The Hidden T-Shirt Economy
By David Goldenberg

(Business 2.0) – Who needs internet advertising? Silly T-shirts are turning into a serious online moneymaker. For a handful of websites, in fact, customized apparel is now bringing in far more revenue than ads do.

CollegeHumor.com pioneered the trend in March 2004 when it launched e-commerce site BustedTees.com. (One of its best-sellers shows a man with furry arms and claws, riffing on the Second Amendment's right to "bear arms.") Merchandise now accounts for more than 60 percent of the $6 million in annual revenues at parent company Connected Ventures, up from 50 percent in March. The company opened a second online store, Defunker.com, in April.

Meanwhile, other sites are building instant business on the backs of third-party merchants such as CafePress.com and Spreadshirt.com, which create custom T-shirts and other merchandise on the cheap for companies that submit designs. About 1,000 merchants per day have opened shops on CafePress this year, a 40 percent increase over 2004. "It's one of those great 'just because you can' moments in the online world," says Reinier Evers, founder of Amsterdam-based marketing agency Trendwatching.com. "Not only is it easy, but the risks are nil." BoingBoing.net opened a new store on Spreadshirt in September, while left-leaning Americablog.com set up a CafePress shop in June. Founder John Aravosis says the store, which sells shirts with slogans like "George Bush is a Category 5 idiot," now accounts for more than a quarter of Americablog's revenues, while the controversial apparel also drives traffic back to his site.

Some websites are shunning ads altogether. Red vs. Blue and Homestar Runner, which publish animated shorts, now bring in nearly all their revenues from T-shirts, DVDs, and stickers featuring their stars and catchphrases. Their merchandise might be silly, but these companies are laughing all the way to the bank.