Gameglow, owned and operated by reputed “self-made millionaire” David Suit, aggressively set out, apparently financed out of Suit’s pocket, to build one of the largest gaming website affiliate networks on the web. Unfortunately, in the process, they made one of the more common mistakes in the “dot com” world – namely, spending more than you take in is a bad thing.
See, for the ad banners they displayed, Gameglow paid its affiliates $2.50 per thousand page views (when they were paid, which near the end wasn’t very often, according to some affiliates), which is pretty generous in the gaming news industry. They got their ad banners from everyone.net, which in turn resold banners from Flycast.
The upshot? For every thousand viewers a Gameglow site got, Gameglow paid their site owner $2.50. Gameglow supposedly was getting $2.75 per thousand from everyone.net. Then again, in negotiations with other web sites, Suit told them that he could only afford to pay them niney cents per thousand. To put it mildly, the internet advertising market has some issues.
Why would anyone purposefully try to lose money? Well, it was fairly common in the “dot com” economy to talk about building your business for the future, the long haul, without worrying about “old money” concepts like, you know, profit and loss. One key component in Suit’s building of Gameglow – affiliates were required to sign over ownership of their content to Gameglow. In other words, once your site was “hosted” by Gameglow, you became, not an independent site owner, but a Gameglow employee. (Other site owners, who signed on later in Gameglow’s life, say they never were asked to sign any contract, much less one that signed over all content rights.)
Gameglow’s owner, the aforementioned David Suit, posted in a thread here about Vault Networks’ problems, (using text almost identical to the form letter he sent out periodically to sites hosted by other gaming networks)
GameGlow is a profitable network and is not losing money. We currently display over 80 milion banners with over 70 gaming sites across the internet including diablo2.com, aoe2.com and many more. We work differently than most other networks in that we guarantee that 100% of the banners on our affiliate sites will be sold and paid for at a set rate. This rate is in writing and can be as much as $ 2.50 CPM (per thousand banners displayed) depending on the number of banners the site displays monthly. This gives our affiliate sites a set amount they can count on every month as an income, not a largely variable income like the ?% of what we get IF we can sell your banners” model. We aren’t as well known as most of the others out there, but we have been around for years and running profitable since day one.
Well, that was certainly news to everyone.net, who told David Suit last month that there was no way in hell they were paying for 80 million banners (the figure I heard was closer to 25 million, but who’s counting) at $2.75 per month. They told him, despite what their contract said, that they were only going to pay for 3 million banners at that rate.
What could Gameglow do? Sue? Cry? Cut their losses finally and close?
Looks like option C at the moment. We’ll keep you updated if the situation changes.