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1: Find small but vibrant niche with mostly paid services. 2: Develop free, high-quality alternative (with either upsales or advertising, or both). 3: Sit back and laugh as the competition fails to adapt to the changed marketplace. The key part is to think *small*, though. The bigger a market, the more competition you'll probably encounter, and the smaller the profit margins are likely to be. Small markets, on the other hand, often have only a handful of semi-serious players, who in many cases depend on that small market for their entire income, and thus both overcharge and overdeliver. Cut the 20% most labor-intensive parts from their business model, and you'll often be able to offer what 90% of the market wants for free while still enjoying decent profit margins. A good example is something I did a few years ago. There was a small agency that put together customized guides for a certain semi-popular touristic area. I drove them out of business by coming up with two short standard guides and putting them online for free. They made a living by selling complete packages with a ridiculous profit margin, I made decent money from advertising by a few hotels and restaurants in the region (in the form of reviews, of course). It took me a week to create what 90% of their customers wanted. It took them two people working a full time job to deliver the little bit extra that the remaining 10% wanted. The moment I entered the market, they lost 90% of their customer base to me, and went out of business. After that, the rest of the market was mine, too. |
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