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For example, the sponsor pays $1,000 for 1 month of sponsorship. The developers gets 40% of that ($400). The remainder ($600) goes into building Code Sponsor.

by cavneb 9y ago

For example, the sponsor pays $1,000 for 1 month of sponsorship. The developers gets 40% of that ($400). The remainder ($600) goes into building Code Sponsor. Understand that this has been a side project since day one. I have not taken any distributions at all. The split used to be 50/50, however I could not sustain myself with that split and still keep the CPA low for our sponsors. We are now setting a minimum CPC for all new sponsors to $1.50+. This means that the developer will get $0.60/click. Finally, part of the 60% goes into the server costs and fraud prevention. We run every click through vigorous fraud detection prior to marking it as “payable”. By doing so, we provide much higher quality clicks to the sponsors. This makes them scale their funds. Remember, we are working with marketing funds, not sponsorship funds.

Deimorz 9y ago
Thank you for answering. I think it's perfectly reasonable at the current income level, since if that's a typical month's income it would mean that you're still only taking in about $50k/year, which is difficult to do much with. However, if you're intending to keep that split as revenue increases, I think it conflicts with the way you're framing the company in places like the linked post and the Code Sponsor homepage. Stating a mission like "fighting for open source sustainability" and remarks like "Why do we do it? Basically, we want to help" don't mesh with the fact that your company alone keeps more of the money than you pass on to all of the projects combined. I recognize that Code Sponsor isn't a charity/nonprofit, but it feels like you're trying to give the impression that it's a similar sort of values/mission-based organization. So it's not a fair comparison, but as a point of reference, Charity Navigator would give a financial score of zero to an organization that only used 40% of their funds for their "purpose", and they'd be solidly in the bottom 10% (https://www.charitynavigator.org/index.cfm?bay=content.view&cpid=48#PerformanceMetricOne https://www.charitynavigator.org/index.cfm?bay=content.view&...). Overall, your take doesn't seem to be out of the ordinary for advertising. The World Advertising Federation says that 60% of advertising cost is taken by various companies that an ad passes through before it's actually displayed (https://3.bp.blogspot.com/-AkjTy8a6FJ8/WGqb2nGR0pI/AAAAAAAAFrw/SONAI8rbvxc5RnJPasRzfSIp8_5IpCpOwCLcB/s1600/Chart.png https://3.bp.blogspot.com/-AkjTy8a6FJ8/WGqb2nGR0pI/AAAAAAAAF...), but those companies certainly don't try to describe themselves as philanthropic ones. I hope I don't come off as too negative. I think it's great that you're working on improving the current situation of open-source sustainability, which really is a major issue. But I hope that if your income reaches the point where Code Sponsor is sustainable (which certainly includes paying yourself), you consider adjusting the split so that more funds are given to the projects you want to help, instead of just keeping it as profit.
- cavneb 9y ago
  Hi Diemorz, I’m very glad for your comment. This is something that I can honestly say I have not considered. My biggest fears were 1) making sure that the whole idea isn’t rejected by the developer community and 2) making sure I have enough money in place to give to developers. I started off initially by doing a 50/50 split with developers. I also started by charging $1/click to sponsors. I quickly realized that it would take a very long time before I could get enough sponsors and developers to support myself full time. Because of this, I dropped the distributions to 60/40. It still is not making much money at all. Code Sponsor may take 60%, but I take 0%. Now in the future, if it does continue to grow at a healthy rate and if Github will allow us to sustain OSS through README’s, then I would definitely consider a more developer-sided split. All I want is to help sustain OSS and do it as a living.
  - takluyver 9y ago
    Thanks for your openness about the finances, and thanks for building something to address this issue, whatever the difficulties and drawbacks are.

by cavneb 9y ago

Deimorz 9y ago

Thank you for answering. I think it's perfectly reasonable at the current income level, since if that's a typical month's income it would mean that you're still only taking in about $50k/year, which is difficult to do much with. However, if you're intending to keep that split as revenue increases, I think it conflicts with the way you're framing the company in places like the linked post and the Code Sponsor homepage. Stating a mission like "fighting for open source sustainability" and remarks like "Why do we do it? Basically, we want to help" don't mesh with the fact that your company alone keeps more of the money than you pass on to all of the projects combined. I recognize that Code Sponsor isn't a charity/nonprofit, but it feels like you're trying to give the impression that it's a similar sort of values/mission-based organization. So it's not a fair comparison, but as a point of reference, Charity Navigator would give a financial score of zero to an organization that only used 40% of their funds for their "purpose", and they'd be solidly in the bottom 10% (https://www.charitynavigator.org/index.cfm?bay=content.view&cpid=48#PerformanceMetricOne https://www.charitynavigator.org/index.cfm?bay=content.view&...). Overall, your take doesn't seem to be out of the ordinary for advertising. The World Advertising Federation says that 60% of advertising cost is taken by various companies that an ad passes through before it's actually displayed (https://3.bp.blogspot.com/-AkjTy8a6FJ8/WGqb2nGR0pI/AAAAAAAAFrw/SONAI8rbvxc5RnJPasRzfSIp8_5IpCpOwCLcB/s1600/Chart.png https://3.bp.blogspot.com/-AkjTy8a6FJ8/WGqb2nGR0pI/AAAAAAAAF...), but those companies certainly don't try to describe themselves as philanthropic ones. I hope I don't come off as too negative. I think it's great that you're working on improving the current situation of open-source sustainability, which really is a major issue. But I hope that if your income reaches the point where Code Sponsor is sustainable (which certainly includes paying yourself), you consider adjusting the split so that more funds are given to the projects you want to help, instead of just keeping it as profit.

cavneb 9y ago
Hi Diemorz, I’m very glad for your comment. This is something that I can honestly say I have not considered. My biggest fears were 1) making sure that the whole idea isn’t rejected by the developer community and 2) making sure I have enough money in place to give to developers. I started off initially by doing a 50/50 split with developers. I also started by charging $1/click to sponsors. I quickly realized that it would take a very long time before I could get enough sponsors and developers to support myself full time. Because of this, I dropped the distributions to 60/40. It still is not making much money at all. Code Sponsor may take 60%, but I take 0%. Now in the future, if it does continue to grow at a healthy rate and if Github will allow us to sustain OSS through README’s, then I would definitely consider a more developer-sided split. All I want is to help sustain OSS and do it as a living.
- takluyver 9y ago
  Thanks for your openness about the finances, and thanks for building something to address this issue, whatever the difficulties and drawbacks are.