Back in June, I made a promise to myself to develop a through understanding of how to make passive income. It turns out that it’s much harder than I had expected.

I was inspired by some books that I read at the time to really figure everything out and start making passive income for myself. The Rich Dad Poor Dad books made the impression that passive income was really the best way to “get out of the rat race” and really become rich. Then the 4 hour workweek gave me the impression that starting a “muse” was just a simple matter of doing some quick testing and then launch a website. The devil is in the details. It turns out that while making $1 might not be that hard, getting to the $100/day point takes a while, and there are a lot of subtleties.

As I’ve found in my research about making passive income online, there are many different approaches. Here’s a short list:

1. Find a manufacturer or wholesaler and open a storefront.
2. Become an affiliate for someone else’s info products (ClickBank)
3. Make money with Adsense.
• have a few good quality sites that you write content for and drive traffic to them
• use a program to generate hundreds of websites and drive traffic to them.
4. Find other advertisers out there that pay on a action rather than a click.
5. Sell text links on your site.
6. Create a product and put it on Clickbank (or another affiliate marketplace) for other people to sell

That’s just a few different approaches. Again the devil is in the details. Can you consider all these to generate truly passive income? Probably not. Maintaining a good quality website or sites is not always easy. If you create a product how do you know if it will sell? How can you generate the traffic necessary to make money on advertising?

Tim Ferriss’ book “4 hour workweek” was great motivation but the truth is that the approach to testing that he advises in the book takes a huge amount of time. I tried that approach. It takes a long time to develop a good sales letter. The first draft is never going to convert very well, especially if you don’t have a background in copywriting. You need hundreds of people to visit the site in order to quantify the conversion rates, and even more if you want to optimize by testing different versions. That is the hole in the Tim Ferriss approach.

Then I came across the 30 day challenge. I learned a lot about the importance of keyword research, and optimizing pages for Google. Ed Dale, and Dan Raine have a good understanding of how to structure the whole approach, and with very little effort get started on something that has a real chance at making money.

There are a lot of subtleties to making passive income online. With enough work, the pieces will eventually come together.

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This entry was posted on Tuesday, October 2nd, 2007 at 7:15 pm and is filed under Business. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.