mouldy.org

A viable strategy for ongoing income is to create a number websites in your spare time that earn small amounts of revenue. Even if none of these websites manages to 'hit it big', a number of them combined can earn a reasonable ongoing income that requires little or no effort to maintain.

Due to its low risk and low initial time investment, this plan is particularly suitable for people already working full-time. They can gradually add an additional income source or transition away from full-time work. This is designed to earn consistent passive income - not get rich fast.

The plan is, roughly:

1. Build a website
2. Attract traffic to your website
3. Profit from that traffic
4. Repeat

Value attracts Traffic

You need to come up with a reason for people to visit your website - a way to provide them with Value. You are visiting this website to read this article. You would visit Slashdot or Digg to read the latest news. You would visit other websites to chat with your friends or purchase books. Websites that provide no Value don't get visited - they get no Traffic. To make any money off your website, regardless of its purpose, you need Traffic. So you need to provide Value.

Ways that an individual or a small team can provide Value are typically by providing content (like this article, or a piece of software) or by providing a service - a community, a shop, a tool. Providing content is a very direct way to generate Value - I write an article, and people read it. I write a piece of software and people visit the website to download it. It requires ongoing effort to provide additional Value. Providing a service - usually by writing a web application - can continuously generate more Value without you needing to do any work. A popular web forum will have new content all of the time, and hence people will visit regularly. The tradeoff is that there's a much larger upfront time investment - writing code, creating a large enough user base, keeping them happy. The risk is higher, too - a website that depends on user submissions to function requires users. If you have to provide all of the content yourself because there are no users, you're back in the content provision category.

People choosing to write custom applications to provide Value would do well to keep their scope as small as possible - do one thing, and do it well. You're looking for maximum payoff with minimal effort. A single useful feature on an otherwise cliched website might be enough to attract high traffic volumes.

Keep in mind that all you need to do at this point is attract visitors. You don't need to be selling anything; you just need a reason for people to come to your website. This greatly expands your options for choosing a way to provide Value.

Marketing attracts Traffic

The web is a big place. Your initial Traffic will come with marketing. It's no good having amazing content or technology if no-one knows it's there. The most effective free marketing - getting existing websites to link to your site - can usually only be done one, so your website has to be right the first time.

You can, of course, use Marketing to compensate for a lack of Value. If you want to attract traffic over the long term, you're going to need actual Value. On a dollars-per-hour-worked basis, this plan is lousy if you only stick to it for a short period of time. It takes time to pay off.

Traffic leads to Money

This is the "..." step in the Underpants Gnomes business plan. We need to convert that Traffic into Money somehow.

Advertising

Selling advertising is a simple way to convert pure traffic into money. Most of the successful advertising programs nowadays are pay-per-click schemes such as Google Adsense. The advertisers you can use depends mostly on the sort of content you have - adult content can't use Adsense, for example, but they have a variety of options that specifically target that industry.

Once you have advertisers, your aim is to convert Traffic into Clicks. To optimise this process, you need to:

• Attract as much traffic as possible
• Maximise your Click Through Rate (CTR) - roughly, the percentage of your Traffic that generates a Click
• Expend as little effort as possible for that traffic

Optimising the number and value of your Clicks is a topic in itself, but generally you get more Clicks and they're worth more if your content relates to products that people can purchase over the web - camera reviews or software how-to guides, for example. Advertisers need to pay more to advertise mainstream products, so you tend to earn more for each ad click. The content will also be applicable to a wider audience, making it easier to attract traffic. However, there will also be more competition for your content, making getting noticed harder.

If you're just starting out, writing content is an easy way to earn small amounts of money. It's the same strategy, but on a smaller scale; if an article hits it big, great, you win. If it doesn't, you've only lost a bit of time. You can use this to gauge the interests of your audience and experiment with different marketing techniques.

Sales

A better way to convert Traffic into Money is to sell something. There's more upfront effort involved - your Value must justify someone actually making the effort to pay for something - but your payoff is also higher. Common items to sell on the web are 'premium' content, downloadable software, access to a service, or a physical product. Performing cash exchange sales is a fairly mature topic, so I won't linger on it.

Money pays the Bills

Running websites is a pretty cheap proposition nowadays. Your main ongoing expense is web hosting. Your hosting costs vary with the method you're using to provide Value. Video and photo sharing will tend to have high bandwidth and storage costs, and probably can't survive off advertising revenue alone. Pure text sites such as RSS aggregators tend to have very low bandwidth costs. Unfortunately, they need to be very focused to get ads which are actually relevant to the users of the site; if the ads are irrelevant, users won't click.

I use nearlyfreespeech.net for my web hosting. They're awesome for this sort of strategy because you pay only for the bandwidth and storage you use. If you get no traffic, you pay for no bandwidth; it's difficult to argue against such a pricing structure. (This is not a paid advertisement, incidentally.)

Because your expenses are so low, it's very hard to lose significant amounts of money even if you make zero revenue (from advertising or otherwise), making this strategy great for the risk-averse. Because income builds up slowly, you probably shouldn't quit your job and jump into doing this full-time. It takes a while for your time investment to pay off.

Traffic leads to More Traffic

If you provide Value, people will link to your website and tell their friends. They'll tell their friends, and they'll tell their friends, and so on. This is how one story can seem to be read by the entire population of Web users in a single day. If the average person that reads the story tells at least one other person who hasn't read it, you get an explosion in the number of readers. The explosion slows down when you reach saturation in the reader population; when people have already seen the article, they won't tell more people. This is a very desirable state for content and service providers alike.

Traffic leads to More Value (and More Traffic)

If the users of your website create Value in some way - by writing product reviews, forums, news submissions, posting photos - people will keep coming back to consume the new content. A community may form. This is great, because you don't have to do any work to create additional Value. You'll find that regular users tend not to be big ad-clickers, but their role in providing Value on your behalf is far more important.

Search Engines give you Ongoing Traffic

Written content - articles and discussion forums in particular - will attract a constant stream of hits from search engines. You can use (legitimate!) SEO tactics to boost this. Search engines will tend to work to your advantage if your content is not available anywhere else. Having pages full of links to other people's websites won't be as effective as having your own content.

Lather, Rinse, Repeat

Assuming no visitors apart from those received from search engines, each item of content that you have (article, forum posting, whatever) will attract a number of hits per day. Each sales proposition that you make will be read a number of times. A certain percentage of advertising views will generate a click, and each click will earn a certain dollar value. A certain percentage of sales pitches will generate a sale, which earns you a defined dollar value (or ongoing income, depending on what you're selling). So in the long run, each item of content will earn a bit of money each day ($x/day). In this situation, you will do well to maximise the amount of content or items to sell. Sites that create their own content - RSS aggregators, forums - are great, because your income will (theoretically) grow over time without you doing any work. Even if no new content is produced, you still have all of your existing content that will continue earning for you.

Once you've established one website, start a new one. This is why expending as little ongoing effort is important; if each additional website requires maintenance, it's going to impact your ability to start another website. Some of your will be more popular than others. Even in the failure case, you have some level of ongoing income for a low ongoing money and labor cost. Think of this strategy as a way to convert time into slowly accruing income. Each hour you spend earns you an additional $x/day. Using this strategy, you can see how even with just a small investment of time each week, you can gradually build a decent ongoing income.

By acknowledging that each website will probably not be a big money earner on its own, you overcome one of the big hurdles of the dot-com days: income expectations set by the presence of VC funding. Most ideas are simply not capable of making someone rich or repaying VC funding. By implementing this strategy, you're aiming to efficiently extract a small revenue potential many times.