[rokhayakebe]

You may want to give her more credit. She did a fashion startup for a few years.

About the 3-8% affiliate fees, that's not a viable business model. You would have to deliver north of 15M dollars to get 1M dollars. Assuming the average ticket is $150, you need 100,000 conversion. The average internet conversion rate is 3%. So you need 3M uniques. That is not very easy to get. Even if you are buying it.

[switch]

Give her more credit for what?

She did a fashion startup for a few years and she never figured out that nearly every luxury company gives 10% to 15% commissions?

If she really thinks it's 3 to 8% then she's blissfuly ignorant.

She doesn't get the fundamental concept of capturing the starting point. If a site becomes the destination for fashion i.e. where people go to search for the next thing they buy.

Then that site can very easily expand into selling that very thing.

At some point we say - Instead of getting 15% from this luxury watch maker, we ask for 25%. Then we say - Let's make stuff ourselves and see if we can get more than 25%.

What Google is doing and what Facebook is trying to do is very similar. Expand and take over all the profits. But first you need to be the starting point or decision point for something (search, social interactions, dating, buying clothes).

[melanie_io]

Back in the real world, it is actually happening the other way around. Retailers and brands (which have all the power and money) are becoming the content creators and poaching talent from the publishing industry. Quote below from a Business of Fashion article earlier this year.

"What began as a trickle is now starting to look more like a mass exodus. Jeremy Langmead, formerly of Esquire, is now at Mr. Porter. Andrea Linett, formerly of Lucky magazine, is now at eBay. Dennis Freedman, formerly of W, is now at Barneys. Fiona McIntosh, formerly of Grazia, is now at My Wardrobe. And the list goes on. It seems that there are almost weekly reports announcing that yet another magazine veteran has fled a traditional publishing company to take up a position at a brand or retailer. Recently, it was British Vogue that was in the headlines, when creative director Robin Derrick and fashion director Kate Phelan both announced within days of each other that they were leaving the magazine. Phelan is set to become creative director of Topshop, while Derrick’s plans have yet to be revealed.

By now, it’s a well-known fact that times are tough for traditional, ad-supported editorial outlets. For example, from 2007 through 2009, Condé Nast — publisher of Vogue, Vanity Fair and others — saw about $500 million in revenue disappear, a decline from which it has yet to recover. In fact, Condé Nast CEO Chuck Townshend recently admitted to the Wall Street Journal, “My eyes are wide open. I don’t consider [the traditional ad-revenue model] to be a perennially sustainable stream of revenue.”

[rokhayakebe]

Do you have an example of a site that started as an affiliate and ended up creating its own products? I think this is would be very very difficult.

[rokhayakebe]

I think you killed your reply. Still read it. You may have a point. In the case of Google you can see this happening, and Jason Calacanis pointed earlier this week that "Google is now buying content companies and just giving you the answer". So you are right. However I think when you are dealing with physical products the dynamics are truly different.

[grimen]

We got 30-40% on each sale. Not sure it's a US issue - in Europe it's 30%+.

[jfarmer]

What kind of products were you linking to that could afford a hit of 30-40% against their gross margins?

[justincormack]

One of the reasons why stuff is so much more expensive in Europe than US. The prices are higher, so cash margins per sale still high even if percentage margins might be lower.

Now Europe is obviously a place where there is a lot of scope for these businesses.

[diolpah]

Reality from my perspective is somewhere in the middle. We pay between 10 and 15 percent.