Why Mass Development?

Nobody can deny the fact that parking is not what it used to be and let’s face it: it was good while it lasted! You were able to make some decent money by simply pointing a domain to a nameserver and doing a little bit of basic tweaking here and there. In other words, parking represented maybe the closest thing to online passive income.

But things have changed and not for the better. A great domain that made $1000 per year a few years ago can barely make $400 per year at this point.

But Hey, $400 Per Year Is Not Bad, Right?

Sure, you can look at it this way if you’re feeling optimistic today. As far as the domains that made 3-4 figures per year are concerned, this way of thinking is not entirely unreasonable.

But let’s face it, domains like those represent a minority. I’ve given the $1,000 to $400 per year drop as an example. But what about domains which were making not $1,000 but a mere $10 per year and are now making $4 instead?

From Asset to Liability

At $10 per year, the domain is at least an asset. It’s making more than regfee and if you own thousands of such domains, it adds up. But at $4 per year, things no longer stand that way and an asset turned into a liability just like that.

As a person who owns thousands or even hundreds of domains, you’re dealing with an extremely tricky situation and are naturally asking yourself what needs to be done next. The seemingly obvious solution:

Wait a Minute, Why Don’t You Develop Them?

Let’s assume that you don’t have a lot of experience as a developer and decide to turn 500 domains into websites, domains which were making about $5,000 per year together via parking back in 2007 and which are currently only making $2,000 or so per year.

You hire a few people to get the job done at let’s say $30 per very very small website. One of those 5 to 10-page minisites I’ve referred to yesterday. And as I’ve mentioned yesterday, you’ll observe a few things:

1) You’ve invested $15,000 and now have 500 5 to 10-page minisites

2) Without additional traffic from let’s say search engines (the #1 traffic source for minisites by far), in other words by simply monetizing the current type-in traffic of a website, you’re making considerably LESS than by parking the domain.

Let’s refer to the 500 domains which were only making $2,000 per year parked. Park pages have considerably higher CTRs and the 500 domains which were making $2,000 per year parked will probably barely make $600 – $700 or so as minisites without additional traffic.

3) OK, so you need more traffic. But in order to generate search engine traffic, you need to build links and that will cost you even more money. And again, as mentioned here, search engines hate you.

Your sites will receive penalties, your AdSense account might get banned and so on. After a minisite creation + SEO campaign, let’s say a year or so later, most of your sites will probably be penalized on Google or even de-listed (which will even affect the resale value of a domain) and in most cases, you won’t even break even. You’ll be back to square one, with 500 websites which have no additional traffic and are making less than what they would have earned parked.

On top of that, you will probably lose your AdSense account as well. “No big deal”, you might think, “I’ll just switch to CPA”. Oh really? Here are two important aspects worth taking into consideration:

1) You will not always earn more by monetizing your traffic via CPA, there are more than a few niches which simply don’t have a lot of advertisers which will accept you as an affiliate.

2) Even if we assume that CPA makes you more than AdSense, it is HIGHLY unlikely that it will make you more than parking as far as most niches are concerned. And with the 5 to 10-page minisites I have referred to, it’s only a matter of time until you end up being penalized by search engines and having to limit yourself to simply monetizing the type-in traffic of a domain (as explained previously).

Alright, so building 5 to 10-page minisites is not the way to go. A lot of you are probably thinking:

Then What About Larger Sites?

Let’s refer to our 500 domains again. Instead of paying $30 per 5 to 10-page minisite, you can pay $200 for a decent site with let’s say 40 unique articles, an investment of $100,000 for 500 sites.

As per our initial example, those 500 sites are currently making $2,000 per year parked combined at this point. You’d have to invest your yearly parking revenue * 50 (yes, 50 years) just so you can have 500 live sites.

Then you have to invest money each year in order to have a steady influx of fresh unique content for each site. Let’s say $100 per year per site, in other words $50,000 per year for your entire portfolio.

Then you have to invest in SEO services in order to make it to the 1st page and stay there (yes, rankings need to be MAINTAINED). Let’s assume that your average term has 500 exact match monthly searches, then be EXTREMELY optimistic and say that you can get away with paying $100 per year per site for SEO services (and that’s only because the terms are not very competitive). Basically $50,000 per year for your entire portfolio.

A short expense recap (to make calculations easier, we’ll ignore regfees):

$100,000 initially
$50,000 yearly for content
$50,000 yearly for SEO services

Now let’s see how much money you’ll be making. We have assumed that your average domain has 500 exact match monthly searches. Now let’s assume that you’ll make it to the first page with each site and have 10,000 pageviews per year per site as an average (a moderately optimistic scenario and I’m taking long tail searches into consideration as well).

As far as your earnings per thousand pageviews are concerned, let’s be EXTREMELY optimistic (again, EXTREMELY) and assume that you will make $20. In other words, you’ll make $200 per year per site ($100,000 per year for the 500 sites combined) if we’re extremely optimistic.

The Final Numbers

Initial investment: $100,000
Yearly expenses (content + SEO): $100,000
Yearly revenue: $100,000

After drawing the line, you’ll see that you’re basically in a yearly “break even” situation and you probably won’t be recouping your initial $100k investment anytime soon.

Does having a great domain help? Yes!
Is having a great domain enough? No!

But What If Your Numbers Are Way Off?

You know what? They probably are but only because I’ve been quite optimistic! Here’s why I think that I’ve been optimistic:

1) I have assumed that each and every site will make it to the 1st page and that each and every site will receive 10,000 yearly pageviews

2) I have assumed that all sites will earn a steady $20 per thousand pageviews

3) I have assumed that there will be SEO companies willing to work on each site for $100 per year. In other words, less than $10 per month per site

4) I have assumed that you will find a company willing to build you 500 non-spammy websites with 40 decent articles for $200 each

5) I have assumed that none of your sites will receive penalties, highly unlikely given the fact that search engine algos are as unpredictable as it gets and that, whether people want to admit it or not, Google hates SEO. In an ideal situation, they would want all links to be editorial.

Is Mass Development a Viable Long-Term Business Model

You’re all smart adults, what do you think?

First of all, let me define what most domainers consider a minisite and take it from there. According to most folks, a minisite is a website which has let’s say 5 – 10 pages of unique content, a custom header and is monetized via Google AdSense. That’s pretty much it, feel free to check out some of the various minisites domainers provide as examples on forums and you’ll see that my definition applies to most of them.

That being stated, here’s how an elementary school teacher would explain the way things stand with these minisites:

1) The guys who are running the Google search engine hate you. They do not want their listings polluted with sites which do not provide any real value. If you think that your 5 or 10-page minisite actually provides value, you couldn’t be more wrong.

2) The guys who are running AdSense hate you as well. Why? Because your average 5 or 10-page minisites represent MFA (Made For AdSense) websites in their eyes. In case you were wondering why so many people get banned from AdSense, the answer is simple: MFA sites are against their TOS.

3) Everyone knows that the folks who are running the Google search engine and those who are running AdSense all work for the same company. As a result, it’s safe to say that if you’re building minisites, Google hates your guts.

In other words, your business model is 100% dependent on a company which hates you.

You want Google to send traffic your way, yet they hate you.

You want Google to send money your way, yet they hate you.

Need I say more?

I’ve received quite a few emails from domainers who are thinking about developing at least a handful of domains and most of them have told me that there’s TOO MUCH information out there. Well, they’re right and here’s the thing:

You ARE Going to Screw Up Royally!

Remember the first domain you bought or registered? Did it end up representing a great investment? Probably not! In fact, most if not all domainers have started out by buying or hand regging crappy domains.

What happened afterwards? Well, there are two main types of people:

1) Folks who get discouraged and give up
2) Folks who see failure as something that teaches them valuable lessons and motivates them to become better and better

Why would things be any different when it comes to development? Go ahead and ask anyone who is currently making bank how things were back when he or she started out. Was that person’s first business model brilliant? Yeah right!

Reading is great and everything but it can only get you so far. On the one hand, it makes sense to dedicate at least a few minutes each day to reading, even if you are making some decent coin. On the other hand, all of the books in the world won’t help if you’re not willing to work your ass of.

I LOVE Failure, Don’t You?

People who come up with all sorts of excuses because they are afraid of failure will also end up hiding from success. Your comfort zone = your biggest enemy. No matter how much you read, you will still fail when starting out as a developer and that’s NOT a bad thing.

Fail, learn a few lessons, fail some more, make bank: rinse and repeat

Blank Czech, using Ask Lord Brar service, asks:

If I have a good domain, do you think it’s worth fooling around with if it’s my first real domain? Or do you think I should try and make a long term (>3 months) development plan for the domain. It currently gets 20-30 hits a month.

Blank, the answer is a Resounding Yes!

There is no reason to be scared of screw-ups. Remember the old saying — “Life is a Lesson You’ll Learn When You are Through“. That is more than true when it comes to domaining or, for that matter, any other business in this world.

I am a proud graduate of the University of Hard-Knocks and I can tell you that the best way to learn something is to go head-on and experiment.

To quote my friend Jon — Being too Careful is Just Plain Gay.

Remember — I may be telling a lot of stuff but do you think I want more competition in my best markets by disclosing those ideas here. I discovered what works by hard-work and hit and trial. You can discover those ideas too if you stop worrying about the results and start experimenting.

I know you are scared because you think that the name you have may lose its value if you develop it. However, if the name has type-in traffic, it is not going to go anywhere just because you have put up a site. It will only grow because now you will also get search-engine traffic.

And in case you don’t do well with the site, you always have an option of switching it back to the parking services — but I am sure you wouldn’t as development always beats parking in terms of traffic and revenue.

What I will recommend to you right now is that you choose a web host, setup a blog, write some articles, setup adsense, add affiliate links, build some links and let it ferment for some months. Mind you — SEO is not instant and takes some time to show results. Patience, my friend, is a virtue.

In summary — Yes, “fool around” with your domains. It doesn’t matter if it is your first one or one thousandth. You will learn something new every time you try out something .

If you don’t try out things because of the fear of breaking things, you will be losing out to those who are out there and discovering what works before anyone else does.

Yes, you can minimize your risk by reading how others do it but that comes with a disclaimer — reading too much can result in “paralysis by analysis” and you don’t ever want that. Whenever you see an idea that you think can work, try it yourself and see if it actually works.

Good Luck with your development effort!

One of the most critical components component of your success on the internet is your web-host. If your web-host keeps giving you troubles, you will not be able to concentrate on developing, promoting and monetizing your websites. Also, if your website is down, you will not be able to show any ads and that would translate into zero revenue for you.

Sure — you can go with the top-of-shelf hosts which provide 100% uptime but they cost an arm and leg. Since our objective is to keep our costs minimum, we are going to use cheap shared-hosts. However, a LOT of these cheap hosts often resort of tactics — which I call “Dirty Games” — to squeeze every bit of profit from their customers.

Read this post to find out how most of these hosts try to rip-off their customers and “Rules of Thumb’ for identifying and avoiding such hosts. And yes, I will have host recommendations from my personal experience with some companies. Let’s get down to business, shall we?

With the advent of cut-throat competition in the hosting market, a lot of hosts have taken to making false and misleading statements to lure those new to the industry and then use “dirty-tacts” to squeeze every bit of profit out of them. Here are Five Worst Dirty-Tactics.

#1 – Long Lock-In Periods – See those ultra-cheap $3 or $4 a month prices? Most of the times they are valid only if you prepay for a year or two. What this means is that you are going to be stuck with this host for next year or two.

Yes, what this means is that it doesn’t matter how bad the quality of service after the 30 days trial period, you are neither getting a refund nor you have an exit strategy. And let me tell you from my own personal experience, even the poster-boys of the industry go bad.

A few years ago I used to have a website hosted with Site5. At that time they used to be a rock-solid host and everyone used to swear by their quality of service. And then within a few months the quality of service turned into one of the worst in the industry.

Perhaps they were victims of their own success and grew much faster than they could manage. They are still in business but I don’t hear much about them these days. However, the point is not that. The point is that people who had prepaid them for two years had to stick with them and suffer through the bad quality of service.

Some hosts use tactics like introducing setup fees to motivate people to pay for longer period. If a host has a setup fee — avoid them. Back in 1998-99, setting up an account used to be a manual thing. However, today, when most of the stuff is automated, charging a setup fees is just a scheme to get you to pay for a longer contract.

#2 – Unreasonable Restrictions – A lot of these hosts put unreasonable restrictions on their users. These may include a restriction on number of domains, daily bandwidth limit, maximum file size limit, database size limit, not being able to use certain popular scripts etc.

One very popular host doesn’t allow its customers to use FTP Software but rather forces them to use an online interface — what a pain in ass if you have to upload hundreds of files — like when you are installing wordpress.

The very same host also has a file size limit of a few kb and a database size of just 10 MB — even though they are giving their customers hundreds of GBs of diskspace and thousands of GBs of bandwidth. Try filling up those spaces in a few lifetimes if you can.

Another host claims to give 3000 GB of bandwidth a month — however they have a daily cap of 10 GB. This means that no matter what, you cannot use more than 300 GB a month of bandwidth.

And there are so many other hosts which do these type of things.

Now mind you, we want to host all of our domains on just one account — using addon domains facility which I will explain it at later in post. If you end up with a host with such crazy restrictions, you are basically in big trouble.

#3 – Super-Sneaky Contracts – Let’s not even get started on the fine-print they have in their contacts. Basically what it usually says is that if you site starts to get popular, we will kick you out unless you upgrade to our more-expensive plan.

Want to know another super-sneaky clause most of these cheapo hosts have? Even though you are given a 30 day money-back period, but, if you ask for the money back, you have to pay setup costs which are usually about $30. Pretty high considering annual fees of most of these hosts is like 80 or 90 bucks!

#4 – Low Quality Infrastructure. One of the reasons why these hosts are able to offer services at such low prices and still be in business is because they do ruthless cost-cutting.

Usually this cost cutting involves using low-quality server infrastructure and using low-quality networks. This usually translates in low-reliability and quality of services being delivered.

Another department which suffers is customer-service. Since highly skilled technical staff costs money, so they are out of question. These hosts usually outsource their support to third-world countries and hire bare-minimum skilled staff. Result – lower quality of support for their customers.

#5 – Hidden Costs – What most people don’t realize when they are paying for the super-cheap hosting package is even though that they are getting a package with “more than you can ever use” bandwidth and space, the power-features missing.

God forbid, if your site ever becomes famous — which it will if you keep following my strategies — you are in for a shock!

I have seen some hosts charging $15 per GB of bandwidth over usage (yeah right!), $10 a month for SSL Certificate (needed for eCommerce) and $8 a month for ever add-on domain.

Now you have to remember that for these hosts, it is simply a numbers game. If you get dissatisfied and move on, it would hardly make a dent to their figure of hundreds of thousands of customers.

However, for you, it will mean a lot of wasted time, effort and money. Let’s see how to find the right host.

Am I saying that all cheap hosts are bad and should be avoided? Absolutely Not. I have used them for a long time before moving to VPSes. However, I do have a big problem with those super-cheap hosts who will go any extent to lure new customers and keep them locked in — by hook or my crook.

Here are some things you should remember when choosing a web-host. They will save you a lot of hassles and headaches in long run.

Rule#1 – No Lock-In. I would strongly recommend against paying anything more than a month in advance and, if you have to, a maximum of three months.

Sure, you may pay a bit higher price by paying monthly than you’d if you pay yearly. However, think of it as your “host-reliability” insurance — in case their services start to deteriorate, you will have an option of moving to another host.

Rule #2 – Know the Restrictions. It is an excellent idea to clear-up any special restrictions that the web host may have before you sign-up with them. Nasty surprises are particularly bad if they affect you monetarily.

And when you ask them about this, be specific in your questions. Ask them the database size limit, file-size limit, if they have any cap-on daily bandwidth usage and any particular script they disallow.

Do remember that nearly every host disallows extremely server intensive scripts like chat-scripts on shared infrastructure. You should be concerned only if they disallow popular scripts like vBulletin, PhotoPost and other which you may use.

Rule #3 – Know Thy Contract. Read the terms of service and acceptable use policy carefully before you sign-up with the webhost. Don’t just skim through it considering it to be regular stuff — more than often it is not and it directly affects you.

Rule #4 – Clarify Prices. Make sure that you always clarify the pricing of various add-ons before you hit the sign-up button. Here also you have to be specific unless you love getting vague responses.

Ask them if they will charge a setup fee if you terminate within first 15 days, cost of excess bandwidth and space, cost of upgrading an account and if there are any additional administration and support charges you should be aware of.

Rule #5 – Contact Support. Always contact the webhost’s support department via eMail and, if they provide it, by phone. Try to assess how professional and supportive they are when you ask questions I recommend above.

Rule #6 – Take my Recommendation. I have recommended a host below who I had happily used for over two-years! I am sure you will be glad that you took my suggestion.

I had used over 8 hosts before I settled for HostGator and used them happily for over two years before I had to move on to PowerVPS due to increased requirements. Even today I hear rave reviews about them just so frequently even though they have become one of the largest hosts out there.

The package I recommend is the Baby Plan at $9.95 a month plan. Now if you host 20 sites on this account, it turns out to be less than 50 cents a month! Click this link and then use the coupon Jury to get the first month for just 1 cent.

Even though they offer insanely high space and bandwidth, they don’t have the crazy restrictions like which I have mentioned above. And furthermore, they are a company with pockets deep enough to back these claimed quotes in case some customers ever reach the levels.

They also offer unlimited add-on domains and on-click install for all popular software. What this means is that you can have as many domains as you want on your account.

And with a click of a button, you can install software like WordPress, Joomla, PhpBB and Coppermine among others on your site. Yes, this means that you can setup a site without having any technical skills.

To Signup with HostGator, follow this link and then use the coupon Jury, you will get your first month for just 1 cent.

Remember — a good host means that you will be able to concentrate on developing, promoting and monetizing your websites. And yes, I know from my personal experience that HostGator is one of them.

Ever since I made my Domaining Strategy post, I have been getting a lot of comments and questions from you all. First of all, thanks a lot for your comments and messages — that is exactly what keeps me motivated to write here.

Most of the questions which you have asked will be covered in upcoming posts about traffic, revenue, outsourcing, hosting etc. In this post, I am going to answer two important questions -

1. How to minimize your development costs?
2. How to Scale-Up this strategy?

This post will be one of the most important — if not the most — posts in the series as it describes the mindset you need to succeed in the game. These points are essentially derived from my own experience developing domains over the last 9 years — so yes, they are street-tested.

Let’s get started, shall we?

This is perhaps the most important tip I can ever give you — Focus on niches you already have an interest in. This will make your life a lot easier, fun and profitable. To quote Diorex from WickedFire -

I dont think that unmarried college age guys are going to be rockstars at promoting a menopause product or even a baby shower list. Look to your life experiences for things you naturally know a little bit about. Sure you can learn, but why set yourself up for a longer more difficult road.

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I’d also quote Hugh MacLeod from his HughTrain Post –

Even though the niche you are interested in may not be as profitable as pay-day loans or credit-cards but it would be easier for you to know what people really want and dominate your niche. This would translate into much higher overall profits and you’d have fun doing what you love.

PS: I have some finance domains lying around which I just can’t get myself to research into and develop! If you have an interest in grabbing them cheap, give me a holler.

It is particularly important to remember that you cannot satisfy everyone at the same time. If you try to do that, you end up disappointing everyone.

So, don’t try to build general-purpose and “one size fits all” kind of sites. TO make such sites truly spectacular you’d need a lot of resources — which should not be your objective.

Let’s say that fitness is one of niches I operate in. To build a general fitness site covering topics for both men and women would be absolutely crazy on my part. If I focus on Men’s Health, that would be better and easier for me but it would be very broad subject and still require a LOT of resources to create good site in.

What I would do is that I’d split the niche into further niches — building abs, reducing fat, dieting, bulking up, upper-body exercises, stronger legs, sports training, cardio-exercises, aerobics etc. — and build separate sites for them. This would make it easier for me to build the site quickly, promote my sites more easily and get more targeted traffic.

Now, I am not saying that you cannot build sites on broader topics — I do it all the time. But, be prepared to put more resources and energy into them. I have a lot of broad-niche sites but I have even more sharp-niche sites.

Don’t re-invent the wheel. If there is some “out-of-box solution” available for what you want to do, use that — even if it means some lost functionality, you will be saving tons and tons of money and/or time that you would have to spend on programming and design.

Most of the times you will be able to find a free open-source solution, all you need to do is look hard enough.

For content management use WordPress or Joomla and use free or cheap templates to change the look. For forums you can use vBulletin or PhpBB. Photopost PHP or Coppermine get the job done for a photo gallery. vBulletin will also take care of your Social-Networking needs.

Use a site like HotScripts.com to find out the various available scripts. You could download and install the script on your server — most of the times Read-Me files are detailed enough.

If you are not comfortable doing it yourself, hire a freelancer — but read Tip #5 before you do. Also, don’t use any third party hosted services except widgets and analytics.

Basically, the whole objective here is to use the already existing free or cheap tools to build your website.

Start milking revenue from your domains right away by using affiliate links, CPA links, Google AdSense et. al. Contrary to the popular belief, sites CAN make money from low but quality traffic.

To give example of one of my own sites, it got only 8 visitors from search engine and made $147 in affiliate commission.

So, optimize your site for revenue right from the start — even though you may get only small amount to traffic initially, but you don’t want to waste it.

Now, whatever money your site makes, re-invest at least 75% back into the domain. Promote the site, get professional content written, buy new software or get custom scripting done — but, reinvest the money to grow your site.

Remember – your site’s revenue is not your pay day but rather your pay day will be when your 25% becomes substantial or if you ever sell the site.

Or at least 80% of them will produce crappy stuff or miss deadlines and you will lose money with them. But it not all gloom — you have to know and follow certain rules of thumb which I will be discussing in later posts. I will embed a link to the post here whenever I publish it.

Also, if you are subscribed to the newsletter, you will get a buzz as soon as I publish the post. So, if you are not already subscribed to the newsletter, it is a good time to subscribe now.

The idea is to keep a detailed record of how much you have invested in a domain and what sort of returns it is getting. I have found that keeping records will not only keep you updated of your current reality but will also keep you motivated to work harder.

With my own sites, I keep an excel file with weekly details of how much traffic did the site get and how much money did it make from various revenue channels. If both don’t increase consistently, I know I need to get moving to grow these figures.

Also, do it on a weekend and don’t spend too much time on keeping super-detailed stats tracking every figure under the sun — just a bird’s eye view of where your sites are going in terms of revenue and traffic. Your priority should be creating and promoting your sites.

Now remember — these are just the rules-of-thumb and the list is no way exhaustive. Also, every situation is unique and you will learn the most by diving in and doing. So, start working, start making mistakes and start learning!

Stay tuned for other posts on the subject including – Stockdale Paradox, The “Big Fat Lie” Media Wants You to Believe, Building Websites, Choosing the Right Host, Traffic Secrets, Art of Recurring Profits and Revenue Maximization.