Dear Valued Member or Visitor,
Since we launched My Language Exchange in October, 2000, we have tried everything
possible to keep all the site's services free. However, recent results from our work
in promoting our site, combined with strong emerging trends in the Internet
business environment have convinced us that if we want to maintain our
level of service to our users, we must charge a small user fee.
I'll try to explain why.
Advertising: The original revenue model
When we first launched this site, we had planned to attract enough visitors that we
could sell advertising banners, etc. This was supposed to generate the revenues needed
to sustain the operations of the site. Despite our efforts, we have never achieved the
volume of visitors required in order to sell advertising banners from the advertising
networks.
Advertisers: One language please!
Another difficulty in finding advertisers, is that they want an audience that speaks
their language. This way, they are not wasting their money talking to someone who may
not understand. Again, being a site that tries to cater to as many languages as
possible makes finding advertisers more difficult.
Affiliates: Sales commissions that don't work
So what about the banners we display on our site? Those banners and text ads
are affiliate links. Unlike
advertising which pays each time the banner is shown, affiliate partners pay only when
a visitor clicks through to their site and makes a purchase. There is no minimum
traffic requirement to join afffiliate programs, but the rate of click-throughs and
purchases are next to zero. To give you an idea, after serving nearly 7000 members in
over 16 months, we have earned in affiliate commissions, less than what a programmer
would earn in one afternoon. It appears people are very goal-oriented when they visit a
website. They do not get tempted by an ad for a related service.
Disturbing Trend: Search engine fees
As if relying on relevant content to rank high for popular
keywords isn't difficult enough, there is a strong trend recently, of search
engines beginning to charge fees.
One model used by Overture allows website operators to pay for a high position in the
search result. It is a bidding system where the more one pays, the higher the website
will appear in the search results. In this model, traffic is going not to the most
relevant sites, but to the sites with the biggest advertising budgets. This model seems
to be working, so it is not likely to disappear (according to Overture, it is used by
85% of Internet users).
Another model is paid inclusion. Recently, Yahoo! introduced a $299 RECURRING annual
fee for new websites to be evaluated for inclusion in their directory.
They say it is an express inclusion
fee, that is mandatory only for commercial sites. However, we've been trying to become
included using the free inclusion service for the past year without success.
All major search engines now have a form of paid inclusion or pay-for-placement
program. The way these trends are playing out, running a useful community website will
be like running a real store or restaurant. In addition to the costs of daily
operations, it will be necessary to pay premium rent for a location on a busy street.
What Cost of Operations?
To my surprise, an interactive website like ours takes much more work than expected.
For example, when we had email system
problems in December, it was a 3-4 week full-time job to select another web server
company, move the site to the new servers, fix all the resulting bugs, and notify all
the potentially affected users. This is a good example of what it takes to provide
the excellent level of service our members have found.
Decision Time
So, a free language exchange site is not sustainable. What do we do?
We chose to charge a user fee, because feedback from our users tell us we provide a valuable
service. Many have commented on how quickly and easily they found partners. About 84% of
respondants had found partners and were practicing. We want to maintain this level of
excellence for our users.
Survey Results
In a survey conducted February 23 2002, 84% of respondants reported having found at least one
partner. Many have found more than one. They have been practicing and improving their
foreign language skills. Most comment on how quick and easy it was to find a friend /
partner. You can read their testimonials here
Yours sincerely,
Dan Yuen
co-founder
www.mylanguageexchange.com
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