We built our whole business by creating, buying and selling content websites.
There are a few reasons why we chose to focus solely on content websites.
If you are new to website investing, a content website also known as a niche website, authority site or blog, is an informational website focused on covering a particular topic in depth through guides and product reviews.
Content websites are mostly monetised through affiliate links or display ads.
Content, Niche or Authority Websites as Investment
When we talk about content websites, we always focus on building a media brand that serves our audience and our affiliate or ad partners.
Read the last sentence again. This is a key mindset shift. We are not blogging for “passion” or “fun” or aimlessly publishing content. We are building media companies and brands whose product is content.
Now that we are clear on the definition, here is why we believe content websites are a great investment.
Media Is Permissionless Leverage
There are no gatekeepers in creating content. If you have something to say, knowledge about a particular topic, access to industry experts or content writers with industry experience, you can start a content website quickly and easily (of course, scaling requires time, money and lots of effort).
We borrowed the permissionless leverage idea from Naval, a well known VC, on Twitter. We read the tweet at the beginning of our business and it stuck with us because it encapsulates the power of a media brand and aligns with our values and ideas of what makes a good business.
Aligned Incentives
One of the best things about authority sites is that incentives are aligned for all parties involved.
The authority site owner has the incentive to create the best possible content to stand out from competitors and more importantly provide value to readers so they trust the resource and come back.
The merchant or affiliate partner of the content owner pays the site owner solely based on performance – a commission or percentage of the product sale.
Advertisers and media networks have an incentive to show ads that convert and align with the interests of the readers.
Diversified Income
Content sites have diversified income streams: affiliate commissions, display ads, content partnerships, digital products and a couple of other creative monetisation strategies.
This makes content websites resilient to market fluctuations and attractive for investment.
Diversified Traffic
Content websites get traffic from many sources. Most common is still SEO – organic traffic through Google.
Media can be easily shared through different channels including social media, email, and services like Pinterest which diversifies the traffic.
Many content websites that review high ticket items also make use of paid traffic.
Marginal Cost of Replication
The great thing about the written word is that it can be repurposed for many other mediums.
Once you have an article, it’s straightforward to use the content to create a video for YouTube, TikTok or visuals for Pinterest. There are even AI services that can help with this.
It can also be updated over time to ensure it is always current.
Media has a marginal cost of replication which makes it cost effective and investing in content has a great pay off over the long term.
Another great tweet from Naval:
Moat or Competitive Advantage
“Economic moat”, popularized by Warren Buffett, refers to a business’s ability to maintain a competitive edge over its competitors.
Authority sites are difficult to replace as the competitive advantage in content, organic traffic and industry relationships is built over the long term as is the relationship and trust with readers.
Makes Money While We Sleep
Content websites work for you while you sleep. They are always available for people from around the world to access.
When issues arise, generally it’s not time sensitive and you can sleep well and be assured that any issues can be resolved the next day.
Media Brands Last for Centuries
My personal favorite thing about building media brands is that they are the ultimate long term business.
Many companies in the media space have been operating for centuries.
They stand the test of time and while the channels and ways of communication change, the fundamentals stay the same.
The Bottom Line
In our view, content websites are a great long term investment. It fits our investment thesis, our skills and the way we like to run a business.
If you are a beginner, they are a great way to get experience in building an online business because the barrier to entry is low, it’s inexpensive to start and will require you to build a transferable, rounded skill set to scale and succeed.
If you are an investor interested in content websites, we have a page just for you.
