The Centralizing Internet

Can the small guys still compete?

The natural life cycle of any new industry/way of making money is as follows:

• Stage 1: Wild Wild West Era - A complete free-for-all. Attracts crazy visionaries, misfits, and people who don’t fit in to normal society. Many people who get involved have crazy personalities, almost like characters in a movie. Also lots of scammers and criminals. Stories about random people becoming rich give everyone the feeling that anyone can make it. “Getting in at the ground floor.” Entrepreneurial paradise.

• Stage 2: Centralizing Era - A lot of people go broke, but a few become extremely extremely extremely successful. These successful people start buying out the competition. It gets harder for new people to break in, but not impossible. The easy money is gone, and the charlatans, misfits, and wild personalities move on to something else. The new people who do enter the market are usually much more serious and sober-minded because they know it’s not going to be easy.

• Stage 3: Corporate Era - The opportunity for new entrants is gone. A few large companies completely dominate the industry. Any small-timers still remaining are either crushed or bought out. Victory of the managerial class over the entrepreneurial class.

Think about the oil industry in the 1800’s. In the beginning it was a bunch of lunatics buying up land and drilling random holes in the ground. If you were lucky, eventually one of the holes would turn into a gusher. If not, you’d keep wandering around drilling holes until you went broke.

Then the successful people started consolidating and it became a legit business. Companies like Standard Oil emerged. John D. Rockefeller would crush any small competitors and, if that failed, buy them out and give them seats on his board so they never competed against him again.

At that point the whole market essentially became Standard Oil vs. Royal Dutch Shell and it was impossible for anyone new to compete.

Of course now in 2024 the idea of a random person starting a new oil company is completely insane. The whole industry is dominated by massive corporations who will push any newcomers out of the market. If some rando bought land and started “drilling for oil” he’d no joke probably get sent to an asylum. “There goes crazy Uncle Dave again, talking about drilling for oil”.

The same applies to other industries.

Personal computers were in their Wild West Phase in the 80s. There was a limited time where a bunch of crazy entrepreneurial personalities entered the market and made fortunes, and I’m not just talking about the people who are current household names. People you’ve never even heard of got rich and immediately disappeared from the public eye. A true boom time. But by the 2000s the computer market was in its corporate phase and it was too late to break in.

Now in Current Year if you tell people that you’re planning to start a PC manufacturing business people will think you’re insane and not in a good way. It’s way too late.

The Wild West days are over for content sites

The Wild West Phase of content sites was the 2010s through early 2020s. Anyone could make a living just by spamming low effort blog content. No need to code, no need to do anything other than keep posting.

You could argue that the beginning of the end was when legacy media brands like Forbes, Rolling Stone, et al. realized they could make up for declining ad/subscription revenue by abusing their domain authority to rank affiliate content.

Smaller niche-specific affiliate sites were getting squeezed out but could still compete in the long tail.

Then of course Google brought the hammer down last year with the HCU. Now even long tail keywords are out of reach for most small content sites.

It’s now impossible for randos to make money by spamming content from their bedroom.

I’ve been sounding this alarm bell forever. Years ago I warned you that you need to either start selling a product or become a legit authority site that gets traffic from platforms other than Google search.

If you’re brand new I would NOT recommend entering the content site game at this time. Some extremely serious people can still break in, but it’s going to be tough.

So where’s the opportunity for beginners?

I think e-com still has a few years left. It’s still relatively easy for randoms to white label a product and start making bank. Especially since Google’s algorithm now favors so-called Real Businesses that sell real products.

But it’s easy to see how/why Google might turn off the e-com gravy train in the medium-term future.

Google currently makes nothing if someone clicks on an organic e-com result and buys something. If there’s one thing Google hates, it’s not getting a cut of the pie. They will force their greedy hand into your pockets sooner or later.

I can see them adding more and more shopping features directly in the SERPs, taking away organic real estate from e-com sites so they can get a cut of the action.

They can even justify punishing small e-com sites by saying something like “consumers are tired of white label product spam, our data shows that they only want authentic products from Trusted Brands”.

Cue the HCU for e-com and the death of the Supplement Bro Selling White Labeled Products From His Bedroom era of internet marketing.

But in my opinion we’re probably several years away from that. So new people can still break in.

The point to remember is that every industry follows this trend:

Wild West > Centralization > Corporate

Crypto is an example of an industry that’s right now AS I TYPE THESE WORDS ON THE SCREEN smack dab in the middle of its Wild West Phase.

You have your classic mix of scammers, legit entrepreneurs, and hordes of desperate young males with no hope of getting either a rewarding career or a girlfriend (meaning they have nothing to lose); i.e. the exact types who would have gone west if they had been born 150 years ago.

There’s always a Wild West somewhere.

You just have to keep your eyes open.

Where YOU enter the picture

Right now I wouldn’t recommend starting a new content site unless you have tons of experience and past success and want to do it as an experiment.

If you already have a content site that’s making money then obviously keep doing what you’re doing. Most people were decimated. If you’re still making money then you’re EASILY in the top 1% skill level.

Always do what you’re good at.

If you have zero risk tolerance and a more conservative personality then you should get a job at Bank of America or Meta and climb the corporate ladder. But if that applied to you then you wouldn’t be reading this newsletter.

Of course there’s always max opportunity when things are in their Wild West phase. But remember that the opportunity goes both ways. Opportunity to ball, opportunity to fall. Most end up doing the latter.

People make fortunes. Lose fortunes. Scam people and go to prison. Become better people through the magic of hard work. Learn who they are and learn who they aren’t. Etc. Definitely not for the faint of heart.

When things stabilize a little bit, right before they start to centralize, that’s when most people should get started (where e-com is right now).

But it’s all up to you and your own risk tolerance, goals, and personality.