Update: One of my favorite marketers, Ryan Deiss has just released 3 videos that cover these concepts in much more detail.
They are part of his Continuity Blueprint pre-launch, but the videos give away lots of meaty content and are free (no email required). If you're even slightly interested in this business model, these are essential viewing. They will really help you get a good grip on how it all hangs together. Watch them here.
I first learned about this business model late at night in the hotel lobby bar at an Internet marketing conference a few years ago.
They say a drunk man's words are a sober man's thoughts. Well that can work to your advantage when they are spilling the beans on exactly how they are pulling in a couple of million dollars a year simply by tapping into other people's expertise.
On the surface, this business model may look like a regular info product model. I guess it is really, but it's taking it to the next level. In many ways, it's about the attitude and the mindset behind the whole thing.
You see, this business model has a different spin on what is normally done with info products. Most of the time, the author and the publisher are the same person. With this particular approach, you are ONLY the publisher.
In many ways, it's the same principle that record labels use. They take a look at what a demographic is seeking musically. Then they go out and find artists that are likely to appeal to this demographic. They help this artist produce the product and then provide marketing and distribution for them.
The record label then takes a big chunk of the profits.
Now think about applying this approach to information products.
You find a demographic of people who are hungry for information. You then go and find experts who can give the kind of information that those people desire. You then help the experts produce the product and you provide the marketing and distribution for them (probably all online).
There are already some big companies applying this kind of principle very successfully.
For example, The Teaching Company is a huge company that follows a very similar business model.
Thankfully, there are tens of thousands of niches that you can tap into so you don't need to worry about not being able to compete. The drunk guy in the bar I was telling you about was doing it by himself and making a killing. There's no reason why you can't either.
Let's take a closer look at this.
What are the start up requirements?
The start up requirements to this business model are really simple. In fact, the simpler the better when you are starting out.
The complexity really only comes later if you want to be able to cross-sell and up-sell lots of different products. In the beginning, I wouldn't worry about that too much. Just focus on getting your product out there.
In its most simple form, you just need:
1) A website to sell the products.
2) A system to auto deliver the digital products. There are quite a few different options around. I've tried quite a few out, however I still come back to aMember. It's super flexible so it allows you to do lots of powerful things that you may not use now, but in the future probably will.
If you are using Clickbank to sell the products and you get a Clickbank only product delivery system, then you are locked in to a certain extent. If you use aMember you can change payment systems easily, as well as have the foundation for a continuity program, like a monthly membership, as well. Plus, it includes integrated affiliate management and autoresponder in the one system.
You can still use aMember if you choose to ship a physical product as well.
3) A way to take the money. As I mentioned last week, a PayPal or ClickBank account will do. I like those two because they convert well.
4) A product to sell. Of course, you'll also need a niche and an expert to co-produce the product with.
What is the learning curve like?
The learning curve to set up this kind of publishing empire is relatively small. Especially when you keep things as simple as possible.
With respect to the creation of the info products, I would look at doing audio records with transcripts first. Video tends to introduce a whole bunch of new technical issues that might steal away the time you should be spending marketing.
Just make sure you use an OK microphone to do the recording. I recommend that you sit down with your expert and record them using something like one of these Snowball Mic's.
Record the audio, bookend it with an intro and outtro and some backing music and BOOM you have your product. Get someone at Rentacoder to transcribe it and you've got a bonus product as well.
There are a few administrative hurdles you'll need to jump, like getting a contract together with the expert so both of you are protected. Other than that, keeping it simple is key.
What are the risks?
The main risk is that you create a product that no-one is interested in buying. Some good market research should help alleviate that.
(Niche selection starts 1/4 way down).
What is the potential?
Like all my top 3 favorite business models, it has almost limitless potential in many ways. However, in saying that, I would think that this kind of business model is more like a diesel engine as opposed to a turbocharged street racer. I'm not saying you can't get rich off it, but it's more likely to be a six figure earner for most people who are successful with it.
Now, there are people I know who are doing several million a year (like the guy I spoke with in the bar), however, he was already a really good marketer so maybe had an advantage.
Once again, I would look at tackling a niche slice of a larger market with less competition. Whatever you do, don't do it in a “how to make money” niche unless you're an exceptional marketer. Mostly because you're competing in a very small pond against some of the best marketers in the world.
There are so many high potential, untapped niches out there with experts just waiting to be published. You don't need to operate in the same crowded spaces as everyone else.
Who does it suit?
This kind of business really suits the same kind of people who are already into niche content sites. This business model particularly suits me because I am a higher lever (as in bigger picture – not more enlightened) thinker, so I enjoy the co-ordination of this stuff.
What do I like about it?
I love this model because it's dynamic and allows you to roll out new products quickly so there is no time to get bored or feel like you're stuck in a rut.
Once you've got yourself a system in place, you just keep finding hungry niches, hook up with intelligent experts, produce the product and then sell it.
Because you're creating lots of products quickly, you are diversifying your risk. When you have the systems in place, you can then quickly roll out more and more products. This allows you to have a strong and steady business growth path.
Contrast that with a business model that has you selling widgets within a single marketplace. If that market tanks, so does your business. If you can build out your business to cover lots of different niches, your business is much more solid and dependable. This helps you sleep better at night.
Another thing I love about this business is the ability to be able to leverage your existing customer base more. When you have lots of products, you have more opportunity to sell to your existing customer base (who are your best potential buyers).
How do I get started?
If you want to get started in this business, you can fairly easily. I would recommend trying to find that dynamic duo of a hungry niche and an expert to produce a product with. Try and publish a product and learn about the intricacies of the process. Once you start making money with it, then don't hold back. Apply the system over and again with new experts (and eventually new niches).
Remember, get that system right first before you try to scale it up because it's much easier to make improvements on the system for one product rather than 20!