The Internet has made it possible to generate many more forms of passive
online income. Passive income is one of three types of income, as
categorized by the IRS. The most common source of passive income is
through online advertisements.
Advertising models
Online advertisers offer a variety of advertising models where
advertising affiliates are offered payment in exchange for clicks,
impressions or for each commission. For example, an e-commerce website
might offer a percentage of the revenue generated from sales after a
user arrives from the affiliate's link.
Generating passive income
The size of the passive income generated by the advertising affiliates
comes from the number of users who see the link and are compelled by the
advertisement or context that the link is embedded in. In order to draw
in traffic and maximize clicks, advertising affiliates need to create
content that is interesting to the users and can also draw in traffic
that is likely to click on the links and purchase the product on the
other side.
The need for content
For this reason, many websites that are advertising affiliates need
content, which is most often text. However, the content can also include
images, downloads, software, video and various other applications and
forms of multimedia. Website owners earn a passive income through
advertisements either by creating the content themselves or by
subcontracting the creation of this content out to other content
creators.
Passive and active compensation
This can be paid for either through passive or active payments. Some
website owners choose to share a portion of the website earnings with
the content creators, while other websites choose to pay content
creators a flat fee, which represents an active form of income. Flat
fees provide content creators with an immediate gratification for the
content creator, but articles with a large amount of views can earn much
more passive income.
E-commerce and auctions
Advertisements are only one way in which income is generated online.
Another way to generate income is through the selling of products and
services. Many products are sold on e-commerce websites and auction
websites. E-commerce websites generally sell a select type of
merchandise, with products sold usually at a set price. Auction websites
allow buyers and sellers to meet online. Buyers can bid on products,
with the highest bidders getting the item for sale.
Private contracts
The bidding concept is also used to sell services on a variety of
bidding websites. In this model, clients can post projects and
professionals can bid on the project. In this case, the bid represents
the fee that the professional wishes to be paid for the project. The
client can choose bidders based on the suggested fee, the professional's
credentials and samples that are presented to the client.
However, this only represents one of many ways that clients and
independent contractors can come together. Many clients will advertise
the need for services on online classified websites, content mills and
forums. For more high-profile projects, talent is usually found through
word-of-mouth or by the independent contractor advertising his or her
services on a personal website. While clients might pay a flat fee for
services, some clients and independent contractors work out an hourly
rate or a revenue share system.
by:
Johnathan Abbiss
