Is Building a Website Directory Still a Good Idea?

IMO, you would be far better off doing something else! I have just taken one of my NICHE directories offline and that had plenty of companies in it and plenty of content pages. Dont get me wrong the site used to get a few hundred unique visitors per month but it just didnt seem worth it to me.

Also you're instantly on the back foot because of google's local results in the search engines..

It actually is, yes, surprisingly enough.

This method is currently going strong and there are multiple applications. You need to think local, though, and stick to industry sectors: legal, dental, medical, and so forth. Using this model, you monetize by paid listings. You need SEO skills. But once you're ranked for a popular term in, say, the legal profession, and you have a couple of paid listings, the rest will follow since they don't want to lose out on potential leads to the competition. That's the paid listing route, and the most common one at present. There's more to it, but hopefully it provides you a jumping-off point for research.

GRM

Google penalizes any site flagged as a primitive directory, so you'll need something more than that backing the business unless you're YellowPages.com. Sites like Yelp, AngiesList and Thumbtack are examples of directories with modified concepts that keep them relevant.

While there has been a lot of discussion in the offline section in the area of charging local businesses for directory placements, this usually involves a scam. They build a stupid directory and then try to convince local businesses that they need a listing. Some of the non-techie types fall for it and pay the fee. What makes it a scam is the directory operators put all of their work into selling placements and little to no work putting the directory in front of consumers.

That's hard to say nowadays.. i just built one myself at @vailable with free submissions, it really seems alot of work with uncertain returns though

Many thanks to all those that offered their insight, particularly GRM and DWolfe. That article on "Twists Used to Build and LBD" was great. I had a vaguely similar idea in mind in that I would offer free placement for a handful of local businesses in each US state. I would offer industry specific news and other info that I might gather from my own subscription to their newsletters.

I would also try to get industry manufacturers in on the site to talk about their offerings and advancements. Eventually offering these niche specific businesses in the directory the ability to advertise themselves, post video and pics, list specials and events etc.

Right now I have a regular J.O.B. making decent money. I've tinkered with IM for a short while but haven't really done all that well. Mostly building some websites for local businesses and bartering for services. I have the desire to continue my endeavor of becoming self-employed but seem to keep coming up short. I need to make this happen with something I'm interested in (the niche for this directory would do it as it is my hobby).

I get discouraged sometimes because just keeping up with the regular changes in SEO almost seems like a full time job to me lol. I need to make something happen! The Directory idea seems like a good idea to me but I don't want to pump a lot of time and energy into something that's not going to do well. Especially in light of (as suggs mentioned) search engine's now focusing on local search results. It seems like the SEO for a directory would also be another full time gig to be effective.

GRM makes some great points but I can't help but think there are easier ways/models to make money online... obviously since I don't publish directories.

The only way I would think a directory is worth it is if you you would like to build up a local biz marketing service you can use the directory as a way to land clients.

Most important is your idea is not focused on SEO but on making a directory that people will actually use. Even better is finding ways that people will participate on your directory writing reviews, rating or submitting content. I've been in the directory industry for more than a decade.