Many people think the future of online business is online courses and memberships. But these won't be profitable for the long-term. Check out this post to discover why and what you can do to position your business for long-term success.
If you’re in the online business space, it can seem like everyone and their mother is launching an online course these days. (The reality that most of these launches aren’t actually profitable is a topic for another day…)
There’s no question the online course business is booming and will continue to grow as more businesses and individuals try to cash in on this opportunity. And while the online course market will continue to grow, chances are that you should NOT expect to build your business on selling online courses, memberships, or information products.
Sure, some of the pioneers of online courses and training memberships have made big money, but as the industry matures and becomes more saturated, it’s important to consider whether digital training programs are the next bubble.
So let’s talk about an uncomfortable question: how long will it be profitable to sell information?
If you’re starting an online business, click here to get access to my FREE online marketing program, BADA$$ Online Marketing University. This program will teach you how to build and market your online business.
The Truth About “Passive” Income
Sorry to be the bearer of bad news but… beware of anyone who talks about “passive” income or a “scalable” model that removes you from your business.
Is it possible to get out of the day to day of your business? Of course.
The trouble is that people have taken the notion too far. To listen to most people touting ways to make money online, you’d think that you just have to create a scalable product based on your knowledge (even if it’s only a few steps ahead of your customers’ knowledge) and you’ll be rich.
With respect, that’s utter nonsense.
Without getting too geeky about economic theory, time for some basic Economics 101. People and businesses make money by adding value. In most cases that’s either labor (aka work) or capital (aka money).
By definition, “passive” income is supposed to be income that isn’t based on your labor, so that route for adding value is out. And the people touting passive income are also suggesting you can do this without any significant investment of money (other than to buy whatever program they want to sell you, of course!).
So… if you aren’t adding labor and you aren’t adding capital, what the heck are you adding?
This is where folks claim that you’re creating a “scaled” program that is based on your knowledge. So, you’re adding information or know-how to the mix. And that can definitely make sense because “know how” and information have traditionally been things that people can sell.
The trouble is that this basis for adding value has limits… and those are limits that are going to create real restraints on people who are trying to sell information products in the future.
Information Product Businesses Will Go The Way Of Blockbuster Video
Back in 2000, Blockbuster was THE behemoth in the home entertainment space. It was a multi-billion dollar entity with almost ten thousand stores. Netflix, on the other hand, was a fledgling online business building a new kind of entertainment business.
That’s where the companies were when Blockbuster had the chance to buy Netflix to shore up its one online business. It declined… and has since gone the way of the dodo.
Rather than embracing home delivery and streaming (which were the clear long-term future), Blockbuster tried to hang on to its legacy business model that relied heavily on physical stores for in-person rentals.
Online course businesses that cling to the idea that we sell information are in the same position Blockbuster found itself in 2000. The existing model will work for awhile… but pretty soon it will be completely outdated.
If you want a successful online business… be Netflix, not Blockbuster.
Most Online Course Businesses Are Built On An Outdated Idea
I’m going to date myself a bit here, but back in the stone age (aka the 1980s), information wasn’t at our fingertips like it is today. We didn’t carry computers in our pockets. Your smartphone is more powerful than the computer I used as a college kid or even law student.
If you wanted to learn about a topic, you needed a tool like an encyclopedia. Now, if you’re under 40, you’re probably not familiar with encyclopedias.
Basically, they were heavy-ass reference books that had entries on all kinds of subjects in alphabetical order. Want to learn about beetles or The Beatles? Pull out the B encyclopedia. Writing a report on orcas? Better grab the O and the W to look up orca and whale. You get the picture.
But let’s say you wanted to go deep on a topic, then you’d need access to a library and, depending on the topic, perhaps even a university library. Given that this is how research was done 30 years ago, it’s crazy to think that now you can do research from your phone. So yes, information was valuable.
Information Is Only Valuable If It’s Scarce
For those of us in the marketing industry, we probably recognize that it was the lack of easy access to information that made it valuable.
But something happened in the mid-1990s that changed this: the rise of the internet. Now these were the days of dial-up, which again, many of you probably don’t remember. But as technology advanced and expanded, our access to information increased so much that the phone gives you ready access to just about all the information ever known to humankind.
Now when you want to know something, like “what year did Joan Jett release her last album” or “do frogs have teeth,” a quick Google search will point you in the right direction. Hell, you can even skip the typing and just ask Siri, Alexa, or Google.
We’re no longer living in the days when you need to own a set of reference books or go to a library, to get information. And that means… information is not as valuable. So what does that mean for those who sell information online?
We can’t simply sell “information” that’s readily available for free, which led folks to ask who in their right mind would pay for an online course or membership program?
The folks who make money helping online entrepreneurs create these kinds of products answered by suggesting that the value is in curating information or providing the service of organizing and packaging the information that you’re selling.
This seems like a good answer at first. Time and money are the main limitations we face as modern people, so if someone can help us save time and get the results we want faster, great.
But How Valuable Is Curated Information Really?
As someone who’s studied economics, finance, and how markets work (both academically and in my role as an attorney in those fields), I’m skeptical that the idea of selling “organized” or “curated” information has staying power.
For the past decade or so, there’s been what economists call an “arbitrage” opportunity. People have been willing to pay a significant premium for organized information. They were willing to pay significantly more than it cost you as the seller to create and run the training programs. Thus, the online course and online membership boom.
The trouble isn’t that curated information has no value… the trouble is that arbitrate opportunities don’t last. This is not me saying that courses are a bubble or anything of that sort. I’m simply predicting that basic economic forces are going to drive the prices for online courses and memberships way down in the coming years.
When the prices people are charging for a product or service are considerably higher than the cost of creating those products or services, competitors come in and drive the prices down. We really don’t need to get into advanced economic theory here; these are kinda the ABCs of economics.
Although we won’t know who will ultimately drive prices down, it’s fair to say that bigger players in the market (think Google, Facebook, and the like) will see the opportunity and start to fill the gap. While someone might be willing to pay you a premium over some random person on the internet, are they really going to be willing to pay you an extra grand over what a reputable company like Google charges for a similar training?
You see where I’m going with this… the larger companies can make money selling at scale, which means they can drive the prices way down. Hell, Masterclass is already starting to do this in some spaces.
Although I can’t tell you when (cause I’m not psychic), what I can tell you is that at some point, consumers will not be willing to pay $997 or $1997 for a training program.
The Future Of Online Information Businesses
The notion of building an online business that sells information will not last. At least, not unless you become a behemoth company that can operate at scale and make money selling $25 courses. The future for online entrepreneurs like you and me is NOT in scaled information. That is a market that is going to go away.
The figure is in scaled implementation. As online entrepreneurs, our natural advantage over the big companies is our ability to provide personal service and personalized support for our people. (And no, I’m not talking about a FB group with 4,000 of their closest friends.)
Information is cheap. The last thing people need in the information age is more information. What they need is someone who can help them apply the information they’ve “purchased” to their situation. They need someone who will help them wrestle with beliefs that are holding them back. In short, they need someone to help them implement the material and hold them accountable. This is what helps people achieve their goals–not more information.
I know this goes against much of what is being taught in the online business space. But I think it’s time for a shake up.
I want you to start asking what you can do to help your students achieve their goals instead of how you can make more money. I want you to be positioned to create a business that is successful for the long term and will outlast this weird space in the market.
My team and I believe in this concept so completely, that we’ve made all of our trainings 100% free. Rather than watch the market forces go by (and be like Blockbuster), we’re choosing to be Netflix. That means we aren’t just giving away our existing trainings for free, we are creating an entire freaking university full of training to help people build online businesses.
We created (and are improving) BADA$$ Online Marketing University because we want to make entrepreneurship accessible… but also because we know that the people who adopt and lean into what’s coming are going to end up on top.
This isn’t just a bunch of junk that repeats what everyone else is saying. It’s cutting edge training that will help you build an online business that will thrive. Yes, it’s free to you. No strings attached. Click HERE to get started today.
We’ll gladly give away the information… knowing it’ll make us the first person people think about when they’re ready to invest in help with the implementation.
The future isn’t in selling information. The future is in selling implementation. Be sure to catch my podcast episode where I break down this distinction in depth.