I just discovered that Google Apps can now do charts, so I made a little chart for my blog. Lo! and behold! It wasn’t just eye-candy, this chart has a function as it illustrates the problem that I am facing: I’m not creating passive income at the moment.
OK. There are many ways to generate revenue from your blog these days. This bonanza is helping fuel interest in making money online. John Chow’s blog has lots of very good information on these ways, but still bloggers have to know what kind of income they are generating: in other words, is it passive or active income? I’m also including non-blogging income as active/passive non-job sources of income .
Let’s define the terms for everyone. Active Income is income that is generated directly through your own efforts, and is usually directly proportional to the amount of time or effort required. When you work, you are paid a salary (by the month), a wage (by the week), or by the hour. When you blog, this would include paid posting or paid linking in posts. In other words, if you choose not to do a particular blogging task, you won’t receive any additional income. There are indeed many good ways to earn this kind of income: Payperpost, ReviewME, SponsoredReviews (to name but a few that I have had some success with). The downside to this is that once payment is received, there is no further income from that effort.
Passive Income on the other hands isn’t directly related to the amount of effort required. Passive income requires usually no further (ok, perhaps a little!) effort on the part of the writer, though additional revenue is generated. Book sales are a good example of typical passive income. If the book is successful, the sales could go on for years, or (in some cases) decades and generate a substantial passive income that may not need further tweaking or additional investment on the part of the writer.
In this post, I’m going to look at three blogs (including mine) and analyze the passive/active balance.
Affiliate Sales: $1,962.20
Text Links Ads: $1,308.06
Google AdSense: $1,129.60
Direct Ad Sales: $625.00
Vibrant Media: $357.08
TTZ Media: $278.92
FeedBurner Ads: $188.27
Grand Total: $8,545.25
Of his totals, nearly 72% could be regarded as passive, while the remaining 28% is dependent on his active participation. Of course, those are the ReviewME Ads that he places.
Bulk Candy Vending: $700.30
Automated eBay Business: $55.83
Network Marketing: $46.18
Grand Total: $898.98
Though the size is smaller than John’s, it’s not the size that interests me, it’s the proportion of active/passive. I’m not sure how much Network Marketing is active, so to be conservative, I would reckon that his business ventures total is even better than John’s total at at over 84%. His candy business requires minimal work as he tells us, but his blogging totals are not broken down clearly, so it’s possible that the 84% passive income could be higher. If it is like John’s ReviewME reviews, this is well paid but still very much active revenue.
And finally, my blog’s March 2007 income; somewhat less than the others, but not bad for my own brief efforts. Anyway, here goes.
Google AdSense: $7.28
SR/Other Blogs: $68.00
Text Links Sales: $232.79
Obviously, the total amount is much smaller than either of the other blogs. But let’s look at the active/passive ratios involved here. In fact, I found that nearly 37.1% was from active sources, such as Payperpost, Other Blogs. Passive sources totaled about 62.9%. Actually, this was much higher than I had originally expected.
Each of the blog’s has a unique passive income profile. John Chow’s has made the most of online sources of income (hence, the dot com mogul). He has demonstrated that these sources of income really can provide a good income, if you can generate enough traffic to your blog. GeniusType focuses more on real world income sources with the Candy Machine Business . His blog explores the Candy Machine World with some really practical advice. I’ve had some success selling links on my blog, and small hosting packages for clients. Also, I’ve had success creating both interest income and dividend income.
So where to from here? My own goals is to generate about $1500 per month in residual income, to have larger elements of income from multiple sources, so that when one dries up, you can still cultivate another stream. But, you need to be aware of some streams of income: it’s important if you are interested in generating additional sources of income that those sources of income are passive, otherwise it’s just a job.
What are your goals? Do you have any passive streams of income? How successful have they been? How did you find them?