Once in a while I check on eBay to see what kinds of web businesses people are selling. One auction I ran across last night was for a couple of domains that provided free, ad-free php hosting.
The guy bought a “free hosting reseller” package for $50/month, and this company provides most of what he needs to let people sign up easily for a free hosting account. He had over 6,000 accounts across the three sites. Even without putting any ads on the users' accounts — he did this to encourage more signups — he was claiming revenue of $2.50 to $7.00 per day just from affiliate income on the home pages. So, if the average was $4.00 per day he'd still be clearing $70/month. When he had the ads on the user pages, he was clearing about three times that.
There were a number of things he wasn't doing with regard to monetization that would help, so it could be a good bargain for someone if the bids don't go much higher (right now the sites are going for $112). On the face of it, the money flow was there to pay itself back pretty quickly.
One thing he had on each domain's home page was a link to a directory containing all of the user subdomains. Peeking into this directory revealed a lot about the business and what the owner of the business is up against in maintaining this site:
- Unused accounts. People signed up for an account but haven't put anything up. He didn't monetize these at all, and by itself this isn't a problem, but if all accounts are unused, there probably won't be much traffic to the home page. 😉
- Accounts with raw directory structure exposed. The hosting company probably has most of the permissions taken care of so that users can't do much damage for very long.
- Websites in foreign languages. Not that foreign languages are bad, but it makes it more difficult to judge the content.
- Redirects. The only purpose for the account was to redirect to another site. I saw a couple dozen accounts linking to the same external site.
- Sites with content blatantly in violation of the terms and conditions. I won't enumerate the types of content; you can use your imagination. Sites with content that if I were the owner I'd cancel immediately, or that might land the current owner in jail.
- A few sites with real content by people starting out. There were a few accounts that actually looked like people putting up sites for their photos, for their business, or for other legitimate reasons.
The large majority of the accounts were put up by people looking to abuse the service. And why not? It's free! It practially begs people to come abuse it! Spammers seek out the easiest, least expensive targets that give them the most bang for the buck, and they're not even paying that!
I'm not saying that this can't be a moneymaker, but doing it right and avoiding potential lawsuits means real work: constantly weeding out the bad sites to allow the good ones to flourish. This is true of any online business. I think to some extent everyone would like to make money without really working that hard (I'm no exception) but there will always be people who work very hard at finding ways to earn money with no real work, if that makes any sense. This usually involves taking advantage of folks who are trying to do things by the book.
I'm coming to the conclusion that if some money-making venture looks like it has positive cash flow but truly looks like it's not any work at all, it will probably get me canned from any affiliate programs I'm involved in, which will defeat the purpose. If it were really no work at all, everyone would be doing it.
I'm generally of the opinion that any moneymaking scheme that requires regularly dealing with tons of spam is a bad idea. Blogging almost approaches that, but there are at least fairly good automated tools to weed it out. That doesn't seem to be the case here.
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