Here are the most common ways that people create Online Passive Income. You can choose just one that works for you, or you can implement many at the same time.
The internet is ever-changing, so I strongly recommend diversifying your portfolio of passive income streams.
1 – Write Articles for Revenue Sharing Sites
Revenue sharing websites are sites where you can submit an original article and then share in the revenue from advertisements shown around your words. Some also allow you to embed “Affiliate Marketing” links in your article (more on these below).
This is by far the easiest way to get started. It takes no cash investment and you can be earning a Passive Income almost immediately. You don’t need to learn how to set up a website or how to optimize for search engines, or any of a host of other skills you need to run your own website well.
These sites were very popular until the “Panda” Google algorithm change severely penalized them in the search rankings. Traffic dropped and many went out of business or were bought up by other sites. Those with higher quality articles did better, but they all suffered. The change also meant that the quality of “backlinks” from articles on these sites was drastically reduced (don’t worry if this doesn’t make sense to you yet, we’ll cover links and Search Engine Optimization in a later article).
In the long run, you’re better off publishing on your own website where you get 100% of the profits, have complete editorial control, and you don’t have to worry about the site going out of business and shutting down your income stream. However, these sites are still a great place to get started and to practice your craft of finding profitable search keywords and writing quality articles that will rank in the search engines.
Of the surviving Revenue Sharing Sites, the best are Hubpages and InfoBarrel. Hubpages is more popular, but I find the look and article quality to be better on InfoBarrel, so it may be more likely to survive in the long run. Try them both out and see what fits for you.
2 – Create a Blog or Website and Sell Advertising
If you create a blog or other type of website that is informative or fun and draws visitors, you can make money by selling advertising, just like a traditional magazine.
You might make a direct deal with an advertiser to display a banner ad for a month, but the simplest and most common method is to use Google Adsense. You can put text or picture ad boxes where ever you like on your site. Google will find ads that match your keywords and your visitors and place them where you specified. If your visitors click on an ad, you get paid.
It’s important to optimize the number, placement and size of the ads to match your site. A well designed site with lots of high quality visitors can earn thousands per month.
3 – Record a Podcast and Sell Sponsorships
Podcasts are audio recordings which can be downloaded and listened to on the road, at the gym, or on a long flight. I am a huge fan of podcasts because I’m in the car commuting for two hours a day. My personal favourites at the moment are the Smart Passive Income podcast and the Family Adventure podcast.
If you have enough regular listeners, you can approach advertisers who will pay to sponsor one or more episodes. You need a high quality podcast with a proven audience before you will be able to attract a sponsor, but people do make good money purely from sponsors.
The only problem with money through podcast sponsorship is that it isn’t passive. You get paid for the episode once and then that’s it.
To create passive income from a podcast you really need to sell something. Most podcasts have a “show notes” page that is mentioned in the podcast and contains links to products for sale. You can combine up-front sponsorship income and ongoing passive income from sales to diversify your income.
Podcasts have the added bonus of reaching a different audience than the search engines and driving more traffic to your blog or website. Even without a sponsor, they can be well worth the effort.
4 – Create a YouTube Video and Monetize it
YouTube allows you to monetize a video. This means that YouTube will place advertisements in or around your video and will give you a share of the Cost per Click revenue if anybody clicks on an ad.
You will need to be sure that your monetized videos don’t have any copyright issues such as background music that you don’t have the right to use commercially.
As with podcasts, YouTube videos can also be used to drive more visitors to your site. This works two ways. First, people might find and watch your video on YouTube and then click through a link to your site if they like what they see. Second, links to a site from YouTube seem to have an extra powerful effect on a site’s rankings in Google (it’s probably not a coincidence since Google owns YouTube!).
Videos can also be embedded directly into your blog posts or website pages, further enhancing or clarifying your message while helping your Google rankings. Win-win!
5 – Sell Other People’s Products Through Your Blog or Website
This is called Affiliate Marketing and is very big business on the internet. You know those helpful review or comparison sites that you go to when you’re trying to decide which camera or skis to buy? Chances are, the person who wrote that helpful review will get a percentage of the sale if you click on the handy link in their article.
Affiliate Marketing can obviously cause a conflict of interest, but since virtually all products can be marketed in this way, there’s often less incentive than one might think to pump up one product over another. There’s certainly nothing wrong with writing a useful post about a product that you’ve used and enjoyed and then getting paid for your efforts if people click through your affiliate link. The customer pays the same as they would have otherwise. The commission comes out of the seller’s profit.
The largest affiliate network is Amazon. Amazon calls this “Amazon Associates,” and you can get 1-10% depending on the product that is purchased. The cool think about Amazon’s program is that you also get a commission on anything else that person buys during their shopping session. That’s a big deal since Amazon is very skilled at up-selling. So if you promote a $10 children’s book and the customer clicks through your link and then also adds $800 in Nursery furniture, then you make a commission on all of it!
There are thousands of other products other than those on Amazon which offer affiliate marketing. The commission on electronic products can be much higher than Amazon’s 1-10% It’s not unusual to see 30% to even 70%.
6 – Sell Other People’s Products Directly via Pay Per Click Advertising
You don’t even need to have a website or blog to do Affiliate Marketing. You can create an ad in Google Adwords or another advertising program and link that ad directly to the product that you’re getting commission on. That’s right, not all of those ads you see on the web are actually by the people who created the product they’re advertising!
This is a simple, fast way to affiliate market a product. The kicker, unfortunately, is that you’re paying every time somebody clicks on your ad, but you only get a commission if they also buy the product. You can easily spend more on advertising than you get in commissions, so you need to be careful. It’s simple, but that isn’t the same thing as easy!
7 – Sell your own Information Product: E-Book, Course, Video Series, Newsletter
This strategy has great potential since you get to keep 100% of the profits. Because the product is electronic, you can sell one or a thousand with no extra effort. The entire sales process can be automated so that the product is delivered automatically once payment is received. You can be at the beach or in bed, and the money appears in your account automatically.
8 – Sell your own Software, App, WordPress Plug-In, etc.
This strategy is similar to the last one, but the product is much more difficult to create. Most people outsource the actual coding which means you’ll need to put out the up-front costs with the hopes of making enough sales to more than cover the investment.
It takes some real talent to conceive of a product and then project manage it to a successful realization. It will never be perfect the first time, so some time and budget will need to be put aside for trouble-shooting, customer service, and updates.
Software can be sold for a one-time or monthly fee. Mobile apps can be free or paid. Surprisingly, free apps can sometimes make more money than the paid ones. The advertisements inside the app keep paying off month after month.
9 – Sell Physical Products that are Drop-Shipped
This is the strategy made famous by Tim Ferris in his excellent book, The 4-Hour Workweek. You can have a product manufactured or purchase from a wholesaler and then put a virtual storefront on the internet. By paying another company like Amazon to physically send out the order when somebody clicks on “Buy Now,” you can then remove yourself from the purchasing process, making the income passive.
Amazon is one of the largest fulfillment companies that people use. Don’t confuse this with Amazon Associates, though. In this case, you’re paying Amazon to warehouse product you own, and then ship it to people who buy it.
10 – Create a Membership Only Section of your Website
This is an incredibly powerful form of Passive Income because people keep paying you a monthly membership fee. The numbers add up quickly. If you can charge $30 a month and find 100 regular subscribers, you’re looking at $36,000 per year.
Of course, you’ll need to have an excellent product to attract and keep 100 subscribers. The average time someone stays a member in such a site is only 3 months.
One great way to keep people coming back is to create a sense of community. A forum is an excellent membership model if you can attract enough subscribers to keep a ‘critical mass’ of conversation going.
Each of these models for creating Online Passive Income can be used on their own or in combination. It will really depend on your niche, your audience, and your own preferences. I plan to try most of the above and see what works for me. I’ll report the results to you as we go along.
In fact, this post has my very first experiment within it. The link for The 4-Hour Workweek is an affiliate link through the Amazon Associates program. If you make a purchase after clicking on this link, I will make a 4% commission. It truly is a great book which launched me and many others down the path of seeking passive income on the internet. If you haven’t read it yet, you should!
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