Making Money Online: Existing Competition

February 2, 2009 · Posted in Blogging, Make Money Online

This is the third part of a multi-part series about making money online. So far I’ve discussed deciding whether to provide content or service as well as evaluating the size of your market. The next logical step to making money online is to analyze the existing competition in the market you are considering.

If you compete in a large market, you can expect to have a lot of competition. If there is little or no competition in your market, if you succeed you can expect competition to quickly appear. When Twitter hit the scene, it wasn’t long before competing services like FriendFeed, identi.ca, and others came to market to provide similar and improved services.

My Failure in Assessing Competition

Last year, I developed a free service for texting online. I felt as though it was a pretty decent service, but it never caught on like I had hoped. I believe a big reason for this was because there were already similar services such as Gizmo SMS and txtDrop.com. ForeverSMS really had very little to offer that these services didn’t already provide.

Improving My Assessment of Competition

I’ve learned alot with the less than stellar monetization of ForeverSMS. Lately I’ve been looking to develop services that do not exist yet or that have very little competition.

My Success in Assessing Competition

Well, the jury is still out for me on assessing competition. I am currently developing a service that I believe has very little competition. Whether or not it will succeed once I announce it is another story. It depends on how I handle my assessment on the size of market, competition, and other factors as well.

Sizing Up Your Competition

I think the biggest reason that many bloggers fail early when they start, is that they fail to realize the amount of competition they face. There are countless bloggers out there writing about a tremendous variety of topics, and many of them do it quite well. Although it is easy to get started with blogging and it is easy to do, it is tremendously difficult to succeed.

That being said, do not be discouraged from blogging. You may find that you do it better than anyone else in the topic you decide to write about. There are quite a few people that have managed to earn a living from blogging. Although it is a long and difficult path, it is indeed possible to make money blogging.

It may be nearly impossible to find a topic to blog about where you would face little or no competition. On the other hand, it is quite possible to develop new services that have no competition. The difficulty with creating new services is deciding on what they should be. Necessity is the mother of invention and often new services are born where individuals find a need for something that does not yet exist.

If you are developing a service and no such service exists yet, you will have a tremendous advantage. It will increase the likelihood you will make money with it. It is also easier to make money with blog posts where you provide information that does not exist or is difficult to find. If you have scoured the net trying to solve a problem and you ended up developing your own solution, blog about it! It’s very likely there are others looking for the very same answer you could provide them.

What’s Next

The last of the three important factors I will be writing about in this series is the quality of service. Quality of service does not just apply to services, it applies to content as well. If decide to make money with a blog, it needs to be informative as well as visually appealing.

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Comments

NewHorizon

Dude - At prospers.org, I thought you said that at the end of last year, you were going to re-visit the analysis you shared with our community about the ROI your were expecting from a properly diversified lending portfolio. But you sorta disappeared on us... :( What happened?

GeekLad

I provided some analysis on the current state of my portfolio on WealthBoy. Here's what I said:

According to Prosper, my account value is currently sitting at $2,725.77, which would be a bit over 7% ROI (on $2,550). My average loan age is 290 days, so annualized it's about 8.5%. Of course, I'm not that naive to believe that my ROI is going to be 8.5% since I currently have six loans that are over 15 days past due.

The six loans that are late, represent $280.55 of the account value and I would say most of that is at risk. The worst case would be if all six default and nothing is recovered. If that were to transpire, I would be at -4.1%, or about -5.2% annualized.

Some of those accounts have since been charged off and my current value stated is $2,615.89. The balance of accounts later than 15 days is $285.71. If all were to default, it would put my balance below $2,330 or a loss of at least -$220 or about -8.6%.

The loss will actually be a bit more than that, because $285.71 is only the balance and does not account for the accumulated interest on those balances that Prosper includes in the total account value. My average loan age is about 320 days, so on an annualized basis that is about -9.7%. So potentially if all my current late loans default, my annualized loss could be somewhere in the neighborhood of about -10%.

Obviously I've not attained the ROI I would have liked. Feel free to pass it along to the good folks at prospers.org.

NewHorizon

My bad - I hadn't seen your reply at wealthboy.com.

But anyway, what I'm trying to do here is revisit of the ANALYSIS (not portfolio) that you provided to the community.

A year ago, you shared this investment analysis with the Prosper community at blog.prosper.com: "If you properly diversify your portfolio and properly set your limits, you should be well on your way to building a profitable lending portfolio." And you went on to predict that your properly diversified portfolio would yield 11% ROI.

Now that it's recognized that your portfolio may well prove not to be profitable, does this change your mind about accuracy of the analysis and the value of the strategy you provided to your fellow Prosper lenders? If so, howz about letting your Prosper readership know? ...first hand? I think your acct at prospers.org still works. ;)

GeekLad