I spent a few months of full time work investigating the viability of an eHow like site - trying to measure likely profit margins. I put the effort in because of this Demand Media article in wired: http://www.wired.com/magazine/2009/10/ff_demandmedia/ and because it was the opinion of some people whose opinion I value highly that such a site would be profitable. The idea actually went against my own gut feel because I was wary of all the SEO that goes on. Although typically localized in topic, I thought in aggregate the global phrase space would be pretty densely covered by now.

Anyway...

I optimized on both the demand side (data from keyword search tool) and supply side (number of results returned from searches, number of exact term matches, and page rank of each site in the top ten). I did this for about 200k phrases (yes, it was difficult to get the supply side data). I set up 3 separate test sites to test the most promising search phrases.

I couldn't make the numbers work. I was actually nearly an order of magnitude off being somewhere reasonable and even allowing for benefits of scale (which are admittedly hard to quantify) I still couldn't rationalize that it would be a good business.

So i'm quite happy to see this article in that it some what validates my own findings. I for one will not be taking part in the IPO!