Friday, October 24, 2008

Big-Tracker Finances

As I mentioned yesterday, I am seriously strapped for time this evening and won't be able to continue my announce-writing series as I had intended. I'll do some coding over the weekend and hopefully get things going again on Monday.

Early in the life of the blog, I discussed the financial logistics of running a small tracker. Well, TorrentFries grew out of that phase. As you grow, so does the complexity of your bookkeeping.

Obviously, the cost of hosting increases as you move to faster and faster servers. However, things also become a lot less predictable. I've previously advised that contingency is a good thing, and nowhere is this more true than in the case of finances. While you're small beans, you will probably be paying the same cost every month for a long time. Hosting is predictable, although we were impacted by the dropping US dollar, which caused our hosting costs (charged in euro) to increase without any benefit to us. Of course, we were growing and becoming richer as time went on, so that was more annoying than difficult.

Eventually, it is likely that donations will outstrip expenses. Don't let it go to your head and don't squander the money. A big site is always in danger of being taken offline or even coming under threat from the copyright police. Having a slush fund handy is invaluable, since you won't even be able to beg for money with the site down. At one point, we had as much as $800 in reserve, plenty to get us a new server if need be. In fact, we were saving up to build our own box to colocate somewhere friendly. That didn't end up happening, but it certainly could have with a few more months. At the time, we were making about $30/mo in ad revenues (Project Wonderful is not the most profitable provider around) and over $500/mo in donations, although donors are fickle and hard to rely on – another good argument for a slush fund.

Now, running into trouble with PayPal (which I assume you are using for your finances) is another concern. I suggest spreading your wealth across multiple accounts, a few hundred dollars in each. If one goes down, you still have access to enough money to tide you through until things get sorted out. Don't use Tor while accessing PayPal. If your geographical IP jumps around too much, PayPal will automatically flag your account as potentially compromised and will freeze your funds until you confirm the account with a credit card. Prepaid cards are handy there, but a massive pain in the ass nonetheless.

How you choose to use your donated money is entirely your own choice, but I have no ethical problem with paying for personal projects that have direct benefit to the site. For example, I bought Coda with donated money, and paid for a course in UNIX administration that significantly improved my ability to do my job. I went from absolutely thumb-fingered to only moderately thumb-fingered, and I think the cost was worth it.

Since there is a massive time investment involved in the operation of a torrent site, I wouldn't begrudge you making a profit, either. The excess donations I received would have amounted to something in the ballpark of $1/hr, and I don't think that's unreasonable. However, profiting from the site opens a whole new can of worms. Profiting from copyright violation puts you in different ethical and legal territory. The implication of sale is what landed the EliteTorrents admins in deep shit, and will get you kicked out of Spain, too. As always, it's a personal decision as to where you want your tracker to go, and I decided to take the high road.

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