For those of you who are not familiar with this service or are currently not using it, it may be a good bet to avoid my ranting this week. Things will be back to normal next week!
With the economy being talked about on every TV and radio station we tune in to lately, I got to thinking about taxes and blogging. Don't ask me why I thought of these two items together since they are not even really related. As my Dad always tells me "Your mind works in mysterious ways".
He usually does not mean that statement as a compliment.
Anyway, I was looking at the 'tax' rate on EntreCard and I was horrified. We are all paying 75% tax on every advertisement we sell to someone. Unbelievable!
To put this in perspective to those not completely familiar with math, for every 1024 credits we sell an advertisement to someone for, we only actually get 256 credits and EntreCard keeps 768.
Sweet deal for them, not so much for us! Have a look at the table below to get the full picture.
Column 1 is the day count, Column 2 is the selling price, Column 3 is what EntreCard gets and Column 4 is what is left for you.
|Number of Ads||Price in Credits||EntreCard Gets||You Get|
Unfortunately for bloggers there is little to no competition that offer a decent blogging network type of service, so they can gouge you right now without shame, and believe me a 75% tax rate is without question, a gouge!
Now don't get me wrong here, I do like using EntreCard as it has introduced me to a large number of blogs I would not have ever come across and also increased my own blogs traffic somewhat. I like the idea where you can both advertise and surf in order to acquire and spend credits.
My only issue here today is to complain about the exorbitant tax rate they are charging for the 'luxury' of using their service.
So what do we as members currently get for the 75% tax rate with EntreCard, you may ask ?
Apparently not much other than access to the EntreCard network and the odd email telling you the guy who started it isn't making enough money and may sell it. (in fairness, a day or so after he announced he was selling it back in September, he had an 'apparent change of heart' and is no longer doing so. Personally, I hoped he would sell out as I believe it needs new blood & fresh ideas.)
Blogexplosion used to have a great service entitled 'Rent my Blog' which would allow you to set the price to rent space and they would only charge a nominal fee (tax) on it.
It was actually a brilliant idea since the bloggers market would 'adjust' your price. Set too high a price no one wanted it or ask too little, well there would be buyers lined up so you would know next time to raise your price. Unfortunately they discontinued this service some time ago along with a number of other things. Too bad.
Anyway to continue, EntreCard has also put a dollar value onto their credits which is 1000 credits for $6.00 or .006 per credit.
So using my example above, an advert costing 1024 credits is valued as follows:
They keep: 768 x .006 = $4.60
and you get: 256 x .006 = $1.54
A pretty steep price for a 24 hour ad on someone's blog however if you were able to exchange or 'cash in' your credits for cash, it would seem to be alright. But unfortunately you cannot.
Unlike banks that offer both a buy rate and a sell rate for exchanges, EntreCard only sells. So they have arbitrarily set a price of .006 per credit. Since I cannot cash it
in for anything and am not allowed to sell it, the true and accurate value to me is .000 per credit. Nothing, zilch, Dick!
In reality, I am thinking the true value lies somewhere in the middle between my assertion of .000 and EntreCards set price of .006.
The danger that these folks at EntreCard may not have understood is that when you have a country, or in this case a service, with a extremely high tax rate, a black market of activities is bound to spring up in some format.
People were selling credits on Ebay for up to 1/4 of the price EntreCard was charging, so they stopped that and put in a rule only credits can be purchased through EntreCard.
Of course there are other ways to save / make credits to circumvent the system. Lets take my example of an ad costing 1024 credits once again.
If I know the owner of the ad charging 1024 credits is only going to actually receive 256 credits after tax, instead of me buying in through EntreCard at 1024 credits, why not just send him an email and offer to transfer 300 credits into his account. All he needs to do is agree to put my ad on his site somewhere and he not only gets an additional 44 credits, I get to save 724 credits. A huge savings even if I offer him 600 credits. Still cheaper than 1024 credits by a long shot. The savings are even better on a more expensive ad, which in theory should give you even more exposure.
But I did forget to mention that there is yet an additional tax of 12.5% on all credit transfers. So in this example, to transfer 300 credits would cost me another 38 credits so my true cost would end up being 338.
Yes, The taxman taxes it both 'coming and going'. And why not, EntreCard is really the only game in town right now! (Note there is also a limit of 1000 credits per week to transfer.)
Before I go on, the above is just an example. I am not advocating that you try this but rather just pointing out one way to make your hard earned credits last a little longer. (Please do not email me with any offers to do this as I already have enough credits to last me for the next little while.)
There are a number of 'old school diehards' reading this that love EntreCard in its current form and do not agree. They are probably muttering the old adage of 'don't let the door hit you in the ass on your way out.' Well that really no longer cuts it in this day and age.
Its should not be a 'love it or leave it' proposition anymore. We, as dedicated members, both want and expect more from this service. That is the point of this entry today. Well, aside from my whining & complaining! (that's just a free added bonus!)
This is meant to be a challenge to the owners and operators of EntreCard to lower this ridiculous tax rate. Share the wealth so your users do not need to resort to petty black market activities like the one I outlined above or other equally as foolish ideas.
If we as users didn't care about the service, we probably would listen to those diehards and simply just walk away. But were not. Well, not yet, at least.
The challenge is not for you to arbitrarily drop your tax rate and that's it. It is understood you are in this venture to make a profit. I think no one would have an issue with that.
The challenge here is to look at other areas where your members can spend there credits on and not feel like they are being gouged each & every time they complete a transaction.
Your infrastructure is already in place to perhaps sell banner ads or text ads or animated ads (just to name a few alternative sources of income) that should be relatively simple to put into place.
Why stick with your one source of income, that being the static 125x125 advert? Honestly not only are you limiting your income stream, you are boring a great number of us.
So that is all that is bugging me today. I have now had my say and am curious to read what others think and feel on this. Am I totally off base here ?