Sure lots of people have tried plenty to make money of the internet, but it really comes down to two basic options. The first, make a lot of money off of a few people. The second is make a little of of a lot of people. There are a few that manage to make a decent amount off of a lot of people, but that’s the dream of everyone.
Making just a bit off of a lot of people is in so many ways the common business on the internet. Anything that relies on advertising as it’s business model falls into this category. Content businesses, blogs, photo sharing, etc. Successful ones can make decent amounts, but there’s a real hard part to these businesses. You have to get the lots of people to make that work, and usually that takes investment. This is a tough place to play. Ever since I had heard of the Internet, people were talking about eyeballs and meaning this model.
The other option is the rarer one. Make a lot off of a few people. Theladders is a solid example of this. They’ve sliced off only a small portion of the market, and asked them to pay to participate. While part of what they are selling is exclusivity and intent, they cleverly segmented in a way that they can make a decent amount off of an individual. They can take this cash and invest to get more people, making a nice cycle of growth.
There’s a moment of truth with making a lot off of a few people. It comes when you ask someone to get out their credit card and pay you for the value you’ve delivered. If too many say no, you never had that kind of business in the first place, and you are back to needing lots of people and eyeballs.
I’ve also seen some people convert their lots of people into a few devoted paying customers. Texts from last night is releasing a book. Only a small percentage of their audience will actually buy it, but it’s worth lots more to them than the advertising. Bloggers become consultants for particular industries or business ideas. One engagement can pay more than months of ad revenue.
There’s a constant in the good businesses. They have some people that see extreme value in the product they deliver. Sometimes it only takes a few.
Tags: Business, business models, investment, value