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How to: Monetize the Internet, File Taxes, Give Bonuses

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Monetizing the internet. Any entrepreneur worth their bootstraps will tell you: revenue can't depend on web advertising alone. Acknowledging the glut of ad inventory on the web, Time Inc. announced yesterday that over the next six to eight months, it's going to start experimenting with charging readers for content on sites like SI.com, Time.com, CNNMoney.com, and EW.com. Time Inc. EVP John Squires told the Silicon Alley Insider, "Certain content area of our sites will try some pay tests, just to see what will drive consumers to get out their wallets or subscribe to one of our magazines." Peter Kafka points out that the New York Times has been publicly toying with the idea for some time. And sites like ESPN.com have long used a "freemium" strategy (some free content, some paid premium content). Sites that have failed to monetize beyond some web ads or plans for a premium services (ahem, Twitter, Facebook, Tumblr), might want to take note. But what about consumers? What would you be willing to pay for?

A tax cut that could make a difference. Could we be reaching a tipping point against the payroll tax? BizBox points out just how wrong-headed that could be during a recession: It's both regressive, because it's phased out as your income approaches six figures, and literally a tax on work. And it contributes to the massive headache that tax-related paperwork causes small businesses. Liberal Hendrik Hertzberg and the right-leaning NFIB both want either a temporary or permanent break from it. At a time when everyone is focusing on immediate job creation, it's a compelling idea.

Tax tips from former auditors. Business Week has some advice from a former IRS auditor. As a small business owner, you're more likely to get audited than an employee, so be sure to dot your I's and cross your T's. Don't forget payroll taxes, be sure you're properly classifying independent contractors, and have a paper trail to back up cash payments.

Credit rate hikes killing small businesses. More dispatches from the credit crunch: Skyrocketing credit card interest rates are forcing small businesses to shut their doors, Bloomberg reports. Many owners are abandoning cards as they become too expensive, even as bank loans are drying up. According to a recent survey, 3 out of 4 businesses with fewer than 500 employees are getting hit with tougher credit-card terms—and half of them depend on plastic for financing. For more funding alternatives, take a look at Inc.'s guide to angel investors nationwide.

How to do bonuses right. Blogger and VC Fred Wilson weighs in on the the bonuses at AIG (he's canceling his policy, for one thing) and offers his own guidelines for how to give out bonuses. He recommends compensating employees mostly with equity and making all bonuses subject to board approval. For cash bonuses, which may be necessary in private companies, he outlines his favorite formula: a long term approach based on EBITDA. Writes Wilson, "There is no question that the word 'bonus' will now be political poison. And that is unfortunate. Because I believe that bonuses, when properly constructed, can be an excellent way to compensate executives."

Is time running out for Tim Geithner?
Business Insider and Gawker have started the countdown on Tim Geithner's tenure as head of treasury, with the New York Times jumping on the Geithner-questioning bandwagon this morning. After the AIG bonus debacle and Obama's asserting his "complete confidence" in the secretary yesterday, it's only a matter of time, they say. Any guesses on who might replace him?

Citysearch fights a dip in readership by going hyperlocal. In 1996, Citysearch was one of the first online companies to create an online version of the Yellow Pages. But with competition like Yelp, its February viewership saw a 21 percent drop year over year where Yelp's monthly visitors more than doubled. "We got a little bit stale. Our consumers were telling us to get modern," CEO Jay Herratti told the New York Times' Bits Blog. To that end, it's becoming more local, and more social—going from 150 city guides to 75,000 neighborhood guides (sushi in the East Village vs. sushi in Manhattan), which it hopes will eclipse Yelp (currently only in 24 cities). Since November, Facebook members have been able to see their friends favorite restaurants and bars show up at the top of their Citysearch listings and publish Citysearch reviews via Facebook Connect. Borrowing a page from Yelp, user reviews now get equal prominence with editorial ones. In the past 4 months, daily registrations have tripled. Herratti's approach to the competition? "You watch and then you get better."

EntrepreneurSpace? The SBA just announced a new website meant to act as an online community for small business. Ohmygov.com likes the idea but panned it as "little more than a clunky forum more reminiscent of Web 1.0 than Web 2.0." Still, there is some potential here: "Eavesdropping on one conversation between aspiring government contractors demonstrated the power of information sharing, even in such a basic platform, as one firm learned the rules of becoming a veteran-owned small business from the other."

Trimming severance packages. The outlook for individuals laid off from small firms is bleak—not only do they enter a brutal job market but according to the WSJ, employers are scaling back severance packages too. One of four firms polled in December said that they planned to change severance policies, some by reducing cash payments others by trimming benefits.

Recommendations for the new administration. Despite some stimulus for small business, challenges remain, writes Palo Alto Software founder Tim Berry at the Huffington Post. Berry cruised the web and gathered some recommendations for the Obama administration: redouble funding for SBDC's and SCORE, offer bigger tax credits for private business investments, and fix the health care problem. Sound advice, but we fear it will end up filed under "easier said than done."

Best states for business. According to Chief Executive magazine, they are Texas, North Carolina, Florida, Georgia, and Tennessee, in that order. The Lone Star State was a particular standout--seeing its gross state product grow by 4.2 percent, compared to 1.9 for the nation. The worst states? Massachusetts, New Jersey, Michigan, New York, and California. The rankings are based on a survey of more than 500 CEOs who considered business climate, regulation, and quality of life, among other criteria.

You can't have that doggy in the window. A $300 robotic triceratops toy, named Kota, released last year by Hasbro Inc., is facing extinction, according to the the WSJ. Not surprisingly, parents are spoiling kids less and less with pricey playthings these days. They're buying them less expensive items, especially big gifts like bikes and scooters. Some parents interviewed think it's a shame, but others see the downturn as opportunity to teach their toddlers lessons in fiscal responsibility.

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Last updated: Mar 19, 2009




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