KaChing: How to Run an Online Business that Pays and Pays (16 page)

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Authors: Joel Comm,Mark Victor Hansen

BOOK: KaChing: How to Run an Online Business that Pays and Pays
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But content delivered for free on a web site and supported by ads isn’t the only way to make money with the knowledge you possess. In Chapter 4 I explain how to earn the full value of your expertise ... by selling information products.
 
4
 
Information Products—Seeing Your Knowledge
 
All of the methods that I’ve described so far have been based on the idea that the knowledge you possess has value. Whether you’ve picked up that knowledge from years of practicing your profession or learned it by indulging in your passion, if other people want to know what you know, you have an opportunity to make money.
 
Everyone has knowledge like that. Everyone can now build a web site to display that knowledge. As we saw in Chapter 3, there are now plenty of different ways to surround that knowledge with advertisements, giving you a steady stream of revenue. You don’t even have to go out and track down the advertisers yourself. Google and other services will serve them up automatically, matching their inventory to your topic.
 
As long as you’re adding content, bringing in readers, and tweaking those ads until they’re working at full power, you’ll be hearing KaChing.
 
An ad-supported content site gives your knowledge away for free. You can make a lot of money with it, but that money doesn’t come from the value of your knowledge. It comes from the value your readers have for your advertisers. If your users like to buy lots of things from your advertisers, you’ll make lots of money. If they prefer to read and click away without touching an ad—and some traffic sources have lots of users like that—then you’ll struggle.
 
In the meantime, you’ll have given away something valuable of your own for little reward.
 
You might think that there’s no other way. For years, we’ve been hearing that it’s impossible to get people to pay for content online. Everyone has become so used to being able to read the news for free, browse magazines for free, even watch movies and listen to music for free that trying to persuade Internet users to part with cash is like trying to get teenagers to clean their rooms: It’s something you know you should do, but why waste your time when you know it’s never going to happen?
 
The reality is very different. In fact, when the incentives are in place and the product is right, not only is it possible to sell information online, but you can actually get closer to the real value of that information.
 
That’s something that’s very difficult to do offline.
 
Head to a movie theater, for example, and you can expect to pay about $10 for a ticket. The price might vary slightly, depending on the location, the plushness of the theater, and whether the movie is in its first run, but no theater is going to expect you to cough up $50 or $60 for a ticket. The ticket price a theater can charge is fixed within a fairly narrow band.
 
Whether you’re seeing an 80-minute comedy that leaves you cold or sitting spellbound through a three-hour sci-fi epic, the price is roughly the same. And that’s true even though you might come out of the epic aware that you would have been willing to pay three or four times more for that experience.
 
In order to squeeze more money out of the movie-going public and reduce the gap between the price of the ticket and the value of the experience to the moviegoer, movie companies have had to get creative. They’ve had to offer features with clear additional value, such as Technicolor, surround sound, or IMAX. They release DVDs packed with special features and offer merchandise to children to squeeze every penny they can out of the value the movie has to the audience. Just calling it an “epic” or adding half an hour to the film won’t do the trick.
 
In the publishing world, the limitations for sellers—and the opportunities for buyers—are even clearer. One of the best-selling books in 2009 was Ramit Sethi’s
I Will Teach You to Be Rich.
Describing itself as a six-week financial boot camp for 20- to 35-year-olds, the book explains how to automate savings and investments, negotiate raises, manage student loans, and generally be smart with money. If it does what it says it does on the cover—and there’s no reason to believe it doesn’t—then over the lifetime of the reader, the knowledge in that book should be worth hundreds of thousands of dollars. Ramit Sethi should be able to sell it for thousands of dollars a copy and still call it a bargain. You can buy it on Amazon for less than 10 bucks, making it perhaps the best investment this side of Wall Street.
 
The book sells for that price because it’s a paperback, and that’s what paperbacks sell for, especially after Amazon has done its price slashing. Buyers don’t look at the value the book contains for them but at the price of the next book along the shelf. When the competition is that fierce—and price expectations so low—publishers have little choice but to pitch their books in the range that the book-buying public expects.
 
Move away from long-established and tightly priced industries like movies and publishing, though, and sellers start to enjoy more freedom. In addition to selling a New York Times best-selling book, Ramit Sethi also runs virtual boot camps that build on his book’s content by providing Q&As, webinars with other financial experts, and information about “entrepreneurship and psychology” These are not very different from the content of his book, but because they’re not in book form, Sethi can charge a price closer to their real value. The boot camps cost $199 and sell out quickly.
 
The Internet is such a new marketplace that information products sold online can enjoy plenty of pricing freedom. Copywriter David Garfinkel, for example, sells his copywriting kit online for $997. Buyers get more than a book, of course. They receive a stack of DVDs showing a complete seminar that students have paid thousands of dollars to attend, together with transcripts and audio versions.
 
It’s all valuable information, but it’s presented in a way that allows Garfinkel to cram in more details than he could in a 200-to 300-page book—and also allows him to charge a price closer to the amount that buyers can expect in returns on their investment. While $997 might look like a lot of money for a pile of DVDs, buyers realize that one sales letter they write using the information they paid just under a thousand dollars to learn could easily offer them 50 or 100 times that amount in return.
 
The format the information comes in no longer matters. Only the value of the information matters. Create information products, and you’ll be able to realize the true value of your expertise. That can mean hundreds and even thousands of dollars for every sale.
 
In this chapter, I explain how to create information products. I explain how to come up with killer ideas, create the product, write the copy that turns browsers into buyers, and recruit affiliates. I even discuss the most important practical steps, such as creating shopping carts, fulfilling orders, and of course, giving your product a rocket-powered launch.
 
Creating Killer Ideas for Your Information Products
 
I started this book by talking about creating a content site. I think that’s always the best place for any Internet business to begin, because it’s the easiest. You don’t need any special skills to create a web site, fill it with content, and surround that content with ads.
 
Once you hear that KaChing sound for the first time, you’ll immediately receive a massive injection of motivation to keep going and to make that KaChing ring louder.
 
But there’s another reason I think that it’s a good idea to start with a free, ad-supported web site. As you’re writing content, reading comments, and talking with your readers on Twitter and Facebook, you’ll also be getting an idea of who they are... and what they need.
 
That’s incredibly valuable information.
 
Put up a blog post that no one reads and you’ll have wasted an hour, maybe two. But you’ll also have helped your site’s search engine ranking and learned something about what your audience doesn’t want to see. You’ll have risked little and won a little. That’s the worst-case scenario, and it’s really not terrible.
 
But creating information products does require a larger investment. As you’ll see, there are ways to reduce the risk without significantly affecting the returns, but the risk that you’ll lose time or even a little money creating an information product that doesn’t sell is always higher than the loss you might endure by creating a dud blog post. Three factors will decide whether your information product makes a giant KaChing or a dull silence: the idea, the implementation, and the launch.
 
The idea sounds like the hardest part of the product. It looks like it’s the most important and the toughest to get right. You need to do lots of research, test the ground, carry out surveys, and build focus groups. Get it wrong and you’ll never see a dime for your efforts, your product will fail, and you’ll have to stay at your job for the rest of your life.
 
Actually, none of that is true, and while you might want to do a bit of research before you get to work, you won’t have to do too much market testing before the release. You’re creating an information product, not a new flavor of Coke. There might be some risks associated with information products, but the costs are low ... and the brainstorming is very simple.
 
The first rule in choosing a topic is to follow your gut.
 
If you’ve created an online business in a field that you enjoy, that you understand, and that you’ve already spent time in, you should have a feel for the market. Your customers will be people like you, and you’ll have a sense for what you—and others with your interest—would be willing to pay to learn.
 
That doesn’t mean you should rush out and create the first information product you think of. If you’ve thought of it, there’s a good chance that someone else will have thought of it, too. You’ll certainly want to make sure that the product you’re thinking of creating isn’t already available and that there is room for your own take on the subject. Looking at those other titles will also give you an idea of what’s selling and what the market is used to seeing. All of that is important.
 
That’s straightforward enough, but though your sense for your subject can point you in a general direction, it’s not enough by itself to plot your course. You will also have to do at least some research.
 
And that leads to the second rule of information product brainstorming : Listen to your readers.
 
As a web site publisher, your readers are both a vital part of the market and a market that talks to you. The comments they leave at the end of your blog posts and the actions they take on your site give you tons of valuable information about what sort of information they might (and might not) be willing to buy.
 
The comments themselves are obvious, but they’re also unreliable. It’s possible that some users will say specifically that they’d be prepared to pay for a book that would tell them how to build their own patio or how to cook dinner parties in a snap, but you can’t rely on those kinds of posts to tell you what information product to create. What you can do is look at the number of comments your posts receive to see which topics push people’s buttons the most. Although there’s a difference between prompting people to write a comment and driving them to spend money, it is likely that controversial topics will help you to move more goods. The comment count will help you to identify the subjects most likely to generate interest among your users.
 
Comments are the most obvious sources of information about your user preferences, but they’re not the only intelligence that you can use to make smart decisions. Your web site stats will also tell you which pages are the most popular and how long users spend on them. That’s a measure of interest. If a blog post topic has generated lots of views and persuaded your readers to stick around and read through to the bottom of the page, that’s a good sign that people are gripped by the subject. There’s a reasonable chance that they’ll find it interesting enough to pay to continue reading.
 
As you’re wondering what sort of topic you should use for an information product, take a few minutes to look at your site stats. List the 10 pages that generate the most views, the 10 pages that generate the most comments, and the 10 pages that generate the longest views. You should find that there’s plenty of overlap, giving you a good idea of what attracts your readers the most.
 
Those figures will tell you how much interest your readers have in the topic before they reach your page. They won’t tell you how much interest remains
after
they’ve read your page. While it’s unlikely that a single blog post will be enough to completely satisfy people who want to know about a topic, it’s certainly possible that a good post will leave them feeling that they know enough not to need to read more. (That’s not a reason to write poor posts, though. If one post can satisfy readers, then the topic is too narrow for an information product.)

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