Living The Dot Com Lifestyle – Rule 3

This is part three of my Living The Dot Com lifestyle series. It’s based on a presentation I gave at Third Tuesday Vancouver call how to run a million dollar business on two hours per day. Previous posts: Part 1. Part 2.

Rule 3 – Make Passive Income

Passive income is money that you make without having to put in additional time. An example of passive income would be buying a bond or T-bill. You do it once and the interest payments come in every month or quarter without any more time input on your part. Another example is you’re an author who gets royalty from a book. As the author, you get paid a percentage on every book sold. If you’re a best selling author like Stephen King, those royalties go into the millions of dollars.

If your priority is to have both time and money and not trade time for money, then passive income is the way to go and everything you do should be geared to the generation of passive income. When you generate passive income, you’re not trading time for money. Yes, you may spend some time to set this up but once it’s done, the money keeps coming in without any more time input on your part. It’s really the ultimate way to make money.

A Blog Can Have Both Passive & Active Income

A blog can make both active and passive income. Most blogger go after the active income. They spend many hours per day churning out the content so they can get more traffic so they can sell more advertising or land the next consulting job. My blog has active income but it’s really geared for the creation of passive income.

An example of how the blog makes passive income is its referral system to the recommended money makers. I deal with many ad networks and all of them have a referral program where I would get a one time fee or recurring percentage of income. It’s the recurring percentage of income deals that I promote the most. For example, one of the ad networks I deal with gives me 10% of whatever the person I referred makes for life. So if i referred a new blog to this network and they run the ads and made $100 per month, I will make $10 per month. Now $10 per month isn’t that much but if you referred enough people, it can add up to a nice chuck of change. Over the years, I’ve referred thousands of sites to these ad networks and I make a small percentage of each one of them.

Passive Income Offers Great Security and Growth

What this gives me is tremendous security. I am not relying on just my own work. My income is being generated by thousands of people. And it’s cumulative. Everyday I add more people to these ad network so the income keeps increasing. A year ago, the blog made about $20,000 per month. Today it’s over $40,000. However, I haven’t increase my ad prices or added any new ad spot in the past year. The new income is not coming from the blog’s advertising sales, it’s coming from the monthly royalties from those thousands of sites it referred.

The really nice thing is this type of income is it continues whether or not the blog is here. If for some reason, my blog gets shut down tomorrow and never comes back, it would still make five figures every month. I would lose the direct advertising income but the passive income will continue.

Passive income is why I love affiliate marketing so much. It’s so much easier to do than running a normal business. You don’t have to worry about dealing with rude customers, credit card fraud, inventory problems, bad employees, etc. Just refer the customer and collect the fee. And if the fee is recurring, that’s even better.

Passive Income Is The End Income Goal

Let’s face it, passive income is what we’re all trying to achieve in the end. That’s why we’re saving for retirement (at least I hope everyone is saving for retirement). We know that there will come a day when we can no longer work and when that day comes, we better have a passive income source to keep us going. Otherwise we’re in big trouble. Well, there’s no rule that says you have to wait until you’re 65 to live on passive income. Why not do it now? It really doesn’t take that long if you focus your mind on it.

Look for rule 4 tomorrow.


60 thoughts on “Living The Dot Com Lifestyle – Rule 3”

  1. David Cain says:

    Ah, passive income. As long as you’re producing your own content, blogging income isn’t exactly passive.

    David Cain’s last blog post: Do Something

    1. Ryan McLean says:

      Yeh but I think the point is that even if John stopped producing his own income he would still be earning passive income because of the referrals he has made in the past.

      Ryan McLean’s last blog post: A-List Blogger Case Studies: ProBlogger

      1. I have been watching Johnchow.com growth. It really take times to build passive income.

        Watch my stock trading account balance grow here

        StockTradersBlog’s last blog post: I am Very Skeptical About Ultrashort Financial’s Viability

        1. Every things need time to grow. So this is the similar case with passive income as well.

          Continue effort in the right direction with the fixed routine can make your task easier.

          ZK @ Web Marketing Blog’s last blog post: 10 Tips to increase your Twitter followers

    2. Cam Birch says:

      As Ryan stated blogging isn’t passive, its active. Its just like writing alot of little bitty books. Its the income generated thats passive. You work and work. Then sit back and watch the money come in.

      TBills are a wonderful example, put money in and enjoy the interest. How did you get the money to begin with, that is the active part. Some time spent up front returns at the back end.

      Cam Birch’s last blog post: Steps To Business Success – Record Keeping

  2. Ryan McLean says:

    This was a great blog post and really got me thinking about ways to monetize my blog. Getting advertising, or even making affiliate sales isn’t the goal after all.
    The goal should be to develop passive income by referring people to different income sources.

    One of which I use is aweber, I have made a couple of referrals to aweber and make money every month from that

    Ryan McLean’s last blog post: A-List Blogger Case Studies: ProBlogger

  3. great points John. Passive income is very good. You said you jumped from $20K – 40K/mth, but how long did it take for you to get to the $20K level? just wondering about the struggles on the road to success.

    [email protected] last blog post: Freebie Monday #25 – Free Coffee (USA) and Codes for SwagBucks!

    1. Cam Birch says:

      If you check out the back issues (previous posts) you will notice that John really didn’t struggle to the top. He basically created most of the Make Money Online Blogging category. 9 months with no income, under a year to make 5 figures, not long after that to make 20k.

      It is a type of miracle, shows what quality and timing do for a person.

      Cam Birch’s last blog post: Steps To Business Success – Record Keeping

      1. wow.i did not think it was that fast of a growth. I thought the bread and butter of his income came from another site he runs…or ran..some tech site?

        [email protected] last blog post: Freebie Monday #25 – Free Coffee (USA) and Codes for SwagBucks!

        1. I think he does make a lot of money with TTZ also.

          TYCP Entertainment Magazine’s last blog post: Courtney Van Dusen Interview

  4. Michael Zhao says:

    Indeed. I can sit on my butt and do nothing!

    1. Cam Birch says:

      Except hold the chair and carpet in place 😀

      Cam Birch’s last blog post: Steps To Business Success – Record Keeping

    2. I kind of disagree with that. You’d be sitting, but you still have to work hard. Doing nothing will get you nowhere!

      TYCP Entertainment Magazine’s last blog post: Courtney Van Dusen Interview

  5. I definitely have to agree with this one. Passive income is the only way to become free from working in the end. You just have to work on increasing your passive income!

    cashtactics.net’s last blog post: Just a little update on EVERYTHING

  6. LithiumMind says:

    Great post. I guess one of the best ways of making money online is making sure that you are getting passive income.

    LithiumMind’s last blog post: Get Paid For Your Blog

  7. Holly Hopper says:

    Hey John, I’m really enjoying this dot com lifestyle series! Not only are your posts informative, they’re inspiring as well! Thanks so much and I’m looking forward to rule #4!

    Holly Hopper’s last blog post: Things I can’t stand about email campaigns

  8. You made a really good point in here John. I agree one hundred percent that you should always go for reoccurring payments rather than direct, one time payments. You never know if one day your website might plummet to the ground and become worthless. It’s nice to have a backup system(Affiliate programs) in place keep the income coming in.

    Also, earlier in the post you said “So if i referred a new blog to this network and they run the ads and made $100 per month”. I think you forgot to put a link in the “this network” part.

    Again, great post John

    bradleybradwell’s last blog post: How Many Google Ads Should I Have On My Website?

  9. This is becoming really interesting series John. Passive income plays vital role for any guy who is in Internet Business. I am wondering how come your blog made double jump in just one year of time ??

    If you can highlight few of key point for me to apply for my own blog….thanks for the same in advance

    Ricky Peterson’s last blog post: Influential Internet Marketing

    1. Benjamin Cip says:

      It’s maybe John’s secret. Will coca cola teach the true receive of their sparkling drink? I guess no, they’ll just give you the basics ingredient of their successful drink so that no other people copy them. Maybe John will teach about his success throught a book he will realize when he will be retiree. Who knows?

      Benjamin Cip’s last blog post: Still Wondering How To Avoid Products Scam ?

      1. Coca Cola won’t teach you how to make their soft drink, but you could invest in the stock and receive dividends, which are another source of passive income.

        Blogging Banks’s last blog post: ING $50 Bonus Deal

      2. Jake Stone says:

        Hello Benjamin,
        John could easily reveal everything, because he uses affiliate marketing. If we succeed he will be super successful. In a matter of fact, if he fails to teach and educate his readers he will fail.

        Jake Stone’s last blog post: Real estate sales

  10. Benjamin Cip says:

    I already talked about passive income before. I really like this one. I would call it “freedom income” because if this one is big enought, you won’t have to stress much about your future. It’s a security income that you earn every month. However, I’m wondering if you can still make a good passive income if the person you referred aren’t active… Anyway, thanks to your 3 last blog post, I understand what is the best way to make money online 🙂 Thank you very much John!

    Benjamin Cip’s last blog post: Still Wondering How To Avoid Products Scam ?

  11. These series are becoming more and more interesting

  12. This is a great series John and has certainly given me a few things to think about.

    Garry – thisimprovedlife’s last blog post: Beating Exercise Apathy

  13. John Green says:

    Passive Income should be the goal of every person working online. You should always start some online business with the passivel income goal in mind, and as soon as possible make it Real. Interesting Posts John !

  14. Dean Saliba says:

    Passive income isn’t working for me yet. If I don’t work I don’t get any money. 🙁

    Dean Saliba’s last blog post: Follow Me On Twitter

  15. Asswass says:

    The cool thing of passive income is that you could be making a couple hundred bucks with adsense a month but thousands with referrals.

    Asswass’s last blog post: 5 Easy Steps to Make Money Online with Hiburrito.com

    1. Some people are still able to make a living off Adsense. These days, it all depends on the traffic you receive.

      TYCP Entertainment Magazine’s last blog post: Courtney Van Dusen Interview

  16. Lee says:

    Hi John,
    I don’t understand the meaning of passive income. You say that if your blog is being shut down, you will still be making 5 figure monthly. How is that possible?

    1. theottawaguy says:

      I think what would happen if John’s blog went kaput tomorrow, he would still have a percentage of sales from previous referrals, i.e. other blogs that are still active.

      1. Lee says:

        Now I get it. John has some other blogs which he makes his income. That is why if his blog is down, he is still making 5 figure. Thanks.
        Share your posts at: ArticlePinger.com:)

        Lee’s last blog post: Make Money by Designing Logos

      2. And then there’s TTZ Media.

        TYCP Entertainment Magazine’s last blog post: Courtney Van Dusen Interview

  17. Greg Ellison says:

    We just need to strive to get both passive and active income. It is very hard to get your readers to sign up to a program if your not authoritive in your niche. We can always keep trying. Greg Ellison

    Greg Ellison’s last blog post: How to delete unsubscribers in Aweber

  18. fas says:

    Passive income may take time to build, but once done, the rewards are stupendous.

    fas’s last blog post: 6 Tips For Affiliate Marketers To Increase Sales

  19. Hi. An income whether passive or active would be very welcomed especially for the “average” blogger. Achieving a real income from your online efforts is the goal which seems to elude the best efforts of most souls.

    Anthony Pierre’s last blog post: Wagan Cordless Air Compressor with Swivel Spotlight for $54.95

  20. No arguing that passive income is great… been experiencing that myself for about three years now (not enough to completely live off though). Nonetheless, it’s enough for gas money and to pay a few bills. The hard part is setting it up in the first place.

  21. nektarii says:

    I hope you dont forget the world premier on june third in Zurich. The new Clip from Marc Forster for the SWISS Airline.

    Greetz from Germany

  22. I’m wondering how you really can run a million dollar business in only 2 hrs a day when it takes me 24 hours a day to run a $100k per year business?

    Gold Coins Blog’s last blog post: Higher CAFE Standards Means Less Taxes For Uncle Sam

    1. Thats a lie Alan.
      I m working on some blog post about all these hypes..including master of all “Mike Filsaime”
      Mike even talks about bigger numbers…

      internetsalsa’s last blog post: No boundaries for Adam Lambert

      1. What’s a lie, $100K a year on 24 hrs a day or $1 million on 2 hrs a day? I was half joking anyway. If I didn’t spend so much time reading other blogs, DrudgeReport, Yahoo news, financial info and tons of other crap, It would only take me 23 hrs a day. That’s another joke BTW…

        Gold Coins Blog’s last blog post: President Obama To Take 69 Percent Ownership Of GM In Bankruptcy

  23. Outsourcing is where it’s at. Hard for us control freaks.

    needmoney.com’s last blog post: Website optimization through eyetracking: latest findings

  24. John you really are an awesome affiliate marketer! Thanks for sharing what you know.

    -Smart Teenager

    Smart Teenager’s last blog post: Utilizing Online Forums

  25. Todd says:

    What are some good programs that offer passive income? Any suggestions or resources for finding these would be appreciated.

  26. Rachel says:

    John, I’m so happy I found your website. Your free e-book was definitely invaluable, and I’m going to model myself after the master. I’ve just created my first website – a forum for anonymous work related confessions. There are many more to come! Some will be membership sites and others will rely on affiliate marketing techniques. Thank you for sharing your wisdom!

  27. pounds says:

    Impressive, inspiring stuff! Congrats on your success.

  28. That is the best income, Passive. Its like Yaro´s new membership site product, he is creating passive income.

    Marketing Business Review’s last blog post: mysqlerror

  29. Paul Ubiadas says:

    I am still working on my passive income.

    Paul Ubiadas’s last blog post: Miscellaneos Ramblings

  30. Norm says:

    Passive Income doesnt always have to be online. It can be anything that generates some kind of revenue from property, shares or other investments.

    Online is inexpensive entry point in my opinion. Anyone can get started.

    Norm’s last blog post: Learn Affiliate Marketing for Free with Shoe Money

    1. agree…rental properties are similar, but there is a larger investment and risk with that…online has higher margins with smaller downside risk…however for me its still something I need to monetize from on a regular basis

      [email protected] last blog post: Stocks Rise Thursday After Brushing Off Home Sales Data

    2. Yeah, a relative of mine keeps telling me to invest in real estate. I’ll get around to it one of these days…maybe.

      TYCP Entertainment Magazine’s last blog post: Courtney Van Dusen Interview

  31. Eddie Gear says:

    Hi there,

    This is a very interesting idea, thank you very much for sharing it with your readers.

    Cheers,
    Eddie Gear

    Eddie Gear’s last blog post: PerfectIT by Intelligent Editing : Product review

  32. Debo Hobo says:

    It helps to get in on the ground floor, but what about those just starting out. Can they really make a significant amount of passive income? The pie is so divided already is there a share left for the newbie??

    Debo Hobo’s last blog post: Flying High Friday-How To Apply For A New Passport

    1. I think it’s still possible for someone new to do it. I’d say it depends on their blog content & how often they update it.

      TYCP Entertainment Magazine’s last blog post: Courtney Van Dusen Interview

  33. game-girl says:

    Passive income is a kind of award for previous tension,time and efforts,but it comes later not at once.

    game-girl’s last blog post: Призраки в Коннектикуте скачать фильм онлайн

  34. Tahir Jameel says:

    Passive Income is the the most desirable thing in this world. Hopefully one day i would get to that point where u are now!

    Tahir Jameel’s last blog post: Mechanical Engineer – UNICOL Limited

  35. Boy these three posts of yours are gold mine for us. Awaiting to get more from you in this series.

    ZK @ Web Marketing Blog’s last blog post: 10 Tips to increase your Twitter followers

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