Fred Dewey, CEO Kachingle
Every week, Kachingle promotes a different category of sites. Recently, we had “web comic” week, because most of our team members are reading several comics on a regular basis, as are many of our users. As we started to promote this category, we got plenty of feedback both from users who recommended comic sites, as well as from some of the web comic sites that we added.
What we learned from that feedback is that there are some questions that we need to answer more clearly, which will be answered in this blog post as well as on our website. We also learned that in some places on our website, we can be more clear about the way our system works. In this blog post, I will summarize some key points, and some improvements we have made to our system.
First some key points:
- We are building a whole new source of revenue for content and application providers. And while most sites and apps need more revenue, many of them are not able to make the changes needed to integrate with Kachingle. So we invented Kachingle Anything! This allows our users to support any site they want, without the site having to join Kachingle and do any work. The money flows automatically to them! Pretty cool eh?
- We are just the middleman. Our users use our system to make micropayment donations to the sites they love, as a way of showing their gratitude with a financial “thank you”. We do not collect money on behalf of sites. Rather, we are the conduit through which the users of a website make micropayment contributions. So our users decide which sites they want to support, not us. We just facilitate their desire to donate.
- Adverse revenue impact? One concern that we hear from time to time is regarding whether or not Kachingle could cause a decrease in a site’s revenue due to existing donors of the site switching over to Kachingle. Kachingle facilitates the wishes of users who are unable or unwilling to donate directly to a site, so basically Kachingle is generating an extra revenue stream for the kachingled sites.
- Prior to Kachingle, making micropayments to websites was impossible because the payment processing fees would eat up too much of the money being contributed. But with Kachingle’s fixed monthly subscription pay-in model, micropayments to content are now possible. That is one of Kachingle’s biggest breakthroughs.
Also, some people want to know why we add a site to Kachingle and allow users to start contributing money to it right away, prior to making contact with the site:
- Our users (kachinglers) have made it clear to us that they want to be able to add a site to Kachingle and start contributing to it immediately, without having to wait a month or two for us to track down the owner of the site to see if they want to start getting free money. Because we are completely user-driven (as we need to be), we have said yes to that desire, and we therefore add requested sites to Kachingle and enable them to start getting paid by their users immediately.
- We always make best efforts to contact the owner of a user-requested site so that we can pay them. We do that automatically using twitter and email, and eventually also manually using phone calls and postal letters. It usually takes a few months, but eventually most sites respond enthusiastically, confirm their desire to be part of our system, and give us their PayPal email address where they want the money sent. Some sites that were added to Kachingle right away after one of their users requested them and that have already started accepting their users’ contributions include Wikipedia (information resource), Dilbert (comic), Aaron Swarz (personal blog), and NowCAST San Antonio (local journalism).
- There are some sites (about 5 so far) that have notified us that they do not want to accept contributions from users. In those cases, we remove them immediately from our system, and send them the money that has been given to them by their users thus far, or at their option the money can be given to Kachingle’s official charity which funds brain cancer research. **
- There are also some sites that we will not be able to reach in spite of our best efforts over a long period of time. We will continue trying to reach those sites and in the event that they just do not respond, we can either keep trying, or exercise our right to donate their money to Kachingle’s official charity which funds brain cancer research. **
We always welcome feedback from our users, and we take full advantage of that feedback to constantly adjust and improve our service. A great example of this is the changes we have made and are in the process of making, in response to the feedback we received from some web comics’ site owners this past week: **
- We have enhanced the format of our information page about each site so that it now includes a clear indication of whether or not the site has given us their PayPal email address and started accepting payments or not. That way Kachinglers can know if a site has confirmed their willingness to receive payments from their users via Kachingle.
- We will be adding more ways for site owners to contact us, including adding a link to the site information page.
Our users insist that they be able to contribute money to a site immediately without a lengthy delay, and therefore we don’t agree that sites should agree to be part of Kachingle prior to them being added. But we appreciate the concerns behind this feedback and have responded with site changes, FAQ changes, and this blog post.
Kachingle is a revolutionary startup. As such, our job is to try new things, press the envelope and do whatever it takes to overcome the challenges of building something brand new, that has never been done before. Sometimes that causes us to rub people the wrong way. And sometimes that means we will not operate the way people want us to. Other times that means deciding between the conflicting needs of different groups of users.
We are very passionate about what we are doing, and know that it is the future of content monetization. Over the past few years, as we have built and refined the first ever social micropayments service, we have picked up a large group of passionate sites and users who are as excited about this as we are. If you are such a person, thank you for your partnership!
Fred Dewey
CEO, Kachingle.com
** UPDATE: After considering this feedback further, we’ve decided that the right thing to do is to change our policy as follows. If a site owner decides to opt out, we will deliver (to them or to our charity, at their discretion) any money that was already collected, without taking any cut – the recipient will receive 100%. We will in fact lose money on this, since we will still have to cover the PayPal fees for these transactions.
16 comments
“We do not collect money on behalf of sites.”
That is not true. If I opt-out my site and people donate, where does the money go? This makes no sense.
“Kachingle is a revolutionary startup. As such, our job is to try new things, press the envelope and do whatever it takes to overcome the challenges of building something brand new, that has never been done before. Sometimes that causes us to rub people the wrong way. And sometimes that means we will not operate the way people want us to. Other times that means deciding between the conflicting needs of different groups of users.”
That is a very disturbing way of looking at it… and disrespectful of the owners of content.
I am almost certain it is illegal to take 15% of donations on behalf of a person or group who did not give you permission to hold donations for them.
Fred Dewey, CEO of Kachingle, just phoned us from 1981 to deliver this message.
Except that the other thing you neglect to mention is that, by allowing users to start donating immediately, you also can start taking your 15% cut of the donation right away. You are accepting money on behalf of people who have not consented to have money collected – and on top of that, you are making money doing so. You wouldn’t be making the money from that cut if people couldn’t donate to the site, so you allow the donation immediately. What you’re saying is, if the person is unreachable or declines, you just earned 15% on being a middleman to a donation to your choice.
Simply put, how can you see taking a cut of money that you earned based on someone else’s brand – on people wanting to donate to that brand and thus you earning a profit from that donation, and so ultimately earning profit from someone else’s established IP – as anything other than stealing?
How can you see that as anything except trying to piggyback off of established brands? You function on a ‘it’s better to beg forgiveness than ask permission’ system, which is frankly more than a bit unprofessional and sketchy – I’ve never known a business to function that way that was on the up-and-up.
@SN:
To be sure I have understood your issue, I repeat it here in my own words: You suspect that Kachingle is not designed to deliver revenue to the sites, but rather to raise a small amount of money for a brain cancer research fund?
But if our goal was to do that, instead of spending investment money and three years of our lives building Kachingle, we would just give them a donation ourselves. It would be easier to just solicit donations for brain cancer directly, don’t you think?
Here is what Kachingle is actually doing: We are building a system that directly fixes the really serious revenue shortfall in content, which is resulting from a combination of users demanding that everything be free, pirating, advertising rates being nearly zero, and ad blockers proliferating.
Are Kachingle and PayPal, going to make some money along the way? Yes, and that seems right considering that we are producing a brand new revenue stream for online content that enables users to easily and effortlessly make micropayments, down to the penny level, to sites they love! If you want to attack a serious problem regarding content monetization, you might consider ad blockers. Luckily, Kachingle is the antidote.
If sites do not want the voluntary contributions from our users, they just tell us, we give them the tiny little bit of money already donated to them, and remove them from our system.
Fred Dewey, CEO, Kachingle.com
@Jesse:
If a user adds your site to our system, and starts donating, and then you notify us that you want to opt out, we immediately send you the money your users have given you minus the 15% handling fee, and then we remove your site from our system.
What we are doing is completely legal, as confirmed by our attorneys, because we are not using your logo or any of your intellectual property. And most of our 15% fee goes to cover payment processing fees. We manage all financial transaction fees to enable our users to actually effectively make voluntary micropayments down to the level of 1 cent. No company has ever accomplished this before without the financial transaction fees being 40% or more of the total transaction. All financial transactions are transparent and visible on http://www.kachingle.com thus allowing crowdsourced auditing.
Please remember that this is all being initiated by the users of sites. We do not make them start sending sites money. We are a donation conduit for users to send a small thank you gift to the sites they love.
Fred Dewey, CEO, Kachingle.com
“Our users insist that they be able to contribute money to a site immediately without a lengthy delay’
Really? Publish their requests. And by the way, a user who does not own a site has no authority to add the site to your system and ask you to begin collecting on that site’s behalf. None. How about I call myself a Red Cross collector – without notifying them – and take a 15% cut before handing over the money, what does that get me? Arrested, that’s what it gets me.
You should have been around in 1999 when this kind of bullshit was more tolerated. You bring to mind Sam Jain and eFront.
If this idea had any value it would be opt-in. Dead giveaway right there.
So let me try to put your business model in physical terms:
You stand next to the register at, say, a coffee shop. Every time someone gets a drink, you ask the patron “Hey, do you think the barista did a good job pulling that latte for you? If you want to tip him, just give me the money, and I’ll make sure it gets into his pocket!” This patron, apparently unaware of the various revenue streams that many coffee shop baristas have, like their paycheck or the tip jar on the counter, hands over a couple of dollars and saunters off, sipping their tasty beverage, thinking they’ve done good, and easily too!
And then at the end of a period of time that you determine – an hour, a day, a week, a month – You take your “processing fee” off the top of the tips, and then stuff it in the tip jar for us. Unless the coffee shop doesn’t *have* a tip jar, then you hang around for a bit – a day, an hour, a minute, 15 seconds – to try and snag that barista and stuff the remainder in his wallet. And if you don’t happen to catch him, or he doesn’t see your hastily scrawled note left on a napkin, then you go and donate that money to a cause of your choosing.
Nope, doesn’t sound daft at all. In fact, I think I found out how I’m going to make my next million – EZTip ThankYouBoxes at every restaurant and CoffeeBucks in town!
If a site does not approve of the use of your service on their website, then I believe you should return the money to those that made the contribution without taking any for yourselves. You should only get a share when both parties agree to the use of your service.
This is from my Twitter, from which I never got a response:
@kachingle_de No, the problem is you are taking donations for sites that don’t know you exist, taking your cut, then donating the remainder.
@kachingle_de I understand you are the middleman providing a service, but unlike flattr there is no opt-in, you just assume everyone knows.
@kachingle_de Look at how well involuntarily including people is going for Klout; and there isnt money passed around there (directly anyway)
—
Above that, calling yourselves “just the middleman” makes it seem like you’re trying to disassociate yourself from any blame placed in your direction. You built this system, you should have to defend it against criticism.
I understand the service you are trying to provide and as a small-time creative type trying to make a name for myself on the Internet, I appreciate it’s essence. But accepting donations for a website who may or may not have knowledge of this system is beyond absurd.
Mr. Dewey,
I do not care how innovate a revenue stream Kachingle is creating. Regardless of whether or not you are using someone’s intellectual property directly you are still profiting from that intellectual property. The fact that such use might fall within legal definitions of acceptability makes it no less parasitical.
Kachingle’s entire business model is designed to allow your company to profit from the work of others, and your defense is, “We’re helping you, regardless of if you wanted us to or not.”
If the Kachingle model is so innovative, and stands to help so many, then people should be signing up for it. They should be coming to you and saying, “Yes, we would like you to help us make use of this revenue stream.” Having to opt out of your service after the fact does nothing but reflect poorly on you.
The New York Times didn’t appreciate Kachingle’s presumption, and I suspect they are far from the only organization to find the behavior of your company bizarre and frustrating. If you want to show the world any revolutionary potential Kachingle has as a start up, I honestly suggest you revise your business plan to include a healthy dose of both common sense and ethics; as it stands you have not left me with the impression of being an organization that I would be at all interested in doing business with, and from the comments already posted I suspect I am not alone in this respect.
“Please remember that this is all being initiated by the users of sites. We do not make them start sending sites money.”
This is disingenuous as all get-out.
Users aren’t their sending sites money, they are sending YOU money. If I give you $5 and want a portion of that money to go to a site that rejects your offer to be their middleman (or somehow cannot be contacted), then that is not “sending money” to that site. I don’t send money through PayPal with the understanding that if the recipient cancels the transaction, PayPal will give my money to the United Way or to fund AIDS research instead. If a website rejects my donation, that money should come back to me.
EVERY website that produces content that I value has a way of directly contributing to their upkeep: ad impressions, subscriptions, buying merchandise from them, or at the very least a donation/tip jar link. You’re telling me that (after scanning the leaderboard) Wikipedia, Twitter, Google, YouTube, Yahoo, The Washington Post and Pandora are in need of a service such as this? That they don’t have their own mechanisms for collecting donations? How many of those organizations have actually agreed to let you skim money off of their users’ goodwill?
Do you tell your users when their contributions do not go to the site they thought they were contributing to?
How long do you plan to hold money before donating the funds to brain cancer research? When you give up on contacting a site do you remove them from the kachingle list?
I think if your company wants to prove its good intentions a simple change in policy is in order. When a website declines your offer for “free money” you should just cancel the transaction, return all of the money back to the donators, not take any cut since attempting to provide a service is not the same thing as actually providing one, and removed the site from your list. Simple as that.
Does that mean your company makes less money, sure. But your current business plan allows you to literally make money from fans wanting to support intellectual properties that you have no connection to. That is shady at best and the reason for the controversy and outrage.
wow, you actually -are- oblivious to the despicable level of con-manship you’re indulging in, aren’t you? you’re not just greasy, you’re greasy and too dumb to understand -why-!!
Attorneys confirming something is “legal” does not make it legal.
@wahjahbvious:
“Simply put, how can you see taking a cut of money that you earned based on someone else’s brand…”
Look, I’m just a humble Kachingle user, and I may have this wrong, but it seems to me that if your “brand” has to offer its content to me for free due to the prevailing conditions of the web, and I happen to love your content and want to send you some change each time I consume it, what’s the problem? Answer: you can’t afford to accept my donations of less than, say, $5.00 a pop. So I’m screwed and you’re broke, right? Wrong. I pay (you don’t, I do), I pay Fred Dewey to keep track of my teeny-tiny donations to you, and then he puts them together with a bunch of other people’s donations, and you finally make some money for your awesome, otherwise free content. Everybody’s happy. Why aren’t you happy that I love your stuff and finally found a way to pay you for it? (Thanks to Fred Dewey; weird haircut and antique phone notwithstanding)
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