The perfect online business model?

With hundreds of different business models online, it's easy to get overwhelmed and wonder which one is worth pursuing.

While all models have their advantages and disadvantages, there's only one that I consider to be nearly perfect. I feel I am in a position to say this because it's responsible for earning me a steady 6 figure+ income per month online for the last few years.

I am talking about running membership sites.

Since launching my first site in 2001, my sites have generated a substantial, recurring income for me. Month after month. I now run four membership sites.

Membership site benefits

You may be asking, "So, what's so good about membership sites?" Good question.
There are lots of great benefits to starting a membership web site. For example low startup costs, no inventory, no employees, and a steady (ever increasing) monthly income.
Another major benefit is that it's a true asset.
Investors have no problem paying several times your proven yearly earnings on the site when you wish to sell it. It makes sense for an investor. After all, they can see your proven financial track record with how much you have been making each month. They are comfortable knowing what the true value of the site is worth.
Reducing your online risks
There's another major benefit to running a membership site - it's much less risky than most other online business models.

Far too many online marketers are putting "all of their eggs in one basket" when it comes to income. All it takes is some changes in Google, for example, to wipe out many online income strategies.
Imagine going from tens of thousands per month to nearly zero just because some search engine changed the rules of the game. What would happen tomorrow if all of your leads from Google totally dried up? Where would that leave you?

If you had a membership site, you would at the very least have your recurring member base to keep paying you month after month. There are also many different ways to market and promote your sites. This leaves you much less vulnerable to sudden changes online.
The bottom line is that membership sites guarantee me a strong, ongoing income which isn't left to some other company’s control.

Multiple streams of income
The membership fees you charge are just the tip of the iceberg. In fact, a few of my membership sites have gone from my main source of income to one of my "front end" products.
Having a membership site automatically leads to a degree of recognition as an expert on your topic. Your subscribers are looking up to you for advice and they inherently trust your judgement.
The effect of this is typically a very responsive customer base. You obviously know what their interests are because they are telling you in your forum. You can then tap into this responsive list with backend offers, affiliate reviews, seminars, coaching... The profit potential can be many, many times above what just their membership income provides.
Topic selection
The million dollar question of course is "What is a good topic for a site?" One important element of that is the "passion" level of the topic. That applies in two ways.
1) How passionate are you about the topic? That can make a big difference in you following through and taking your site to its fullest potential. It's one thing to write an ebook about a topic you're not interested in, but running a full-fledged membership site is another story completely.
2) How passionate are the people interested in your topic? Uncovering a pool of passionate people who have shown a predisposition to spending money on their interests is a very strong formula for success.
For anyone interested in brainstorming, there are many great resources.
The next time you are in a book store, stroll over to the magazine rack. You are likely to find hundreds of titles in various niches. If those magazines have been around for a while, you can pretty much guarantee that they have enough interest in them to be sustainable. There are online research resources as well of course but those could fill up articles all by themselves.
No better time than now
In the years that have past since I began my first site, it has become much easier to get up and running with a membership site. What used to take months of hard work and configuring is now provided in "turnkey" software that can be ready to use that same day.
There's another big advantage to getting started now. Membership sites are gaining in acceptance by online consumers. People are finally getting comfortable with the fact that they may have to pay a few dollars for specific, valuable information.
A good friend of mine, Tim Kerber, is the support manager for a very popular membership site software solution. Tim has a unique (and enviable) position of being able to get "behind the scenes" of several hundred running membership sites. The interest in membership sites has never been stronger. Not only for starting them but for people joining them.
Best wishes to your online success,
Ryan Lee

September 21, 2006

Comments (10)

Don McElroy
Said this on October 7, 2006 At 10:59 am
The ideas proposed in your article impressed me very much and I'll be following up on your suggestions. Could you give me the website addresses for a couple of your sites, so I could see what you do?
Don McElroy

[Don, Membership sites which Ryan owns include and Allan.]
Said this on October 7, 2006 At 09:32 pm
Very good information mate. I was thinking about starting my own membership website. Could you please provide me with the urls to your own membership sites to have a look at.

[See my answer to the previous question. :) Allan.]
Ryan Lee
Said this on October 8, 2006 At 11:03 am
Said this on December 9, 2007 At 10:03 pm
Hi Ryan! How can a person start their own membership site? Can you direct me in the right direction?
Said this on January 21, 2008 At 09:52 pm
Slick, very slick. A classic example of using a blog as a lead generation tool and not saying anything of substance.
Tom Justin
Said this on October 11, 2008 At 04:07 pm
Membership sites are HOT with lots of articles and ebooks, service sites, etc. Do you have any idea of the number of membership sites that are on the web today? Approximate, of course. I can't find any authoritative source that gives that information.

[I'm sorry, I haven't been able to find even an approximation of the number of membership sites there are currently operating online. You might try asking your question in our friendly forum. Someone there might have some inside information.
Said this on May 7, 2009 At 01:19 pm
One of the best ways to learn about a good membership site is to join a couple of them. The problem with that approach is then you get way intimidated and think your own site needs to be as awesome as theirs. Another option is to say to heck with it and become a monster affiliate of a very good affiliate site. Then they can manage the site and you can just work on your own stuff and promote their site. On some of those sites you get 30-50% of the monthly gross of the members you sign up. That is probably more than the owners are making after expenses.
Said this on May 26, 2010 At 06:42 am
To be honest, your sites suck. Too simple, text-based.
Said this on December 27, 2011 At 12:26 pm

That ^ strikes me very much as a comment born out of jealousy AND quite clearly, ignorance... not least of the K.I.S.S. principle!

Said this on June 21, 2010 At 04:31 am
The idea of developing online business is great and every business should aim for longterm goals for making its business success.Joining in some membership site is also important to get to know about you to your customers.Developing business online is very important and has many ways but it should escape from the spam and unethical means of doing its business online.
Thank you !!

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