The success of passive income sources on the net has now produced an industry in its own right, dedicated to promoting sources of passive income. It really is a minefield, and like anything which promises the Earth, most of the hype is of very dubious quality.
But- some forms of passive income do work. The need is for quality of passive income sources.
‘Passive income’ is defined as a source of revenue from a product or service which doesn’t require any additional work after being set up.
Revenue is paid per click, for example:
Like on many sites using Google advertising, per click, a percentage of revenue.
For hits on an article or blog, which can pay for years afterwards.
Sale of electronic rights, generating a payment for each sale by a third party.
Sale of information, or ‘infopreneurial’ work. Ironically information on ‘How to make money on the internet’ is a very common commodity in this field, to the point of saturation.
Affiliate or invitation systems whereby a person recruits others, usually for direct sales of things like Amway, Tupperware, and gets a percentage of their sales, or for online or other commercial content.
Online business, of any sort, also contains an element of actual marketing, both direct and indirect. Passive income works best when operating through sites which get a lot of traffic.
Most important: Passive Income is generated by volumes of traffic.
There is now a virtual science devoted to generating traffic to web sites, and anyone considering passive income streams should know the basics before starting. The need for volumes of traffic has created a need for a range of tools and practices like:
Search engine optimization, (SEO),
Other methods of defining the ‘reach’ of a site, meaning its market status and size of clientele.
Tailoring of ads to website content
The list is almost infinite, and the effects of these methods are very much a matter of debate. Some people swear by Google?s Adsense as a passive income stream, some wish they’d never heard of it. Many people say Ebay is the greatest thing they’ve ever done, and some people are almost allergic to the whole online auction thing after using it.
Both Adsense and Ebay are the big reach sites in their fields, and both relate to passive income streams which can generate a lot of money. So you can see that passive income involves a very mixed range of possibilities.
The ranking agency of the internet is Alexa, which provides information about the traffic going to web sites, and allows current and historical comparisons with other websites in the same niches. Alexa is the Nielsen of the net, useful in getting an idea of what’s hot and what should be shot, for passive income earners.
That’s how seriously the volume of traffic is to those doing the advertising which generates that form of passive income. Billions of dollars are spent on advertising on the net, and a result is expected to be achieved for that sort of money. As the internet absorbs more mainstream business, opportunities will expand, but so will the demand for cost effectiveness. That could be very good for passive incomes, because the less cost effective sites tend to drop out faster, leaving fewer timewasters.
Passive income can work, and work well. People do make fortunes on the net, but they tend to be the people who’ve done their homework, and know what will sell and generate income. Just sticking Adsense on your site and hoping for a few million to drop in out of the blue isn’t a good idea.
In terms of time management, passive income is a very good, very useful, idea. It is quite possible to operate many different passive income sources, without having to do much more than set up the product or service.
The most common misconception about passive income is that it’s a one way process.
By H. SKIP WEITZEN