Why You’re Not Making Money Online

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Too many people think that they can just start a blog, put some AdSense on the sides, throw some links on there and start making money within the month. Of course that’s just wishful thinking; here’s a look at reality.
According to a study done by the University of Texas along with Chikita, the top 50 thousand blogs (as ranked by Technorati) cumulatively generate $500 million in revenue, after which the revenue starts to plummet. Here’s a look at the revenue distribution:
However, these figures aren’t necessarily discouraging. If you read the Pronet Advertising’s 4 Steps to Success you’ll note how closely most of the top blogs follow the formula (which is quite obviously not rocket science). What most people tend to overlook is that while blogging can be a profitable business, it takes time for any blog to mature, get recognition, and start generating the traffic required to generate money.
With that in mind, here are some other things we should acknowledge:
1. The top 50,000 blogs making $500 million per year means that the average blog made $10,000. While in most cases you can’t sustain yourself solely based on your blogging income, this is still a good amount of money to supplement other income sources.
2. While top-ranked blogs like TechCrunch and Mashable are raking in hundreds of thousands of dollars, reaching that status is incredibly difficult and an irrational expectation for a new blog.
3. The blogging space is growing, the long-tail is become longer and as blogging becomes more and more mainstream the amount of money flowing in and the size of the pie are only growing larger. This means that while you should have rational expectations, you shouldn’t give up hope on blogging as a viable source of income.
4. Not all monetization schemes are made equal. To decide how you can make the most from your blog, it is best to try out several different methods over time and see which suits your blog and your audience the best and then stick to it.
Note: Though the results of the study may not be entirely accurate they do present us with a good starting point for the discussion.

Cameron Olthuis

Cameron Olthuis

Cameron Olthuis

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  • I think something else we can draw from that is that there is no big money to be made with a site that isn’t genuinely traffic-worthy.
    Unless you create a destination many thousands of people will want to visit you’ll never be able to make a full-time income blogging. It’s the websites that give something great to their readers which receive the greatest rewards in return.
    And like you said Muhammad, that’s not rocket science :).

  • This reminds me of the radio comercials you hear where they tell you they have a way for you to make money with products you never touch. It’s called afillite marketing. what they don’t tell you is that you need to provide a reason for the websurfer to buy through you rather than amazon or eBay.
    You can’t just throw up an Amazon store front site and expect to make money.

  • Very interesting article. We have done well but with so many blogs it has become a tight market. I do see more money flowing in to the blogging sites that our company runs.

  • I see this a lot. People will start a new blog or site, throw adsense on it and hope after 2-3 months of hard work, that they’ll be able to buy an island of the cost of Florida. Its just not true. Having said that, working hard 12-24 months, adding new content every day, that’s fresh, and continually building up links to your blog(s) works everytime. The problem is that most people are lazy. They do the work for a minute and then hope for the money to pour in. If it doesn’t work fast, then they move on to the next “thing”.

  • The big thing people don’t account for is building links to their blog, and giving it time to age. No one should just expect to build a site and profit, these things take time. Cheers.

  • I am fairly new to blogging and would like for things to happen quickly. I am learning that it takes time and patience.

  • Make $1,000 Per Year for All the Effort You Put Into Your Blog!!
    If 85% of the top 50,000 blogs make a total of $50,000,000 (i.e., 10% of $500 million), then that’s only $1,176 per blog (i.e., among the 85%). Of course, this skews heavily in favor of the most popular among the 42,500 (i.e., the lagging 85% of the top 50,000). But this is also the top .1% of blogs, right, i.e., if there are truly 50 million or so blogs. Not encouraging data, at least not encouraging if someone hopes to make $$$ through their blog.
    Okay, the data isn’t perfect — but the message is clear: Most bloggers shouldn’t expect to make more than jiaozi money (at best).
    Monetizing Blogs: Other Options
    Yes, I realize that blogs can be monetized in other ways (e.g., sponsorships — isn’t this how Tony @ AO makes money from this endeavor, besides using it as a publishing mechanism to support his money making conferences) and that blogs can sometimes generate good sales leads. I’m thinking of China Law Blog as an example of an excellent blog that has generated good leads for their boutique law firm. But the numbers are still challenging anyway you slice or dice it.
    Do You Have a Prayer?
    What’s clear, I guess, is that if you have a winning blog, i.e., one of the top blogs, you’ll make good money.
    The problem: Most bloggers don’t have a prayer at creating a top blog. They want the riches, but will likely get scraps at best.
    Hence, blogging should be done for reasons other than making $$$ — since few blogs (relatively speaking) will make the top grade. This is one reason I simply keep posting here, keep my “Letter from China” columns cross-posted on both AO and the Sand Hill Group: I get more readers, but I wouldn’t be able to make any money doing it independently, at least not through advertising. (The top English-language China-focused blog has 5,000 subscribers at best, with the number two slot pulling in 2,500, the third at 1,500, and the tenth at less than 1,000 — and I’m being generous with my numbers. Not compelling numbers by any metrics. My “Letter from China” columns get more views on AO and Sand Hill Group when combined.)
    If ProBlogger is one of your must read blogs, then you should stick with your day job and build a substantial readership before taking a foolish leap of faith and becoming a full-time blogger under the assumption (a probably false assumption) that your blog will be successful.

  • Essentially this means that you really need to have a good strategy, serve a niche and know what you are doing to make any money in an online business or blog… just like the real world.

  • Finally, a blogger who tells the truth. I’m one of those people who made an unrealistic leap of faith, and I’m currently trying to recover from that mistake. This blog is a breath of fresh air.
    Thank you Muhammad!