Internet marketing is NOT passive income

“Build a passive income business on the internet.”
“Making passive income online, one website at a time.”
“Blah blah blog teaches you step-by-step how to create online passive income streams with information product and affiliate…”

…and so on.

These are near-exact quotations taken from search engine result description text, in response to a search for “passive income.” These quotations can be found without even going into the websites. The quotations have been ever so slightly tweaked, to protect the guilty.

The problem is they are painting a false picture of what is “passive income.” When you are blogging three times a week, cranking out hundreds of products to see what sticks, attending networking events to hype your brand, attending seminars and watching webinars to keep up with this week’s current techniques, and constantly fighting to defend your political capital against would-be detractors who threaten your income stream…it ain’t passive.


How passive income became a sham

Somehow this idea of “passive income” became a buzzword, sometime after Robert Kiyosaki popularized his “Rich Dad, Poor Dad” line of books (which he in turn ripped off from “Your Money or Your Life” by Vicki Robin and Joe Dominguez, but I digress), and somewhere along the way, “passive income” changed its definition from payouts of U.S. Treasuries to stock dividends, to real estate cashflow, to book/product royalties to this notion that anyone can make money by promoting “Make passive income today!” websites which sell expensive products to gullible people. And the real smart ones are those who are teaching the “Make passive income today!” site authors selected tricks of the trade for truly exorbitant fees.

Internet marketing does not result in profit for most people who attempt it. This seemingly little-known fact is conveniently not mentioned by the sites selling $50-$5,000 products on how to accumulate internet riches. The quest for passive income has become a high-tech pyramid scheme. It’s ridiculous, and I strongly advise you to not buy into the hype. Instead, consider this:

True passive income does not require effort on your part.

I want to repeat this last statement:

True passive income does not require effort on your part.

That is… once you have selected your investments. Some effort is required, in the beginning to select investments to procure. But, after that decision is made, passive income is passive: it’s automatic, like clockwork. No effort is required on your behalf!

Here is a chart which lists some false prophecy passive income vehicles, along with some real passive income vehicles:

Fake passive income!=Real passive income
Website developmentU.S. Treasuries
SEO marketingDividend-paying stocks
Affiliate marketingCorporate bonds
BloggingMunicipal bonds
Twitter followersCashflow-positive real estate
Running a scalable businessOwning a cashflow-positive business
managed by somebody else
Prolific product creationSong and book royalties
Starting a huge Web 3.0 siteInvention royalties

Savings accounts will pay out monthly, income stocks will pay out quarterly, and every other legitimate form of passive income will pay out according to the “get rich slowly” principle, which is much more predictable and in alignment with integrity than the “get rich quick” websites want you to believe as you are digging for your credit card.

To be fair, I have been inspired by Rich Dad, Poor Dad. And also by Your Money or Your Life, and dozens of other personal finance books and articles that have been published. It has become a passion of mine, and that is why I am able to write about these matters with such enthusiasm. Passive income is great, and you should absolutely dedicate yourself to learning everything you can about the subject, if you feel so inspired.

Also, I have nothing against using the internet to make money. I certainly have made money through the internet, and you cannot deny how successful some people have become through building an information-product business online. But it is a business, not passive income. They invested years and a small fortune into building their scalable business. Know the difference!

Don’t spend $10,000 for a weekend, especially if it requires putting yourself into credit card debt, just because somebody is able to sell a “transformational” experience based on hype. There is no cheese at the end of that tunnel! (If you want to send me a 15% gratitude commission for just having saved you lots of money, you may reach me at jason@livingafreelife.com. :} )

“You spent $150,000 on an education you could have gotten for $1.50 in late charges.” – Good Will Hunting—don’t be that guy he was speaking to, and I’m not talking about Harvard students, but motivational seminar students.

Comments (2)

Heather MeyerDecember 29th, 2011 at 10:41 am

I just stopped by your blog and thought I would say hello. I like your site design. Looking forward to reading more down the road.

adminDecember 29th, 2011 at 1:19 pm

Hi Heather.. thanks for stopping by!

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