Passive Income – Defining Online Wealth

admin | October 30, 2008 | 0 Comments

Passive income allows you to build more with less. It sounds simple, but it’s a form of online income not entirely understood. You sell nothing but a service, like a program that keeps running on your computer.

Passive income is the perfect ingredient in any online business. It means working less while making more. Ever sell something on Ebay? Ebay makes money mainly through passive income, a stream of cash pouring into the site with every single sale that goes on. They don’t sell anything but a service, where millions of products are offered in stores and auctions on a daily basis. In many ways, Ebay is the most successful passive income company online. Sellers pay them small fees to post an auction, then Ebay gets another cut when the auction is over, a small percentage of the sale. It may be $1 or $50, and adds up with so many sales occurring on a daily basis.

Another strong passive income site Amazon, where sellers can offer items for sale, like used books or movies, for a price and Amazon gets a cut. Amazon is only selling a service, with little or no work on their own. They, however, go the more creative route than Ebay, and actually sell items while creating passive income.

For the creative business entrepreneur, doing exactly what Amazon does isn’t a bad idea, mainly because selling and informing are becoming popular trends in the online creative businesses. The more streams of income you build, the more profitable the online business is.

Also, Google Adsense is another form of passive income, where you’re simply getting paid for ads. The rates are much lower usually, and therefore the best online creative business not only sells adspace but products.

Passive Income – Services

In some ways you can still sell a simple programmable service. You can, for one, do what Amazon, Ebay, and Google do—take a small cut. This is an ambitious project, and usually involves some form of social marketing. Social marketing is one topic I will explore in detail with later articles. For now, remember that social marketing is the new term for Web 2.0, where you build a kind of community business where people share material, perhaps pictures or writings, and you sell adspace around it.

Adspace

Google is where passive income truly comes together. Often business will both sell services/products, while also informing customers of certain news items, using ads on these pages to gain a passive income. Some creative businesses actually do quite well with this, namely because they get 50,000 or more hits a day. Once a site gets enough hits, the passive income almost always grows. You will notice this on many sites across the net, and might be surprised how many of the biggest media sites also sell major adspace. People like to be informed, in general, prior to being sold. That’s why some bloggers are pulling in thousands of dollars a week, mostly from passive income.

Blogging

Blogging is not only a way to express yourself, but to get people to notice your business. One strategy is to use a blog to promote an online creative business. You sell unique jewelry, but are having trouble getting enough hits on your site, even though you’re getting some conversions (sales). The quick solution to this problem is a blog—and to then use social marketing to promote the blog. There is a market for just about anything on the net, and with social marketing you can get free advertisements for not only your blog but major products you offer.

Selling

When an inventor gets a royalty check for his new form of peanut butter/jam sandwich, that’s passive income. When a business begins selling eBook reports for small commissions that’s also passive income. You might sell the report through multiple sites, paying other online businesses commissions to sell your book. You’re not directly involved in the sale, making it passive income.

Or you can go the other route and sell products through your site from other businesses. This is a popular way to make passive income, and no matter what you sell, there’s usually a market for it.

Close

Passive income comes in many forms, but it’s rarely the final word on online profit. It’s a good sideline to pull in extra income, and some make quite a bit of money doing it. But, if you don’t have 50,000 hits on your site/blog daily, the income will be lower than your real sales. So, this means you really need to start hard-selling. One of the best ways is to become a major niche market in your field. That’s the topic of my next creative business online article.

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