“[The tree] is slow in coming up, is there to give
Your grandsons shade in later years, long hence”
Virgil, Georgics II:58
I still remember waking up in a cold sweat.
2 years ago, I had an epiphany. Instead of freelancing and earning money by the hour, what if I figured out a way to earn money while i slept? If I could build something that would earn me money, constantly, I would finally
I decided then and there that I would develop a passive income, enough to allow me to travel and live without HAVING to work. I wanted to do better than the 4 hour workweek—I wanted the ZERO hour workweek.
Note: The zero hour workweek doesn’t mean I actually only work zero hours per week. It means that if I WERE to work zero hours a week, I would still earn money. For example, when I lived in the wilderness in October, 2011, I had no access to any electronics for 28 days. When I returned home, a full month’s salary was waiting for me in my PayPal account. However, now that I’m back in civilization, I’m writing this blog and working on projects that interest me. Passion drives my work, not a desire for money.
Now, I want to give you an overview of passive income and the strategies that I used to achieve it.
My first passive income
I still remember the day when I received my first sample copy of Game Programming for Teens, my first published book. Below is a video from my first segment on TechTV’s Call For Help, which became a monthly segment.
I was 14 years old, and I had just gotten published! In the coming month, it turned out to be a thrilling success–my book became an international bestseller, was translated into several languages, and it reached the top 200 books on Amazon.
Since 2004, I’ve continued to earn royalties on the sale of that book. I learned my lesson well: build a product that earns forever, not a one-time commission.
Consider the average employee. He goes into work daily, works for his 4-8 hour shift, and earns money for every hour he spends at the office. An employee trades time for money. No matter how highly salaried he might be: at the end of the day, without spending time working, he’d earn no money.
I, on the other hand, had built a product, something that, once created, would continue to sell itself. The fundamental idea of passive income is to build something that will be evergreen; that is, something that will continue to earn money without requiring time.
Building a business is a great example. Take a restaurant owner, for example. He spends years building an excellent reputation and clientele. He hires other employees to take over the basic duties. He frees up his time by hiring new managers, who take over the administrative duties. If he is really successful, he franchises out his business so others pay him a cut without him doing any real work other than providing a name.
When my epiphany hit in 2008, I decided to take that passive ideology online. i waned to figure out a way to make money constantly through evergreen content.
Let’s look at some specific methodologies of building passive income generators.
Online Passive Income Strategies
I. Ad Revenue via Search Engine Optimization (SEO)
My first idea was to figure out a way to write articles online that would rank highly in Google’s search results. I started learning how at The Keyword Academy (affiliate link) which taught me a TON about how to build niche sites and articles. I hired a team to write hundreds of articles on niche topics and posting them on a variety of websites, trying to rank highly on Google.
The strategy worked amazingly well. I picked perennial topics that wouldn’t go out of fashion during a specific season or over time, such as how-to articles on repairing your home or reviews of kitchen products—things that will always be searched for.
I would find potential keywords by using a combination of tools. Using the Google Keywords tool, I would generate a list of thousands of potential words. Using Excel and an algorithm designed to find the value of the keyword, I would decide keywords based on two criteria, which I creatively call The Keyword Monthly Value Test.
Does the article make, passively, at least $20/mo if ranked in the top 4 results on Google?
Does the article, based on the competition of previously written articles, stand a chance to rank on the front page?
Below, I’m pasting a video from one of my old master classes, which shows you step by step how I generated keywords and valued them. This video is a nice $25 value, free for you Note—the Google Algorithm has changed a bit in the meantime, so I don’t write hundreds of small articles anymore. But, this video shows you exactly how to value any keyword, and that is data you can use on any keyword for any web site you already have or any business you want to advertise.
Since 2008, I still make money daily from those articles, written three or more years ago. Granted, Google has changed their algorithm so I make quite a bit less than before, and it is difficult to jump in this system today. The workflow is simple:The AdSense Passive Strategy
The goal is to choose an underserved niche, and actually build a website that provides value. Here’s an example: One friend, after subscribing to my email list, joined The Keyword Academy. He then registered and built Costumesery, which made him a bit of money during the Halloween season. He then built a team of outsourcers who wrote, edited, and published his content—now he has a network of 10 blogs, all written by outsourced employees. This method takes a long time to set up and get going, but it provides a nice consistent passive source of income. The downside is that it really does take a lot of work to set up, and you never know if a keyword will be successful until it actually is: you need to take the ‘ready-fire-aim’ approach of attacking numerous niches and keywords until you find something that sticks. To the naysayers who say that SEO or article writing is a scam. Yes, it’s true, there are tons of crappy AdSense optimized pages that are out there just to attract clicks. However, these sites fade with every Google update. The kind of approach that I’m talking about revolves around building niche Web sites with GOOD content. You want to provide value. Like any business, you attract repeat clicks and loyal visitors by actually building good content and interacting with potential customers. Then, the web sites that seem to be performing well, you can focus into a real business. Imagine, for example, you go to Flippa.com and buy a ranking domain about home repair. There are dozens of articles already prewritten about home repair, how to install shower kits, and whatever info. Then, you improve the content and backlink the site, improving its ranking on Google. Now, you start getting lots of visitors, 100-200 per day. You put up an email subscribe form and start emailing them content. You start actually surveying customers and seeing what they want. Now, you can actually build a business around these customers—you could buy and sell items they are looking for, and use drop-shipping to provide them with products. One of my students started importing toilets from China and reselling them via his domain, making quite a bit of money in the meanwhile. Ok, so this is a basic overview about building good niche Websites with SEO. If you’re interested in more info about this topic, sign up at The Keyword Academy.
II. Affiliate Income via SEO or Search Engine Marketing (SEM)
Affiliate income in the online world is like a party promoter in the real world: money is made by getting the word out. An affiliate marketer makes money when they refer a sale to someone else. So what’s a good example of an affiliate market? Amazon.com is the world’s largest affiliate network: just go to associates.amazon.com, and you’ll earn 4-8% for any sale you refer. When you see Amazon product ads on sites that you browse, know that the owner is earning money every time someone clicks the ad and buys something. In the affiliate method, your goal is to match people with the products and services they desire. There are several affiliate networks that help marketers find out about affiliate programs. My favorite is NeverBlue.com, which has high class merchants such as Netflix, eBay, an eHarmony. A couple other good networks you might check out are Commission Junction and ClickBank. So once you become an affiliate, how do you actually convince a potential consumer to buy the product? This can be done in several ways. First, you can do it with SEO, which I spoke about in the last section. Rather than building websites to garner ad-clicks, you might instead substitute the ads on your site for affiliate links. Many of the SEO sites I built recommend relevant Amazon products, and each time someone buys something, I earn money. You can also try Search Engine or Social Media Marketing. In this method, YOU buy the ads (on Google, or Facebook) and try to redirect people to your site or to a related product page. If you hit on the write ad/product combination, you can simply buy ads automatically and repeatedly and earn a consistent income. Buying ads is easy on Google Adwords or on Facebook. I love you, reader. Like, a lot. I want you to understand what I’m talking about, so below I’ve pasted a video from my Online Marketing Master Class. This video, a $25 value, shows you how I buy ads to landing pages, in order to bring in affiliate income.
There are lots of methods for turning affiliate income passive—email lists, permission marketing, brand building, etc—but they are out of the scope of this article. I teach these methods in my Online Marketing Master Class, which is about to reopen for sale…
One last method to building passive affiliate income is via affiliate subscription services. Some merchants charge a monthly subscription for a service, and if you successfully affiliate one of these products, you can earn monthly residuals for the lifetime of the customer. I’ve used this method to earn $1,000/month for over a year from a single email (for a product I truly believed in and recommended).
III. Building Your Own Product
One excellent way to build passive income is to develop your own information product. If you build an excellent product and market it well, you can convince others to purchase it.
An information product is distributed online via video, audio, or text. If you build a subscription product, you can earn monthly income from your customers. You can also attempt to find affiliates who will do the marketing for you!
Check out Commission Junction and ClickBank to see examples of products that have been built by people just like you.
Your product doesn’t have to be online! You could build a drop shipping business. When customers buy a physical product from your website, this automatically starts a process where your supplier ships the product to the customer, without you being involved.
I’ve talked about several ways to build businesses online in this article. Note: No passive income business is easy. Every business model requires a lot of setup time and often an investment before it can be profitable. If you are interested in learning how to build an online business, check out my Online Marketing Master Class, where I teach these methods from the ground up.