Saturday, October 24, 2009

Alternate Programming Business Model: Driving Affiliate Traffic With Shareware

I've written recently about how I think consulting is a terrible business model. Given that it's basically the business I've always been in, I started to look into other business models and find out what my alternatives might be. Out of curiousity, I bought an ebook on affiliate marketing.

Since Ruby programmers love meta crap, I'll introduce affiliate marketing the meta way: if you click this link and buy the PDF, I'll get a commission. That's affiliate marketing - basically, driving traffic, selling stuff, and getting a commission. (I'm not actually expecting to see a lot of people buy this thing, but a) if I'm going to link, I might as well use an affiliate link, and b) the FTC set up some new rules about that, so I'm mentioning it out of legal paranoia.)

Anyway, most of these things are pretty cheesy. This one was written by some kind of surfer guy, so I thought what the hell. I know a woman who does Internet marketing full-time - she gets paid to blog about yoga - and another who offers an affiliate program for her business, where she teaches actors how to be financially self-sufficient. So I've seen a little bit of this affiliate marketing world, and by its standards, this surfer guy seems unusually chill. He also gives away a lot of detailed information, which I took to be a "good karma" type thing. Anyway if I get into explaining it I'll want to do a whole review, and I'm too tired for that right now. Maybe later.

What surprised me, and why I'm blogging this: a chapter on the guy's "secret weapon" for generating lots of traffic (traffic is a big deal to affiliate marketers). Basically, the secret weapon is downloadable applications. This includes shareware, freeware, and Web apps repurposed to run within dedicated browsers and thereby become equivalent, as far as a nontechnical user is concerned, to downloadable desktop apps.

On the one hand, this struck me as a weird potentially-revolutionary business model for programmers: building stuff for people to give away to drive traffic to their affiliate marketing programs. On the other hand, there's nothing that revolutionary about it. It's essentially what many of us already do for a living. We build stuff for entrepreneurs to give away to drive traffic to their "hey Mr. VC, buy me out" programs. But it's scaled down much, much smaller than is usually the case.

It matches the thing I said in my Archaeopteryx presentations: that Internet startups can be not only too cheap to fund - from the traditional VC perspective, where any business launch requires millions upfront - but also too small to see. If I make some shareware, license it to somebody in exchange for a portion of their affiliate marketing earnings, I have in a sense successfully launched an Internet startup, even though it's not at all what people mean when they use the term. This is an "Internet startup" that you could in theory launch with one programmer in his or her spare time, although I have no idea if there's any real money there.

When you look at the fiction people have generated about robots, a lot of it revolves around the idea of giant robots. What's the reality? The reality is that tiny robots can do a lot, and robot price gets out of control quickly if you make the robot big. A robot the size of a computer mouse costs about as much; a Lego Mindstorms NXT kit costs around $300; a Lynxmotion hexapod costs around $700, not counting brains or sensors; and anything bigger than a hexapod gets you into crazy money really fast. Technology tends toward miniaturization.

Lynxmotion hexapod

A corporation is kind of like a robot, although that's a huge separate topic. Point is, a lot of people think the Internet is here to make our corporate overlords more powerful than ever before, and give them even more gigantic empires. (And by "a lot of people" I mean those corporate overlords themselves, and their minions.) But I think long-term, it's going to have the opposite effect, and that (among other things) the Internet may make software businesses much, much smaller than they are (and they're already smaller than they've been in the past).

This is the other reason I find affiliate marketing interesting. Every indication is that these businesses are extremely small. But that's another rant, and I'm tired. Anyway, if you're curious, here's the ebook link again. It's an interesting read, even if it isn't free (assuming you find these sort of micro-entrepreneurial phenomena interesting).