Moola is a new site that offers cash prizes for playing games. You begin with $0.01 and the prize doubles each time you win - if you win 30 times in a row, you'll get over $10,000,000. However, Moola is free to play - the money comes from advertisers who pay you for watching a video ad before each game and answering a question about it. The site itself is great and the games are fun to play, but that business model sets off some alarm bells.
A quick history lesson: Moola strongly echoes the cash-skill gaming trend. Around the time of the online poker craze, a few smart companies began to establish gaming sites with cash rewards - players paid a few cents to play, and the winner took all the cash (the "house" also took a cut). This made online gambling more accessible to stay-at-home moms, but it also skirted around the legality issue - since there's an element of skill involved, it's not really gambling. (Disclaimer: laws vary from country to country, I am not a lawyer). Two notable services included Skilljam and King.com (formerly Midasplayer). This model appears to be sustainable, since many of those sites are still around today. However, Moola's approach is different - the money comes directly from advertisers, and I think that's where it could come unstuck.
Paying people to watch ads is one of those Web 1.0 business models that flopped countless times. Pay-to-surf programs like AllAdvantage provided an ad-supported toolbar and "paid" users to run it. Others paid members to view ad-supported emails. Unsurprisingly, these schemes fell victim to spammers and falling ad revenues - most of them shut down during the crash. So the question is: have things really changed? Have ad revenues increased to a level that makes this model sustainable? This element feels like the weak link, and I'll be interested to see if Moola continues to pay out over the long term.
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