Regarding #1, I think you are right that there are a lot of niches which can be tapped and which will make one a moderate amount of money. But problem arises when tons of creative people choose a single niche (e.g. todo lists). Choosing a niche and executing well is important but what stops from other fishes having their lunch at your part of pond?
Regarding #2, do you think luck is involved there in getting to jump the step function?
Choosing a niche and executing well is important but what stops from other fishes having their lunch at your part of pond?
The pond is so vast and the river flowing into it is so wide that all the other fishes are welcome to anything they find in the general vicinity of me. I'm hardly starving. I also find time to publish a blog titled Tasty Worms Here and release open source swimming techniques. (Plus, although many people think my section of the pond is the size of a mud puddle if that, I think I'm probably, hmm, fourth biggest fish in these here parts? Maybe third. I don't spend too much time thinking about it -- too many tasty worms to eat, not enough time to worry about other fish.)
I don't believe in luck, and I think it lacks explanatory power. For example, the top 1% of iPhone apps rake it in next to the bottom 99%. If you were to ask me why, I'd talk very little about luck and very much about how the App Store is virtually designed to encourage churn and blockbusters, which exacerbates the Winner Take Most effect to the point where it gets almost absurd.
All great points, so I'll throw one more out there. Not all fish have the same tastes, needs, or swimming abilities. If the "niche" that you are filling is occupied by a huge number of fish, is it still a niche? ;-)
Regarding #2, do you think luck is involved there in getting to jump the step function?