Paul Kedrosky recently mentioned a report about how all markets are a bubble. In the report it states that the two conditions that cause a bubble are strong liquidity and a great outlook. The report also talks about how success kills itself

There is nothing that suppresses the success of a brilliant new idea more completely than having 12 nearly identical start-ups.

Everything is a bubble. If you are successful people will emulate it. If you create and aggressively market a half dozen sites in the same vertical you not only compete with yourself, but you also create a new type / system / format / category of spam that others will emulate and authority systems (such as search engines) will work to reduce.

Just how people learn to ignore ads, they also learn to ignore abused content formats. Andy Hagans destroyed Digg.

What keeps Google strong is not their search relevancy, it is their ad formats and their ability to shape public perception.

Search engines also redefine what they are looking for by benchmarking information quality. Do search engines really want to promote a bunch of thin content sites that are easy to spam? Not likely. These sites act as testbeds for features that search engines clone, but eventually most of them will die.

Content and advertisement formats are not the only types of information bubbles. All of this rides on how people use language, from spam filters, to ad targeting, to the perception of fair use, to syndication guidelines, to deceptive offers:

Stanford Group this week issued its own bulletin, stating "we believe the FTC is investigating deceptive Internet advertising by several companies, particularly relating to offers claiming or implying "free" products."

right on through to general public deception, ala Frank Luntz:

Luntz was quizzed on his prior advocacy of the term, 'climate change' as opposed to 'global warming', given the emotional nuance of the latter term.

You'll see that both terms are used by Australian Internet users, but 'global warming' is by far more referenced. Further search analysis is telling, revealing that searches for 'climate change' are more likely to result in visits to News & Media and Government websites; while users more commonly visit Education and Environment online industries when they search for 'global warming'. Could it be that 'climate change' is in fact now the more emotional term, given its prominence in the media?

If you know everything is a bubble, and are building for the long-term, it might make sense to look beyond the current fashion.

Stock market was BIG... everyone became a broker trainee... it crashed.... real estate was BIG...everyone was a realtor/trainee/mortgage broker... it's crashing....what's next?

What is out of favor now will likely come back in fashion at some point, as noted by Alan Meckler:

I still contend (even with the heavy push for user generated content) that high quality, wholly owned content still has a major role to play on the Web. When you own content as we do, then opportunities continuously present themselves. Great content also provides an environment to create new lines of related business.

If you improve the value of another service based largely on their infrastructure or data, it usually doesn't take much for them to roll your offering into their well known brand, and kill your market position. Alexaholic was praised by Alexa for being innovative, right up until they sued when the creator failed to sell them the domain name. It took a year for Alexa to clone Alexaholic.

AuctionAds created an easy way to syndicate auction listings. Frank Schillng mentioned eBay to Go offers a similar interactive service. eBay to Go came out within months of the AuctionAds launch.

I helped launch ReviewMe. ReviewMe extended its model to include allowing advertisers to create a marketplace of review requests that bloggers can chose to accept. Text Link Ads also recently announced post level text links as a product under their flagship TLA brand, which is sold using a more profitable business model (since it has recurring ad costs). Patrick Gavin ensured I got a good deal, but without his dedication to making ReviewMe a success it could have just become a test platform for TLA that didn't make much money.

Tim O'Reilly wrote data is the new Intel inside. If your success is based entirely on another network's reach / brand / information / platform it is hard to have enough of a core asset to be profitable or a purchase target. It is hard to stay ahead of the value curve since the core brand has inertia and fatter margins. The reason most Web2.0 companies will fail is that they are creating entire companies based around a feature to another product, while having no market leverage.

Google plans to announce today that they are partnering with state governments to help make their public records more accessible:

J.L. Needham, who manages Google's public-sector content partnerships, said at least 70 percent of visitors to government Web sites get there by using commercial search engines. But too often, he said, Web searches do not turn up the information people are looking for simply because government computer systems aren't programmed in a way that allows commercial search engines to access their databases.

As more of this content comes online, industries such as real estate and insurance will get uglier as commercial players are forced out of the SERP and into buying AdWords. But on the upside, if you gain editorial access to one of these trusted websites it should be quite easy to rank for virtually anything.

If you are not nepotistic in your marketing some of your best content will go unnoticed, especially if you write at a level that is beyond most of your readers. Many of the people who are popular are not popular just because of content quality...there are so many nepotistic partnerships that go unspoke of that it is quite scary. Anyway, here is a brilliant post by Andy Hagans about how to sell a site for a million dollars. He is a friend, and the link may be nepotistic, but I am surprised that it got so little traction for how great it is. I guess more bloggers want to be told their blog is worth a million than want to learn how to get those million dollars in hand. To each their own.

You can tell that he is writing from his experience and learning while he is actively doing what he is talking about. That is typically where the best ideas come from...when you escape ideals and theory and talk about the trends you see right now and what is working for you right now.

If you have a site where it takes little effort to update it then the number of pages a site has is not a big factor, but if you are buying a website that is sold as an authority the number of pages is a crucial factor to consider.

Less is More:

More is better is not always true. The two most recent interesting looking sites I have seen for sale recently have been non-appealing because they have SO MUCH CONTENT for their traffic stream. A friend of mine has a 20 page website that gets 1,500 uniques a day. In the same vertical a site with 20,000 pages is getting less than double that traffic stream.

Is the 20,000 page site an authority site? If it is, it is one that has a bad content management system, duplicate content issues, and internal architecture problems. I could clean those problems up an increase traffic, but if the first thing you have to do when you buy an asset is to gut a large chunk of it then you might be just as good off starting from scratch.

Why Less is More:

I don't mind buying smaller sites that I can extend out. One friend of mine runs an AdSense site that was about 30 pages a year ago and made $600 a month. As he extended it out to a 1,000 page website (while marketing it to keep building authority along with content) the traffic went up 40 fold and the earnings went from $600 a month to $750 a day.

That 20 page website I mentioned above is being fine tuned to earn more right now. If it was extended to rank for a couple related terms that are not yet heavily targeted it could double its earnings by adding another 10 pages of content to the website.

Track Your Growth:

The last thing you want to do is add so much low value content that you spread your link authority so thin that you best earning pages no longer rank. As you add new pages make sure you consider their effect on your supplemental ratio, and how your internal link structure is flowing link authority toward your key pages.

If you are building your own site make sure you track traffic streams and earnings and base your internal architecture around maximizing those while keeping the site looking legitimate. If you test something and it does not perform suppress its roll in the site navigation while building more authority. Keep testing extending the site in other potentially profitable directions.

Getting Rid of the Garbage:

If you buy a site off someone else you are buying

• the domain name

• the brand
• the site age
• the link authority
• the content
• the traffic and revenue streams
• any upside potential you see that the market does not see (and thus does not value)

If you buy a site which has limited earnings for its size, when gutting out the bad content you need to first see what is worth keeping. The easiest way to do that is

• track conversions to see what pages are profitable

• see what pages have quality backlinks (using Yahoo! Site Explorer, or maybe sign up for Google Sitemaps)
• look for pages with surprisingly large traffic streams or other indications that they could become self reinforcing authorities that garner recurring links.

Some of the content may also be valuable, but just underperforming because the site has so much more content then authority. In that case, don't gut useful original content, just ensure that you focus more effort on building the site's authority before you bulk up the site with more content pages that won't get indexed or ranked.