Copyright 2005 Michael Lever
If you built and sold the first teleportation
device you would make some serious money.
But...
If you built the network that connected
the teleportation devices and charge a subscription
fee to use it, you're set up for a future
of enormous passive income.
This is the view many entrepreneurs are
taking in the 21st century. Passive income
can only be derived from niche products
with a sustainable market.
We love niche products because they inherently
don't have many competitors and solve the
problems of people who have money to spend.
It is no wonder affiliate marketers fall
over themselves in a rushed "grab-for-cash"
type frenzy whenever a niche product with
affiliate income opportunities launches.
Unfortunately many are too late and end
up scraping the bottom of the barrel for
the last few customers.
If we analyze niche products closely we
can divide them into 2 distinct categories:
Un-Sustainable and Sustainable.
Unsustainable niche products may or may
not make money. If they do make money, they
only do so for a short period of time, then
they need to be re-invented to become new
niche products. Affiliates who get in early
stand to profit. But sales usually diminish
quickly once new competitors or hot products
arrive to saturate the market. Take for
example a car or a DVD player, when first
released the manufacturer sales margin would
have been massive. Only the rich would have
been able to afford one. But as competitors
enter the market, margins start to reduce
drastically and there is no longer much
profit to be made. Mobile phone handsets
are an example of this. The market is so
saturated that the phones are often given
away for free.
Sustainable niche products are those products
that grow in value the more people know
about them. Drawing on the mobile phone
example, the telecommunications network
would be a sustainable niche. The more people
on the network the more valuable the phone
becomes to the owners. Affiliates of sustainable
niche products stand to profit considerably
more using this long-term strategy compared
to the possible quick profit from unsustainable
niche products.
Sustainable niche products can be sold
to each individual in the market. They are
inherently viral as every individual who
has the product can derive greater value
when they convince others to use it. For
example a fax machine has greater value
when everyone has one. With subscription
or disposable services, there is generally
no market saturation. You can re-sell the
same niche product back to the same customer
again and again.
So before you invest your time, effort
and money promoting another merchants product,
ensure the niche product passes the following
checks:
#1) Does the product meet a continuous
need of consumers? Can you sell it 10 years
from now?
#2) How viral is the product? Will people
rave about it or keep it as their secret
weapon?
#3) How big is the market that would use
this product? Is it likely to shrink in
the next 10 years?
#4) Does the product lend itself to a subscription
based, limited license, or a disposable
user pays model? Can you re-sell it to the
same customer again and again?
#5) Do the product benefits grow exponentially
for every user that purchases it?
Here are some examples of sustainable (past-niche)
products:
#1) Internet Telephony
#2) Online Auction
#3) Online Dating Service
#4) Customer Acquisition Exchange
#5) P2P file sharing services
If you're an affiliate marketer looking
to derive sustainable passive income, make
sure you market the right kinds of product.
About the Author
Michael Lever is a co-founder and CEO of
SpinningTornado.com, an independent company
offering unbiased tools and services to
help affiliate and network marketers build
profitable online businesses. http://www.SpinningTornado.com
Partnering affiliates the world over. |
