This is purely a question of general interest:

With all the hype of the dotcom crash, and the general sentiment of 'websites don't make any money', I was wondering what the actual scenario is.

I would like to know if the guys and gals that populate this board are actually making any sort of resonable $$$ from their 'good but not quite Yahoo' websites.

With all the hype surrounding the next 'big failure', it stikes me that the main culprit of that failure is gross over initial over expenditure, in the face of insubstantial potential revenue to cover that expenditure.

So for example you have a dotcom which launches by spending $10 mill on advertising, and soon goes under because it is only making say $500K profit (ex paybacks on the $10mill spend). Now obviously the paybacks on the $10 mill alone will exceed the $500K "profit". Therefore the biz is going down the pan unless it has money in the bank to cover it through to 'profibility'.

Is it really necessary to spend $10 mill on advertising? Personally I think not, and in my opinion it is the dotcom's being nievity to the advertising agencies (who are makeing the $$$) calls of "you need to spend x$mill or you will never get anywhere", that is there ultimate downfall.

Anyway rambling away from the question. Are many people who populate this board makeing enough $$ from their sites, to sustain an independant living - or are you all doing it as a pays its way hobby.

I'd be interested to know which sites are making enough $$ to sustain atleast 1 person working on it full time.

There was a good segment on 60 Minutes last week on this very subject.

Despite predictions of a new economy and avid investment in dot coms, reality is now sinking in. Many dot coms have disappeared, others devalued, and even giants like Yahoo and Amazon are not profitable. One example on 60 Minutes was a company devalued from about a billion dollars to $850,000. What happened was reality set in.

Predictions of a new economy are bunk as is being proven as economic principles indicate.

What has happened with dot coms is an investment fad, much like one long ago with tulips (yes, the plant). At one time, tulips were a craze and people were speculating with them. Prices were ridiculously high and many people got in on the speculation, hoping to make a fortune.

When reality settled in (after all, they were just plants, something that could be replicated and die), prices plummeted and many people lost their investment.

That's what's happening now with dot coms. Furthermore, investors are being more cautious and traditional business and economic principles, like having a business plan to make money, are being reasserted in the marketplace.

It's not a new economy, just the same economy with some new players.

I have a website that me and my wife started about 8 months ago, http://www.hempcreations.cc. It is to the point to were it is a third full time job, in regards to the time spent on it and the money we are making from it. We do not do any advertising except in search engines. We have done some things with other hemp related sites that have helped a little. Our biggest boost was getting listed on Yahoo, when it was still free. We are ranked in the top ten, for the most part we are #2 depending on what you are searching for. This might not be what you are talking about when you say websites making money. We are not getting rich off it but we are constantly growing and making more money. And yes it could support one person just working on it. But I am married (no kids)and like money so thats why we both have full time jobs.

Well your sort of biz is exactly what I'm talking about. I'm sure there are thousands of websites out there that are making resonable enough incomes to be self supporting as a biz in itself. Not making millions, but makeing an income similar to that of any other small 'no web biz'.

It seems to me that the media are grasping on to the websites which shout themselves as the next best thing since sliced bread via huge campaigns, only to fall flat when they can't generate enough income to warrent their huge initial outlay. They make their own bed as far as I'm concerned, if they want the hype when they start, they are always going to get it when they fall.

It would however be nice if the media where less overhype either one way or the other. I would lay whole super-hype followed by super-negative-hype at the feet of the media and greedy investors. We are currently in a situation where the media are jumping on every 'failure' with much glee.

Although I think that many of the supposed 'new economy giants' which have resulted in failure had it coming, it would be nice if the media could also highlight some of the e-successes, such as yourself.

I would think that much of this is down to the fact that those successes have never launched to a huge fanfare (along with the spent $mills), but are quitely plugging away and gathering steam as any normal new biz should; quality - products, content, & service.

Anyone who thinks they can make a biz worth $100 mill, by spending $10 mill on advertinsing and not having the product to back it up, deserves everything they get.

i think people are finally realizing that you can't just take a good domain name and make a business out of it...

my goodness, if i see another "hey i found this great domain, what can i do with it to make money?"

like all businesses, i'd have to believe a well thought out business plan and top management are the more important things...

and even then...

every heard of Scout Media (creators of the now defunct Modo?) they were an idealab funded company which provided a 'paging service' of sorts to keep young, hip, urbanites informed about what to do and where to go... and they folded 6 weeks after their launch... (i did a case study on similar companies, and that was good, one last company to write about... :) )

I hear from quite a few small business website owners in our support mail. The conception I'm coming up with is, there are a great many small operations that do very well -- not making a fortune, perhaps; but making a reasonably good living.

The web has proven a great equalizer in this: Small businesses, even the smallest, can compete in a world marketplace... making it possible for all sorts of new businesses to do well that weren't even possible five or ten years ago.

et is quite correct. It also depends on the type of business model you accept.

You may be aware that venture capitalists now have tightened their purse-strings quite severely and with many dot-coms failing, hardly any I know are turning a profit. Unless you have something else running on the side (like a consultancy business or brick-and-mortar business) to cover the costs or you're a millionaire to start off with, then you are going to burn money fast unless you can do everything yourself.

Following up on BC's post and my own above, consider businesses like our sites [ http://www.CodeBrain.com http://www.BrainCode.com http://www.CodeLifter.com and others ] which sell, basically, software products.

If we had to market software the way it was typically done even five years ago, we'd be dead in the water -- murdered by advertising, physical production, shipping and distribution, and even accounting systems costs.

Via the 'Net, our advertising cost is zero; we don't even have a budget line for it. Our accounting systems are fully automated via an outsourced service; cost, likewise zero. And since the products themselves are shipped via the 'Net (as files), our costs in shipping and distribution are negligible, too.

Businesses like this were impossible to do even a short time ago... but now, well, the 'Net is just *made* for them.

Among other models, businesses that work within this framework can do quite well on the 'Net.

I'd have to second etLux on that one. We do a similar thing with our products, and without the Web we'd be looking at much larger costs. Distributing software products via a software system makes perfect sense.

There's certain things the web is ideal for. Information sharing, communication and software distribution are three of these. It can of course be used for many other things, but in some cases it's not so ideal.

(Not to mention that our products are made for the web so without it we'd have to think up something else...)



[Edited by Lawrence on 12-17-2000 at 04:41 AM]

Here's one to consider:

The gentleman I design websites for is a consumer show producer (home and garden shows, with one pet show in the fall). We have two websites for his projects. The one, http://www.canadianpetexpo.com is not my best work by a long shot. It's (for the most part) static HTML with a ton of graphics and it's a slow load. Yet for some reason, it makes him a ton of money from exhibitor inquiries and from coupon redemption on the weekend of the show, as well as landing him two major sponsors for the event itself.

However, the site I'm prouder of (although I would like to do some more work on it graphically if/when I get the chance), http://www.regionalshows.com draws a small profit from the exhibitor inquiries and some coupon redemption on the weekends of the various events (should the events have an admission charge...not all of them do).

The only thing I can possibly guess at as far as the "why" is that the Pet Expo site is a lot "lighter" in nature than the Regional Shows site itself. I dunno though.

No comment against your design skills, (as you say its not your best by a long shot) and if the customer wants the customer gets - but OOOOOOO the http://www.canadianpetexpo.com ought to wear shades. But hey if it works why fix it!!

Couldn't get through to your other one for some reason.

Originally posted by Spider John
Here's one to consider:

The gentleman I design websites for is a consumer show producer (home and garden shows, with one pet show in the fall). We have two websites for his projects. The one, http://www.canadianpetexpo.com is not my best work by a long shot. It's (for the most part) static HTML with a ton of graphics and it's a slow load. Yet for some reason, it makes him a ton of money from exhibitor inquiries and from coupon redemption on the weekend of the show, as well as landing him two major sponsors for the event itself.

However, the site I'm prouder of (although I would like to do some more work on it graphically if/when I get the chance), http://www.regionalshows.com draws a small profit from the exhibitor inquiries and some coupon redemption on the weekends of the various events (should the events have an admission charge...not all of them do).

The only thing I can possibly guess at as far as the "why" is that the Pet Expo site is a lot "lighter" in nature than the Regional Shows site itself. I dunno though.

This is a really interesting point. I have noticed this once to often. I always thought it was just me, the crazy choosy guy or something. I guess i was wrong.

Kunal, I'm going to sue. That site broke my eyeballs... lol.

Seriously, it's amazing what works -- and what does not -- sometimes... but, as said above, if it works, for heaven's sake, keep your hands off it... lol.

I've noticed some amazingly minor things, for instance, making huge differences in site profitability. In one case, I moved one single item down in left menu positioning -- and sales tripled. I moved it back up, sales dropped off. I moved it back down, up they went again.

Go figure.





[Edited by etLux on 12-17-2000 at 02:22 PM]

hmmm.. do you keep stats on everything? i am a copywriter on the side, and if you want, i'll take your stats, write it up into a theory, and we'll make millions selling access to top secret marketing tips!

from then, etLux, you could write a program to take every visitors e.mail, and we'll put it in a huge mailing list, which i'll write the every two hour newsletter for, and then we'll e.mail everyone on the list all the time...

hmm... we'll need a host that doesn't mind mainly mailing list and bandwith issues... that shouldn't be hard to find...

it won't be spam though, we'll let people opt out at the bottom (but shhh... we won't tell em that we never answer that e.mail address... :) )

I thank you very much for the kind offer, and yes, I do keep stats on all manner of things. As it happens, though, I'm both an able theoretical mathematician and statistician, as well as a 30-year veteran programmer.

Though perhaps not apparent from the front end, much of our scripting (on CodeBrain.com) is, in fact, already semi-intelligent, in that it automatically analyzes and reacts to user-based statistical factors -- changing layouts and positioning based on user reactions and habits. The above anecdote was, in fact, actually a miniature case study, drawn from the results of our own scripting experience.

This is a fascinating area, and the techniques are, of course, widely in use by many of the large sites with deep programming pockets. But with the ever-growing technical sophistication of small site builders, this sort of artificial intelligence approach is certainly not out of reach for them.




[Edited by etLux on 12-17-2000 at 05:29 PM]

Originally posted by chilliboy
No comment against your design skills, (as you say its not your best by a long shot) and if the customer wants the customer gets - but OOOOOOO the http://www.canadianpetexpo.com ought to wear shades. But hey if it works why fix it!!

If yer knockin the background that was my own design. And that's the only part I LIKE about the site hehe. :)

But the customer likes it, the customer's got it, and the customers of the customer like it. So (shrug) go figure people.

What error message did you get when you couldn't visit the site?

I tried a couple of times - all I got was page not found, when clicking your link. Maybe a typo - the above link works - haven't checked back to look for errors though. If it wasn't typo maybe server was down?

RE: background - sorry I didn't like it - but then again I don't like sites with any repeated backgrounds. Just my personal opinion.

I'm kind of a person who goes for everything easy on the eye. Pet hate is animated Gifs, although 1 good animated gif on a page works ok, but those clipart sites just make me want to SCREAM!!

I'd be interested to get some sort of stats on the effectiveness of animated banners - especially the button banners.

My guess would be this - although I have no stats to back it up. While an animated button banner (abb) may be more effective in a static page than a static button banner (sbb), I think that if you have a page with many abb's (say 5+) I think that maybe a sbb placed amongst them may be more effective. Or maybe a button that is very subtley animated, or changes out of sink with all the others ( say change every 10 secs).

Personally if I see more I see more than 3 animated buttons on a page it turns me off.



[Edited by chilliboy on 12-18-2000 at 05:12 AM]

Very few large dot-coms are making money. Look at Amazon. years in business and no profit in sight!

The only E-sellers I know of that are making money are small "mom&pop" sites that typically specialize or niche` in something. They aren't making millions and few will ever IPO but they are making money.

People thought being on the web was an Excaliber Sword to mega bucks. Business planning was ignored. People thouight the "new economy" didn't need old fashioned things like a budget, support, delivery etc.

If net selling was so easy why would so many companies have to advertise in traditional ways? (i.e. radio, TV, newspapers, billboards etc.)

Also one other point: A lot of the stuff being done on the web isn't new. It's the same old same old. Catalog sales mostly. No one has yet come up with anything really radically new to do with the net. It's like when motion pictures first came out. Old movies were little more than plays on film. It took years before things like camer angles, new scenes and close ups were developed. Sounds obvious to us now but was new back then.

I agree, the dot com scene was over hyped. In all the excitement people forgot the basic needs for any company to reach it zenith. The people who did not forget are minting money.

Arguably, there is no new economy. The Internet is just a new channel for the regular economy, a channel that some companies choose to use exclusively.

Originally posted by Lawrence
Arguably, there is no new economy.

Arguably, there is.

The Internet *is* having very significant effects on the current economy.

With more and more people working directly on the 'Net, fewer and fewer drive to work (or need new cars more often, or use as much gasoline, or buy tires as often, or pay tolls, or cause as much wear on roadways, or... etc.).

As more and more people work at home offices, traditional corporate office space is being downsized (as is rental income for office building landlords, tax income for the communities where corporate real estate is located, income for fuel and utilities and maintenance companies that provide energy and services for corporate structures, and... etc.).

As huge segments of the general communications burden shift from traditional mail and telephone architectures to the Internet, so does the income from these, along with the associated jobs, the economic benefit gained from maintenance and expansion of these traditional vehicles, and the income from the widely held stocks of these companies.

As retailing outfits of every type and description flock to the Internet, an entire cascade of events follows: reductions in use of physical retail space, reductions in travel-related costs associated with shopping, reductions in sales force personnel -- and all of the dislocations these imply.

As the Internet equalizes the possibilities of low-cost, effective, broad-scale marketing for companies from the smallest to the largest, literally hundreds of thousands of new companies -- never before possible -- are springing up, siphoning off significant revenues from the bottom lines of the traditional corporates.

And that's just a few points. Detailed scrutiny clearly and resoundingly shows the Internet altering virtually every aspect of economic life.

If that doesn't add up to a new economic model, I'm not sure what does.

Good point(s) etLux. I concede.

However, I do object to the Internet being considered a "new economy" in the sense of it being a separate, or second economy (not always interpreted at such, but at times it is). It has resulted in vast and rapid change to the economy, but it has altered the present economy rather than created it's own separate economy.

etLux,

Much of what you attribute to the Internet was made possible by computers at home long before the Internet became mainstream. Along with modems, WANS, fax machines, and other technologies, SOHOs preceded the Web by years.

Let's not exaggerate its importance. Certainly the Internet has had a big impact in parts of America and other nations, and has made more things possible. It is not a new economy, though, just a new player bringing new possibilities to the old one.

This may sound silli but how does one define a "economy" wether old or new?

kunal - stupid! That's such a good question that I can't answer it!

Perhaps "economy" could be simplified down to its raw state and defined as the resource distribution system of a society? (including monetary and human resources of course) But perhaps that's too simple.

As a budding economist I demand that you regard the economy to be the sum of GDP, services, trade, exports, and take into account all macro-economic data at your disposal. Don't forget the micro-economic levels too.

Otherwise I will be forced to subject all of you to dry economist jokes that will bore the heck out of you :D

Well all those things can fall under the greater heading of "resources" can't they?

Even so... can you let us in on some of those jokes?

Originally posted by BC
As a budding economist I demand that you regard the economy to be the sum of GDP, services, trade, exports, and take into account all macro-economic data at your disposal. Don't forget the micro-economic levels too.

Otherwise I will be forced to subject all of you to dry economist jokes that will bore the heck out of you :D


Doesnt the Internet cover all these things? I would call it a new face for the old economy? It redifines the old one, doesnt it?

Lawrence,

Sure!

Top 10 reasons to be an economist

1. Economists are armed and dangerous; "Watch for their invisible hands."

2. Economists can supply on demand.

3. When you are in the employment queue, at least you know why you are there.

4. When you get drunk, you can tell your colleagues that you are just researching the Law of Diminishing Marginal Utility.

5. You can talk about money without ever having made any.

6. Economists do it with models.

7. If you arrange the letters in Economics, you get "Comic Nose".

8. When you call a Chat Line and get Candy Keynes, you will always have something to talk about.

9. Economists do it risk-free, and in an Edgeworth Box cyclically.

10. You can say "trickle down effect" and keep a straight face - and your job!

(those with knowledge of economics will be ROTFL by the time they finish)

Personally, I'm terrified of economists. If I see one coming down the sidewalk, I cross to the other side of the street.

That Greenspan guy, you know he's the leader of a whole vicious mob of these economist characters... Why, I heard once he and three of them got together and beat the spare change out of a nun -- then claimed they were just working to reduce the national debt.

Originally posted by chilliboy
RE: background - sorry I didn't like it - but then again I don't like sites with any repeated backgrounds. Just my personal opinion.

I'm kind of a person who goes for everything easy on the eye. Pet hate is animated Gifs, although 1 good animated gif on a page works ok, but those clipart sites just make me want to SCREAM!!



Like I said, I hate it too. But one thing I've learned over the course of time is that anything that makes me want to retch is usually what sells.

I'm not sure why the link doesn't work for you by the way...I tried it myself on preview, and just now, and it worked fine. It is entirely possible that the server was down however. It's been down twice in the last week (a first).

As far as your comment on the GIFs, I personally agree. Then again, I'm sane, logical, rational, reasonable, intelligent and most importantly atypical.

I did try taking those GIFs off one time without telling the boss. 15 solid minutes of screaming after he found out, they were back on. And no matter how much I don't like them, they're staying. :)