Some people are saying that user generated content (UGC) isn’t profitable. For example, Adam Cohen recently posted a link on Twitter to an article on eMarketer that includes comments like this:

“Unfortunately, if things stay as they are, this frenzy of content generation and attention is not likely to produce commensurate rewards for marketers or site publishers.”

There are other quotes that are similar. There’s this idea floating around that since big companies aren’t making a killing that it’s not possible to make money with user generated content. Part of this thinking is the result of this wrong thinking:

“The prevailing wisdom used to be that user-generated content would attract advertising volume commensurate with its audience.”

But this thinking is just plain wrong. Let’s poke at both issues: (1) Only big companies matter and (2) advertising is the only way to make money with UGC.

It’s kind of silly to think that UGC only concerns BigCo’s and monster companies. It’s like only they care about making money. Or only Fortune 500 companies have skin in the game. That’s complete hogwash. Small and medium sized companies utilize UGC all the time, and many know how to make money with it. I’ll explain this more below; stick with me.

It’s also naive to think that the smartest way to make money with UGC is via advertisements. This is like saying that the only way to make money with magazines is with full color advertisements. What about classified ads? What about subscriptions? What about inserts? There are always multiple channels of revenue to utilize.

So, now I’ll spill the beans. What’s one really smart way to make money with UGC? Well, I’ll first give you this secret tip: If you can get traffic to a web site, you can make money. It’s all about traffic. If an online marketer knows that a site is getting traffic, money can flow. This is almost an absolute truth when it comes to “hungry markets” and “hungry niches” but it’s also true even with niches that don’t seem to have much hunger.

Here’s what I’ve done on several sites where we have user generated content (e.g., blogs). I simply provide a visitor with an opportunity to watch a free video or download a free report, then I capture their email address. From there, the real magic happens. I learn what my subscribers want, find or build a product, then sell it to them.

Here’s something to drill into your mind: The profit margins on this activity are insane. You can make a killing online if you can get users to generate content for you, which in turn drives traffic, which in turn gives you the opportunity to capture emails, which in turn gives you a list, which in turn allows you to build a relationship, which in turn allows you to provide something of value in return for payment.

That is just one way that you make money with content supplied by other people. There are many other models. If you’re interested to learn more about this “way of thinking” I encourage you to take a look at the 10x Method. It’ll help you understand how to find more excellent business models liek the one I’ve just clearly laid out for you.

~ John S. Rhodes of “The Rhodes Brothers”

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