The joys of passive income

Passive income.

What is it?

According to Wikipedia, here is the definition of passive income:

Passive income is an income received on a regular basis, with little effort required to maintain it…

In my opinion, the most important words in the definition are the final two words… “maintain it.”

Some people think that passive income is money that comes in without having to do anything at all.  You don’t have to do anything to get the flow of money started, or to keep it going.  Frankly, nothing could be further from the truth.  As the definition says, you have to expend “little effort to maintain it.”  Little effort, not no effort.  And, it takes little effort to maintain it, it says nothing about expending only a little effort to get it started.

Truth is, I have many different streams of passive income.  Over this past weekend, I was doing a little analysis of one of my streams of income, and that is advertising income from one of my blogs.  Because of the terms of my contract with this particular advertising company, I cannot give certain information when talking about this topic.  However, I can give you a very good idea of what I am talking about without naming the company, and without quoting some certain key information.

So, as I said, I spent some time this past weekend analyzing one of my blogs, and the advertising income that the blog earns.  I will not name the blog that I am talking about, because that will leave me free to give a bit more detail than I could if I had overtly told you what site I am talking about.  The information that is important for you to know is that this particular blog has about 3,000 articles that have been published, and such publishing has been done over the past 6 years or so.  So, if you figure that out, it works out to approximately 500 articles each year.  In the early days of this site, the blog had 2 or 3 articles per day.  In recent years, I publish one article per day on the site, but I do it every single day.

Now, when I was analyzing the ad earnings of this site, I used the month of July for my studies and analysis.  I found that during the month of July 2012, more than 770 articles on the site produced some earnings.  Earnings ranged from a high of about $150 earnings on a single article, down to some articles earning as little as 1 cent in the month.  So, the range is wide.  Articles as old as 6 years old earned some money.  Of course, the new articles on the site earned the most money, as they were the most viewed articles on the site.  But, some very old articles earned some significant amounts too.

What is a significant amount?

OK, so let’s say that you have an article on your site, and that article was written 5 years ago.  How much does that article need to earn in order to be considered a “significant earner?”  Well, it depends on what you personally consider a significant amount.  Let’s say that the article earns $5 in a month.  Sounds like that’s not very much, who would go to the trouble of writing an article for $5 a month?  Well, let’s consider that.  The fact is, when you first wrote the article, it earned significantly more because it was fresh and all of your regular readers went and read it.  After 5 years on the site, not many people will be reading it, to be honest.  If it is earning you $5 per month after 5 years, I consider that to be an excellent… or significant earner.  Let’s see why:

Let’s just say that the article has earned the same $5 per month over the life of the article, even when it was first published when it should have been earning significantly more than now.  If the article has been pulling in $5 per month for 5 years, that means that it is earning, on average, $60 per year, or about $300 over the life of the article.  $300 over 5 years is not much, I know you are thinking that.  Think about this, though…  if you have 700+ articles that are earning you money every month, and each article is earning you $5 per month, month after month, year after year… well, that is indeed nice money.  Seven hundred articles earning $5 per month means that you are bringing in $3,500 per month from the site (assuming that ad revenue is your only income stream from the site, which it need not be).  Sound a little better?  I think it does.

How can a blog be considered passive?

I know that some are thinking that a blog is not passive income because you have to keep working on it to keep it going.  Remember the definition, though.. for passive income, you still need to do a little work to maintain the flow of the income.  The truth is that if you take 5 years or more to build up the site and make the site an authoritative site in its niche, you don’t have to keep working at the same level to maintain the income.  You establish yourself in the search engines, and in the minds of those interested in the subject, and after you have thousands of articles already on the site, maybe you just need to publish one new article per week or even one per month.  Fact is, you can even stop publishing new material altogether and still maintain significant income for years to come.  I recommend maintaining some schedule for publishing new content, though, even one article per month.  In the interim, you can re-publish article that has already been on the site.  If you have 3,000 or 5,000 articles on the site, I can guarantee you that very few (if any) readers have seen all of the articles or even a majority of the articles. Another truth is that you don’t make money off of the “regular” readers anyway.  It is the new people, the ones that find you on a search engine, and just come to check out one article or a few articles, those are the people that patronize your ads, and bring you income.

So, can you make a living with passive income?  You sure can.  I do, for the most part.  Yeah, I have some income that requires a fair amount of work, but I have a lot of income that is very passive, because I have already done the work, and the money rolls in from my previous efforts.  You can do it too.  A lot of people, when they see that an article is only bringing them in $5 per month.. well, they figure it just is not worth it for $5. But, think about what happens over time when you have 3,000 or 4,000 articles that are bringing in $5 each month.  When you have that, you have something special, something significant.  Something YOU built, and something that will produce income for you over a significant amount of time.

Remember, those early years when you are doing all of the hard work and making little money will pay off in the long run, but only if you stick with it.