How To Create Passive Online Income
Passive income is the topic du jour in the personal finance blogosphere lately. Quite a few bloggers have written in detail on the virtues of creating alternative streams of passive income, and several others have called into question just how passive many of these alternative streams really are. If you have to actively work to maintain them, the argument goes, you are simply trading one job for another.
For all the rhetoric surrounding passive income, there are relatively few sources of alternative income that are truly passive. My definition if “truly passive” is simple: it’s okay that an alternative income stream requires a bit of work upfront to get the ball rolling, but once an income stream is up and rolling, it should require absolutely no further intervention. A few common sources that fit the bill are investments in things like equity income funds, index funds, or even CDs at the bank, but these income streams all requite large amounts of capital to get started.
Passive Online Income Fits The Bill
Income-generating websites are a good fit for two important reasons:
- They often require very little if no on-going work once up and running (fulfilling my primary requirement)
- The upfront capital requirements are negligible: $10 for a domain name and $6 per month for a web host and you’re good to go.
Now it’s important to note I am not talking about blogging, here. Blogging is a huge on-going commitment and while it probably has the greatest long-term profit potential, it most certainly isn’t passive. I’ve finally reached a point where I earn a respectable per-hour income from my blogging activities ($15-20 per hour, roughly), but for months and months in the beginning I worked for literally pennies per hour. It will probably be another year or so yet before my per-hour income from blogging reaches a level equal to that of my full-time job (if it ever does).
Niche Mini Sites For Passive Income
A niche mini site is a small, tightly focused website designed to be the ultimate resource for its niche. Strong, focused content is useful for attracting inbound links over time, which will increase your site’s search engine authority. In my experience, it takes around 20-30 hours to produce a quality mini-site capable of producing a decent income of between $100-200 dollars per month. That may not sound like much, but look at it this way: $100 per month would generate a yearly income of $1,200. If it took you 30 hours to build, launch, and market your new site, that $1,200 equates to $40 per hour in the first year alone. Fortunately, mini sites in most “evergreen” niches like Spanish, finance, or acne can have a profitable life-span of many years, if not decades (who knows where the internet will be in 20 years?) Spending just 10 hours per week working on web projects should be sufficient to launch approximately one mini site each and every month, or 12 sites per year, yielding a monthly income of between $1,000-2,000 per month after the first year. Could you use an extra $2,000 per month? I sure could. And please believe me when I say these numbers are extremely obtainable if you work hard at it.
A Mini Site Example
My Spanish language site, Learn Spanish On Your Own, is an example of a niche mini site focused on the tools and techniques required to learn the Spanish language. As you can see, it’s not much to look at (it was the first money-making website I ever created), but is full of valuable content such as grammar tutorials and a step-by-step learning guide from beginning to advanced Spanish. The site is sprinkled with contextual advertisements and product reviews (the site’s real money-maker) to generate income. All told, this site took me approximately 40 hours to build (it was my first, remember) and currently generates around $300 per month. While the site isn’t entirely passive (more on that later), it requires very little on-going work for me to maintain that level of income.
You may have noticed I added a blog to the site about 6 months ago. At that point, I was reliably generating around $100 per month from the site and realized I had just scratched the surface of its profit potential, so I made the decision to invest more time into the project. You will probably have a similar experience: some of your niches will prove to be more profitable than others and you may decide to devote more time and resources to those successful projects at the expense of the failures. While that particular website won’t be “passive” anymore, you will probably be able to dramatically increase that project’s profits with only a moderate amount of work. To me, that’s the real beauty of the multiple-niche-mini-site mentality. If you build 15 or 20 sites and they average $100 each without having to spend any additional time on them, that’s great! More likely, however, you’ll discover some of your sites generate far greater income than the average and others generate very little. Building niche sites is a great way to test the profit potential of many different unrelated niches with no financial risk. Then, you can focus on the projects most likely to increase your income substantially.
Tomorrow, I’ll give more details on how to go about building a niche mini site, using Learn Spanish On Your Own as an example.
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Very interesting. When you suggested this on my passive income post I actually thought you were joking. I’ll look forward to tomorrow’s post!
How many “niche mini sites” do you currently have? Are you still doing 1 / month? Do you have a list of them somewhere (or do you avoid tying the “identities” together)? Are you personally interested in every subject (it seems like you’re passionate about learning Spanish)?
Thanks for the link to my passive income post!
Nah, I don’t create anywhere near one per month. I wish I could, but I just don’t have the time. I have 5 total not including this and the Spanish blog. And I prefer to keep them secret. All together, those 5 sites earn between $250-350 per month. So it’s not great money, but it is easy money. Most of them I haven’t even logged into in over 6 months.
And no, I’m not interested in every subject I create a site about, but it’s only 20 hours of work per site so I can deal with the boredom.
I always like these kind of articles to see how other bloggers are making money online. I just wish I had more time to devote to my online activities. Work has picked up a lot this year (and need to be careful in current economy) so that keeping 1 blog is hard enough!
One point I would differ on. I think blogging as a source of income will reduce over time as blogging gets commoditized and more full time bloggers come on the scene. Part timer like us will then find it hard to make money because every article/view will be covered a 1000 times. That’s when SEO skills will come in handy!
Hi dear,
Thanks for sharing great information for the benefit of others
I think that Demand Media, AOL, and others that are moving into niche content will be making this strategy passive online earnings obselete. I’d be interested in a followup to this post in about a year to see if the forecasted earnings of the microsites have decreased.
I doubt it will have much, if any, impact because these niches are too small for big media to bother with. It’s not worth their time to win a niche worth at most $8,000 per year. But it’s worth my time because I only need a few of those to dramatically boost my standard of living.
I’m sorry. This looks great on paper. But in reality ? Has anyone actually succeeded with this strategy in the long run ?
As a reader of many sites, blogs and forums on the Internet, I don’t believe that there is such a thing as evergreen content, that never needs updating. Even slowly-shifting fields of interest do move with time. And how will you know whether and when your site needs updating, if you don’t allow regularly some time to explore your chosen subject, ahead of the date when some change will, very probably, be needed ?
Let’s take an example. Teaching foreign languages. That’s a good case in point. It might seem that the way you learn Spanish (for instance) never changes. Wrong ! Languages do change. New words are introduced. Colloquialisms get obsolete. Thirty years ago, people used such phrases as “My tailor is rich” to learn English. There are no tailors any more.
This particular piece of software, which makes the bulk of your site’s earnings, will have a new version some day. You’ll need to review it. Maybe, at some point, this product will start to lag behind a new competitor. You’ll need to be sure to cover this, and update the site accordingly.
Can you say : OK then, I’ll look it up every six months, and update it if necessary ? No, because if some significant change happens at some point — and it will — you can’t afford to leave obviously stale information on your site for months, weeks or even days. Readers would spot it immediately. It would ruin your credibility.
Now suppose that your earnings come not from one, particular, expensive product (which is a very odd situation), but rather from hundreds or thousands of cheap, low-tech products (which is much more likely). Low-tech products do change names from time to time, disappear from the market, get banned because of some new safety rule, etc. Now you have a hundred (or more) products to watch, instead of a single one.
Let’s suppose, for a minute, that you’d be able to find 20 or 30 niches where the content would be truly immutable (which I think is impossible, but never mind). Even then, I believe that you’d have to overhaul each site periodically, just for the sake of change.
After all, that’s what brick-and-mortar shops do. Restaurants change their menus. Apparel shops redecorate. Supermarkets shuffle merchandise around. Even the city hall gets a new coat of paint from time to time.
This need for novelty also exists on the Internet, even if you’re not selling anything. Nobody wants to browse a dead site. Hell, even dictionaries need to be updated in order to keep on selling.
Robert, I’ve succeeded with this strategy and so have many others. There is certainly such a thing as evergreen content. The particular products somebody may use to learn Spanish may change, but the METHOD hasn’t changed for hundreds of years. I have no need to cover new products if I don’t want to (Rosetta Stone does not make up the majority of my earnings, btw).
You are greatly overestimating the amount of work it takes to maintain a site. Once you get things going, you can do all the maintenance you’ve mentioned in a few hours per year. It’s really not that big a deal.
“Nobody wants to browse a dead site.”
They don’t have to. Regular readers are practically worthless from a monetization standpoint, at least with most monetization models. The majority of the time, they aren’t even targeted.
Restaurants change their menu and apparel shops redecorate because they deal in industries where tastes change. There is unlikely to be a sudden drop in people interested in learning Spanish or sound investing principles, and these sites rank for keywords generic enough that they wouldn’t be affected by whatever was popular at the moment. It works quite well, I assure you. If you aren’t willing to spend 10 hours per year per website to make a load of money, that’s your problem.
I don’t understand where the income from these sites is coming from? Are you just using Google Adsense on all your niche sites? Or is it something else?
Daren, mostly adsense and affiliates. Some sites do very well with adsense, others do better with affiliates. Just depends on the niche.
How do I get started in earning money for blogging? Can someone show me how? I am returning from Afghanistan soon back home and would like to know how I could get started…thanks fellas!