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Making money online generally sucks

Want to make more money online? Want to quit your 9-5 and become a full time internet entrepreneur?

Well um good luck because it’s probably not gonna happen. In fact, the odds are you will fail and waste a lot of time and money in the process.
This may come as a shock and disappointment to many people who aspire make a living online, but before you set yourself up for disappointments by living in a world or online grandeur here are some key reasons why making money online generally sucks.

1. Too much competition. Since 2004 following the dotcom shakeout the number of websites across all niches has simply EXPLODED. NO matter what niche you target there will be a lot of completion and trying to get your foot in the door will prove to be exceedingly difficult for most aspiring internet entrepreneurs.

As you can see from the graph below after a pause in 2001-03 the rate of domain registrations has surged, and shows no sign of slowing. With more websites being created it is generally more difficult to get traffic

As you can see from the graph below the total number of internet users has tapered off since 2004.

You can electroplate using the domain registration graph above that the rate of new websites being created vastly exceeds the rate of new internet users. Therefore supply is exceeding demand which makes it more difficult for your website to be seen.

2. Google aging and filtering factors. It used to be until around 2004 you could literally write a 500 world blurb of content, point a few high pagerank domains to it and have a permanent top ten ranking for most moderately competitive keywords. Yes, it was that easy to rank and get traffic. There were no sandboxes, no link age filters, no duplicate content filters, and very few penalties. You could use an automatic page generator program like Traffic Equalizer (which I still recommend) to build thousands of pages and have each of those pages rank for well for a multitude of terms with almost no work.

Nowadays it is generally much, much harder for newer sites to rank well and get traffic because google has implemented tons of filters and updates since 2004. There was a Florida update, the sandbox, Big Daddy, and many others. While this has resulted in less spam it has made it drastically more difficult for new sites to get a foothold in google.

3. Surge in online advertising costs After the dotcom rout of 2002 online advertising rates hit a nadir because so many dotcoms has gone out of business and the demand for online advertising had flatlined. But by 2003 the trend began to reverse. As you can see from the chart below the total spend in online advertising began to pick up in 2003 and has been on a tear over since.

As a reusult it is more expensive to promote your website regardless of what advertising medium you use. Adwords has become more expensive as well as banner ads and popunders. Since online advertising has become so expensive it is more difficult for online entrepreneurs to cover advertising expenses and actually make a profit. Online ad companies like Google, Yahoo, Valueclick are raking money from the surge in online advertising, but are entrepreneurs faring as well? Maybe not.

4. Copycatting It used to be that a solid, original novel idea could remain unique for many months or years allowing the creator to reap profits unabated, but that is no longer the case. With the surge in forums, social networking sites, and other mediums on online communication and networking it is nearly impossible to keep an original idea..original. Nowadays there are probably thousands of Digg and Youtube clones as budding entrepreneurs try to capitalize on the astonishing success of Digg and Youtube. As soon as a profitable niche is uncovered other people jump on the bandwagon and the niche no longer becomes as easy to monetize.

5. Centralization. There are millions of websites but only a tiny minority of those sites receive the bulk of internet traffic. The top 10,000 Alexa sites get the vast majority of traffic which makes it difficult for a new site to establish an audience or user base since the majority of internet traffic is centered around so few sites.

According to Roughtype.com “Using data from Compete, MacManus shows that the top ten sites accounted for 40% of total internet page views in November 2006, up from 31% in November 2001, a 29% increase. The greater concentration comes during a period when the number of domains on the web nearly doubled, from 2.9 million to 5.1 million.” (http://www.roughtype.com/archives/2006/12/sharecropping_t.php)

What this statistic shows is that website traffic has become increasingly concentrated to fewer sites in the past six years.

In conclusion where there is still a lot of money to be made online, it is much harder now than many years ago for the five factors listed above. Overall, I wouldn’t recommend trying to make money online. There are much easier and efficient ways of making money such as trading options or working a 9-5 job and getting a promotion.

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