Passive income is income you make even when you aren’t working. Most people are familiar with earning interest on a savings account – that is passive income because you earn interest regardless of what you are doing. The internet created a whole new industry around passive income. People discovered that if you create a website or service on line it is possible to earn income outside of a regular job or making investments.


Kinds of Passive Income

Almost any business that is web based has some kind of passive income built in. This could be advertising, selling products or services or the aforementioned membership. Each of these styles of income has its own benefits and drawbacks.  Advertising is a great way to get started as you don’t generally have to do anything except decide where to put the ads. Google Adsense is the #1 advertiser in this area and they have many different plug-ins and codes that you simply cut and paste into the spot you want them. Google then reads your website and puts ads in that it thinks people who visit your site will be interested in.

Selling products or services is often more profitable than simple ads, but it also requires a bit more work. You need to choose products your visitors will be interested in and make sure they are quality products. It is best if you have personally used them so you can make an honest recommendation. This is called affiliate marketing and many people make their living from this style of passive income. Another option is to create your own product and sell it. An ebook is one example. If you are already an expert in an area and can create an electronic product you can sell it directly to your visitors and take all of the profit.

Membership websites are the best way to make passive income, but also the hardest to do. If you want someone to pay to be a member of your website you need to provide quality information that is worth buying. It will take time to gain a following of people who want access to your website. Once you have started to gain momentum you can build the site to provide a full time income. Again this will take time and effort in marketing and constantly adding new information to the site to keep it up to date and relevant.

Most online entrepreneurs use a combination of these passive income options. This combination will provide the best income over a long period of time.


How Can I Create Passive Income?

Creating passive income online takes time and effort. I recommend reading books such as the 4 hour Work Week or Guerilla Marketing. I have followed people like Pat Flynn of Smart Passive Income for several years and Ryan Lee of Founder Fly is another great resource.

One online resource that is the single most valuable site I have ever found is  This is kind of an Angie’s List for making money online. They have a free membership and you can find the best mentors/products on the web.

Creating an income from an online business is simple, but not easy. It takes work over time. While you can make a lot of money much faster online than in any other way, it still takes work. It is definitely worth the effort though as you can reduce your 40 hour week to a 4 hour work week.