One glaring hole in the Food+Tech Business Model Canvas is, of course, revenue. The central issue for an online media platform (or any start-up business!) is how to monetize (ie, get paid for) the value of the content and underlying technology.
Danielle and I met with Holley Atkinson last week to talk about this and we quickly identified five possible revenue sources for Food+Tech Connect:
Even though some of you have indicated that you would be willing to pay to support Food+Tech (thanks Carolyn Blake for the comment!) Danielle is building this community with a commitment to open source/open data and these principles rule out charging user fees to access the main platform. Danielle’s decision is backed-up by this observation made by tech investor Fred Wilson in a recent post about the mobile web:
“A central issue with the Internet, no matter what device and presentation layer you use to access it, is that there is an unlimited amount of content available … What is valuable is filtering and curation. Restricting access to content doesn’t work. Someone else’s content will get filtered and curated instead of yours. Scarcity is not a viable business model on the Internet.” Fred Wilson on AVC 12/30/2011.
Another common revenue source for blogs is advertising, which is certainly a possibility for Food+Tech Connect. However, to make sizeable income from advertising requires a sizeable audience. And even though we really do believe the whole world should be following food, tech or Food+Tech our audience will start off relatively small (potential to grow includes various verticals: farmers, producers, startups, policy makers, researchers, health professionals). Food+Tech is and will be a highly filtered and curated platform – serving a loyal niche audience in a B to B (business to business) world. Large scale advertising thrives in the Facebook, Amazon, Groupon world of many visitors, many clicks. Another downside: advertising revenue is the source with the longest lead-up in terms of investing time and the lowest pay-back in dollars earned. So, while Food+Tech will attract some advertising, contextual banners and PPC advertising will not be the mainstay of its revenue.
Instead, we’re planning to build Food+Tech’s revenue model on sponsorships, events, and research/data. Today I’m focusing in on sponsorships. We believe that with our impassioned audience operating at a busy and popular cultural intersection we have plenty of value for companies seeking a presence in this space. This will translate into significant sponsorship or affiliate advertising for Food+Tech. For the business plan, we have to test that assumption and find the data to prove it.
What do you think? Do you have experience with sponsorships? What makes them work well? What are the obstacles and pitfalls?
I’ll be researching this over the next week, so your comments and recommendations will help greatly. And that consulting offer in response to your comments is still open! One hour of coaching/consulting for helpful comments.