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Build and promote sites on subjects you know, not on what you think will generate adsense income.
Pay attention to what areas generate income and build those up in order to increase traffic (and income).
Ten X $0.10 produces the same income as one X $1.00
As for finding the "just right" niche that pays decently but the competition is moderate, asking about them is like asking a good card player his methods, a great chef his recipes, a magician his tricks, etc. Nobody will just tell you "oh, to make a lot of money, you just need to do this and that." It just doesn't happen.
What's left is being the best at writing about something you know about, and make sure to consider "what would be the advertisers interest in displaying ads on this topic". In other word, do consider the potential commercial demand.
And yeah, avoid topics that mainly interest kids and teenagers. They don't have credit cards (hard lesson here, hehe).
As koan suggested create a site for sharing something and not just gaining back something (rule #1); money will follow automatically (rule #2). Rule # 3 read rule #1 again :P
And on a related side note, what if Google were to re-word their main AdSense page to make AdSense sound less like a moneymaking scheme and increase the barriers to entry? I wonder if that wouldn't reduce the demand on support and enable them to provide better & timely responses to publishers?
* the quickest way to make yourself an authority on something is to tell everyone you are, and then act like it. Case in point: SEO blogs.
Its nothing really hard or special, and I am sure anyone can develop the same approach. All it takes is a daily newspaper and a tv or radio, and a little time each day.
After getting an idea, however, you can't just go charging in and develop a worthwhle site. IMHO this only works when you find something, and either know quite a bit about the subject, or are committed to the work of researching and learning about it. It takes time, of course. About a year, in my personal experience.