2007 is almost over. This year was a great year for the free hosting market (read my earlier post about that here; mostly outdated information!); thousands of new freehosts saw the light and most of them went into the blackness of going broke in the same year. So what happened? Why did so many people start and stop with this business of freehosting and is it, as so many people in forums tell us, really dead?

Read on to see these questions answered. And I’ll tell you how can make a lot of money with free hosting here and now too.

At the end of 2006 I met a guy, let’s call him G for now. He was a clever guy who really understood the world of internet and marketing. And he really had feeling for the free hosting market. If you are reading this, you probably know what free web hosting is and probably you know even who this G person is I am talking about.

Because of his financial success, the free hosting market grew very rapidly and a lot of people made a lot of money with it.

In may 2007, an ebook was released by a well known internet marketer; that really boosted the sales of freehosting software and freehosting far beyond anything that market ever knew.

So what was that book about? It was about starting a free host and supporting and monetizing it. The book described in great details the exact steps of creating and maintaining a free host based on the fantastic Layeredpanel (click here to see it!) script. The book mainly told you to:

• Buy the LP script including installation
• Get a nice layout with nice big buttons
• Rent a dedicated server
• Put Google adsense on your homepage
• Put an upgrade page on your site pointing to Hostgator.com to make people pay for upgrades

That’s it!

And you are on your way to making the serious bucks!

Hostgator had a fantastic affiliate program; sell more than 20 accounts (upgrades for free hosting clients) per month and you’ll get $125 per client. It was excellent; I owned several free hosting companies and some of them did 100+ upgrades per month! Running on a heavy $400/month server and having a cheap administrator ($250/month) made me, on paper, $11k profit.

This seemed a fantastic oppertunity; getting members for freehosts was (and still is as you see below) very easy and with only a few thousand profit was already there.

Ofcourse, it didn’t go like that. And, considering that people call the free hosting market dead, is 100% and completely thanks to the people at Hostgator.com. They refused to pay the affiliate earnings. And not just to me or my friends; they hardly paid anyone. They said that the orders they got via freehosts were fraudulent and they couldn’t pay them. Now they even forbid orders via free hosting companies. They promised to pay every 90(!) days but didn’t; so my company went from a $33k profit in three months company to a $2500+ loss affair.

So what were those free hosting being sold on various forums and why did they sell so high; very simple ofcourse; I have $33k open in Hostgator for 3 months, so if you sell within those three months, the new owner will think it is really making this kind of money!

When Hostgator announced they would no longer work with free hosting companies, most free hosts closed their doors or sold for peanuts. And the free web hosting business was considered dead.

But is it?

Ofcourse it isn’t! Can you imagine what an enormous lack of creativity these free hosting webmasters have? One hick-up, one company refusing to pay and that’s it??? They just gave up? Yep, most did. And the most common reason was; Hostgator pays the best and now that they won’t pay, it is not possible to make money with free hosting!!

Ok, let’s go over this together. Let us say we have a hosting affiliate that pays less than half; $60 per sign-up. And you would get 100 per month, which makes $6000/month, you still make a profit of more than $5000/month in commissions!

But there is something even better; a lot of hosts pay a lot more than $60 per sign-up; check out this host (click here) to see much better plans; they pay $100 / sign-up and they have been paying me for months already; fast and easy. And they pay out via Paypal.

So by just eliminating a small hick-up you are suddenly profitable again.

But there is more…

A secret which I will divulge for you all; a free host always makes profit in the end. You never, ever, have to quit one without having made a profit from it.

Facebook.com is worth $15 billion; not because it is a great site, but because it has an enormous userbase and it has solid growth. Same goes for free hosting companies; if you have thousands of members, ofcourse your company is going to be worth something. Members have money and members buy stuff that people have to sell! Don’t be naive in thinking that your memberbase cannot be tapped in this way; they can and I will tell you further how further on.

So how to set up a profitable free web hosting service:

1. Buy a free hosting panel; no matter what anyone says; LP is the best for making money and not wasting time or server resources; order it here now!
2. Get a nice layout for your freehost here
3. Order a server by clicking here. Don’t (really don’t) bother with shared hosting; you’ll make a very good profit anyway.
4. One of your biggest moneymakers is upgrades; use this service to get $100 PER sign-up, click here; simple registration
5. Get a Google Adsense account
6. Get a Google Analytics account
7. Get another CPM/CPC service account here for your user pages
8. Get a CPL account here (another secret!)
9. Have the Layeredpanel guys install the system on your server so everything is working and make sure they change the Hostgator page to match the new affilliate

Now you are ready and set to go and make money. Advertising free hosts is very trivial; I will write a lot more about that in some days, but for now what you need to know is free web hosting directories. Just find all of them in Google and put in your free host.

Now; here is something crucial; do not put any ads on userpages yet. Layeredpanel has a great function to do that, but you should only put your analytics code in there to measure your traffic. Leave out the Adbrite code. Put Adsense on your front page and on your 404 pages but not on your user pages and promote your site.

Now give it a few months of time to gather thousands of members; free host, without too much marketing, should run, after 1 month, about 100 new members a day, so 3000 a month. Even the small ones do that.

When you have, say 4000-6000 members after a few months (although some do that in weeks …), you should be seeing income appearing from the upgrades. You are out about $1000-1300 after two months, but with normal traffic, your Adsense should be delivering about $500-$700/month and upgrades should be 13-18 (that’s $1300-$1800!) per month. So you are breaking even for the first time and probably even making a small profit in that month. The next months you will get back what you spent in the first months and going to a profitable business.

From this point on, you should let it grow very large; adding servers over time (LP admins will arrange the technical part of that) and tap that user potential.

So how can you tap the user potential? Let me start out by saying that even if you haven’t reached the break even point after 2 months, you will still profit from this all. How? Very simple; by tapping into your userbase and it’s potential.

The easiest, and laziest way of doing so is (and there is yet another, previously untapped secret); find out what most pages in Google about your site are about by asking;

site:yoursite.com

and make (or buy) a site about that, put it on your host with Adsense and you’ll be getting very high conversion. But that is a worst case scenario and you should only do that after you are sure this is not for you. I have seen cases in which the new site actually turned out to be a solid business; the traffic from the free host proved to be enough to make the new site 100% profitable and viable. Meaning you will not have loss, even if it does not go as planned. But chances are it will.

When your free host is running to it’s potential, it is very easy to tap into your users. The ways to do this are (and these are 100% tried and tested and will make you a lot of money):

1. Put CPM/CPC ads on your user pages ; making $150-200 per day on busy free hosts
2. Ask your hosting affiliate for a discount coupon (they’ll give it to you) and put that on your site; boosting affiliate sales with 100-200% on average
3. Same as 2. but mail all your members the same deal; mail them every month with that deal; boosting affiliate sales with 500% on average
4. Make a mailing list and send your members a mailing every 2 weeks containing links to non-hosting affiliate products, boosting your income with thousands per month!

All these options can be mixed and matched and the efficiency can be improved by making landing pages for the affiliates and so on. What you should remember is; you have thousands of members; these members are worth a lot. Most free hosting companies of 2007 didn’t think of this and threw their users away. Don’t make that mistake!

When you have a money machine going, you can decide what to do:

• Sell for 10x the revenue
• Keep it and try to make more money and get more users

Both options work fine and are really worth it.

The free hosting market is not and will not be saturated and not starting a free host today, is your loss entirely. Even if thousands are added in the coming month; there are 1.4 billion people on the net; only handful is tapping into the potential of the net. Hosting is one of those potentials. Better act now; Free Hosting is NOT dead! Just be a bit more creative and don’t follow the sheep!