According to Wikipedia a web directory is a directory on the World Wide Web that specializes in linking to other web sites and categorizing those links. Web directories often allow site owners to submit their site for inclusion. Editors review submissions for fitness.

Probably the most famous web directories are Yahoo and DMOZ.org and rightly so. But they aren’t the only directories and there is room for more. Yahoo charge $299 for express inclusion in their directory and it is also possible for you to make money from a directory.

There are two types of web directory,  general directories (like mine www.glowdir.com and dirstop.com)  as well as niche directories. A niche directory is one that focuses on specific areas on the web. I have a niche directory for Media, News and PR. So your first decision is what  type of directory do you want, general or niche. If you have a passion or a hobby then I would suggest making a niche directory about that. Your audience is smaller, but it is well known and your competition is smaller. If you want a general directory then you have a lot of competition but your potential customers are all the web users in the world!

What makes a directory popular. If you want to start charing sums like Yahoo for inclusion in your directory you need to have two things: traffic and page rank. The more visitors you have to your web directory the more exposure each included site gets. The higher your page rank the greater the importance put on each link in your directory by the search engines.

So what do you need to do, here is a list:

1. Download a free directory script like PHPLD
2. Get a template to make it look unique
3. Advertise you directory (in forums, in your blog etc) and get link submissions
4. Build back links to your site (that is other sites linking to you)
5. When your popularity rises you can start charging for inclusion.
6. Add Google Adsense adverts to your site to increase revenue.

Good luck!