Comment by axod | Hacker News Reader

Comment by axod | Hacker News Reader

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There are millions of web businesses making extremely big profits - from advertising, leadgen, and even a few like 37signals from subscriptions

37s advice about charging is still quite a niche model for the web though. But I'll resist the temptation to start another 'get users to pay' vs 'advertising debate.

Grow based on your profit isn't really 'run of the mill stock business advice' though. Some businesses take time to build. Some require a few years investment. Some can be profitable straight away. One size doesn't fit all.

If you want the lowest risk sure fire way to make money online though, it's certainly "Find a niche" -> "Create useful content" -> "Promote" -> "Monetize through advertising".

The other thing is that in the several autobiographies I've read, people who create really cool stuff - for example Walt Disney, Richard Branson, Duncan Bannatyne... They're always in debt. They're always running from one thing to the next by the skin of their teeth trying to get the next thing financed. Investing all their profit and more into building and growing. But they're also workaholics as well. So what do they know ;)

I'd say the more sure-fire way is: “Create something useful” -> “Charge for it”.

Now there's always the risk that nobody wants what you made (see fendale's comment), but lets assume for a sec that that's hard either way. Here's a very dry analysis of the path to money for both:

Advertising model:

- Create something useful

- Find an audience

- Find advertisers

- Get advertisers to pay you

Product model:

- Create something useful

- Find an audience

- Get audience to pay you

That's at least one less step in the ‘product model’. You can even argue that to properly execute the advertising model you'll actually need one more step in between: “Create an ad placement strategy” (“Create” as in “design and implement” in all cases here).

Getting money from the people who experience the value of the “useful thing” sounds a lot more direct (and more efficient, which correlates to a better return) than getting the people who value the attention of the people who value the “useful thing” to pay you.

I don't have any first-hand experience with the ad-supported model, but I seriously question whether it's a/the sure-fire way of making money online.

Problem is, people expect things to be free. By restricting yourself only to people willing to pay money, you've cut out most of the internet population. You might be restricting yourself to a small business.

There's also a heap of other reasons... for example, if you create X, and sell it to users, you're only selling one thing. By advertising other peoples products, you can be selling 1,000 different things. The chances of success are vastly increased. Also, if you sell directly, your users are likely only to purchase once from you. If you run advertising, they are more likely to generate continuous revenue for you, from multiple products.

> Problem is, people expect things to be free.

Businesses don't.

> By restricting yourself only to people willing to pay money, you've cut out most of the internet population.

No, you've cut out freeloaders who expect something for nothing, people you generally don't want anyway. This isn't cutting people out, it's filtering out bad prospects. People who want stuff free are the worst customers, I'd much prefer those who are willing to pay for something they find valuable to them. You can avoid a lot of scaling problems by only focusing on paying customers and there's no shortage of paying customers if you build something of real value.

If you want to do business to business, then sure. Personally I don't particularly enjoy that.

Also the point about 'avoiding scaling problems' is sort of funny. You can certainly avoid scaling problems if you don't try and grow big.

Growing big and growing profitable are entirely different things. If you get profitable without getting big you do gain the benefit of not being forced to scale on borrowed money. The goal of business isn't to be big, it's to make money.

Getting profitable is easy. It's the getting big bit which is hard.

The fact is, it's often easier especially online, to solve the hard problem (get big) first. Once you've done that getting profitable is a walk in the park.

> Getting profitable is easy. It's the getting big bit which is hard.

Exactly my point, and since the point of most business is to make money that should be the obvious first goal. Getting big is for dreamers, it's a lottery, getting profitable is the sensible goal. Get big later, or risk failing chasing wild dreams.

> If you want the lowest risk sure fire way to make money online though, it's certainly "Find a niche" -> "Create useful content" -> "Promote" -> "Monetize through advertising".

I keep hearing this Find A Niche thing, and I have been doing some research. It really sounds like a case of researching stuff and writing some useful articles on it. Place the articles on a SEO optimized website and wait for the adsense dollars to roll in.

If it is that easy, surely everyone would be doing it, or is it really that easy?

While I would like a passive revenue stream, the only problem I have with this strategy is that I don't really want to spend my time researching and writing articles. I would much rather find a niche market for an online software app (sort of like patio11's bingocardcreator) that is small enough to build fairly quickly and makes a difference to some market, but finding such a market if you don't already have inside knowledge is the hard part I am finding.

It IS that easy, the trouble is finding the niches that are profitable that other people haven't already found. Getting in late to the game limits your choices to either 1) Being MUCH better at SEO than the more established people working the same strategy, 2) Finding a new niche that has somehow been overlooked by all the other people doing the same thing you are or 3) Finding less profitable niches in which to fill the need and game.

The reason that everybody isn't doing it is many-part, but the highlights are that SEO isn't that easy for the lay-person, and it actually does take quite a bit of work and commitment. There is a very big initial workload to setting up a site to generate passive income, and like a fire, it needs constant stoking to maintain, and will start by making VERY small amounts of money at a time (My first attempt grossed an average of $12 per month).

Simply put, the 'easiest' way to make money isn't really all that easy... and as for 'lowest risk', I'd completely dispute that too. If Google changes an algorhythm, or categorizes you as spam, or you're linked to by an unsavory site, then that could all go away. If you're hosting 50 sites on the same IP address, and have actually managed to get them to profitability, and Google bans the IP, now what?

> If you're hosting 50 sites on the same IP address, and have actually managed to get them to profitability, and Google bans the IP, now what?

You tar the sites and move them. It typically isn't that difficult, however most of the people who run the "online niche" strategy have got little technical know-how, so if you can do this stuff you're ahead of the curve.

It's even better if you know a programming language because you can create tools that handle the dull repetitive tasks (eg, backlinking) that you need for it to work at scale.

How exactly do you do the backlinking thing? Do you literally create supposedly related sites with 'rehashes' of your same articles and place a link on one to the other?

There was a story on here a few weeks back by someone leading the 4 hour work week nomadic lifestyle and it in the comments I think it was hinted that was the case.

Shoot me an email - mark {at} marklancaster {dot} org and I'll send you a file to start going through.

I came across the gtrends tool that supposedly helps you find niche markets in the past few days - it looks like it may be helpful.

Do you care to share any example sites you have produced that bring in some amount of money passively?

I am currently employed in a decent job at a big corporation, so my goal at the moment is to do something that makes some money, so $12 a month be a start. I have in my mind a 2 year plan to some sort of independence.

As I said, I would much rather spend my spare time building Rails Apps that provide a useful function to some small set of people willing to pay something for the pleasure, but finding the niche markets is the problem.

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