Warning: Are You Blogging Like it’s 1999?

In the late nineteen nineties, many many people began to invest in the stock market primarily because online brokerage houses made investing so easy that anyone could do it. There was no longer any need to contact a stock broker, so everyone could believe that they had the knowledge needed to beat the market. For the next few years this “easy money” dream combined with the technology bubble drove the stock market to new heights.

By late 1999 I can remember that almost everyone I met was starting to make their own trades online. Then in March 2000 the bottom fell out of the market and many people got slaughtered. If you study investing or any type of money making activity you’ll see this trend repeat itself over and over.

Most people get interested in stocks when everyone else is. The time to get interested is when no one else is. You can’t buy what is popular and do well.

Warren Buffet

Rich Dad describes it as the lemming effect.

…remember these lessons from the way to find investments, simply remembering that when it comes to investing, most people are lemmings.

Lately as I begin to see lists like The Top 100 Make Money Online Blogs I can’t help whether or not the lemming effect is in full force when it comes to blogging, especially when it comes to the “make money online” niche.

A Real World Example

A couple weeks ago, the stock markets took a tumble due to concerns over the US banking industry’s exposure to low quality credit. This caused panic selling and drove prices sharply lower over. The lemming effect was clearly in play. Most investors who were selling were only doing so because the prices were going lower…below their comfort zones.

Realizing this, I took some of my cash reserves and loaded up on my two best stocks (which were both down over 25%). In about 48 hours, as the investors bought back all the lemmings discounted shares, I made about $1000 bucks.

How To Make $1000 in Blogging?

Compare that to the amount of effort required to make $1000 blogging these days and you’ll begin to see the point of this article.

I’m starting to think that to a savvy investor the idea of making money by blogging is looking a lot like the stock market did in 1999. Of course millions of bloggers will not loose large sums of money by starting a blog, but the time involved is equally, if not more valuable, than money and it could be lost just as easily.

1. Lemmings are late and investors are early…and that applies to both buying and selling.
2. It is easier to find great deals in a bad market than in a good market.
3. When markets are bad, lemmings return to hiding in their dirt burrows. When markets are bad, investors are out and about getting rich.
4. You can still make money during a good market. You just have to be a much smarter investor in a good market. When markets are hot, markets are at their riskiest, so be extra careful.
5. When markets are good, the hardest thing to do is not to be a lemming. When markets are bad, the hardest thing to do is to be an investor.

Who Took My Money?, Robert Kiyosaki

The blogging world is hot right now, but in reality very few are making anything even close to a decent return on the hours they are putting into their blogs.

How Would an Investor See The Current Blogging for Dollars Landscape?

Hard to say. I don’t consider myself an expert investor. I don’t think that the the crash has come yet. With the benefit of hindsight, I’m sure many people who had money in the stock markets wished they were sellers and not buyers during 1999 / 2000.

• this may be the time to sell or get out of blogging rather than jumping into the game.
• consider other options before beginning to blog for money. Especially if you aren’t dead certain you can own your topic (and how you’ll accomplish it).
• learn business skills to enable you to work smarter than others. Remember that even a successful blog require a lot of work.
• track your time spent on blogging and measure your return. Be prepared to cut your losses and get out, if the money doesn’t flow fast enough. If after a year you’d be better off working at McDonald’s…

Easy money comes from not doing what everyone else is doing. Blogging has become so darn easy that virtually everyone in a first world country has in their backpack all the tools required to replicate the success of all the top bloggers. In short, just like when anyone could point and click their way to purchasing Global Crossing in 1999 (like I did), there is zero barrier to entry.

Anyone with legs can take a good running jump straight off the cliff and into the blogosphere.

Blogging is Not The Same as the Stock Market

It should be noted that there is a flaw in my analogy between the stock market and making money blogging. That is, of course, that stocks require each seller to find a buyer before they can get paid, so they are particularly sensitive to the sentiment of the market.

Blogging on the other had, relies primarily on advertising revenue to drive profits. Advertising revenue is not showing the same bubble characteristics as the blogosphere.

This distinction may actually be worse news for the smaller blogger. I believe this will mean that advertising dollars will continue to flow online, which will fuel the dream of easy money for bloggers, but a higher and higher percentage of these dollars will flow to the top bloggers. This will result in a lower and lower return on hours invested for the average blogger.

Does it Mean You Shouldn’t Blog?

No, but it does mean that you’d better have a very realistic and focused approach to what you are trying to accomplish and the savvy to know how you’re going to get there. Bloggers like Brain Clark from Copyblogger and Maki on DoshDosh certainly did not benefit from being ahead of the blogging curve. But they have talent and a depth of subject matter knowledge that most people don’t have.

Before you dive over the cliff and into blogging for dollars, I do think that it is worth taking a look around the universe of money making possibilities with the eyes of an investor and to challenge the lemming approach. What other things could you do that aren’t “make money online” that could provide a way out of the rat race? What things are not fashionable right now that you could do?

And if you do decide you gotta do the blogging thing, don’t forget to value your time as part of the investment in your blog.

This post was written by Jon Symons, see my short bio. Or use the contact page to get in touch.