arcade will just continue using advertising as it always has. At the time of this writing though, the campaign is most of the way towards the $250,000 goal with over a month left to go, so it's a sure bet that the first tier will be met. It's hard to gauge how far it will go from there, but it will be interesting to see if the experiment pays off and, more importantly, prompts other sites to start similar Kickstarter projects.
Check out the video below to see other financial options the Penny Arcade staff tried before turning to Kickstarter.