The perfect storm is brewing in the Make Money Online blogging world. These blogs tend to elicit strong reactions for various reasons. It seems that most people tend to either love or hate them with very few being indifferent to them.
Whether you are an advocate or not, it is clear that as more of these blogs are sold, a very familiar trend is forming.
My first taste of irrational exuberance was the raging stock market of the 90s. Ahh… those were the good old days, stock market mania was everywhere.
Maria Bartiromo was one of the most recognized faces in America, Alan Greenspan was a household name and Jim Cramer was a rockstar.
Obscure companies like Cisco, Lucent and Applied Materials rocketed to the tops of the stock market charts and made people millions of dollars.
Tech stocks were the gold standard and these things were selling for ridiculous multiples. It mattered not that they had no revenue, no receivables, no profit, no inventory, nothing.
People bought them because they kept going up, not because it made any sense. They were buying a dream.
Any idiot could make money picking stocks. This was GREAT!
Of course all good things come to an end and when common sense burst the the bubble, the paper millionaires came crashing back to reality.
Flip This House
The drug of choice in the 90s was the stock market. After “the crash” people wanted a safer drug, one that wasn’t so volatile and that they understood more about.
Low interest rates and ridiculous lending practices began to skyrocket the housing market and people looking for the next big thing had just found it.
Those who didn’t even know what Applied Materials made, felt much better about investing in something they know, housing.
Houses began to appreciate 10, 20, 50 even 100 percent a year in many cases. Homeowners were cashing out and indulging in a lifestyle that they never dreamed possible.
Maria Bartiromo was replaced with Ty Pennington and Page Davis. Flip this House and Trading Spaces became two of the most popular shows on network TV.
Viewers eagerly tuned in to watch the latest moron buy a fixer upper, screw everything up beyond belief, yet still sell for a 6 figure profit. If that boob could make all of those mistakes and still profit, then so could I?
Any idiot can make money flipping houses. This is GREAT!
Just as the stock market of the 90s did before it, the Real Estate market has come crashing to earth. The guy who stumbled and bumbled his way to a 100k dollar profit before, was now stuck with the house and soon to be bankrupt.
Roughly a year ago a similar trend started in the world of blogging. It seems that MMO blogs are the latest “next big thing.”
John Chow and his outrageous income reports fuel the fire every month as bloggers see how easy it is to make money blogging.
Every time John Chow posts an income report it reminds me of those people who were able to make thousands on a flip without even knowing how to use a hammer.
Any idiot can Make Money Blogging. This is Great!
Flip My Blog
This latest flip my blog craze is still unfolding even as I write this post. It seemed to start last year when when Blogging Fingers was sold. The floodgates were open and a number of blogs have been sold since that event.
The previous two bubbles that I mentioned all had signs of “irrational exuberance” that foretold the end of the craze and this one is no different.
OneMansGoal has sold 3 times in the last 6 months with the latest being to a rank newbie who knows little to nothing about WordPress and is an admittedly poor writer. The selling price over 10k dollars!
Simply learning to blog is hard enough but learning to make money blogging at the same time is harder still. It appears he spent 10k dollars hoping to accelerate his learning curve but reality is that he bought the car before learning how to drive.
SEONoobs might be an even better example. This blog sold for $4500 dollars despite being only a few weeks old. You could duplicate that blog for almost no money and a couple of weeks worth of writing.
Nobody can accurately predict where the MMO blog craze is heading or how much money will change hands before we see that bubble burst, but I don’t think anyone will argue that a bit of irrational exuberance might be in play already.
I listed the two examples above but the bar for ridiculous might reach a new high any minute. John Cow has his parody blog on Sitepoint with a Buy It Now price of 50k dollars!
Cow reports an income of about 3500 dollars per month, so in the unlikely event that the buyer is able to maintain that revenue, it will be more than a year before they even break even.
Much like the “flipper” who ended up being stuck with a house that wasn’t worth what he paid for it, will this end up being the case for some or all of these blogs.
Time will tell and maybe they will prove my theory wrong, but all of the signs of a bubble are there. Much like the past, dreamers will blindly plunge into a field they know nothing about hoping they can be the next big thing.
The bottom line is it’s their money, if they want to plunge their life savings into a dream then so be it, but I expect that they will quickly learn that Hoping makes for a very poor business plan.
If you enjoyed this post you can find many more on my own blog at The Blog Entrepreneur. You will find me here every Friday as long as David doesn’t sell after reading this article.
Originally posted on April 18, 2008 @ 5:00 am