For quite some time, I have been trying to build blogs that would provide for steady income. Some, I abandoned after a single post, others I managed to build to an OK size.
While I am still in the process of building “the blog” that will provide for an equivalent of a full-time income, my view on the subject of blogging has changed a lot over the years. Among other things, as I learned and actually started doing things, my view on the “passiveness” of blogs has changed completely.
Having recently seen the tweet below by Miles Beckler, I decided to write down my own thoughts on the nature of online income here.
Every time I see a ‘Passive Income Furu’ publish another video…
Or another blog post.
Or send another email.
I wonder if it is just me who sees through their bold-faced lies?
They are ACTIVELY marketing, week in & week out.
Seems unethical to me.
— Miles Beckler (@milesbeckler) May 5, 2020
Passive Income Exists, But…
…it’s not something that can be derived from building a blog or other similar business directly. At least not if you are looking for something that will last for decades.
You definitely can buy a website for, let’s say $30,000, and keep making a thousand dollars or so for a while, even for a few years, without doing any work on the site if all goes well. You can similarly build a website from scratch up to a certain point, and then continue enjoying the cashflow from the website for a certain amount of time.
However, in both cases, you will start facing more and more competition over time and your content will get more and more outdated if you don’t put in any work. With those two combined, your traffic and earnings will start to deteriorate.
On top of that, in the case of building a blog from scratch, it’s hard to call it a passive income in the first place considering the amount of time and effort required to do so.
That said, if you want truly passive income, you can put your money into bonds or other similar instruments. While you would still need to spend some time choosing the right ones to put money in, it is fair to say the returns the invested money would make you would be passive.
Compared to starting a business like a blog, though, the return on investment would be very low. As such, you would need a significant principal to make any meaningful amount of money in the short term.
As an example, let’s take the popular (although not necessarily accurate) “four percent rule” which says you can withdraw four percent of your portfolio safely each year.
That would mean you would need a million dollars in investments to make $40,000 a year passively. To make $100,000 a year, you would need $2.5 million in investments using that rule.
Chances are, though, that if you are reading this, you are looking to make similar amounts of money but without the hefty principal.
While, unfortunately, you cannot do that truly passively, the Internet has allowed for a different type of income. It has allowed for a type that allows for more freedom than a traditional job and also has the potential to earn more. It has allowed for income that is asynchronous, leveraged, and compounding.
These three properties combined make an online income, especially that from blogs and other similar endeavors, appear passive to someone that is not involved in the business.
However, the reality couldn’t be further from that appearance…
Asynchronous: You Can Make Money While You Sleep, But…
While not unique to online business, the fact that income from blogs and similar businesses is asynchronous–that it isn’t earned at the time you put in the work–is what makes it really attractive to me.
For a very simple reason.
It’s what allows bloggers to watch a movie on Monday afternoon, travel for pleasure on Wednesday, or go out for a walk when not feeling productive rather than sitting behind the desk scrolling through Facebook and pretending to work.
Being able to do that, however, doesn’t mean that you don’t have to work. And, that is the part which, as Miles pointed out in his tweet, many “make money online gurus” misrepresent.
Instead, it means that you can work whenever (and wherever) you want. In other words, you don’t have to work a set amount of hours or during a set period of time like you would have to at a normal job. For large parts, your schedule is flexible.
What matters instead is that you finish things that need to get done and that you finish them in a timely manner.
Regardless of whether you work on those things at 2 AM, on a Saturday, or on a Monday morning. Regardless of whether it takes you an hour or four hours to do so. Regardless of whether you work on those things from the comfort of your bed, from your home office, or from a co-working space.
In other words, earning income asynchronously doesn’t mean you don’t have to work. Instead, it means you can work whenever you want since your income is not directly tied to your inputs. You can frontload the work.
On a larger scale, the asynchronousness also allows you to take time off for longer periods of time without your earnings being affected immediately.
It allows you to sit on a beach and sip margaritas (if that’s your thing…) for a week or two without having to worry about making money. It doesn’t allow you to do so indefinitely, though.
All that flexibility I talk about above comes with an obvious flipside, though.
Just as earning asynchronous income means you don’t have to work at the time the money gets to you, it also means that you won’t get money at the time you actually put in the hours.
It means that you have to “work hard now to reap the benefits later.”
Leveraged: You Can Scale Easier Than You Would Offline
Leverage is what, according to the ancient Greek mathematician Archimedes, has the ability to move the earth. It is also what, to an extent, caused the 2008 financial crisis. And, it is what makes online businesses like blogs attractive.
In the traditional financial sense, leverage can be dangerous.
You could, for example, leverage yourself by buying $2,000 worth of stocks using $1,000 of your own money and $1,000 of borrowed money.
If the stock went up 10%, you would gain $200 instead of $100 which you would have gained if you only used your own money without borrowing any. While that’s great, if the stock went down 50% instead, you would lose $1,000 or your full principal.
Luckily, the leverage that the Internet provides when building content businesses has very few downsides and a lot of upsides.
While there are multiple ways to look at this, below are the two types of leverage that the Internet provides and that I believe are the most important.
First, in the case of organic traffic, in case you are getting Google to bring people to your site for example, a single piece of content you produce can rank for multiple keywords.
In other words, even if you write an article aimed at people searching for, let’s say, “types of pens,” Google will also potentially send you visitors that are searching for “fountain pen vs ballpoint pen” and many other related phrases.
To me, that’s equivalent to being able to have the same magazine on a store’s shelf with multiple different covers, each attracting a similar but different audience. An audience that wouldn’t have picked up your magazine if it was only available with one type of cover even if they would have liked the content that was inside the magazine, simply because if wouldn’t have caught their attention.
Second, the Internet lets you reach a global audience at a very little cost. That’s true for the content you publish, but also for the people that you hire.
To go back to the magazine example, with an online content business, there are virtually no printing and shipping costs. There is also no need to find distributors to have your online content consumed by people all over your home country and elsewhere. Similarly, your job ads can reach audiences around the world, helping you both minimize your costs and reach the largest possible talent pool.
Compounding: Over Time, You Can Earn Disproportionate Amounts of Money Compared to the Time You Put In
Lastly, unlike trading time for money directly in a regular job, blogs that are driven by organic traffic and other such businesses allow your income to compound. They allow you to work on things that will not bring you income once but that will bring income consistently for some period of time.
Because of that, you can stack various income sources. You can do so by starting and running multiple sites, but you can also do so by simply having more content on a single site or YouTube channel.
To demonstrate, consider a part-time fast-food job. If you work at McDonald’s from 8 AM until noon every day, then there is no way you could also be making money through a part-time job at Burger King between 8 AM and noon.
However, working on online businesses like blogs does allow that. It allows you to work on one blog post while another blog post that you wrote in the past is making you money. In other words, each blog post is a small income-producing asset in itself.
What that means is that when you are working on your blog, you are not working to earn money. Instead, you are working to build an asset (or assets) that will make money for you.
That’s why each hour you work can bring you income for weeks, months, or even years. That’s why you can write an article in a few hours and under the right circumstances have it earn dozens or even hundreds of dollars each month for a year or more.
On top of that, if you “play your cards right,” those mini-assets (blog posts, YouTube videos, etc.) will support each other in becoming stronger than they would be by themselves.
To go back to the example of “types of pens,” chances are that you will get more visits to that article if you also write an article about “types of pencils,” “best pens,” and “advantages of fountain pens.” That’s because having a “cluster” of content around the same topic will likely increase your authority.
That, in turn, will increase the chances of all of those posts showing up higher on the search results pages. That, of course, will bring more traffic and more revenues.
So, when building online businesses, not only can you stack multiple income-producing “mini-assets,” but you can also stack them in such a way that a group of them will perform better collectively than the sum of its parts.
So, Blogging Income Is By No Means Passive, But…
…it’s still well-worth pursuing if you do not mind working hard.
While building an online asset like a blog will not make you rich quick, it will over time–with a lot of hours put in, and with some luck–allow you to build a business around your lifestyle rather than the other way around.
To do so, however, you have to throw away the idea of chasing passive income and instead start looking at it as building a proper business that requires investment, whether in the form of time or money. You’ll have to do so simply because that is what blogs that appear passive are. They are well-designed businesses with proper systems in place.