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Make money online - the gold rush of the 21st century. And the Holy Grail of the marketing world to make money online - the product with zero delivery cost - is the information product.
An ebook, an audio, or even a video these days, an information product can be downloaded by the customer at zero cost to the seller, who can make money online with no cost of sale.
Before we started to make money online, long before the internet was invented, information products were the darling of the direct marketing world, because the value of the information contained within them was so much greater than the cost of the paper on which they were printed - or in later times, the tapes and then VHS videos (remember those?) on which they were recorded. The profit margin was huge, because once the information was recorded once, it could be sold over and over at the same high price, but the actual cost of producing the product was relatively low. This made profit margins higher on information products than on so-called “hard products” which had to be built, shipped, and then repaired under warranty.
When the internet started to take off, the direct marketing mavens hopped on board to make money online, and discovered that all the same techniques worked really well to make money online - and the cost of production for their information products had now dropped to virtually zero. Profitability soared even higher. It was even easier to make money online using exactly the same tactics which worked so well offline.
Until …
The inevitable happened.
You see, in the old world of direct marketing, there were barriers to entry. You had to have the money to buy lists, pay postage, take the calls or faxes when the orders came in, and do fulfilment. It was less than starting a bricks-and-mortar business, but still significant.
To start the same business and make money online costs you just $10 for a domain name, and $30 a month for hosting and an autoresponder.
There is a much lower barrier to entry when you aim to make money online - therefore, more competition.
What’s more, some of this “make money online” competition lives in parts of the world with significantly lower costs of living, and is therefore willing to work for a much lower profit margin.
Sooner or later, someone starts giving away information that previously they would have charged people to buy. Once one person is doing it, everyone starts doing it, and soon enough you can’t make money online by getting people to pay for just an ebook. If you want to make money online by getting people to pay $47 for an ebook, you had better have some massive bonuses attached to it - audios, videos, even personal contact with the author!
Where will it end?
The second level products to make money online, the ones that used to sell for $297 or $397, you know the three manuals, eight DVDs, wall poster and coffee mug type deals - these days, those products are going for $97, or even $67. The second level product to make money online has become the entry product to make money online, because we’re giving away the former entry product for free, just to get the email address of a propect.
The packs people are selling from stage, or in big launches to make money online, which used to be something like 20 DVDs, five manuals, weekly email reminders and a monthly teleconference for $2997 or $3997, have undergone a radical transformation in the past year or two. They are all now offering … THEIR TIME!
To get people to shell out that much money online, you have to promise personal attention in real time.
There are even affiliates who make money online by offering their personal coaching as bonuses to get people to buy the $297 and $497 products from the big guys - who won’t sell their own time so cheap.
It’s the opposite of inflation - it’s deflation. The perceived value of information in the market is rapidly approaching zero. You can’t make money online just by selling information any more. The combination of competition and consumer conditioning is actually making it difficult even to give away information which previously would have commanded a price of $47 to $97.
And what will happen to all the newcomers who haven’t been around to watch this happening, and are still being told (in all the free ebooks they are downloading) that the way to make money online is to sell information products … ?
And even worse, to make money online by paying for PPC traffic to affiliate sites?
It’s Already on Life Support - How Long Until The Information Product As We Know It Is Totally Dead?
I am betting that Rich Shefren will be talking about this issue in his mega-calls this week - those of you who listen in, drop by and let me know whether I was right.
