Michael Haislip: Professional Millionaire

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In economics, there’s a term called “barrier to entry,” sometimes known as “cost of entry.” It refers to the obstacles that a person faces when entering the market (not the grocery store; the general economy). For example, a doctor’s barriers to entry are years of expensive medical school and government licensing.

These barriers restrict the available supply of doctors. Of course, low supply means higher prices for that supply. Doctors make the big bucks because they overcame those entry barriers.

What the hell does this have to do with making money online, Michael?!?!

Hey, calm down. I’ll tell you. We can apply this same concept to making money online by determining the entry barriers for various online enterprises. It’s science!

Blogging

It seems as if everyone is trying to blog their way to riches, or at least some beer money. However, blogging has the lowest cost of entry. A person can go to Blogger and be competing in the market in 5 minutes. That is a near-zero cost of entry.

Of course, this means that the supply of blogs is massive. Remember: more supply, lower prices. If we average out the revenue generated by all the blogs in existence, the number would be somewhere just above jack squat (that’s an official number; look it up if you don’t believe me). Even though the John Chows and ProBloggers of the world are raking it in, the other quadrillion blogs with no revenue are the norm.

E-commerce

Ah, now we’re getting into the real money online. If a blogger made $10,000 revenue in one month, he’d be ecstatic. If an e-commerce operation made that, the CEO would likely be beaten with sticks, perhaps with rusty nails in them just to give it that nice tetanus feel.

Here’s the question: why is there exponentially more money in e-commerce than in blogging? If you’ve been paying attention at all, you know the answer is “cost of entry.”

Take me for example. I’m currently building an online music supply store, with a shopping cart and a database and all that jazz. My barriers to entry:

• Federal, state, and local licensing/registration
• Cash on hand for inventory
• Vendor credit applications
• Shipping supplies
• New telephone line

The list goes on. However, even if I’m moderately successful, I’ll be making way more money than can be expected from a blog.

Let’s wrap it up already, Michael

I’ve only shown two examples here. As the barriers get higher, the profits get higher. Consider online currency trading (minimum: a budget of thousands), high-end domaining (minimum: a budget of millions), etc.

OK, class dismissed. Remember to sign up for my Econ 204 class for the fall semester.