What Kinds of Companies Make Money, and Which Kinds Don't
March 09, 2007
Individuals launch websites - sorry, I mean "potential multi-million or billion dollar ventures within the space of months rather than years" - every day. Maybe it's a site that you can customize and become part of a larger community, or a place to upload videos or charts or pictures to, but they do all have something in common: they make it easy for people/users/members/participants to express their creative sides while incurring massive financial hemorrhaging for the investors in the company (of course there are investors, because the guy/girl who dreamed up the idea for the site in the first place couldn't possibly bankroll the server and development costs with a budget of zero dollars, based on realistic future projected revenue of zero).
I submit that the ONLY economically viable ventures are those which do one of two things: allow people to be more productive, or provide entertainment. Simply allowing an outlet for creative expression will not generate revenue; the only reason people use such sites is because they don't cost anything. Ask these masses of Spielberg/Lucas aspirants to shell out for the right to display their worthless pieces of crap to the rest of the masses, and they would laugh. Heartily. "What? You want me to PAY to distribute this garbage? Are you INSANE?" Sure, lots of people participate when it costs them nothing (who WOULDN'T jump on the opportunity to have their junk distributed to hundreds of millions of people for free? What's the risk/opportunity cost to them? It's exactly zero.). But deep down, they know their effort is pure rubbish, and they're not going to spend a dime of their own on distributing it.
However, what people WILL pay for is entertainment and productivity. Give them a better way to make money or get something done more efficiently or enjoyably, and they'll gladly open up their wallets. Give them sustained entertainment (we're talking 10's of minutes here, not just a music-video length rib-tickler, or in the case of songs or video games, something that can be repeated ad nauseum without losing its luster), and they will likewise voluntarily de-shekel themselves with great vigor and regularity.
So if you're looking for a way to monetize the fruit of your love's labor (and face it, you realistically have a virtually infinitesimal chance of generating anything more than several dollars from ad revenue unless you already have sort of existing forum or exposure to produce even more exposure to your offering), you need to give them a better way of doing something they're already trying to do or would like to try to do, or make them laugh, think, be amazed, or, preferably, all 3, on a regular and frequent basis.
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