Making Money On The Internet Isn’t Sexy

May 27th, 2008 | Categories: content, financing, launch, markets, networks, off topic, trends

Web 2.0 is sexy. Making money on the Internet isn’t. The majority of web 2.0 initiatives fail to turn a profit. Their existence is dependent upon funding or passion. The true money-makers of the Internet are businesses that people don’t talk about.

The most profitable and successful online businesses reside in lackluster industries such as affiliate programs, arbitrage, porn, domains, and directories. None of these spaces present revolutionary, ground-breaking services. Having said that, they’ve all been around since the advent of the Internet. This must mean one thing: there is money to be made.

In all likelihood, you’ll never hear about any of the major players in these industries. This is to their advantage. They enjoy operating in the background, beyond the bounds of PR. The sustainability of their model and long-term prosperity is dependent on this information inefficiency and a lack of education.

This may seem depressing, but it’s to hard to argue with success. Web start-ups are more glamourous, but they often lack a fundamental business staple - a revenue model. I’m not advocating against web start-ups or applications. In fact, I highly encourage entrepreneurs to go their own route. My concern lies with the financial model. Often times, it is easier (and more successful) to follow a path that has already been laid down than to try and pave a new one.

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  1. Paul Says:

    I think there has been some degree of success in the B2B area. Web 2.0 for these companies has really been about getting applications off the desktop and onto the Web. The revenue model is the basic SaaS monthly fee, but it can work.

    Actually it seems that the greatest success has been small business to small business. Eventually small companies realize they can’t track everything in Excel. A lot of new start ups are providing an alternative solution that is affordable.

  2. Mark Evans Says:

    Everyone loves new, shiny things, including Web 2.0 startups regardless of whether they have business models or not! As long as developments costs remain low, there will be no lack of new startups.

    The reality is many of them will disappear as quickly as they appeared after the novelty wears off, they’re unable to come up with a business plan/generate enough money, or the founders move on to the next thing. The upside is the lack of IPOs means retail investors don’t get burnt when things go pear-shaped - unlike the last dot-com boom.

  3. Rian Says:

    I like how you listed porn in the unsexy list. haha.

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