Peter Kafka

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Lady Blog Network BlogHer Gives Bloggers a Pay Cut

BlogHer, a women’s ad network/publishing network and conference organizer, is cutting the amount it pays to its blog partners by 10 percent. That’s really sort of a double cut, since the blog owners/writers in its network get paid based on the ads BlogHer can sell, and ads are already under pressure.

The only real surprise here is that the BlogHer founders–Lisa Stone, Elisa Camahort Page and Jory Des Jardins–don’t blame the economy for the cuts. Rather, they say that they have to reduce payments because they’re so successful:

When BlogHer’s network was created in 2006, we began with 35 blogs, a few advertisers and a small number of staff members to sell and manage the entire network. Today, BlogHer’s network is more than 2,500 blogs strong, and we’re working with dozens of advertisers each quarter. We have had to grow our technology infrastructure and staff dramatically to keep pace with network growth. Because many of these costs are fixed, expanding our network to compete for Fortune 500 advertisers has been a major investment.”

BlogHer was founded in 2005, and has received funding from Venrock, the Rockefeller family’s VC arm, and Peacock Equity, the JV between GE’s (GE) NBC and GE Commercial Finance.

Here’s the full text of the email from the BlogHer founders to their blog partners:

December 10, 2008
Hi everyone,

This is a long letter, but an important one, so thank you for your attention during this busy time of year. We’re writing to share with you:

* One change that BlogHerAds is making to our contract terms with you, effective January 1, 2009. This change will require your agreement, and instructions will be provided on how to indicate your agreement.

* One change in our payment processes, also effective January 1, 2009

* One new benefit: A new way to receive your payments online, immediately available to all members

This letter explains what the changes are, and how they will affect you.

In the past year, BlogHer expanded and competed for more advertising dollars for your blogs. The good news is that we successfully grew our business in the worst economy in the nation’s history. However, because of the current climate, we need to make some changes so that BlogHer can continue to invest in the resources necessary to recruit the very best advertising for your blogs.

* Contract Change -Your revenue share percentage

When BlogHer’s network was created in 2006, we began with 35 blogs, a few advertisers and a small number of staff members to sell and manage the entire network. Today, BlogHer’s network is more than 2,500 blogs strong, and we’re working with dozens of advertisers each quarter. We have had to grow our technology infrastructure and staff dramatically to keep pace with network growth. Because many of these costs are fixed, expanding our network to compete for Fortune 500 advertisers has been a major investment.

Currently, you get a revenue share of 100 percent of gross advertising fees received by BlogHer. Effective January 1, 2009, we will apply your revenue share to 90 percent of gross advertising fees, thus reducing your revenue share by 10 percent. To document this change, we need to amend the first sentence of Section III.A.3 of our Agreement to read:

For the purposes of this Agreement, the term “Revenue” means the gross fees actually received by BlogHer for Advertising Impressions originating from the Advertising on Partner’s Blog, less an administrative fee equal to ten percent (10%) of the Gross Fees to cover sales commissions, costs associated with serving the advertisements, administrative third party fees, campaign referral fees and other miscellaneous administrative expenses.

Here’s what the difference will mean to individual bloggers:
Currently, on a $10 CPM, a network blogger earns $5 per 1,000 impressions if the number of impressions on the blogger’s site is equal to less than one million. With a 10% deduction from gross revenue to cover our operating costs, a network blogger will now earn 50% of $9.00, or $4.50 per 1,000 impressions. (As always, BlogHer will not take a revenue share on BlogHer house ads or on remnant inventory – 100% of that total revenue will still go directly to you.)

While we have needed to make this change for some time, we held off for as long as possible. We are acting now in order to continue aggressively pursuing new revenue for you and your sites.

What we are asking you to do now:

We have added a section to your BlogHerAds profile with a summary of this change. Please visit your BlogHerAds profile and check the box indicating that you accept these changes to your contract by December 19, 2008. If you have any questions, please don’t hesitate to contact us via our help desk form.

This is an opt-in contract change, so you must indicate your acceptance of these terms. If you do not visit your profile and accept these terms, we will have to suspend ads on your site, starting January 1, 2009, until acceptance is received.

Please accept these changes now by logging into your profile at
https://www.blogherads.com/user/login and clicking the Accept Terms of Service box.

* Payment Process Change – Net 45-days payment terms for each month’s payment of your revenue share

Our contract with you currently allows us to pay your revenue share 45 days from the date we receive payment from our advertisers. We’ve actually been paying you much sooner than we receive payment! BlogHer has consistently sent payments within 30 days following the close of each month for that month’s revenue. As we have scaled in number of both bloggers and advertisers on the network, we need to extend our payment schedule to 45 days from each month’s close, rather than 30 days. This is a more realistic schedule and will allow us to continue to scale, while continuing to get your payment to you more quickly and efficiently than paying you 45 days after we receive payment.

To effect this change, there will be a one-time 45-day gap between your payment for November’s revenue and your payment for December’s revenue. Subsequent to that you will continue to receive a check every 30 days, by the 15th of each month.

Here’s how your payment schedule will look:
Your revenue share for December 2008, which would normally have been received by January 31, 2009, will now be received by February 15, 2009. Going forward, you will continue to receive a check on the 15th of each month for the calendar month prior to the immediately preceding month (as long as you’ve earned or accrued at least $25 by the end of that calendar month.)

Near-term schedule:
November 08 revenue will be paid December 30th
December 08 revenue will be paid February 15th
January 09 revenue will be paid March 15th
February 09 revenue will be paid April 15th
March 09 revenue will be paid May 15th

* New Benefit (optional) – switching from paper checks to electronic payments

Many of you have asked about receiving ad revenue shares via electronic payments. Effective January 1st, BlogHer is making it possible for all members, domestic and international, to select PayPal as a payment option. We have switched to using Mass PayPal, which has the following benefits:

* No charge to you. BlogHer covers the entire surcharge for using Mass PayPal

* Using PayPal eliminates paper checks, and any inefficiencies with the U.S. Postal Service or if you should move physical addresses

If you are interested in switching to PayPal, you may choose the PayPal option of payment, along with entering your PayPal email address, by logging into your profile and going to Your account > Edit > About You, and selecting either check or PayPal under the Payment Preference header.

This change is optional and offered as a service to our bloggers. We hope it is good news to many of you! Please let us know if you have any questions about PayPal payment of your BlogHer Network revenue share.

As 2008 comes to an end, we are thankful for our partnership with each of you and proud of the pioneering publishing network for writers that we are building together. We and the entire BlogHer team will be working very hard to make 2009 a year of continued growth.

Best,

Elisa, Jory and Lisa


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