The Beginning Edit
From its foundation in 1995 through 1999, Newgrounds had no way of creating money, nor as expenses were low, was there a great need to obtain money. It wasn't until 1999, when hosting fees reached $100, that Tom Fulp began selling space to advertisers. Although the advertisements were generally clean at first, the internet crash at the turn of the century hurt Newgrounds badly, like many other websites. Newgrounds was able to avoid closing, thanks in large part to the lack of investors. However, advertisements became increasingly racy. Matters were not helped by the fact that Newgrounds did not directly control advertising until March 2003. Previously, it had been controlled by the Troma company. Afterwords, Tom Fulp slowly but steadily reduced the number of adult advertisements on Newgrounds.
Better Days Edit
As time went on, Newgrounds became economically viable. Tom Fulp described 2005 as a year of great growth, and the revenue from advertisements steadily increased. In March 2003, the top banner on the main Newgrounds page could be bought for as little as twenty dollars. By October 2007, a single space could cost $17,000 a month.
Changes in 2012Edit
Everything changed again around 2012 with a tighter budget as revenue from adverts dropped etc. . Tom and the Team started a number of new things to deal with this, including starting the Membership scheme and adapting the software to receive other forms of animation, other than Flash. Whilst Newgrounds has survived, it has done so on a smaller scale; the staff was cut and the Store was closed.
Along with advertisements, Newgrounds has also attempted several other ways to make money. Tom Fulp once tried to create a website called "Newdgrounds," which would be the adult equivalent of Newgrounds. However, the Los Angeles company that ran it only gave $2000 out of their $70000 of revenue to Newgrounds, so the deal was called off. The material at Newdgrounds resembled the "Mature" section of modern Newgrounds.
Merchandising EditNewgrounds also sold merchandise, but as late as 2007, only a tiny fraction of Newgrounds's income came from merchandise sales. The official Newgrounds store opened in August 2008, but has now closed.
The Value of Newgrounds.com Edit
Despite its rocky financial history, Newgrounds has been valuable for a long time. Even before the automated submission system, people offered to buy Newgrounds from Tom Fulp for as much as $7 million. In January 2008, Tom Fulp estimated that he could sell Newgrounds for $15 million. Unlike other creators of major websites, such as Eric Bauman of EBaum's World, Tom Fulp decided to keep direct control of Newgrounds. This makes Newgrounds one of the most popular privately owned websites on the internet.