Ello chooses its first revenue stream: merchandising

Ello has teamed up with Threadless for a series of custom designed, limited edition t-shirts

(Updated with comment from Threadless)

Ello has made it its mission to remain a clean social network. That means no selling of personal data, and no advertisements. And that is not just lip service: it legally cannot run ads.

The company has to make money somehow, though, and there are a variety of ways it can go about that. For example, it can do what Snapchat just did and enter into the payments space. It can also go the a la carte route, sort of like what Sykpe does, and charge small amount for specific features. 

While those may eventually come, Ello has already chosen it's first revenue stream: merchandising,

The company has entered into a partnership with e-commerce website Threadless to sell a series of Ello-based t-shirt, it was announced on Tuesday.  The shirts will feature the Ello logo, which will be "reimagined by independent artists."

The first shirt that will be sold will by from Chuck Anderson, a Chicago-based artist also known as NoPattern. In fact, Anderson will be curating the entire t-shirt collection, which will be known as Ello x. Shirts will be released bimonthly, appearing on the 1st and 15th of every month. Supplies will be limited, and once a new design is released that will be the last time it can be purchased (well, not on sites like eBay, I suspect).

"Ello is about freedom - freedom from advertising, freedom to be who you want to be, and freedom to create. Working with brilliant artists like Chuck is a way we support Ello's creative community," Paul Budnitz, co-founder and CEO of Ello, said in a statement. 

"Right now, we're just excited to see where this artist-designed series with Ello takes us, and hope it can continue to grow," Threadless founder and CEO Jake Nickell told VatorNews.

Selling in-app merchandise is a business model that has worked well for others apps, specifically those in the messaging space. For example, Japanese mobile messaging platform Line offers both games and emoji, or stickers, that customers can purchase and use to communicate with one another as well as personalize their user profiles.

Line's revenue in the last three months of 2013 was 12.2 billion yen or $119 million, an increase of more than fivefold from a year earlier. Roughly 60% of that revenue came from its games, while another 20% came from sticker sales.

Tencent makes most of its money selling customers virtual goods. The company is projected to make 6.8 billion Yuan, or $1.1 billion this year and 9.6 billion Yuan next year. About 85% of the money that Internet giant Tencent, WeChat's parent company, will make will come from gaming.

There's obviously a lot of money that can potentially be made from in-app purchases, but it should also be noted that those services have millions of users. Ello, on the other hand, is relatively new and small, so it would not be able to make anywhere near that type of money, at least not in the short run.

Ello is going to have to get a little creative with its revenue streams, since it has legally bared itself from selling ads by reincorporating the company as  a "public benefit corporation" last month. That means that the company has pledged itself to provide a benefit to society.

Since its no ads policy is in the company's charter, the company is now legally forbidden to ever show ads on the network. It states that Ello must never make money from selling ads, nor can it ever make money from selling user data.

While that mission is what is likely to draw a number of people to the site, as more people become wary of what happens to their data online, it could turn into a double-edged sword if Ello can't figure out another sustainable revenue stream. T-shirts are simply not going to cut it, at least not for a while. 

VatorNews has reached out to Ello and Threadless for comment on this partnership, as well as Ello's future revenue opportunities. We will update if we learn more. 

(Image source: ello.threadless.com)