Conspiracy Theories. Oh, We have a few.

In a flash of angelic harmonics that usually only sounds with the convergence of the alignment of the heavens and earth, it came to me as to why views have hit all time lows on Etsy.

Rokali had always wanted to take Etsy public. He's never really made that a secret. And so do the people who put $25 million into it. Sometime in the future, Etsy will have an IPO, but Wall Street doesn't care about handmade, they care about money... lots and lots of money. Which Etsy is still not making enough of to be considered one of the cool internet wunderkind like Zappos or Flickr. Yet.

Etsy made $12 million in 2009 from all reports I’ve seen. There were $200 Million in sales on site last year. Etsy’s percentage of that $200M comes out to about 5%.

And before you start to go off on me about the 5% number with a “Etsy’s take is only 3%!” Right, but on top of the 3% take from $200 Million in sales (Final Value Fee) there is listing fees, relisting fee, showcase and Dorque ads.)

Now that makes 5% sound like a big ass chunk - until you realize eBay probably makes 15% to 25% of it's seller's sales with many forms of “upsizing” your listing with all sorts of add ons, options and enhanced listing features - not to mention PayPal’s 3.5% cut of sales, since eBay owns that too. Up against that kind of major league double dipping, Etsy’s little 5% or so looks like a joke.

So then, what can Captain Swimmy McSwimmypants and the Snobby Investors League do to make enough money from Etsy sellers so that it makes Wall Street happy when they do decide to go public? See, adding more sellers is not good enough...they have to make more from each sucker seller that hasn’t yet caught on that the Etsy Dream comes with tears and broken dreams attached.

So as I see it Rokali and the Etsy Bored have a few options:

1. Raise fees - seems pretty simple, ebay has done it for years, but it's very obvious and the sellers tend not to like it. If Etsy raised fees to something like .35 cents per listing and 4% final value fee they could bring in more money but would have a fight on their hands. I can see the forum now: "Oh noes guyz, my fees were 600 bucks this month instead of the 500 I normally pay! rabble rabble rabble" - it would be a popcorn worthy event to say the least.
   
   
2. Reduce the number of months that a listing lasts, thereby increasing fees. Just changing the listing length from 4 months to 3 months would increase listing revenues 33% without any actual fee increase. “Hey guyz, at least they didn't raise the fees!”
   
   or
   
   
3. The way Etsy appears to be going...contextual advertising...now try to follow me down this rambling path:
   

Several months ago Etsy purchased Adtuitive , remember that? They were a search engine advertising company, and the word was they acquired them solely to get their developers to work on search . But you know, if you work in the tech field that if you want to hire developers, you make them an offer they can’t refuse. If you want a company's assets, you buy the whole damned company. We’re guessing Etsy probably isn't after Adtuitive's desks and supply closet. The real asset is their search engine advertising platform.

Contextual advertising is like Google Adwords. It lets people bid on or buy search terms and place ads next to or within the results of those searches. It’s kind of like Etsy showcase spots, only more advanced, but it’s a tool that isn’t really useful without relevant search. (Which Etsy seems damned set in NOT providing.)

“Wait!” you say “Etsy started testing relevant search awhile back!”
CORRECT! Are you starting to see now why you haven’t gotten the basic seller tools you've been asking for?

See, an odd change happened a few months ago about the time Etsy bought Adtuitive, they started creating pages for searches. Etsy creates web pages for searches that people run on the site, and the ones that get searched pretty often get linked to from the Dorque, other searches, or maybe even a site map, so when Google crawls Etsy it finds these perfect keyword matches with good links. The keywords people use to search on Etsy are the same they use on Google, so this is a really good way to have Etsy pages show up high in Google searches.

The problem though, as many know, is that Google will only return a couple of links per website. The searches have a lot of authority and stay around for a long time, even if the items on them change. So while your items might not get returned by Google, Etsy's new keyword search pages do. So Etsy gets all the traffic for your items - not you.

Any move towards relevancy-based internal search results will line up everything perfectly for this new Google search advertising platform.

Etsy has been doing this for about 3-4 months, and sellers are definitely starting to notice the drop in search traffic to their items, even though Etsy says the Google traffic to the site is the same as always. Of course it is, they are just manipulating where Google goes, or doesn’t go.

What have the new Adtuitive developers been doing since December? Working on the new Etsy advertising opportunity, not on search (Etsy hasn't announced any additional search changes or plans).

Etsy's new sleazy gimmick...”HEY SELLERS! Buy ads on Search Results! That's where the traffic is!” Right, because they stole it from your shop! Etsy will use your item and content to get Google to direct traffic to Etsy search results pages so it can resell that exposure to the highest bidders. When sellers are so desperate to sell that they are frothing at the mouth more than ever for views, they will continue to renew, renew, renew even after internal search relevancy arrives. But will they be rabid enough to pay more to get favored status on those search pages - you damned well know they will.

The results that can be expected if Etsy does go this route:

1. Renewing will continue to get exposure on category pages for buyers who browse the categories, and those who will choose to browse results by recency.
   
   
2. People will pay to get spots or placement in the search pages.
   
   
3. Google traffic will dry up completely to individual shops - you will have to pay Etsy for those views, and pay, and pay. Like good little sheep.

But don't completely discount the idea of reducing listing times and fee increases when these will increase their revenue even more. The end result - Etsy follows in eBay’s footsteps and moves further toward the 15-25% of all your profits that Wall Street wants to see, Rob gets an IPO, and the investors get their money plus a nice big payoff. Good for Etsy, not so good for any of us handmade sellers.

It's hard to know positively if this is what they are planning, but a lot of the pieces are starting to fall into place when you look at the scattered hint, and the non-relenting nosedive in seller Google traffic with this in mind.

The Plan: Etsy wants to redirect Google traffic and sell it back to sellers.... mo’money from the same group with no additional cost. CHA-CHING!

Conclusion: Etsy makes the cupcakes and keeps'em all to themselves. The bastards. But Wall Street will love it.