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Tuesday, July 15, 2008

Look toward peripheral industries for money making opportunities

I just read an article by the website Life is Colourful, saying they are making $2000/month from their blog. They have been in existence over two years, and have a Google page rank of 3 and an Alexa of 73646, as of today. This means of all the tens of millions of websites and blogs, Alexa ranks them 73,646 most popular, meaning they are in the top tier of websites. I also read an article recently that said Perez Hilton makes $500,000/year on his blog, and John Chow makes $30,000/month. But that’s Perez Hilton, who has a television show promoting his blog, has made hundreds of TV appearances, and is Alexa's 446th most popular website. And John chow has tons of notoriety in the blogosphere as well.

Seems like everybody and his brother has a blog these days, often with the idea to make money working from home by writing an article per day and getting lots of advertisers. The reality is, most people aren’t even going to come close to making the numbers John Chow, Perez Hilton or even Life is Colourful are making. There’s a low startup cost to getting a blog going, and zero barriers to entry. Therefore, there is Huge competition.

I’ve noticed there’s a huge rush to make quick money in our culture. For instance, when the stock market was going strong on tech stocks in the late nineties, tons of people quit their jobs to become daytraders. They could work from home and supposedly make lots of money buying and selling stocks from their PCs. Great idea when the market soars every day, but when the market went down, lots of people lost their shirts doing this highly risky venture. Interestingly, the people who made the most money during the tech boom weren’t the daytraders, rather, the peripheral industries around day trading: companies helping daytraders to trade. These businesses included

  • online stock trading firms,
  • computer makers,
  • CNBC and Maria Bartiromo,
  • and the people smart enough to hedge their bets and sell their companies when the going was good – like Mark Cuban.

More recently rookies got into the fast moving real estate market to make a fast buck. I remember eating at a restaurant when a student and waiter told me he was buying and selling houses in McDowell Mountain Ranch, a high end development in Scottsdale. Clue #1 a market is peaking: your waiter, the person next in line to you at the grocery store, the taxi driver are all talking about getting into the industry. In the real estate peak of the early 2000s, the peripheral people are the ones who made the most money:

  • realtors,
  • real estate schools were filled solid,
  • real estate sign makers,
  • MLS listing services and
  • Zillow.

I see a similar phenomenon is going on right now with blogging. The people making money aren’t the bloggers, though in this like all industries there are variations on the norm. The money making opportunities seem to be in the peripheral industries around blogging: those who help bloggers try to make money. For instance,

  • many blogs require pictures, so istockphoto.com and 123rf.com are doing well.
  • web design and web logo companies have huge opportunities right now.
  • search engine optimization companies as bloggers look to increase their page rank, as well as
  • websites like reviewme.com and sponsoredreviews.com which bloggers pay to get their sites reviewed to increase their Google pagerank.

Bottom line is, the winning startup idea in the blogging industry ain't in blogging, but in helping people blog.


t said...

You're probably right. I know I am not making a dime doing it. This is why I will never be rich: I do things for the enjoyment of it, not to make money from it. Once you do something for money, all the enjoyment is sucked out of it.

Mommy Meryl said...

excellent post!! so essentially we need to come up with something that bloggers NEED and then we'll make money! :-)

Anonymous said...

This was a very interesting post. I think the saying "don't quit your day job" is appropriate for bloggers (at least with today's economy). I'm an optimist though, so I think I'm going to be an exception to the rule. :)

Anonymous said...

This is the case with a ton of industries and companies. Look at Amway. Their top people make their money on selling things to the distributors. The same goes for the business coaching industry, home party companies, etc.. There really is no substitute for following through on a solid plan to get you to your business goals. Someone has to have determination, patience, and be "hard headed" about refusing to give up!
In response to a previous poster, Theresa, every business has to be just that first - a business. If it doesn't make money, you are out of business and then can't help anyone or enjoy it anymore. This happens to a ton of startups every year. (Lots of passion + not caring how / if the biz makes any money)
It's just a matter of changing "your" mantra that you are to giving yourself: "Once you do what you love for money (and don't stop until you get it), you can retire off of it!" See blog by donna's comments for a great example of this!
I've been doing what I love for 9 years - working for myself. You can do it ladies!