The Long Tail of Online Profitability

by Tom Johnson on Nov 3, 2009
categories: blogging • technical-writing

Last week I listened to David Peralty give feedback to Jeff Chandler about his WordPress Weekly and WPTavern.com projects (see episode 75). David praised the community and visibility that Jeff had created through his weekly podcast and forum, in addition to his WPTavern.com site, but noted that he was aware Jeff hadn't reached the monetization goals he hoped to achieve.

In other words, Jeff has done a tremendous job at creating a community and audience for his site and podcast, but he hasn't found a way to make real money off his activities. If you monetize your online activities, you can then justify and devote more time to the activities to establish and grow your community.

But if you can't make any money, it's hard to justify spending so much time online. And if you can't spend the necessary time online to build your community, your site or podcast won't take off.

Although David was critiquing Jeff, I felt like he could have been equally speaking to me. I listened carefully, waiting for the key ingredient Jeff was missing. What was he not doing? What was he not seeing? How does one move from a hobby site/podcast that has a growing enthusiasm to one that makes enough money to sustain you full time?

I have a few notes, gathered from anecdotes and people I know:

• Just recently Cameron Moll, a well-known web designer whose blog is Authentic Boredom, quit his job and turned to freelance full-time. He sells posters and job listings on his site and does some freelance work, I believe.
• A basketball buddy of mine explained that, according to Jason Van Orden (who creates the Internet Business Mastery podcast), I should be making $1 per month for every follower I have with my site. Translating that, I should be pulling in more than $2,000 + every month.
• My former brother-in-law taught me that information products about making money online are more profitable than selling regular products. He's an eBay mogul who earns thousands of dollars teaching people how to drop-ship products on eBay. The business of teaching others how to drop-ship is more profitable than actually drop-shipping.
• About a year ago Jane kept prodding me to sell some ads in my sidebar. I finally did, mostly by contacting companies separately and pitching ads, and it worked. But ad revenue doesn't scale. I only have about 12 spaces there. (By the way, there's an empty spot, if you're interested.)

Lately I have been mostly resigned to the idea that “information wants to be free,” and that the real benefit of having a blog or podcast is the capitalization on the attention economy of my audience, as cool and unprofitable as it sounds.

But the other day I was talking with Sean, my brother-in-law (a different one), who is an interactive programmer and runs his own company, HD Interactive. Sean manages a successful online business, so I asked him what I am missing. What is that missing element that I could adjust so that I would be profitable? Create a premium version of the podcast? An online site with video tutorials for WordPress or other software? Sponsored posts? WordPress blog design projects? T-shirts? Webinars? e-books? A forum?

As I talked with Sean, it became clear to me that no single product would provide an online revenue model of the sort I'm searching for. There is no missing ingredient. Rather, the revenue model of the Internet is the Long Tail. Of course! I should have seen it coming.

If you're unfamiliar with the Long Tail, it's a model by Wired Magazine's Chris Anderson and purports that online stores such as Amazon.com make more from long-term sales of their niche products than they do by selling mainstream products. For example, the Grateful Dead Mug from 1979 that someone purchases from your online store for $5 combines with a thousand other low-selling, inexpensive niche products to surpass the income that you make from selling top-of-the-chart music CDs or other mainstream products.

The neat thing about the Long Tail is that it seems to apply to so many phenomenon online, not just revenue. There's a long tail of participation. A long tail of travel. There's even a Long Tail blog, where all of this is discussed. I never thought the Long Tail could apply to my attempts to make money online.

But as I spoke with Sean, I realized that the revenue stream for online activities really is the Long Tail. You won't make your fortune selling one product or service (even though some have). Instead, it's the combination of various revenue streams, of selling a variety of products, that combines to create an income to equal your goals.

For example, you sell a premium and paid version of a podcast, and maybe 50 people sign up for the premium version. You sell ads in your sidebar, and maybe a dozen sign up. You create a forum and offer a tiered membership, and some more sign up. You sell T-shirts, mugs, and other paraphernalia, and some more sign up. You sell video tutorials and e-books and print books, and more sign up. You present at conferences and coordinate webinars, and more sign up. You offer one-on-one tutorials and online training, and more sign up. Any of these methods alone would produce income that is weak and unsustainable, but the combination of them all accrues a revenue stream that is substantial.

Now that I think about it, this is also the strategy Jason Van Orden recommends in a podcast with a hobby geneologist (though I didn't realize it at the time).

The Long Tail may be the model underlying a number of phenomenon on the Internet. It may also be the best answer to the conundrum of making money online from a popular blog or podcast.