I hate to break it to you, but it’s pretty rare to set up an online business that spits out boatloads of passive income indefinitely. Most of my online income is not passive at all… only a portion of it is.
Like many people, when I started with niche sites, I thought it would be a piece of cake. Write content, publish it and watch the money roll in. Was I ever wrong.
Some say you need to invest 10,000 hours to master something. Well, I’m sure I’m approaching 10,000 hours of work in building profitable niche sites. I haven’t mastered it, but at least I’m earning a living.
While I earn a decent living online, the lion’s share of it is NOT passive. I work Monday to Friday 8:30 am to 4 pm. In the evenings I check email and check out internet marketing blogs. Once in a while I work weekends.
The big picture is that I’m a blog publisher. As publisher, I’m very particular how everything is run so I’m involved day-to-day. I plan content, instruct my outsourcing team, review content before publishing, manage affiliate links, manage paid ad campaigns, test ads, write the email newsletter, make videos… on and on and on.
Also, I’m the sole writer for this blog, Fat Stacks, which takes time too.
Needless to say, being a website publisher is far from passive.
Nevertheless, while I work reasonably hard, I have generated one stream of nearly perfect passive income in the amount of $62,000 USD per year (and growing). Next year it should approach $70,000. I haven’t set goals beyond that.
The following are 2 quarterly commission checks ( 6 months’ commissions). Notice they incrementally increase over time. I only reveal revenue to demonstrate I’m not making this stuff up… after all I’m providing business information. If you gave your money to an investment broker, you’d want to know their track record too.
Q2 2014 ( 3 months’ commission)
Q3 2014 (3 months’ commission)
How do I generate $62,000 in passive income online?
4 words: Recurring affiliate commission software. Promote some kind of recurring affiliate commission software as an affiliate.
I’m not going to give you some B.S. list of online business models suggesting they’re passive. I’ve tried (and continue to do) most and many online business models. I can tell you most aren’t passive.
Watch the Video (or Read it Below):
Most online models are not 100% passive:
You name it: SEO, email marketing, product creation, niche websites, consulting… I’ve done it all (except physical product e-commerce). In fact, I do all of that now. None of it generates truly passive income.
SEO: While you can take time off with ranked pages that earn, you do need to continue building backlinks, rank new pages, carefully monitor everything, test conversion… and deal with pages that lose rankings. I’m not saying you can’t earn a living with SEO; I’m just saying you can’t rank a page and go sit on the beach for 24 months (usually).
Email Marketing: You need to continue attracting new leads, publish the newsletter, network with JV’s, test conversion rates… it’s not a pure set-it and forget-it model. Again, when done well, it’s a fantastic business model, but it’s not truly passive.
Product creation: Just like email marketing, you need traffic, leads, conversions, JV’s, new products, etc. It requires an ongoing effort.
Niche website publishing: This require ongoing content, traffic generation, email marketing, SEO… it’s a lot of work (but work I love).
Consulting: Consulting is a lot of fun because I enjoy chatting with people in this lonely business and teaching something I know, but it’s essentially trading time for dollars.
Again, I like all of the above business models. They have passive elements. You can take time off and still earn. Unless you have a bank full of cash, you really can’t take a year off and expect to earn as much as when working. That’s all I’m saying.
The one exception that’s proven to be a growing and consistent source of passive income is successfully promoting recurring commission software. It’s not 100% passive, but the above revenue was earned with only 10 hours of work in 2014 (I didn’t list all my checks for 2014… I figured 2 would make the point).
4 reasons promoting recurring commission software is a nearly perfect source of passive income are as follows:
1. Quality software sells very well to its target audience. In other words, it actually converts.
2. Cloud software (which is the type that usually pays recurring commissions) has a very high stick rate. This means once a customer signs up and implements it, they remain a customer for many months; often years. This is very important. It’s also why I recommend promoting software vs. recurring commission membership sites. Most info-based recurring products have a low stick rate.
3. Some software costs $100 or more per month. Even a 30% commission ads up.
4. If you promote the right software, there’s very little competition. That said, some recurring software products have insane competition (think email autoresponders and hosting services. I’d avoid these two… there are better options).
You won’t get rich overnight
I make about 5 to 10 sales per month. My commission is $30 per sale. I sure didn’t rack up the revenue all that fast in the beginning, but I stuck with it and over time it’s now accumulated to generate a very tidy income stream.
Because the stick rate is high, most of those new sales contribute to growing passive income.
Is it really passive? Don’t you have to generate new sales?
Over the last 12 months, I put in about 10 hours of work. All of that time was setting up and participating in a webinar with the merchant. Other than that, my sales funnel runs on autopilot.
That said, I should invest at least 2 hours per month by publishing one blog post. I just haven’t gotten around to it this year (2014).
What is my sales funnel?
It consists of 2 blogs and one email newsletter. The email newsletter has 30 pre-scheduled email newsletters that promote the software.
The blogs receive about 120 visitors daily from the search engines attracting about 3 to 12 new subscribers per day. That’s not very much traffic or leads at all, which goes to show the effectiveness of promoting a high quality software product to the right audience (my blogs are very narrow in topic so most visitors are the software’s target audience).
I haven’t posted new content in over 1 year (I should add some more mind you).
Why don’t I just focus on this recurring commission business model and ditch the other time-consuming niche blogs?
I actually really enjoy the work involved in publishing niche blogs. Frankly, I’m not sure what I would do with all my time. Besides, while promoting recurring commission software is lucrative, I earn far more from my other niche blogs. In a nutshell, I enjoy what I do. I also believe having more than one income stream is smart. No income stream is bullet-proof.
Couldn’t the blog and email newsletter method work with non-recurring commissions?
Sure, it could and it would produce passive income. However, you wouldn’t enjoy the recurring and growing revenue based on past effort.
That said, if you set this up properly and promoted a high commission product, even if it’s a one-time payment per sale, you could do pretty well. However, I really like the recurring aspect because it grows and grows and grows.
Pitfalls to be aware of:
1. If the company I promote goes bankrupt, I lose that revenue stream. This is a hazard of any affiliate arrangement.
2. If a new product hits the market that is far superior to the one I promote, my referrals may stop being customers in droves.
3. Important: you need to be patient with this model. It takes time to generate sales and set up the funnel. This is not a fast passive income model at all.
What niches and software do I promote?
Sorry, I’m not going to invite competition.
But I will tell you this, there are many software products that charge users every month and pay decent commissions monthly for the length of the subscriber. You just have to find them. Actually, I suggest you find one and focus on promoting that one product.
Dig around. These days, with cloud software being the norm, there are literally thousands of options you can choose from. Once you find a good cloud software product that pays recurring commissions, set up a sales funnel that serves the target customer base. It’s that simple.
Are you interested in learning more?
I sell an in-depth guide explaining in precise detail how I went about setting up this fantastic passive revenue stream. Against my better judgement, I share more than a dozen niches in the guide which can work (which makes it pretty easy to find the software to promote).
I also set out all the content you need to publish on the blog up front that will not only attract email subscribers, but will promote other products.
Most importantly, I explain precisely how to promote the software (it’s pretty much the same in any niche for any type of recurring commission software).
I call it my Passive Income Guide – you can check it out here.
Jon runs the place around here. He pontificates about launching and growing online publishing businesses, aka blogs that make a few bucks. His pride and joy is the email newsletter he publishes that’s “the best blogging email newsletter around.”
Hyperbole? Maybe, but go check it out to see what some readers say.
In all seriousness, Jon is the founder and owner of a digital media company that publishes a variety of web properties visited and beloved by millions of readers monthly. Fatstacks is where he shares a glimpse into his digital publishing business.