I just set up a Basil Pesto Recipes website over at bonblogs.com, where we keep a few interesting projects and kid stuff. It's a dev box and we have fun and learn with it:
Basil Pesto Recipes
This Basil Pesto SEO experiment has to do with identifying a term using the External Keyword search tool that has several thousand (between 2 and 10) hits per month, but is also not competitive.
The generic terms in "basil pesto recipe(s)", split apart, represent high value searches. But when combined, specifically in the niche phrase "basil pesto recipes", there is not a lot of direct competition. So we are seeing what we can learn by creating a very small site, doing all the basic SEO work, and seeing where we land in the Google index, whenever their next update includes us.
Long term, the strategy is to use what we find out to identify a loose formula that we can apply to uncover other medium quantity searches that have low competition, but specifically in fields we have an interest in, like cooking, music, art, graphic design, etc. If and when we are able to capture a steady stream of visitor, the plan is to then develop some kind of product around that very small niche.
I think there might be a new niche arising, as a result of the acceptance of eBooks due to the success of Kindle, Nook, and other eReaders. Ponder this: what is not quite a book but not quite a blog post? Posts are generally short and free. Books are generally much longer, even on their small end, than the longest blog post. But books are not free. eBooks are in the $5 to $25 dollar range depending on the topic. What if you had a "micro book" that was in between the size of a big blog post and a short book and had "app" style pricing to go with it? Think $2.99, and sell several hundred a month. Do this with several niches...see where I'm going?
I should retitle this post "How to build a microbook empire". :)