Why are you using a two percent conversion rate? Isn't that low?

I bear the scars of overblown projections and I have vowed to never fall prey to their wily and dangerous charms again. I focus on consistency and longevity, not windfalls. I enjoy this work and I want to do it for the foreseeable future, so my goal is to reach reasonable sustainability as quickly as possible and grow from there. That said, more power to you if aggressive projections are within your reach. Maybe someday your cash-rich empire can buy my humble firm.

Can a one-person operation use this model or does it only apply to larger businesses?

I originally developed this model as a business that could be run by a single person, so technically it should handle the one-man/one-woman band. The trick is to arrange your work day so you have 3-4 uninterrupted hours for community engagement, 2-3 hours for long-range product development, and 2 hours for sponsorship, advertising, marketing and business issues. Keep in mind: your community requires daily attention, so don't shirk those duties.

A small team of 3-10 people could make this model hum. Each member would need to be a multitasker, but that's nothing new in the online realm.

Big organizations are often slow to react and easily distracted from audience interaction, but this model can be effectively implemented at a large company if leaders commit to an unwavering "audience first" mindset.

How do you find your first community beat manager?

A listing on Craig's List is often useful. You should also look for people already covering the topic on blogs, Twitter and social networking platforms.

What if the target audience is passive?

Look for a subset of the audience that is engaged. Your gooey geek center may be smaller than anticipated. If that doesn't work, examine adjacent topics and see if your interests align. But don't fool yourself into thinking a semi-passionate approach will work. You'll need to dedicate long hours to this topic area, so you better love it.