What constitutes as a sale for an online content based business?

https://news.ycombinator.com/item?id=2747706

by collateral • 15 years ago

1 1 15 years ago

news.ycombinator.com

I understand that a sale must come first in any business.

For an online content based business... say like AOL and online magazines like Smashing Magazine, Forbes, etc - what constitutes as a sale?

With a physical product - when it's sold (duh)

I know that they rely on advertising - but I'm fuzzy as to where the actual sale takes place. Is it upon visiting the page? Clicking on an ad? Subscription?

mechanical_fish• 15 years ago

You are probably looking for this, as linked from the Wikipedia page on "Cost per Mille (CPM)":

http://tlvmedia.com/pdf/CPM_CPC_CPA_dCPM.pdf

The short answer is "it depends". Sometimes sites get paid when anyone visits the page (CPM). Sometimes sites get paid when someone clicks on the ad (CPC). Sometimes sites get paid only when someone clicks through the ad and does something on the other end, like sign up for a service.

So you're not fuzzy at all. The world is fuzzy, and all of your answers are sometimes true.

Incidentally, all questions of timing become complicated if you look closely enough. Talk to an accountant and you will find that determining "when a physical product is sold" is by no means as easy as you think. Do you count the sale when the product is ordered, when the credit card is charged, when the check arrives in the mail, when the product ships, when the product is received, when the 30-day guarantee period has expired and you know it isn't coming back? What if the customer orders a monthly subscription ("one case of wine per month for the next 12 months"); do you count the revenue when the subscription starts, when it ends, or a little at a time? When a customer does return a product for some reason, do you un-count the revenue that you counted before? What if you've issued a quarterly report in the meantime? Do you owe taxes on the revenue that you collected in June but must now refund in July, and when are those taxes due, and do you pay the June rates or the (perhaps different) July rates?

What constitutes as a sale for an online content based business?

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