Big-Tracker Finances

As I mentioned yesterday, I am seriously strapped for time this evening and won't be able to continue my announce-writing series as I had intended. I'll do some coding over the weekend and hopefully get things going again on Monday.

Early in the life of the blog, I discussed the financial logistics of running a small tracker. Well, TorrentFries grew out of that phase. As you grow, so does the complexity of your bookkeeping.

Obviously, the cost of hosting increases as you move to faster and faster servers. However, things also become a lot less predictable. I've previously advised that contingency is a good thing, and nowhere is this more true than in the case of finances. While you're small beans, you will probably be paying the same cost every month for a long time. Hosting is predictable, although we were impacted by the dropping US dollar, which caused our hosting costs (charged in euro) to increase without any benefit to us. Of course, we were growing and becoming richer as time went on, so that was more annoying than difficult.

Eventually, it is likely that donations will outstrip expenses. Don't let it go to your head and don't squander the money. A big site is always in danger of being taken offline or even coming under threat from the copyright police. Having a slush fund handy is invaluable, since you won't even be able to beg for money with the site down. At one point, we had as much as $800 in reserve, plenty to get us a new server if need be. In fact, we were saving up to build our own box to colocate somewhere friendly. That didn't end up happening, but it certainly could have with a few more months. At the time, we were making about $30/mo in ad revenues (Project Wonderful is not the most profitable provider around) and over $500/mo in donations, although donors are fickle and hard to rely on – another good argument for a slush fund.

Now, running into trouble with PayPal (which I assume you are using for your finances) is another concern. I suggest spreading your wealth across multiple accounts, a few hundred dollars in each. If one goes down, you still have access to enough money to tide you through until things get sorted out. Don't use Tor while accessing PayPal. If your geographical IP jumps around too much, PayPal will automatically flag your account as potentially compromised and will freeze your funds until you confirm the account with a credit card. Prepaid cards are handy there, but a massive pain in the ass nonetheless.

How you choose to use your donated money is entirely your own choice, but I have no ethical problem with paying for personal projects that have direct benefit to the site. For example, I bought Coda with donated money, and paid for a course in UNIX administration that significantly improved my ability to do my job. I went from absolutely thumb-fingered to only moderately thumb-fingered, and I think the cost was worth it.

Since there is a massive time investment involved in the operation of a torrent site, I wouldn't begrudge you making a profit, either. The excess donations I received would have amounted to something in the ballpark of $1/hr, and I don't think that's unreasonable. However, profiting from the site opens a whole new can of worms. Profiting from copyright violation puts you in different ethical and legal territory. The implication of sale is what landed the EliteTorrents admins in deep shit, and will get you kicked out of Spain, too. As always, it's a personal decision as to where you want your tracker to go, and I decided to take the high road.

Retrospective 5: Money

Continuing from where we left off on Friday's post: as a result of the move to a dedicated server, our monthly costs went from $5 (or $0, depending how you do the math) to roughly $80. That's a huge jump for a small site. I made a news post pleading for donations. EasySpeedy required 3 months' worth of hosting payments in advance, plus a €60 setup fee, when paying with PayPal. As a result, we had to raise €240 up front, or $360 US. The community came through. In two days we'd raised $250 and had enough with our previous donations to make the move.

However, going to the member base with hand outstretched is very poor form, and something I like to avoid at all costs. By the way, when you see a host do a donation drive, don't forget that there are a lot of generous people out there and the host may be making more money than you think. I heard secondhand of a site where things slowed down and the administrator announced they needed a new server and started a donation drive. A few weeks later, the site sped up again, "we're on our new server", and the admin walked away with a cool $10,000. Don't let that prevent you from being charitable, especially to a small site—please don't—but that's something to bear in mind.

Anyhow, we obviously needed to find a more sustainable way to supplement our income to ensure that we could make our next hosting payment. I hadn't gotten around to looking into advertising up to that point because it often requires credit cards, mailing addresses and other undesirables. The provider that we did end up with was Project Wonderful. They're wonderfully subversive to normal advertising models, which appealed to my rebelliousness. They certainly don't pay as well as other providers might, but it's all right. Instead of scams, spyware and pyramid schemes, we got ads for web comics and independent online clothing stores. Again, a little subversive.

I also implemented a few perks for donors. There's not a lot of incentive to offer without removing features for regular members, so I added the usual formula of donor star, your choice of username color (staff names in italic), and x days of status per dollar donated. It seems to have worked all right, and we did manage to meet our next quarterly payment with a bit to spare.

I have a feeling there was something else I was planning to mention here, but since I'm actually writing this days in advance as a result of my unnecessarily long post attempt on Thursday, I imagine I'll have time for it to come to me. If not, maybe you'll be lucky and I'll remember later on and tell you then.