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Saturday, January 07, 2006

Earning Passive Income

The idea of passive income is made popular by [I am not sure]. I heard of it since 1997, the year I started having exposure to MLM (Multi Level Marketing). Frankly speaking, I never actually appreciate it until now, when I realized that having no backup incomes is really scary.

I have couple of debts at hands (Credit cards, cars and some angel fundings). Having no bonuses for the last 4 years doesn't give me the advantage of clearing debts seamlessly. I have to do it slowly and prudently.

Robert Kiyosaki talks about passive income too, and in a very practical manner. You need to have money to earn passive incomer; the key is to strike balance. Of balance will be disastrous.

Then the Internet proved to be a good platform for passive income as well. Proliferation of online MLM proves that I am not alone or genius to have thought about this. Yeah, of course it is simple.

Global MLM Money Machine
88 MLM Biz
The Power Matrics

I have been thinking.. with computing skills in my hands, I could probably come out with some solutions like creating an online accounting system, doing web sites like friendsters or aggregators like Technorati. However, the onus to such ventures is that it can NOT be totally passive because commitment is required.

Simple Accounting Software:

For instance, if I develop a simple program for accounting purposes, people will not buy unless I demonstrate commitment. You got to keep adding new features and competiting with competitors. Thus, this idea is out of the answer, even though it is grey, for the reason that there is no single company or person in this world who has ever developed a software or solution based on hindsight and managed to reap a big bucks without putting further efforts to it, not even Microsoft. To reasons are basically:

1. You are not a god or genius who knows everything about a subject. Even a PhD has limited knowledge.
2. If you don't know everything about a subject, you have to keep learning.

Theoritcally, it is possible to develop a perfect software for a given domain of application (subject) , however the problem is the knowledge required to cover all aspects. Otherwise, it will be buggy.

Thus, selling software is not going to be a passive income business, it should be a big income business.

Content Management System
Content Management System
P.O.S System
Online Games
Instant IT
Google Pack

Friendsters, Linkedin and Technorati:

And if you are thinking about web sites like friendster, linkedin and technorati, same problem applies, you have to be there to maintain and provide continuous development.

Contents Provider:

After pondering for some times, painfully I accepted the fact that doing those things don't promise passive income. It may bring income but not a passive one.

Thus, in my quest to chase for passive income, I can NOT lie to myself to pretend that such bottom-line thoughts are not real and thus try to beat the odd, that is naive I think.

I conceded that content provider is the only way to do that. For instance, if you start a web portal, aggregating informations from various sources will be it a contents provider. Now, let's assume that a web portal is like a web site to many (actually it is not merely that, Google, Yahoo and MSN run a cluster of systems), the minimum cost for doing that is according to the following links; USD 133.85 (RM 481.86).

Affiliate marketing too expensive ? - Dunce Money.

But as the matter of facts, I feel that weblog is the most cost-efficient channel. What you need to do is just to sign up a free account and include adsense to it. Your job is then to write whatever you want and invite readers. Last month, my income from adsense is around USD 11 (RM 39.6), not bad and it can be considered passive because blogs are written during free time.

In my summary blog about 2005 summary, I mentioned that to earn a good RM 2k (enough for my basic expenses for a bachelor), I need to attract like 125K visitors per month to earn from per-impression basis. Currently, full time blogger Liewcf is probably able to do that, he is attracting around 80K visitors per month to his blog.

The right thing to do?

Ok, thus instead of thinking about being high-tech like doing technorati or another search engine like where heavy commitments are required. It is appropriate that to earn passive income, why not figure out a way to attract more people to your contents. Then we can think about doing SEO and etc, but the real problems are two things:

1. What does people want to read or view ?
2. How good is your contents ?

People want contents to be of the following things(based on my experience):
1. News ( If becoming reporter, then it is not passive)
2. Analysis, statistic and research. (for business purposes)
3. Leisure (Entertainment, porns, images and videos)
4. Sharing (no big impact)

Weblogs are information sharers. I don't forsee anyone would be serious with my blog when making important decision is the priority. I may be writting something about Microsoft or Linux but I will still need to link back to the principals. And I realized that these days, with explosion of blogs from all over, there is no time to read all of them, even those in your favourite and crony lists. People won't read all of them. period.

Take liewcf blog, even though the traffic coming to it is impressive, but the duration of time spent on reading the contents is only less than 2 minutes on average. Same goes for this blog, people are not actually reading 90% of the time. Unless they are critics or etc.

Contents is King - Graphical:
Therefore, I still think that the best contents would be the brainless content, such as images of pretty faces or celebrities, after all, Google confirmed that the biggest search of 2005 are things like Janet Jackson, Brad Pitt and Angelina Jolie. Thus, why doubt it ?

Now, we have to think of producing graphical centric contents, as addon to our writtings. Have you read through this part already ? (nevermind)

I have always got this idea, hope to make it work, that if I could translate main ideas of a blog into pictorial. Something like cartoons which is work-intensive. It has to come with some automation. Right now I am experimenting with some technologies like Flash and also Java Graphics.

If people like seeing pictures to eradicate boredom and for enlightenment, having more graphical contents should deliver the 125K visitors objective.


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Anonymous said...

Hi Brandon, whatever you do, you still need to have your effort in it intially. The different is whether your effort will eventually lead to passive income. For example, even MLM, your passive income will only come in when you have certain agents under you. As in Robert books, the main different is whether you are building a business that can be run by itself after certain time - then it will become your passive income. It can be the software program, or a sundry shop - just make sure that it grow and you can hand it over to someone to run it for you later.


Brandon Teoh said...

Dear Stanley,

ok. thanks. noted.

I guess there is no real passive income, probably just comfortable side income.

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