Entrepreneur Post

Passive Income Ideas, Between Myth and Reality.

Abdallah Alaili

I have decided to write this article to respond to the huge amount of disinformation concerning the topic of passive income. Sending people on a wild goose chase behind the holy grail represented by “passive income”, is a disservice to them. Indeed, the vast majority of content about passive income, holds no real value, and does not offer a critical analysis of the various ways this income is earned.

If you do a simple search about earning passive income, you will hundreds of sites offering many examples of how to make a passive income, you would find titles like: 99 passive income ideas. The major problem with almost all these blogs is that they fail to distinguish between passive income and side hustle. Furthermore most of these blog creators, did not test the passive income streams, and are simply regurgitating what they read somewhere, hence they have no idea of the amount of money earned or work required.

Since 2004 i have been involved in internet projects. I have launched numerous projects, and tried various passive income ways, below i will resume my observation and analysis.

First, let’s define passive income, what is passive income ?

Passive income is money that you can earn with little to no ongoing effort. Unlike active income, which you earn by trading your time and skills for money (Example of an active income: a regular job), passive income comes from sources that require minimal day-to-day involvement once set up.
The idea is to set up income streams that continue to generate money over time, even when you’re not actively working on them.



Passive income should follow these main conditions to really qualify :

Passive income VS. Investment or Business !

It can get confusing to distinguish passive income from entrepreneurship and investing sometimes. Let’s try to analyse when entrepreneurship can or can not be considered passive income. And when investing can or can not be considered passive income.

Often, an investor, is taking risks investing. This risk taking has a different dynamics and can not be considered passive income. Investments can grow in value and can drop in value as well.


An entrepreneur, or more precisely a business person has employees handling the work, this can not be considered passive income either, because entrepreneurship also has risks, and even though the entrepreneur/boss is not working, the employees are, and being a boss is not a simple task.




Passive income is mostly a personal goal, It is also hard to distinguish between the personal passive income, that most people chase after, and the enterprise passive income.
An example of an enterprise passive income, is a company that get royalties for songs, movies, and so on, enterprise passive income is not passive income, because it does not fill the conditions. It is just a business model that rely on royalties.


Types and Examples of Passive income.

I. Content Creation – passive income from sales, royalties or ad revenue.

The biggest issue with content based passive income, is the amount of competition, and hence the percentage of success. The percentage of success in creating a passive income based on creating content is very low these days. I will say even less than 0.1%. All you have to do is check the amount of youtubers and tiktokers that do not earn a significant income VS those who earn. Blogs are not better, this blog for example, have existed for 10 years and have almost 600 articles, yet barely made a couple hundred dollars in advertising revenue in 10 years! There is a huge competition when it comes to content, whatever the platform is, whatever the content is.

From books, to youtube channels, to blog, podcasts, music and even OnlyFans, there are a lot of competition, and the top 0.1% get all the revenue. Furthermore, in such a competitive space, it is no longer setup and forget, you will need to continue creating and advertising and promoting.

To give you a more concrete example: As of 2023 YouTube has 113.9 million channels , 91.1% of these channels do not have the required 1000 subscriber to be able to monetise the channel. From the remaining 8.9% a certain percentage does not have the required 4000 valid public watch hours on long-form videos. Thus, we can expect that only 3-4% of channels can be monetised (after removing channels that post copyrighted content). These 3-4% of channels can earn anything between $1 to $ 54 millions (Mr. Beast). But given that each 1 million views roughly brings $1000, how much can you really earn, is a good question ?
You would probably need at least 100 000 subscribers (top 0.3%) to get any serious views on your videos (99.7% of channels are under 100k subscribers, 98.2% are under 10k subscribers).

II. Product Creation Income – revenue from sales, royalties or ad revenue.

Product creation is a bit less competitive than the content creation, but it is still pretty competitive, and the chance of making any revenue in my opinion should be under 1%. It is a bit less crowded than content, but still quite crowded. To give you a couple examples: Apple’s App Store has 1.76 million apps and 460,000 games, Google’s Play Store has 3.59 million apps! Amazon releases way over 1.4 million self-published books through its Kindle Direct Publishing every year.
Creating the product will require quite a lot of work, and it will also require proper advertising afterwards.

III. Passive Business Income – revenue from sales, rental.

IV. Affiliate Income – revenue from affiliate links sales.

Fact Checking Passive Income Ideas!

I have seen many articles about passive income, many on prestigious sites, however, these articles are usually content with objectives. For example a shopify article wants to convince you that a passive income comes through opening an online shop (can’t get more obvious), and lists the many ways you can earn a passive income. I have decided to write down what is wrong with most of the ideas i found online, and singled out good ones.



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