A sub niche is rather much what it sounds like: a smaller niche within a larger one. For example, say the large niche is BDSM but you want to narrow it down to just FemDom. FemDom is then considered to be a sub niche.
Sub niches come in all shapes and sizes. What is considered a sub niche by some may well be considered a main niche by others who further break it down. There can, (and often are), sub niches to a sub niche. By breaking down the sub niche, we can get micro niches, which are tiny niches that appeal to a small number of people, however, micro niche surfers are often tremendously loyal to a site once they find it.
How can one make a sub niche work for a site? Build around the idea that surfers are more interested in the sub niche than in the larger niche. This is usually true, and it often annoys surfers to no end to find the usual stuff seen in the larger niche on their sub niche site of choice.
For example, should you decide to build and maintain a site focused around FemDom, then do not throw in everyday bondage or threesome dungeon pictures. That's not what your surfers are after when they look through your site. Keep the content completely FemDom. Don't push other BDSM stuff in your site, (exception: a toy store would be a good idea in a site like this, especially if you have stuff from the "Domme" herself), and make sure you can readily provide fresh stuff on a weekly or bi-weekly basis.
What happens if your sub niche begins to go stale? Break it down again. There are sub niches in sub niches, remember? Find another sub niche and slowly bump it in your regular stuff. An example of this would be breaking down your FemDom sub niche to find that a humiliation scene is a real draw to your surfers. Start sliding some humiliation scenes in your members' area and see how well your surfers respond.
Targeting an audience using a sub niche is not really difficult at all. Most of your surfers actually want to see sub niche content, and will actively search it out. You could build an all BDSM site, but your surfers might treat it like a Wal-Mart and find annoyance instead of pleasure. Target your surfer by breaking your niche down and building a site for his enjoyment.
Finding sub niche content can be the most difficult issue you could run into, because most of it will have to be either custom done or thoroughly exclusive. You see, this sort of content can be seen all over the internet, albeit usually on large niche sites. If you want to pull in your surfers, you're going to have to get content that not only hasn't been seen everywhere, but also piques the interest of your surfer in such a manner that he doesn't want to leave.
Many reputable content providers will have no problem with doing custom shoots for you if you're willing to pay the price. It's going to be expensive to get started, that's for sure. Custom shoots can cost upwards of thousands of dollars. However, once you get your shots and your video, you can use these exclusively and reap the cost in sign ups.
If you're thinking about a sub niche site, I wish you the best of luck. It can be a pain to get it all together and online, but once it's there and you know where to get your traffic, you're on your way.
Take care of yourselves! ~ Tala
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