Social community site Blue Kaffee is in trouble. Earlier this week I noticed the sites webmaster Chad Levesque has posted a message stating that site needed to raise $2000 by 10:00 NST Monday March 26 2007. Failure to do so could see the site go down for an undetermined amount of time. For users of this site this must be heart breaking news. Blue Kaffee has been around since 2002, boasts over 22,000 users, 3200 daily active users, and at any given time you can usually find 200 or more people active on its pages.
For those who do not know Blue Kaffee [BK] is a home grown social community site. The majority of users are Newfoundlanders and mostly from the Avalon region. Even given this small user base the sites popularity has grown tremendously over the past 3 and a bit years. But the growth has come at some cost. With the growing user population BK was forced to get commercial hosting at an expense of nearly $250USD a month. Since then the site has operated on the generosity of its membership though various fund raising events and donation drives. But this March has seen one of its biggest challenges since it went online. After building up $2000 in personal debt, founder Chad Levesque, has been forced in to a final donation drive to recoup his costs and keep the site going. Failure to do so will likely see the site go offline until he reaches that goal.
But how does BK compete with sites like MySpace and Facebook, the number 1 and 2 social networking sites. Their success comes partially from their ability to scale with the growing user base. MySpace and Facebook relay on advertising as part of its revenue stream. However, BK has no form of advertising on its pages at all. Relaying on donations allows the site to be ad free but also creates risk when donation levels do not meet expenditure demands. Having constant revenue is essential to being able to grow and sustain your site.
A constant revenue stream will also allow the site to upgrade hardware, software, and hire staff to support and develop the site. A better, faster, sleeker site, with ever enhancing features will help keep user satisfaction and loyalty. Right now BK suffers from a gloated UI design both graphically and textually. If highly successful sites like Google and Facebook are any indication, less is more in visual site design. Slow bandwidth and server response times also frustrate end users and could be addressed with enhancements to the code base or hosting solution. While some pages render fast – according to the PHP render script at the bottom of some pages – it can take several seconds to transfer to the user. This kind of lag hurts more than helps a growing site like BK.
Some of the user comments regarding the donation drive state “if you use it, pay for it” and “advertising sucks”. While other users argue that a simple banner ad will not harm the site. A heated exchange is happening between the two camps, all while the required amount of donations is only at 50% with just a day left to the week long drive. Something I believe that is forgotten is that a majority of the users are teenagers, many are young teens. This age group is unlikely to have Paypal accounts or mentionable amounts of personal income. What income they do have is likely going towards clothing, movies, and doing things with friends. Not toward online community sites, no matter how heavily they use it. Clearly donation drives are not an effective way to pay bills.
I believe this is do-or-die time for BK. While they could continue to depend on the donations of its users to continue to operate, they should be looking at sustainable methods of profitability. Banner ads – not popups – are one way to generate revenue. One user –whom I agree with – suggested targeted advertisements from local business who want to access that age group. This is much like the sponsored ads seen in Facebook and MySpace. Local businesses would likely take advantage of this, although at first it might take some convincing. Accessing stable revenue streams will open new opportunities for things like code optimization, new features, inevitable infrastructure costs to keep the site running, and eventual expansion. If BK fails to take heed of this sign I believe the owner will eventually have no choice but to stop risking his personal finances and close up shop.