Here is a post that is especially directed towards those who are newer to this industry, but it may give some ideas for those of you who have been around a while.

Making money online is a challenge. That challenge, and its rewards, are what draw so many people here. Unfortunately many with great web sites end up stunting their potential due to under-monetization.

This list is far from comprehensive, but it should give you some ideas.

1. Advertising. Since the launch of Adsense, advertising has become the monetization method of choice for small internet publishers. Publisher-side pay-per-click advertising makes the “throw it on the wall and see what sticks” method profitable.

Pros: Advertising makes any piece of content monetizable without significant work. Targeting technologies such as Adsense mean a third party figures out what makes your content profitable.

Cons: Advertising may mean someone else is walking away with the bulk of your profits. If an ad market for a particular niche is weak your earnings will suffer. With the exception of pay per click arbitrage (where incoming traffic is immediately driven away from your site via ads) positive ROI from ad buying is rarely profitable.

2. Selling for other people. In web jargon, affiliate marketing. In this case you take a cut of the profit, or a lead fee. Unlike ad models, payment is strictly performance based.

Pros: No need to occupy your time on shipping, customer service, or other retail hassles. 100% of your time is going to marketing.

Cons: Although you may turn a bigger profit on the front end (think ringtone offers paying out $12 for $10 subscriptions) you are missing out on the back end (the additional $40 the ringtone provider makes for the next 4 months the customer remains subscribed.) Additionally, you lose much of the branding benefit. In rare cases an affiliate advertiser will provide you with a white-label solution.

3. Selling your own product(s). Many mom-and-pop shops benefiting from the internet have taken this approach. A niche product may make 30 sales a year locally but do 3000 sales a year globally, turning a hobby in to a home-based business.

Pros: You are in full control. You can adjust your product based on customer feedback. Detailed customer data can give you an inside look on who your customer is and what they want. You can recruit other affiliates to sell your product, thus benefiting from other’s expert skills and knowledge. If you are failing at #2 this may be a better option for you.

Cons: Most of you time and effort may not go toward promotion and marketing. Rather, you may end up spending the bulk of your time managing employees, cashflow, production, etc. Alternatively, if you are selling information (ebooks, website subscription) the option may be more attractive.

4. Build to be bought. No joke, just as during the dot com days a growing number of companies are being created solely to be bought by a larger company. Large companies are opting to purchase smaller businesses rather than roll the dice on their own R&D.

Pros: As the YouTube deal has reminded us again, this can be one of the most profitable business models. Good luck making a billion dollars on numbers 1-3 in 2 years.

Cons: High cost, high risk. The business model behind number 4 is venture capital. The financer can afford to lose millions because they are financing many similar deals. Only one has to be a winner for them to profit. If its not you, you’ll walk away with little or nothing.

Nothing is set in stone. A successful business model relies on only two things: expenses and revenues. (Of course, trying to avoid breaking the law & killing off your customers are an added plus.)

Free traffic means you can get away with making a fraction of a penny from each visitor. The catch is you either need to be very crafty, or you do something that makes them want to be there.

Everyone complains about expensive ebooks with little offer. The fact is much of the cost you are paying for that ebook is the cost of getting you to even know it exists. $25 might be a nice price point your new ebook on blogging, but if you spend $30 on Adwords for every person who becomes a customer, you have no business.

Just the same, a brand new pair of Nike shoes may cost the company a few dollars in parts, labor, and shipping — but you pay $150 for them. After spending so much money on advertising campaigns and celebrity endorsements you no longer have a $3 shoe. Still doesn’t add up to $150? Thats the reason why Nike’s founder, Philip H Knight, has a net worth of $7.9 billion.