How To Make
Money Online by
Fifteen billion smackers: That's the value Microsoft recently
slapped on Facebook when the computer giant invested $240 million for a
1.6% stake in Mark Zuckerberg's online social-networking site.
You could seethe with envy--or you could chase your own fortune on the
Some online businesses require only a few hundred dollars in equipment,
while others demand significant hardware and perhaps even a warehouse.
Some might make you rich; others might just cover beer money. And all
involve various levels of time, capital and technological skill.
In Pictures: Eight Ways To Make Money Online
"Some people have dreamed about owning their own business and have not
followed through because of the investment in resources," says Jim
Griffith, head of eBay University, for those aiming to set up shop selling
goods at the online auctioneer's site. "The Internet allows people to at
least try without making a large initial investment."
Army veteran Brandi Ramos of Springfield, Ill., did it. As a single mom
in need of extra income, she started her online retail career peddling
"big and tall" men's clothing on eBay.
Three years later, Ramos, 32, makes a good living working online out of
her 600-square-foot basement packed with hanging displays and baker's
racks piled with tupperware containing underwear and belts. Ramos aims to
offer quick service, answering all e-mails within four to six hours. She
claims to net $25,000 on $100,000 sales a year, and even earns a few bucks
per order on shipping.
If managing inventory seems too big a chore, play virtual landlord and
charge other retailers monthly fees (or per-transaction fees) for the
opportunity to market their products on your site. Amazon.com (nasdaq:
people ) nabbed 28% of its revenues this way in 2006.
Craigslist is another take on this model: The 25-person company, worth
a reported $2 billion, charges businesses to post help wanted ads in San
Francisco, New York and L.A.; it also collects fees for apartment listings
in New York City. Total page views per month: about 5 billion.
Then there's every pajama-clad blogger's dream: producing content
supported by advertising dollars. Selling advertising is how thousands of
established online media outlets pay their electric bills. They charge
advertisers two ways: by the number of overall Web pages (called
"impressions") served up, and by the number of people who click on the
Setting up a blog requires not much more than a basic publishing
program, a server and software to track ad clicks. The hard part, though,
is attracting enough eyeballs to make it worth someone's while to pay to
advertise on your site.
To have any prayer of attracting large advertisers, sites need to
attract at least 500,000 unique visitors per month, says David Hauslaib,
publisher of Jossip.com, a media and gossip blog that counts Coca Cola
people ) and Sketchers among its advertisers. Sadly, even if you do
generate enough traffic, the "click-through" rates on ads tend to be quite
low--in the neighborhood of one half of 1%.
Subscription-based models are even harder to crack. Unless your site
fulfills an urgent need (for tangible investment ideas, a potential mate,
etc.), users aren't likely to pay for the content.
One way to garner subscription revenue is to run a virtual marketplace.
These sites collect by allowing buyers and sellers easy access to each
other. Many of these marketplaces flamed out in the dot-com bust, but some
persist. Mfg.com, for instance, matches equipment manufacturers with
smaller component suppliers. Dating sites like Match.com charge
subscription fees for access to their members. And H2Bid.com links
municipalities with wastewater-equipment vendors.
As with tangible real estate, you can buy virtual plots (URL
addresses), flip them and make a buck. GoDaddy.com sells unused domain
names for under $10 dollars apiece. To attract buyers, run tests to
determine how often certain key words are searched so that you can
demonstrate the likelihood that your URL will show up in a Google (nasdaq:
people ) or Yahoo! (nasdaq:
people ) search. One tip: The best domain names are short, sweet,
specific and easy to remember. (For more on this model, check out
"Meet Noah Of The Internet" and
"The Most Expensive Web Addresses.")
As Internet usage grows, so too will the sophistication of online
business models. Take 3-year-old Yoonew.com, which sells futures contracts
on sports tickets.
Fans buy the right to take delivery of tickets if their teams make it
to a coveted playoff game, perhaps months away. Given the uncertainty of
the bet, those contracts sell for a fraction of the future market value of
the underlying tickets. If your team makes it to the big game, you've
locked in a cheap seat; if it falls short, you lose that insurance
Yoonew makes money when the revenue it collects from selling all those
contracts exceeds the cost of delivering a small number of very expensive
tickets on game days. The danger: If ticket prices spike, or there are no
seats available, the company could suffer a loss or alienate its
Sure, you can make money online. But no one said it was easy.