Free is a Great Word...
One of the most recognized and endorsed types of online businesses has always been the "Free Content" web site. A "Free Content" web site is a site which basically gives away information or free tools to generate a large audience or a large community of users.
If you were to listen to some web experts, you would think that all you should do at your site is give away free stuff. These "experts" have the idea that if you give away enough stuff for free, then you can build a site with loads of traffic. You can then sell advertising for millions of dollars.
There is only one problem with this idea. If all of the traffic at your site is only there to pick up free stuff, then they won't buy anything from the advertisers. The advertisers lose money. Eventually the advertising money dries up and you don't have a profit model for your site anymore. Only the top 100 or so web sites on the net are able to currently make a decent profit selling advertising space to their audience. The rest of the millions of sites out there following this model are quickly finding out that just having free content is not enough to build a successful Internet business.
Yahoo.com is an example of a successful site with free content following this model. They have a directory, articles, news, weather, chat, forums, and everything else you could possibly imagine for a free content site. Yahoo is the King of Content sites. They have been around since the early days of the Internet and are one of the few major corporations who actually earns a profit online. Yet, even they are considering changing to a Paid Membership Model for some of their content.
Am I suggesting that you should never give away freebies? Not at all... I still use quite a few freebies of my own including this article you are reading now. What I am suggesting is that you shouldn't be giving away freebie after freebie hoping to just build traffic at your site. Every freebie you offer should have a specific goal in mind. In other words, you should be thinking about how this freebie will generate more customers for products and services you are selling. Below are two ways to turn web content into profit...
Model #1: Joint Venture Endorsements
Instead of just selling banner ad space or text ads on your site, use that same space to make deals with companies you feel good about recommending to your customers. Then, do personal recommendations of these companies products or services. You will find that the response rates they will receive from a personal endorsement from you will be three to five times what they would have received just buying ad space from you.
This will turn your dead ad space into a cash generator. In most cases you will also be receiving a lot more money through doing these joint venture deals than you could have ever received selling out the ad space. You may have sold ad space at a price of $20 per 1,000 impressions...if someone was willing to pay that. By signing up with an affiliate program and personally endorsing them, you will be able to make much more than this without worrying about having to sell out your ad space.
For example: If you signed up with an affiliate program paying 30% on a $100 sale, you would get $30 per sale. If the endorsement you gave only gave them a 5% click through rate (very low for an endorsement) and a 5% sales rate, you would be having 2.5 customers per thousand impressions for a total of $75 for the same ad space. This would have been done without ever having to worry about dealing with advertisers, credit cards, or anything else. The affiliate owner would have taken care of the worries for you.
If you have a high traffic site or some type of other leverage, you can also make special partnership deals with your endorsements. Instead of just signing up for an affiliate program, contact a merchant who has a product you know your customers will love and make a special deal for them. Get the merchant to offer a discounted price, an extra special bonus, or some other type of offer to your customers only. Then your response rates will be much higher at your site than just the regular affiliate program link.
Model #2: Paid Membership Sites
This is the next eventual step for online content. General information such as news, weather, etc. will always be free. Specific and highly specialized content has started moving over to a paid membership model. Instead of giving away their hard to find content for free, membership sites now charge either a yearly or a monthly fee for access.
Most of them charge anywhere from $39 to $4000 per year or $9.95 to $150 per month just to see their cutting edge content. The more specialized and valuable the content, the higher of a price you can expect to pay. For example, if you planned to join a "Day Trading" membership site, you can expect to be paying near the upper limits of the scale at $150 a month or more. If you joined a "Brittany Spears Fan Club" you could expect that to be at the lower end of the price range. Either way, you can expect that more and more sites are going to follow in the paid membership path.
Some people don't believe paid memberships will last, but they also originally didn't believe people would pay for cable TV. TV Networks were originally free. Then cable stations came out and the major networks of ABC, NBC, and CBS thought it was an absolute joke. They didn't think anyone would be willing to pay for something which was originally free! How many US customers aren't paying for some type of cable or satellite service now?
Information on the Internet is going to go in the same direction. General information will always be free, but highly specialized up to date information is going to cost you. If you can become the producer of this type of information, then a paid membership site will be the best way for you to profit online.