A lot of people have approached me about making it big on the internet. They’ve heard of the Jerry Yangs, the Jeff Bezoses and others who have made billions on the web.

Truth be told, these are the very tiny, almost non-existent, exceptions to the rule. Most people who enter the business never make it, especially when they enter a niche not related to porn or gambling. The web business is dynamic and challenging endeavor that requires an enormous degree of creativity and luck. There is no magic formula, and a lot of trial-and-error is necessary.

But not to get discouraged! While few people, including this blogger, have struck it rich, many have been able to make a decent living off the web. In fact, tens of thousands of people make a living selling on eBay and other marketplaces.

I think the key is stop looking for an easy way to make a lot of money. Instead, do what you love. The online business is fiercely competitive, where you have to go up against people from all over the world. It takes an incredible amount of learning, tedious work and inspiration to gain the edge over your competitors. It’s hard to get inspired if you don’t do what you love and, instead, focus on getting rich.

A lot of site owners are complaining that making less and less from Adsense nowadays. No matter how they play around with their ad size, position, color schemes, etc., they still see their revenues declining.

I think part of this is that people are learning to habitually ignore contextual ads. Sure these ads are relevant to the material they’re viewing, but they also know that they’re, well, advertisements by companies going after their pocketbooks.

When contextual ads first came out, I liked to click on them thinking that I’d find useful (and free) information on the landing pages. But once I had found out often enough that these sites are mostly trying sell me something, I learned to avoid them.

I’d figure that everyone else is probably the same way. Most people get on the internet to look for FREE things. They don’t necessary like sites where they’d have to pay.

So what’s next? What could be more effective than context ads?

Since there is no industry standard for pricing a website, a site is only worth as much as someone is willing to pay for it. This isn’t helpful if you’re considering selling your site and don’t know where to begin. In my opinion, a website should be priced as one would a brick-and-mortar business.

One might price a site by taking its annual profit and multiplying by some factor, say 2.5, to arrive at a “fair” value. Unlike brick-and-mortar businesses, the internet business is volatile and everchanging, so a profit one year may not translate to one in the next.

Other considerations for valuing a site include the site’s niche, market reach, traffic, search engine rankings, age of domain name, number of inbound links, number of paying sponsors, Google PageRank, Alexa rankings, number of competing sites, and so on.

dnScoop has an interesting site valuation tool that attempts to value a site based on various factors. However, one should be forwarned that the results, while useful and interesting, should be regarded for its entertainment value rather than taken seriously for valuing a site.

Perhaps a better way to get an idea of how much your site is worth is to hang out in forums like the Digitalpoint and Sitepoint marketplaces and see how much sites comparable to yours are selling for. Ebay is another place to search for past sales of websites.