How subscription revenues are allocated

Practical micro-commerce in digital content, with automated compensation of content providers, editors, publishers, and affiliates

Content Galaxy’s Content Marketplace Platform (CMP) supports a subscription-based model of Internet e-commerce that can be applied to any sort of digital content.

The system receives income from the purchase of subscriptions to paid channels, and it automatically disburses those funds to content providers, editors, publishers, payment processors, affiliates, and the CMP service itself. This process is designed to provide a fair, transparent, and trustworthy basis for compensating all interested parties and is implemented as a large-scale system that includes secure, real-time facilities for audit and understanding usage patterns.

How Does Subscriber Activity Translate into Payment Amounts?

To clarify how content providers make money (without diving into the actual formulas for dividing up subscriptions), let's examine some specific sample scenarios. Suppose you are a content provider who contributes to a video channel that charges $30 per year and follows a typical set of publication parameters (listed below). Content Galaxy provides a detailed breakdown of viewing and subscription activity related to both your content (regardless of which web site serves it) and to your web site (regardless of whose video content you are serving). Here are samples of what you would find in analyzing your results:

• Amount of commission you make from the sale of a subscription to a channel that originates from your web site (i.e. you are an affiliate at the time of purchase and receive 20% of the $30 price):
  
      $6.00 at the time of subscription purchase.
  
  
• Amount you make for usage if the subscriber views only your content and all the viewing is initiated from your web site, i.e. you are the affiliate that the subscriber clicks to stream the videos (66% + 20% of $12.60):
  
      $10.84 in total daily payments over the year (plus $6 sales commision if applicable).
  
  
• Amount you make for usage if the subscriber views only your content and all viewing is done from Content Galaxy's web site, i.e. viewing has not been initiated from your web site or from some affiliate's web site (82.5% of $12.60):
  
      $10.40 in total daily payments over the year (plus $6 sales commission if applicable).
  
  
• Amount you make for usage if the subscriber views only your content and all the viewing is initiated from Content Galaxy's web site, which also made the original subscription sale, i.e. there is no affiliate responsible for the sale (66% of $17.10):
  
      $11.29 in total daily payments over the year.
  
  
• Amount you would make for usage if the subscriber views only your content, but the viewing is always initiated from some other affiliate's web site, which also made the original subscription sale (66% of $12.60):
  
      $8.32 in total daily payments over the year.
  
  
• Amount you would make for usage if the subscriber does 50% of his daily viewing on your web site for your content and 50% of his viewing on some other web site for someone else's content, assuming that some affiliate made the sale, either your web site or some other one (1/2 of 66% of $12.60):
  
      $4.16 in total daily payments over the year (plus $6 sales commission if applicable).
  
  
• Amount you would make for usage if the subscriber views only someone else's content but the viewing is always initiated from your web site, i.e. you are an affiliate that includes links to videos by other content providers and assuming that some affiliate made the original sale, either from your web site or some other one (20% of $12.60):
  
      $2.52 in total daily payments over the year (plus $6 sales commission if applicable).
  

The calculations above are based on the following typical channel parameters:

Subscriptions are $30 per year. Credit card payments take 5% (i.e. $1.50). Content Galaxy takes 20% after the credit card charge (i.e. $5.70) to host and stream the videos, leaving $22.80. When present, affiliates that cause subscription sales, take 20% of the total subscription price (i.e. $6). The publisher takes 25% of the remainder and puts 75% into the compensation pool (i.e. $17.10 or $12.60, depending on whether or not there is an affiliate doing the selling).

In this case, the channel parameters guarantee that at least 66% of the compensation pool will be provided to content providers, and if no affiliate web site is involved, then the content providers would receive more, 82.5% of the compensation pool. (This assumes that a primary editor and senior editor also receive a portion of the compensation pool if they are responsible for your content, 14% total. Otherwise the remainder also goes to the content provider, less 20% going to the affiliate that caused the viewing, if there is one.)

How Much Can Content Providers (Authors) Make?

Content Galaxy's model projects that, early on, building fewer, larger channels will tend to optimize content providers' incomes (as opposed to having many smaller, more specialized channels). The more overlapping areas of interest that potential subscribers see for a low fixed price, the greater the chances that they will make the purchase.

To get some idea of what a content provider can expect to earn under different scenarios and over time, here are some sample data points from the current model (which assumes an average monthly subscription price of $3).