You may use the internet to save money, but are you also logging on to make
it? Don Tapscott, co-author of Wikinomics, a new book, explains that
the web has forced a rapid “democratisation of wealth creation”.
Anyone with a PC, a phone line and an idea has access to a vast market at
communities such as eBay and the blogosphere. Mr Tapscott is concerned that
too many users think of the internet as a place where content is created and
shared free – for example, short films posted on YouTube, or contributions
to Wikipedia.
“People have a false understanding that this is about a volunteer economy,” he
says. “It is not. We look at people who are making money.”
His book kicks off with the story of Goldcorp. In March 2000 the struggling
Canadian goldmining venture published geological information of its
landholdings online and offered a share of a $575,000 prize fund to anyone
who could use this to pinpoint gold. Within weeks hundreds of people, from
retired scientists to students, had submitted well-reasoned entries. A
remarkable 80 per cent of the 110 new sites identified produced bullion and
the company’s value rocketed from $100 million to $9 billion.
Today an increasing number of corporations are putting their problems online
and offering cash prizes to whoever can pitch an effective solution. At
InnoCentive.com, for example, giants of industry, including Procter &
Gamble, post dozens of challenges every month.
Hugues Miel, 39, of Moira, Co Down, works full-time as a chemist. Dr Miel
spent a number of evenings and weekends using his expertise to develop a
proposal for one of these challenges – designing six molecules – and was
delighted to scoop $5,000 (£2,440). “I love SuDoku,
so taking on a theoretical challenge was fun,” he says. “The win paid the
deposit for a new car and helps my CV.”
InnoCentive offers people with specialist scientific knowledge and spare time
unprecedented opportunities to work on big projects from home. But those
with more prosaic interests can also make money. Anyone can set up a blog or
website dedicated to a subject – be it kite-surfing or crochet – and host
advertisements linking to other commercial websites. Each time a visitor
clicks on one, you, the blog or site-owner, make a few pence, or even
pounds.
Tom Whitwell is blogging guru to Times Online and author of Music Thing,
a blog dedicated to guitars, synthesizers and other music-making kit. It is
hosted free at blogger.com and uses Google’s AdSense programme to host
targeted advertisements. Last year Mr Whitwell made about £3,000 from these
– a small return for the hours he puts in, but enough to fund his passion.
He says that the most lucrative blogs tend to be the most niche – new blogs
on model railways or rare books would do well, for example. He emphasises
the importance of quality content. Readers want thought-out, well-written
entries, not diary-style ramblings.
A blog can be up and running, with advertisements from AdSense, within hours,
but a personal website must be “hosted” – from about £30 a year – and takes
time and a little technical know-how to set up. However, the platform gives
more space to work with. Brian Clegg, a 52-year-old author and creative
consultant, runs popularscience.co.uk, a site that specialises in reviews of
popular science books. The work puts him in contact with fellow enthusiasts
and takes about 20 minutes to half an hour a day, on top of reading time.
Mr Clegg is a member of Amazon Associates, an “affiliate programme” that
bloggers and website owners can sign up to. Readers who click on the title
of a book, CD or DVD mentioned on an affiliate site or blog are taken to
that item’s page on Amazon. co.uk. If one of them buys it, or any other
item, Amazon pays the site owner a small percentage. In Mr Clegg’s case,
this and AdSense each bring in £40 to £50 a month, far outstripping the
site’s hosting costs of about £200 a year.
In most instances, running a blog or personal website takes no more than a few
hours a week and nets pocket money. An easier way to make a robust return,
or even a living, is to trade in products rather than ideas. Alongside
millions of weekend traders, tens of thousands of Britons now work full-time
on eBay, tapping its vast global customer base and taking advantage of the
site’s easy-to-use interface.
Maggie Harding, 47, is one of them. She left a job with Manchester City
Council in 2004 to sell vintage clothes online. Her income varies, but she
makes “a little less” than the £32,000 a year she earned with the council.
The work takes in all aspects of running a small business and involves
sourcing garments, posting them online and mailing them to customers as far
afield as Japan. “I work 12-hour days but am doing what I am passionately
interested in,” she says.
Dr Miel, Mr Whitwell and Mr Clegg share Ms Harding’s enthusiasm for their
“work” online and relish the contact with like-minded people. Mr Tapscott
says: “Do not set out to make a buck; create value where there is demand and
the money will come.”
Market-beating rates with peer-to-peer lending
Another face of the new “democratised” economy is peer-to-peer lending. Zopa.com
puts internet users who have money to lend in touch with those who want to
borrow. The idea is that by cutting out the middleman (a bank), lenders can
earn returns that beat a traditional deposit account, while borrowers also
benefit from preferential rates.
Zopa vets borrowers with credit and identity checks and reports bad debts of
only 0.2 per cent. To spread risk, each lender’s deposit is split among a
number of borrowers. Users who opt to lend to higher-risk borrowers, on a
scale of A* to C, receive better rates.
Andrew Hagger, of Moneyfacts, the financial analyst, says: “On Thursday the
site offered lenders 5.1 per cent on loans of up to 12 months to A*-rated
[lowest-risk] customers and 6.6 per cent to Brated customers. The best-buy
rates for online deposit accounts, meanwhile, are 6.4 per cent with Bradford &
Bingley and 6.3 per cent from IceSave or the AA.
An interesting development is Lending Club, an alternative in the US that
operates within Facebook, the online social network.
Set your sites on internet earnings
Armchair scientists have three months to work on the Barrick challenge. The
company is having problems extracting silver from ore at its Veladero mine
in Argentina. If you can find a cost-effective way to boost production, $10
million (£5 million) could be yours. Go to www.unlockthevalue.com.
A range of science and technology challenges from big business are listed at
“ideagoras”, such as www.ideaconnection.com
and www.InnoCentive.com. One
challenge now on the latter site offers $40,000 to “cut sugar content while
maintaining taste and texture in sweet fillings for baked goods”.
To start a blog free, visit www.blogger.com.
Sign up to AdSense at www.google.com/AdSense
or within Blogger to start earning. You will be paid by cheque or transfer
once you have made $100.
Creating a personal website takes time and money. You should start by buying
webspace and a domain name from a provider, such as www.UK2.net
or www.1and1.co.uk, for a few
pounds a month. You can then create pages using free software, such as
Serif’s WebPlus 6, available at www.freeserifsoftware.com.
To start capitalising on your site, as well as AdSense, sign up to an
affiliate programme, such as Amazon Associates at www.affiliate-program.amazon.co.uk.
Commission junction, at www.cj.com,
and TradeDoubler, at www.tradedoubler.com,
can find targeted advertisements for your site.
Google Analytics can tell you how many people are visiting your site or blog,
where they are from and what they are clicking on. Monitoring this
information – as well as reader comments and e-mails – can help you to
refine your content. Sign up free at www.google.com/Analytics.
For courses on eBay trading, go to pages.eBay.co.uk/university.
Visit www.marketocracy.com
for a possible glimpse of things to come in investment. The site’s members
compete to manage 70,000 virtual share portfolios. The trading strategies of
the top 100 performers each month are then emulated in a mutual fund, the
Marketocracy Masters 100, which has consistently outperformed the S&P
500.
Basic membership of the site is free, but premium membership, giving access to
a range of extra tools, costs $180 a year. Members who make the top 100 are
rewarded with cash and a range of benefits.
