[quote]Amazon is always looking for ways to help our sellers grow. We are excited to announce a new service: Amazon Lending by Amazon Capital Services, Inc.

Based on your Amazon selling performance you are pre-qualified for a loan up to $xx,xxx. Use these funds to purchase inventory and increase your sales on Amazon.com.

How the Amazon Lending loan works:

Register for a loan. Sign in with your Selling on Amazon Primary Account holder user id and password.
If approved, the funds will be advanced to your Amazon Seller Account within approximately five business days, and we will initiate a disbursement to your bank account on file.
Your Amazon Lending monthly payment will be automatically deducted from your Amazon Seller Account.
Go to Amazon Lending to complete your loan registration. You will need to sign in with your Selling on Amazon Primary Account holder user id and password. You may also sign into your Seller Central Account, look for the Amazon Lending offer in the right hand column of the home page and follow the links to “Learn more” and “Register.”

If you have any questions, please contact us at support@amazoncapital.com.

This offer expires on February 7, 2013. Registration for Amazon Lending is by invitation only.[/quote]

I find this interesting. As an Amazon shareholder I’m excited for the revenue potentials and it reminds me, quite frankly, of GE Capital. Amazon has gotten famous for getting really good at certain things, such as fulfillment, or Internet infrastructure and data processing, and then farming out their excess capacity. GE is famous for having really low corporate lending costs and then playing arbitrage by relending that money and making a profit on the interest rate spread. Not it seems as if Amazon is taking a page out of their own book and following GE into that same sort of thing.

On the other hand it also reminds me of relatively shady receivables lending. These companies want you to shift your credit card processing to them and then they’ll give you a loan financed by those credit card receipts, the terms are almost always horrible though and I feel as if they just prey on the desperate or the ignorant. What type of program Amazon is creating will depend on the interest rate, which I will check out and report back.

I may actually take advantage of this service. I have a manufacturing business now and while it is profitable it is capital intensive. Making a new product requires hundreds of thousands in upfront costs, and you don’t get that money back until it starts selling, enough capital to cover in between time, especially when you’re trying to do multiple products at once or otherwise expanding, can be difficult.

Update:

So, here are the terms they offered me.

12.9% APR with a 6 month repayment term, or 10.9% apr on a 4 month repayment term.

I do not think I’ll use it, I have existing lines of credit I can tap if need be at much lower interest rates. I also dislike the time limit “You must decide by February 7th.” That seems a bit like a high pressure sales tactic. This program may make sense for many sellers around the holidays, to help buy Christmas inventory, but we’re past that season now. In my opinion, at that interest rate, you need to have a lot more flexibility. I guess if you were a seller with no other access to short term credit it might make sense. I would only consider it if I exhausted my lines of credit and still needed more capital which at this point I do not think is likely.

Today only to celebrate their 15 year anniversary, they’re offering 50% off, I’ve never seen a discount so high. I’d recommend pursuing it. Use coupon code “SINCE94″

A standard screen resolution is 1028 pixels, but also the sum total horizontal room needed for the two most popular IAB ad units is 1028 pixels. If I want to maximize a website design for ad display that often involves using both 728 pixel wide leaderboards and 300 pixel wide rectangles.

So, it fits perfectly right? No, not quite. The obvious solution is to put the box ad somewhere on a left or right menu or side bar (and maybe a second one nested in a content paragraph), then to put a 728 ad above the content. But you have to account for pixels taken up by the browser scroll bar on the right side of the screen, and you need padding or spacing between page elements or it’ll look bad, so that 1028 resolution shrinks to something like, minimum, 970, and that just isn’t enough room.

So it has been a battle, trying to figure out an optimal ad layout while limiting resolution so that people on 1028 or smaller resolutions do not have to horizontal scroll.

On some sites I’ve done a hybrid situation where I park the 728 leaderboard over BOTH the content block, and the sidebar block, and that can work. That type of layout can even squeeze into an 800 wide resolution (which we should have all left by now, if not, do so, you’ll make more money). On other sites I’ve limited myself to a 250 pixel wide box ad. Then I get these emails from Google “You know if you changed this ad from 250 pixels to 300 pixels you’d make like $100 more per day?” I think “Great, okay Google, I’d love $36,500 more per year, but you tell me how I’m supposed to fit it in?”

The solution is to kick 1028 to the curb. 85% of browsers now use a resolution higher than 1028×768. So this past week I tweaked my garden blog settings to be bigger than 1028 so I could get a beefier sidebar without losing my 728 content ads. This site finally pushed me to do this because it uses a lot of big pictures in posts, and so I wanted to keep the large post space, and because I wanted to include a few new things like recent forum posts on the sidebar (so as to draw more traffic into the forum) and it really needed a wider column.

I plan to do this same thing with some of my other sites in the future (such as the site Google keeps telling me will earn more, but its bigger, and will take some time), and I tell you what, it feels good to be unchained from 1028 limitations. I settled on a width of 1050, which allows me to fit in what I wanted to fit in. It does mean approximately 15% of my users may have to horizontal scroll, slightly, but that is okay, maybe it’ll get them to upgrade their computer.

Well, unfortunately, stealing content has become quite commonplace on the Internet, and you may think that your content is unique but since losers the world over are stealing it, it isn’t.

I decided to do some copyright checking today, and found dozens and dozens of places stealing my content. I sent out many DMCA notices.

This was easier because a couple years ago I made a DMCA Form Generator that I never released. Why not? Well… I couldn’t get the PHP to PDF function to work like I wanted to, but everything else worked fine except that. I decide I should just release it and disable that function for now. So…

Website Publisher DMCA Form Generator

This thing is awesome, and if you have a fax machine hooked up to your computer it will save you tons of time.

First of all, you have to be a forum member to use it, so go ahead, register, its free.

Then visit the page and there is a database of 3000+ hosting companies already in, you search for the name, if you find it, great, if not, add the host yourself (eventually, as people use it, all hosts should be covered). Then you can create a form for the host and the form is automatically populated with their contact information, a few fill in the blanks and then you sign it? How do you sign it? Well, you could print it out, sign it, and then fax or mail it, but why kill trees?

Upload an image of your signature to the site and it will be put at the bottom of all your forms, signing accomplished.

Then just print to fax, and send it to the web host for the person stealing your content. You can send a DMCA notice to any web host without touching a piece of paper.

The site will save a copy of your form in an archive as a record you have access to for whatever you might need it for.

Give it a try. No one to send it to? Go to one of your most popular articles (that you own the copyright to of course) copy a full sentence, bracket it in quotations and then search Google for that sentence. I bet you find someone somewhere with your article. If not, consider yourself lucky.

Sometime soon I am going to write a long webmaster copyright article that covers DMCA notifications and other things in more detail.

I’ve never been a fan of people offering 2x profits for an established profitable website, but I explain how and why in that previous post.

Internet Brands, a large online publisher that also happens to own vBulletin, was a publicly traded company until recently, when it was taken private by a private equity firm. The price for this manuever was just over $13 a share and it ended up being… wait for it…. 6x revenue (gross) or 25x EBITDA (profit).

This happens to be roughly the exact same multiple AOL paid for Web Logs Inc, though that was a much smaller transactions ($25m, vs this $650m).

We should know more about valuing content websites soon when Demand Media, that great content factory, goes public. What P/E ratio will they have? I’m betting somewhere north of 25x

Here is a good comparison of Demand Media and Internet Brands for further reading.

Oddly enough… one of those two companies may have offered to buy one of my sites previously and what they may have offered me was less than the 25x others have paid them. If the offer took place, which I cannot confirm, it obviously did not conclude as I’ve sold no sites, but it looks like that sort theoretical aquisition would have been profitable for them, since I wouldn’t ask for 25x (for the record, I’d sell pretty much any site for 20x earnings).

WASHINGTON – Federal regulators are proposing to create a “Do Not Track” tool for the Internet so that people could prevent marketers from tracking their Web browsing habits and other online behavior in order to target advertising.

The proposal, inspired by the government’s existing “Do Not Call” registry for telemarketers, is one of a series of recommendations outlined in a privacy report released Wednesday by the Federal Trade Commission. The report lays out a broad framework for protecting consumer privacy both online and offline as personal data collection becomes ubiquitous — often without consumer knowledge.

This is one of the stupidest ideas I have ever heard.

What can you track online? Cookies and IP addresses. Cookies are fully 100% in the control of the individual user, if a user does not know how to block them in their browser settings they need eduction, not legislation. I cannot fathom that anyone would actually propose a law to limit the right of a website to read and write cookies to a browser if the browser software is set by the user to explicitly allow it.

So, I can only think that they believe that we need some sort of IP based do not track list.

The problem is that people can share IPs (to the tune of thousands on one), that one person can have more than one IP, and that IPs can and do regularly change.

So if paranoid Bob adds his IP to the “do not track list” he is also adding it for Shopper Susan who happens to like getting relevant and tailored advertisements, because they share an IP. Or perhaps one day the ISP switches IPs and suddenly George, who never signed up for the same reason as Susan, is on the list because he has Bob’s old IP.

What is perhaps more interesting is the fact that to sign up you would have to claim your IP address via some government database. So the government would have a free database of people and their related IP addresses. Right now the government can only get that data from ISPs with a court order. And, in general, unless you give a website your personal information, they will never know the name behind the IP.

So paranoid Bob who signs up with the big government do not track list is actually REDUCING his privacy because now his name and his IP are on a list. Could be that this information is then made public. So you go from an anonymous number on the Internet, to a name. Privacy this does not make.

People, if you really don’t want to get ads for stuff you might actually want to buy, turn off browser cookies. If you don’t know how to do that, ask a teenager. If you still can’t figure it out, pay some overpriced security company for their software to do it for you. Then tell your government to deal with real problems, like the economy and North Korea.

And another thing… how would you even tell if someone violated the “do not track” list unless government is looking over the shoulder of every Internet business in the world and requiring daily reports? You know when the Do Not Call list has been violated because you get a phone call. How do you know when the do not track list has been violated? “Hello Government, Bob here, yes again, I just saw an ad that was just a little too relevant if you ask me. Do something about it.” Really you’d need to legislate companies do the reporting, probably by filing out some form outlining compliance practices, with random audits. Lovely.

I can see a lot of false positives too. Poor old Bob is going to get confused by IP geolocating when he stumbles upon an AdultFriendFinder ad for “Hot girls in Springfield” and panic “Oh my god they know where I live!”

I had hired through elance a company called Value on Web to do some programming for me last year. They had good feedback and lots of completed projects, including one just like what I wanted. Their bid was not even close to the lowest.

Look at this code they did:

if ($_POST['submitForm'] == "yes") {
if($_FILES['store_image']['size'] >0){
$image1 =date("Ymds")."_".$_FILES['store_image']['name'];
move_uploaded_file($_FILES['store_image']['tmp_name'],'../store_pic/'.$image1);
//@resize_img('../store_pic/'.$image1,150,100, false, 80, 0, "");
copy("../store_pic/".$image1,"../store_pic/thumb/".$image1);
//@resize_img('../store_pic/thumb/'.$image1,52,100, false, 80, 0, "");
}

This is a bit of a script to handle an uploaded image.

These so called professionals thought this was good enough, can anyone see the problems?

You absolutely always need to check what sort of file is being uploaded when you accept uploads or you could unwittingly allow people to upload malicious scripts and code. You can check the mimetype of the file, and definitely the extension. If the file is not an image mimetype, reject it. If the file does not end with (not include, but end with, otherwise someone could upload image.jpg.php) .jpg (or .gif or .png, etc) reject it. Also, have the system generate the filename randomly, so the user cannot access it after upload.

This isn’t a secret, this isn’t complicated code, had they done a basic google search for how to do a php image upload they would have found numerous examples of code that they could copy and paste that would do this. They were just lazy, or they didn’t know any better. I’m not sure which is worse.

I expect when I pay thousands of dollars to a company I don’t need to go over every line of their code to make sure it works, if I need to do that, I might as well just code it all myself.

So, my server was hacked, website homepages were defaced, and I spent an evening cleaning it up. The extent of the infiltration was such that I am no longer comfortable with this server, it is tainted. So I’ve decided to get a new server and migrate all sites. Thankfully cPanel/WHM has AWESOME migration tools that can move a site in minutes instead of the hours it used to take me manually. This is hugely beneficial when you have many sites. Also, the server was 4 years old so probably about time to get a new one anyways, and because of Moore’s law and whatnot, my new server will be 3x more powerful for the same monthly price.

Don’t think that this can’t happen to you, it can. Botnets scour the Internet for insecure forms, no matter how small and insigicant your site is you can and will be targetted because everything is automated. I believe most servers end up probed within minutes of being hooked up to the Internet.

Included in the bill is a new requirement that would make all businesses send 1099 forms to all providers of goods and services who you spend more than $600 with, starting in 2012. Currently you have to send them only to contractors really, and those who are not incorporated.

So, you will need a W9 form from every company you do business with. If they fail to provide it you will be legally obligated to withhold a portion of their payments. So if Vonage fails to provide me a W9 I am legally required under federal law to withhold payments to them. Do you think I’ll still have phone service after that?

Imagine you’re a trucker, and every single gas station you stop at along your route you need to get a W9 form from them. Seriously? Yes, seriously.

If you take clients out to dinner or lunch a lot at one restaurant, gotta get it. Your ISP, your host, anyone you buy inventory from, the gas company, the water company, the electric company.

You have to accept W9s from all these places, then file 1099s at the end of the year. The paperwork burden on employers alone has to be enough to move our GDP.

Some people say it could result in a billion, yes, with a b, additional papers being sent to the IRS in January. The IRS will have to hire more people just to deal with these billion pieces of paper. I kinda think they should rename the bill to the “Accountant and Postal Service Full Employment Act” or something like that. What is a stamp times a billion?

Can you imagine a truly big company, perhaps one that did B2B selling. You could be dealing with hundreds of thousands or millions of forms. 1 per customer, 1 per supplier. How many trees must we kill?

Apparently, lawmakers, and I use that term loosely, from both parties hate this provision, which had they read the 2400 page monstrosity they might have seen it, and they pledge to repeal this. What if they don’t? What if they get too busy worried about baseball players taking steroids or scoring political points? Are you ready to start doing this crap?

This is the problem with big bills and big government people. If I were president I would tell congress keep it under 100 pages or it always will be vetoed. No one in Washington has ever heard of K.I.S.S. and when you have ridiculously complicated bills, that the people voting on don’t read, you will always have unintended consequences. This is just one, there are many more, there are most assuredly even more we don’t know about yet.

Write your representatives people, make sure they don’t forget to repeal this stupid requirement, or find yourself spending more and more of your productivity pushing paper around. I wonder if it would be possible to measure what percentage of our GDP is just pushing paper.

I invest a lot in real estate, and of course in websites, and I see a lot of parallels. They are both properties that can provide almost completely passive income.

Where they differ is in price, and real estate, even today, after the crash, is far far far more expensive than a website, on an income valuation basis.

Even if you consider all investments, a website is one of the cheapest.

Now sure, some people will claim websites are cheap because there is risk. Well, where have you been the last two years if you don’t think there is risk in real estate, bonds, or equities?

Others will claim that managing a website requires time, and that is true, but how much depends largely on the type of website. A blog will languish without regular updates, and that will take time, a generic resource site though can coast on autopilot for years, earning you passive income.

A typical yield on a corporate bond might be 5%, a yield on a US Treasury bond is too low to even consider right now. A bond provides no protection from inflation, but also very low risk. A yield on a higher yielding equity can also be 5%, and that does include some protection from inflation, but the yield can also go down, so there is added risk. But you also have the chance for capital appreciation. The highest yielding equiting, REITs and MLPs and some Preferreds, might yield 10%.

A yield is how much of your initial investment you get back each year. So on $50,000 at 10% you would get $5,000 a year, at 5% just $2,500 a year.

There are also tax implications, the tax code is scheduled to change a big deal in regards to most of it so it probably isn’t worthwhile for me to give specifics, but if you’re in a higher tax bracket, in a couple years you may end up paying 44% of your dividends in taxes. It makes very little sense for investments to be the most highly taxed form of income (because then you’re just discouraging investment, which hinders job growth and business expansion) so I’m sure congress will act, but right now, that is what you’re looking at (before any state or local taxes too).

Now, with real estate. Most banks require 25% down for an investment property, and it is hard to make a profit on rent unless you’ve owned the property a long long time. So in general you break even on the rent and your profit comes from the equity you’re building as your tenants pay down your mortgage.

If your property costs $100,000 and goes up in value at 2% a year you’re gaining $2,000 a year (the first year) in additional equity. Meanwhile, if you’re on a say 30 year mortgage (at $75k) you’re also gaining equity of, on average (I don’t want to figure amortization for this example) $2,500 a year, as your tenants pay down your mortgage. Meaning your total equity gain is $4,500, or 4.5% of your total house value.

However you didn’t pay cash for the entire house, you used leverage, debt, to get it. So to calculate your true return on investment you take the equity gain vs. your downpayment or whatever you put into the property and that gives us an 18% yield. Way better than stocks or bonds.

You of course have to deal with being a landlord, which isn’t for everyone, but the potential for returns is much greater (so long as you don’t overpay in the first place, which is what so many people did during the bubble).

On the tax front, real estate acts as a tax shelter for people with lower to middle incomes, and even people in the highest tax bracket can still use it to shelter some income. So long as you don’t sell the property your tax exposure will be very limited to nothing. When eventually your loan is paid off you can even refinance and the bank will hand you a big fat check, which you can just pocket as return of capital, no tax required.

The big downside of real estate is that your money is locked up for decades, it isn’t a liquid investment.

So bonds get us 1-5%, stocks 5-10%, and our real estate example nets us 18%. What about websites?

Well, think of a website as a rental unit where you have no tenants to worry about, never have any vacancies, and where the rent is paid to you by advertisers or consumers doing shopping.

The typical valuation tossed around is two years of profits, which I find ridiculous for all but very speculative websites, unoriginal ones, ones just this side of copyright law (or breaking it), websites that have only existed for two years or less. 90% of websites you see for sale fall into this category, I don’t bother with them in general, but I suppose that valuation is fair for them.

But for legitimate unique established websites that valuation is way to cheap.

I recently bought a website for $50,000. The website should make at least $20,000 this year in profit, which is a little bit better than what the previous owner was getting but I added some content and some ad units (and will be doing more). In the end I paid about 3x yearly profits of what it was getting for him, or 2.5x what it will be getting for me. This website is a passive resource site that requires no regular updating or maintenance and that has been around for almost 10 years, with wide and varied sources of quality incoming links.

It is very easy to figure that I’m getting a yield on it of 40%, which kicks the pants off real estate and stocks. Why would my yield be so much higher? Because it is a riskier investment? If this were a bond and it was yielding 40% that would mean that most investors were predicting the bond issuer would go bankrupt within 3 years. What do you think is the chance that my website would lose 100% of it’s value in 3 years? There is hardly any one force that could remove 100% of a website’s value, even an across the board Google ban will still allow you to get traffic from MSN and Yahoo and whatnot, the website might still make money. And, since you’re buying a well established site, and assumingly not changing it a whole lot, what would be the risk of suddenly now for no apparent reason it gets a ban?

I got a good deal, and there were other bidders, who refused to pay more than 2x annual profits, they needed a 50% yield or nothing.

I regularly get offers to buy certain of my websites and they often limit themselves to this stupid metric as well, and I tell them no thanks. You have to think of opportunity cost. Suppose I own a website that makes $100,000 a year, and I’m offered $200,000 for it. Since I am not in debt and needing a bailout or otherwise am I distressed seller I have to think about what I could do with that $200,000. Leaving taxes out of it, I could invest that $200,000 in real estate and make a 20% return, but my money would be tied up in it, still, it’d be $40,000 a year in equity, and all the headaches of being a landlord. I could invest it in a bond or equity or something yielding say 5% and make $10,000 a year, completely passive, no work on my part, and some chance for capital appreciation.

Or, I can keep the website, let it yield 50% for me, and have chance for further capital appreciation.

This is not a hard decision, especially when the website in question doesn’t require regular updating (which is the case for most of my websites).

Even a dropship ecommerce business might not require more than 30 minutes of work a day, which is certainly worth maintaining a 50% yield.

I can’t explain the prices some websites sell for, my only thought it is must be a combination of distressed sellers, and of the fact that buyers need to be specialized. Anyone can buy a website, but 99% of the population doesn’t understand how to run one, so there is a knowledge barrier, and that allows investors to get a massive yield premium.

So, as I said in the beginning of this post, if you know how to do it, investing in websites is a good idea.

Oh, before I forget, on the tax front, websites are much like real estate. Assuming you have a logical business formation like an S-corp you will not need to pay medicare and social security taxes on your business income. You will also be able to depreciate the cost of your website purchase over time. The fact that the website is bound to make more money than the depreciation (which is unlikely with real estate) does mean it’ll increase your yearly tax burden, but that should be seen as a good thing, not a bad thing. The biggest difference is you’ll probably be unable to find a bank willing to finance the purchase of a website, so you can’t use leverage to goose your yield.

Perhaps terminate is the wrong word, they’re basically going to end all existing Right Media services for small publishers, which is most of what the company offers.

Coming on the heels of their implosion of YPN I suppose I shouldn’t be surprised, but I am. YPN, of course, no longer exists really, Yahoo is going to completely farm out all advertising to Microsoft in a recent deal.

Does anyone take Yahoo seriously as a company anymore? Let us look into the past and see how Yahoo has innovated and improved, or perhaps not.

1. Yahoo starts company as a web directory, the first, becomes one of the most popular websites on the Internet, directory is manually edited by humans.
2. Yahoo starts charging for directory submissions, makes a gold mine. Search results are based on on directory listings primarily, making directory listings important for ranking well, everyone buys one.
3. Yahoo deemphasizes directory listings in their search results, but still links to matching categories, less people buy them.
4. Yahoo stops even linking to directory categories in search results, “Directory” doesn’t even get a main tab. No one buys listings anymore, nearly impossible to justify the $300 yearly fee with the paltry traffic received, only the most profitable sites should do it.
5. Meanwhile, Yahoo purchases Inktomi, an early search pioneer, to power their search results. Yahoo eventually also absorbs Lycos, Fast (Alltheweb), and Altavista, all early pioneers, all at one time the most popular search engine on the Internet, Yahoo kills them all like so many wives of Henry the VIII.
6. Yahoo inks a deal with Microsoft for search, effectively exiting the search business, all the money spent on acquisitions could have been saved if they just partnered long ago.
7. Meanwhile, Yahoo had purchased Overture, formerly Goto.com, the original PPC search engine.
8. Despite buying the creator of PPC search, Yahoo allows itself to be out manuevered and out innovated by Google.
9. Google PPC ads get smarter, like Google’s search index. Google launches Adsense PPC ad syndication platform, eventually syndicated PPC ads account for something like 85% of Google’s ad dollars.
10. Yahoo plays catchup, launches YPN, perpetually in-beta ad network sputters along through mismanagement after mismanagerment. Yahoo lets in large publishers of spammy sites but doesn’t allow advertisers to opt-out, sites make good money, for a short period of time, but advertise ROI plummets, advertisers flee. Yahoo keeps crappy partners in network, but kicks out good ones for sending international traffic, which every other network on the Internet has no problem just filtering out. Network never leaves beta, network dies.

11. Yahoo buys Right Media, an innovator in small publisher advertising. Creator of an exchange to match up small publishers with small advertisers. Does some innovative things like allowing “R-Rated” sites (and labeling them as such), something most networks do not touch (but should, look at how much money R-rated movies can make). Eventually, Yahoo kills Right Media, reasons unknown.
12. Meanwhile, Yahoo inks deal with Microsoft to outsource all PPC advertising, effectively killing the original PPC search engine.

For all these reasons, I hereby crown Yahoo, the worst company on the Internet.