As you might already know there are several categories of websites available online. Web directories are one of them. A directory is a site that lists other websites in its index, grouped by categories like business, sports, arts, etc; individuals are able to submit their websites for free or after paying a fee.
As any other type of website, directories can be used to make money from them.

Steps to Earn Money with a Web Directory:

1- Purchase the domain name and the hosting account. Many companies offer extremely cheap web hosting + domain plans, one of them being godaddy.com, but there are many others, if you want to find more just use google.
2- Choose and install the script: You can find several scripts for directories, in my opinion the best is phplinkdirectory. It’s extremely easy to install and manage. You can also find lots of templates for free.
3- Design: As stated before there are many available free templates and themes you can use. You can also build your own personalized themes.
4- Promotion: To be able to monetize a web directory you first need to promote it and generate some traffic. Among the several methods you can use I suggest you do search engine optimization and link building to reach a good position in the major search engines. This will generate a steady amount of traffic and it’s free.
5- Monetization: There are several ways to monetize a web directory, here you have some options: Charge a fee for featured or top of category links, use contextual ads like adsense and adbrite, affiliate links, sell advertising spots. There some other ways to make money of a web directory but I think the ones listed here are the most used and also the most profitable.