Don’t Shoot your Golden Goose!
Sponsored Tweets and Social Spark
Social media marketing platform IZEA has launched several promising services during past few years. Among the most popular ones were Sponsored Tweets and Social Spark. Sponsored Tweets served as a broker between twitter advertisers and publishers. Publishers could post sponsored tweets directly into the twitter feeds of targeted publishers whose twitter accounts were related to the products or services advertised. Publishers were getting agreed upon commission, advertisers had exposure to targeted market segments, Sponsored Tweets received brokerage commission. It was a win-win-win for all parties involved.
With Social Spark the business model was pretty much the same. The difference lied in the source of publishers. Instead of twitter publishers this platform connected advertisers with blog publishers who were willing to create sponsored blog posts.
Have you noticed that previous two paragraphs are written in the past tense?
It is done intentionally to emphasize that those services soon will be history. For now both services are still available, yet they probably will be closed pretty soon.
Why do I make such prediction? IZEA seams to forget that its business model heavily relies on the good will of its publishers. And by publishers I mean not only celebrities with millions of twitter followers but also small guys with a few hundreds of followers.
IZEA’s Exuberant Fees
Unfortunately IZEA treats their publishers worse than a piece of dirt. It had rather high minimum withdrawal requirement from the very beginning ($50). Considering that the majority of small users charge only cents per tweet it probably would take them forever to reach this amount so they can actually withdraw. For comparison, MyLikes (another twitter feed brokerage) allows to withdraw when your balance reaches just $2!
After receiving tons of complaints IZEA decided to do a “favor” to its publishers and introduced an early withdrawal option. From that point on publishers could withdraw any amount they wanted. The catch? You have to pay $2 “processing fee” for each early withdrawal.
Some publishers have dozens of twitter accounts. IZEA was asked many times to develop the module for multiple accounts management. The benefits for publishers are obvious –combining the earning from different accounts would easily allow them to reach the threshold and withdraw the earnings without processing fee. Or at least, even if threshold is not reached, pay once to withdraw the combined earnings.
IZEA response – “It’s not going to happen”(not verbatim, this is the quintessence of their answer.) Explanation: high development costs to develop such module.
Withdrawal is done automatically through Paypal so the withdrawal fee is not justified by the “processing expenses” to begin with. The development costs to provide combined account management realistically wouldn’t be that high. But why bother if this fee proved to be an excellent additional income stream? Right, IZEA? Never mind that publishers are not happy with this “innovation”, to say the least.
The Apotheosis of IZEA’s Greed
But it seems that this change was not sufficient enough to satisfy IZEA’s greed. A few months ago they introduced an inactivity fee. Simply put, if you don’t login to each Sponsored Tweets account each month they will deduct the fee of $5 for “inactivity”. It doesn’t matter that you didn’t login to the account simply because there were no offers for that account this month and the requirement to “check in” just for the sake of it is a complete waste of your time . The fee will still be deducted from your balance without any consent on your part.
The Culmination of Publishers Mistreatment by IZEA
And now we reached the apogee of this story. When advertiser is charged per tweet, IZEA automatically takes its commission (which is equal to the price per tweet set up by the twitter user), and the user’s commission is added to the balance. If publisher withdraws before its balance reaches $50, he’s charged with $2 per each withdrawal.
At least publishers could withdraw their money anytime they wanted. Until now that is. Starting August 28 neither users of Sponsored Tweets nor users of Social Spark can withdraw their earnings at all.
The official response from IZEA? -”Technical Difficulties”.
Let me remind you that these are earnings that IZEA had to keep in the account because they belong to publishers.
And the “technical difficulty” may very well be the fact that there is no money in the account.
IZEA Shoots Its Golden Goose
And here is the hilarious part. Money couldn’t be withdrawn due to “technical difficulties”. At the same time the inactivity fee is promptly deducted for the next month.
If the publisher logged in several times trying to withdraw the money, how he could be inactive? Can you clarify this, IZEA? Is there a limit to your greed?
I wouldn’t be surprised if based on all those facts some smart attorney would start a group lawsuit.
To summarize: publishers is a source of your golden eggs, they are your golden goose, IZEA. If you continue treating publishers this way you’ll soon lose them all.
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Image attribution: Image by By Sophie Riches (Own work) [CC-BY-SA-3.0 (http://creativecommons.org/licenses/by-sa/3.0)], via Wikimedia Commons
{ 1 comment… read it below or add one }
Damu 02.12.13 at 12:16 pm
absolutely agree with you! They are really greedy people. If I set my price $65 then they top it with another $65 and charge advertisers then advertisers think that's too expensive and they don't buy tweet. They should have a breakdown for topping up price. They can ask for 50%-100% more on small prices but should gradually be smaller amount when there is more asking price. And yes they are greedy to charge $2 for less than $50 withdrawal and more greedy to charge $5 to keep account active. They told me i didn't action on one offer, so they inactivated me and i had referred them 35+ referral from same account and i was getting tiny commision regularly but that didn't help to keep account active and they say referral and account are two parts and referral can't keep account active. So, when my account becomes inactive i loose all the referrals and they don't have to pay commission and keep all to themselves. GREEDY!