A jar full of fail: Why tipping and donations don't work on the Internet

There are a lot of things in this article I disagree with.<p>1) Wikipedia doesn't have 5 billion unique visitors (there are only 1.6 billion internet users in the world). And they only put up banners asking for money when they need it, not all the time. So both variables in coming up with the "$.00124/visitor" estimate are incorrect.<p>2) Tax deduction does not make something cost-free. For most people, a donation saves them nothing (since they use the standard deduction) but even for those who itemize, it only saves them the tax they would have paid on that income, not the income itself.<p>3) Tipping doesn't have to create price uncertainty. As someone who has tried the donation model, it's clear that if you set the price of a donation (such as placing a banner that says "Give $5 now"), that's the exact amount that 90% of people will donate. So in essence, you <i>do</i> get to influence what the perceived value of your site is worth.<p>4) The article claims that in order to orgs like NPR to succeed on the donation model, they have to have federal grants and corporate sponsorship, etc. But this argument ignores the low barrier to entry (and low cost) of online content; it's not a valid comparison.<p>5) The article also mentions that those orgs can succeed because they offer physical goods and imply scarcity, but there's no reason that a donation-accepting site could do those as well.

As a loyal NPR supporter, I feel that I have to correct the complete mis-representation of NPR's funding presented in this article.<p>It is true that NPR received a generous gift from the Kroc family ($200 million in 2003, <a href="http://www.washingtonpost.com/ac2/wp-dyn/A6973-2003Nov6?language=printer" rel="nofollow">http://www.washingtonpost.com/ac2/wp-dyn/A6973-2003Nov6?lang...</a>). However, in that same year, NPR's operating budget was $100 million. Assuming a generous 5% utilization of that endowment, that would only pay 10% of the budget.<p>In fact, NPR's web page states that it receives a little under 10% of its annual budget from "major gifts," while nearly a third (the largest single fraction) comes from pledges and annual memberships. (see <a href="http://www.npr.org/about/privatesupport.html" rel="nofollow">http://www.npr.org/about/privatesupport.html</a>)<p>I guess your statement that listener donations are "a fraction" of NPR's operating budget is true. One third IS a fraction, after all. But to say that NPR "really doesn't need your money" is a gross factual error.<p>I, for one, would like to see you post a correction.

I'd guess that tipping is mostly a socio-cultural thing -- it is expected; it would be considered rude not to. In addition, peer pressure is a factor -- unfortunately, I doubt that I would tip as high as I do or as often as I do if I didn't have other guests at my table.<p>Online, you just don't feel bad if you don't tip -- there is no peer pressure and no expectation. So, of course it doesn't work out.

I'm pretty sure that people tip at, say, coffee shops because they don't want to put the change back into their pocket. When people buy coffee with credit cards, they don't tip. When they buy with cash, they tip with whatever coins are left over.<p>(I was told once that this was rude, so I just stopped tipping for coffee all together. If I'm going to be rude, I might as well keep the money for myself.)

A counterexample is Causes on Facebook, a for-profit entity which utilizes social pressure to drive donations to nonprofits and has its own successful "tip" system.<p><a href="http://www.facebook.com/causes" rel="nofollow">http://www.facebook.com/causes</a>

<i>The moment you put the donate button on your website you’re calling yourself a charity case.</i><p>This line caught me. Yes, if you put a donate button you are drawing a parallel between yourself and a charity case if not outright calling yourself one.<p>But if you put a tip button on it is a very different situation. That is more comparing yourself to say a skilled hairdresser (it comes to mind since my step mother is one) where the end user is thanking you monetarily for the good work that you have done and expecting it to encourage you to keep doing good work in the future.

I think it's about context, really. At a restaurant or hairdresser, you already expect to pay and you already have money out. It's usually not too difficult to slap on an extra few bucks for the waiter. (The tipping model makes much more sense at a restaurant, by the way, where there a lot of people involved in your food prep, not to mention the food cost, vs. a barber where the one person cuts your hair and takes you to check out, and they take turns as broom jockey.)<p>If I want to "tip" Wikipedia, for instance, I have to go find my credit card, type in lots of numbers, possibly setup an account, worry about the individual handling of my card information by Wikimedia, etc. That's way too much effort for drive-by donations a la those at the restaurant.<p>I assume that's what tipjoy and some of these other startups set out to fix. I don't think simplification of and success by tipping is particularly a lost cause, I just think that it wasn't easy or prominent enough. Was there a browser extension? If I only had to enter my info once, and there was a button on my browser where I could send any registered site a tip while I was on the page without any special effort, I think I would be prone to tip more often.<p>By the same token, I think that you're much, much more likely to make some money if you follow the more conventional "x costs x, please pay me" model, even if you surreptitiously proliferate content outside of the paywall to increase exposure.

I tip out of fear.

Using the NPR model is pretty despicable if you're getting funding through more traditional means too.<p>For instance, Jesse Thorn (who's background is in public radio), asked for and got $15k in public donations to fund the first season of his web series: <a href="http://www.kickstarter.com/projects/1136753854/put-this-on-season-one" rel="nofollow">http://www.kickstarter.com/projects/1136753854/put-this-on-s...</a> — the problem is that his show <i>is itself advertising</i> — NPR does pledge drives to avoid ads, and here he is using the same mechanism to fund the production of commercials!

I think the main problem may actually be in not setting a price. If you don't specify any price whatsoever, people will be more reluctant to donate because they'll be worried that their donation will be perceived as too cheap, so instead they just choose to remain anonymous and donate nothing at all. On the other hand if you come right out and say 'even a dollar is a welcome contribution!', then who knows...maybe people will only donate a dollar, but maybe a lot more people will donate too...

"Makes the donation essentially cost free to the donor via tax deduction."<p>You what now? Either the US tax system works in some very weird way or that doesn't make any sense.

Incidentally, higher tipping rates, and more honest behavior appears even in the presence of PICTURES of faces. Sure a live human is much more effective at applying social pressure, but that doesn't mean that the internet is helpless on this front (hell use an animated gif).

"Set your own price", on the other hand, seems to be a model with multiple success stories. It has the good vibes of donation, while also having the carrot of a specific item for sale at the other end.<p>Plus, you can use the data as a starting point for future pricing.

Anybody know approximately how much is donated to OpenCourseWare for the free content they provide?

<i>The little donate buttons we were supposed to click on to support our favorite bands as we gave the finger to the RIAA never panned out. It turns out we really were just cheap bastards that didn’t want to pay for music after all.</i><p>This is tangential and potentially destructively off-topic, but when exactly did music become something that we all <i>need</i> to pay for?<p>It seems to me that historically music has been something that people have done in addition to whatever it is that they do for their day job. (You sing while you are doing chores or you sing and dance at the pub at night).<p>When did we become this grotesque soulless crippled race of humans? It seems that there has been a proliferation of a myth that you need specific musical talent (and anointment by a benefactor) to create music. Why is this? It clearly isn't true... If we are all such cheap bastards, why don't we make our own damn music and give the RIAA the finger in that way?<p>I almost feel like there is some sort of institutional loss of music from our culture that almost warrants 'music theft' and is the real reason that people have been so reluctant to pay for their albums. It is as if everyone can make music, but there is some societal obligation that forces the majority of us to believe that we can't.<p>(Bonus: Why guitar hero and not a guitar? The guitar is cheaper...)<p>But please, feel free to ignore. Something about that phrasing simply rubbed me the wrong way and I felt the need to rant.

I still hope that <a href="http://flattr.com" rel="nofollow">http://flattr.com</a> can prove otherwise