The average Joe on the street is very familiar with the eCommerce business model. It’s the easiest to understand – you make money by selling something. The content model is a little harder to explain but once told, most people understand it. Content based sites make money by advertising or affiliate programs. The advertising can range from in-house sales to using a 3rd party advertising network like Google AdSense. With the explosion of AdSense, content based sites have grown like mad. It seems everyone wants a piece of the “easy money” that can be made.
Having dealt with both models I can tell you that the content model is way better than the eCommerce models. Here’s why.
Less Start Up Cost
An eCommerce site requires a lot more start-up capital than a content site. The costs are many. You tie up money in inventory. My brother runs an eCommerce site and he has over $10,000 sitting in inventory. He also needs space to hold all this inventory. The cost of running the site is also more expensive. eCommerce sites require SSL and their own IP for hosting. There are also credit card charges, shipping & handling, and the lists goes on.
By comparison, you can start up a content site tonight and have up on the net by tomorrow and it wouldn’t cost you dime because you can use free hosting services like Blogger. Your running cost would be zero so anything you make is profit. My flagship site, TheTechZone, was started with zero investment.
Content sites are easier to get ranked on Google and it won’t cost anything. eCommerce sites have a very hard time getting ranked and in most cases you will have to pay and use Google AdWords in order to appear on the search engine.
You Can Run A Content Site Anywhere In The World
This to me is the number one advantage a content site has over eCommerce. I am not bounded any one location when it comes to running my sites. As long as I have internet access, I can make money. During my recent trip to Taipei, China and Hong Kong, I was able to update The TechZone with nearly a dozen articles.
If you run an eCommerce site and you take a vacation what happens to the site? Unless you have someone to run it for you, the online store is pretty much closed till you get home. That’s what happened to Lemmy with his eBay store. He took a vacation; store shut down and made no income while he’s away. Content sites don’t suffer this fate – they truly do run 24/7.
eCommerce sites are bounded by their location. You can not move it as easily as you can a content site. When I was running the Cable Store with Carl Nelson, we had local suppliers for our products and if we were to move to a new city, our entire cost structure would change. We would have to carry inventory because the suppliers would no longer be a quick drive away.
When he was in Hong Kong, Carl ran HK Toyz. When he came back to Vancouver, HK Toyz pretty much died. Now that he is back in Hong Kong, he has started up HK Toyz again. Yet throughout this, his content site, HardCoreWare.net kept running no matter where he was in the world.
Content Is Less Work
People by nature are lazy. They want to do the least amount of work for the highest amount of reward. An eCommerce site entails more work. You have customer service headaches, RMA, credit card fraud, shipping mistakes, inventory problems, etc.
For me, producing content is a lot easier and less painful way to do business on the net. I can do it from anywhere. Even while laying on a beach in Mexico (I’ve done that before). Another thing to keep in mind is; it doesn’t have to be you creating the content. Sites like Digg, YouTude, MySpace and Plenty Of Fish were all built on user created content.
User creates the content, you rake in the cash. Now THAT is the ultimate business model!