Making Money On Squidoo

Squidoo Terms of Service (The TOS) says this about the LensRank:

"We use an automated algorithm-LensRank-to rank the lenses. We look at user ratings, lensmaster reputation, clickthrough rates, frequency of updates, inbound and outbound links, and lots of other factors and give the lens a number."

The LensRank concept is further explained here: "In early February 2006, we made a change to our LensRank calculations. LensRank (how we determine a lens's popularity) will still be based on the same formula, measuring things like traffic, click-outs, reader ratings, inbound links, and affiliate sales. ... We're now using a 14-day rolling window.... our lensrank calculations will be done using data from the past two weeks, rather than looking strictly at a lens's lifetime of publication. This will ensure that the freshest, timeliest, and most actively updated lenses aren't trumped by the lenses that perform just because they've been around longer. We're still rewarding the exact same qualities, but we're tossing the grandfather clause out the window."

PS. My referrals to the TOS and FAQ are to their previous version so that the readers could compare both versions. In general, the wording was not changed, only the p. numbers.

Basic ways of making money with Squidoo
Squidoo offers programs that may enable lensmasters to earn revenue through lead generation, affiliate sales, traffic to its partner/affiliate sites, and sponsorship ("CO-OP Services"). As a co-op, the Squidoo CO-OP distributes its earnings to the Members. Currently about 50% of Squido lensmasters are donating their royalties to charity.

Division of revenue earned by the lensmasters
The Squidoo CO-OP divides incoming revenue into two piles.

The first pile is called "pooled revenue". This is revenue that is not directly attributable by Squidoo to a particular lens. There are two kinds of such revenue:

• a/ revenue from selling sponsorship ads on a Search Results page (Interesting... So, the revenue from the Google ads appearing on each lens is not included here? It seems the answer is yes, meaning that that revenue from Google ads is "attributable revenue", which is contradicted by p. 23 of FAQ - it says there it's "pooled revenue" - zuzanna),
  
• b/ revenue from affiliate programs that pay Squidoo income based on overall performance (as opposed to performance of one trackable lens).
  

Pooled revenue is being used by the HQ to first pay the overhead and then to allocate the remaining part to the lenses. This allocation is based on the LensRank AND traffic (IMPORTANT!).

Note: currently the details of this allocation are not being made available. While the current overall LensRank is being shown on each lens, the traffic part is not (it can be found on the Dashboard - for last 7 days and in the Stats (lifetime traffic). Also, the lensmasters do not know how the revenue is being allocated - e.g., in what proportion between LensRank and traffic it's being done; what traffic is it based on - lifetime or last 7-day, etc.

The second pile of earnings is called "attributable revenue." This is revenue that is being tracked directly to a particular lens.

Attributable revenue is being used to:

• pay any remaining overhead (wasn't that paid already?) and then
  
• distribute the CO-OP share (50%) directly to the lenses that earned it.
  

As I mentioned, the TOS explain that all lensmasters with traffic get a pro-rated share in the income earned from the Google AdSense ads that run on every page. Money is also earned via affiliate programs, such as Amazon.com, ebay, CafePress, etc.

FAQ describe how money earned is divided. First, the HQ pays the bills - direct out of pocket expenses like rent and servers and salary and benefits expenses (CEO and board of directors don't get salares). Then, with no other deductions, 5% of the post-expense revenue goes directly to the charity pool, 50% directly to the lensmasters and the rest is retained to pay off investors and employees.

Because Squidoo is a startup, the HQ expects the overhead to be greater than the income stream - at least for the time being. Fixed costs (like servers and tools and staff salaries) have to be paid and all revenue that comes in goes first to cover overhead and then 5% goes to the charities.

Then, the remaining part (i.e., revenue minus expenses minus 5% charity share) is divided among lensmasters as follows:

AdSense revenue: this money goes into a pool, so as to avoid clickfraud. Half of the pool distributes out to lensmasters, on a PayRank scale that is based on a lensmaster's average LensRank and traffic (IMPORTANT!).

Notes:

1. PayRank is a mysterious creature - not explained anywhere else and if it is a number, it is not reported anywhere. Isn't that very interesting that one of the two most important numbers having direct impact on lensmasters' income is not being published (the other one is of course the LensRank);
2. Using traffic as the second ingredient in income calculation is very troubling as the traffic number can be easily manipulated or artificially inflated as activities of "the videosense group" and "the affiliate marketing (contest) group" clearly show;
   
3. The Stats every lensmaster gets don't show any revenue from Adsense ads - at least that's the case with each of my lenses (each of them gets traffic, at least one gets substantial traffic);
   
4. Neither the FAQ nor TOS tell where the other 50% of the Adsense revenue goes.
   

Affiliate revenue (i.e., referral income, like Amazon and eBay and CafePress and SuperStore sales): this is directly attributable to the lens that generated the revenue, and is not pooled with the whole co-op. The lensmaster gets a straight 50%.

[Update: Just recently, Chief Engineer Gil provided some explanations regarding the important issue of PayRank and Adsense revenue in this thread in the Squidoo Lounge. He didn't gave a lot of info, but promised to edit the FAQ portion about this subject. I will write more when that happens.]

The transparency of of the Squidoo revenue allocation is not satisfactory and neither is the amount of statistical data that could and should be provided to the lensmasters so that they could build better and more profitable lenses.

According to the FAQ, the HQ will publish every quarter all Squidoo numbers (financial data?) so that everybody can see exactly how much money was distributed to lensmasters and to charity. The lensmasters are being promised in the FAQ that the HQ will be showing every lensmaster's estimated earnings on the MyLenses page (aka Dashboard). The FAQ page says that this numbers will be updated daily.

Notes:

1. Those estimated earnings - being called "Pending $$" at the Dashboard - include only estimated royalties earned recently from affiliate partners (they are still pending clearance from those affiliates). They don't include earnings from Squidoo participation in Adsense program (clicks on ads displayed on each lens generate royalties for the whole co-op - i.e., everyone should get a cut, but the Stats I get don't show it).
   
2. No quarterly data have ever been published since Squidoo ended the Beta period (it's been longer than a quarter - since October 2006?)
   

One of the topics in SquidU describes how lensmasters are being paid by Squidoo - how the HQ calculates what a lensmaster gets paid and how the money is being actually paid to the lensmasters.

Calculation of the money earned
After Squidoo earns out its overhead and startup costs, the money is split with the lensmasters ("very openly" - HQ promises). Royalties earned via AdSense go into a pool. Half goes to lensmasters, based on lensrank and traffic. Lensmasters get half of the directly attributable revenue from every purchase made via commerce modules on their lenses. Money displayed in lensmasters' My Lenses pages is currently an estimate of lensmaster's income, less overhead, returns and other deductions. Likewise, the amount on the current home page is an aggregate gross estimate. This Topic sends those interested in learning more about the organization of the Squidoo co-op to the FAQ.

Revenue payment processing
Squidoo uses PayPal, an easy, commonly trusted and widely used online payment system. Lensmasters need to sign up for a PayPal account, which limits its usefulness as PayPal is not available in every country.

Note: many marketers question now trustfulness and reliability of PayPal and stop using it for payment-processing.

P. 9, 10 and 11 tell about that - payday is around the beginning of each month. Squidoo uses PayPal to send you cash, but if if you've selected to send your royalties to charity, the HQ will make a donation in your name.

Here is what should and hopefully will happen if you have any money earned at the close of every Squidoo pay period. First, Squidoo will send you an email with a report of total money earned across your account (for all lenses), and the breakdown of where you're sending it. For example, if you have 2 lenses that pay cash directly to you, but 10 lenses that pay the YMCA, this email report will confirm how much money is going where. Secondly, after you receive the Squidoo payment report, you'll also get an official email from PayPal with instructions for how to pick up your money. The PayPal email will go to whatever email address you use for Squidoo.

If you're from a country outside of PayPal's reach, here's what a other lensmasters are doing: a) find someone in an "included" country to accept payment for you or b) send your royalties to the charity of your choice.

Finally, many lensmasters earn substantial income by using on their lenses their "private-account" affiliate links, or they simply promote their own business URLs. Naturally, those earnings are not being reported by the HQ - the size of those earnings is a sweet secret kept by those who earn such income. Some lensmasters say they cash in more than thousand dollars every month.