Online forum business model
It's all about connections



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Online forum business model

The online forum model is the business model that is used by, arguably, the two most successful Internet businesses of all time; eBay and Google. The forum model doesn't really involve selling anything, products or advertising, but rather creating a place where buyers and sellers can interact.

Take eBay for example. "All" they do is create a forum where buyers and selling meet. Because this is insanely inexpensive to do, their gross margins approach 97%. With gross margins of that size it's almost impossible not to make money.

The same goes for Google. While some people may consider them an advertising based business model what they really are is a forum where advertisers and searchers meet.

Now, the online business that you start isn't going to grow into the next eBay or Google. But that doesn't mean that it can't be quite profitable. Let's look at a smaller scale forum model business, one I happen to run. :-)

GreenBusiness.net. It's a forum where eco-entrepreneurs can interact with each other, make connections, and share best practices. As you can see if you visit the web site, it cost $12 a month to be a member. I have a little over 100 paying customers (it's a rather new business for me) but you can do the math and see what my monthly revenue is. Now, my costs are only about $112 a month so the difference is profit.

I don't sell any product, I don't sell any advertising. All I do is create a forum where members can interact with one another. The simplicity of the business model does not mean that it isn't a valuable one. Just check out the member testimonials.

Why did I start such a business? You can read the details here, but in short, it's because:

A) I had a passion for the subject matter

and

B) There was a void in the market place.

Now that we've covered the three different ways to do business online let's look at the next step, designing a web site



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