And the reasons why alternative sources are falling behind
There are thousands, if not millions, of articles describing how you can generate passive income. Two of the most common ideas are:
- Blogging (which creates indirect revenue from ads, sponsorships, affiliate marketing, etc.)
- Online side hustles (which creates direct compensation for copywriting, social media marketing, assisting, consulting, etc.)
These ideas are fine, but the truth is that they can take a lot of time. You might not capture any income from these sources for weeks, if ever. What sounds like a source of “passive” income may turn out to be anything but. Side hustles can require a good deal of work, at which point you might as well just call it a second job.
You may be able to generate steady cash flow from these sources eventually, but the upfront input costs are meaningful.
This is a big deal for many people who need or want additional income. Spending 100 hours of your precious time to create a blog, all for a few cents of ad revenue, simply isn’t worth it.
Perhaps the most successful alternative for generating passive income is creating and selling digital products. This category is becoming bigger by the day.
Digital assets include things like templates, spreadsheets, ebooks, and graphics. For instance, you can create spreadsheet templates for any of the following use cases:
- Personal budgeting
- Retirement planning
- Project management
- Event planning
- Marketing campaign management
- Personal productivity / goal setting
Alternatively, you can create and sell assets like Notion templates, Canva templates, and graphic designs. These products can vary in price, from as low as $1 to upwards of 600€ a piece!
It’s not enough to create a nice template though. It needs to look attractive and provide the user with an intuitive, guided experience. Otherwise, the user may simply be confused and will regret buying your product.
Here’s an example of a nice-looking spreadsheet I found on Tiller:
This template does a few things right:
- Leverages charting features to create an easy-to-understand result
- Pre-populated with sample information to act as a baseline for new users
- Provides spacing between different components to provide clarity
- Uses colors to signify different ideas and increase visual appeal
- Includes a brand asset which may generate some referral traffic
Compared to a plain spreadsheet, this asset has much greater chances of delighting the user and providing value.
But you have to go beyond the basics these days to capture meaningful value. Anyone can create a spreadsheet with pretty graphs and eye-catching colors. Indeed, many such assets are already available for free.
In order to succeed, you need to create products that are tailor-made to specific use cases, and those products need to provide direct value to users. Blog posts tend to provide very thin value, if any at all. Maybe you change someone’s way of thinking for the better, but how actionable or impactful is that change?
If you’re having trouble thinking of new use cases, then you can instead think about specific verticals. Going with the topic of retirement planning, you might make a retirement plan tool designed just for teachers (or police officers, photographers, etc.). Think about what problems or issues that group of people might face in relation to the broader use case.
Creating a valuable digital asset isn’t enough on its own; you also have to get it in front of the people who need it.
It is true that these assets do require some input costs (e.g. for distribution). But this task is relatively easy compared to blogging and side hustles. Because these assets are standalone products, attracting demand can be quite straightforward in practice.
Blogs have to compete in a global arena of content. How will someone discover your blog? Why would they read your blog over another one? What tangible value is your blog creating for readers?
The answers to these questions reveal that it’s quite difficult to do well in blogging. To make matters worse, people are becoming less interested in written content in general, as video and audio content rise in popularity.
On the other hand, people may find digital assets quite easily. Someone searching for a solution to a particular problem (e.g. retirement, management) already has high intent. You can list your assets on a dedicated marketplace or listing center where people already go. In many cases, that actually means getting blogs (or other commentators) to write about your digital asset. Rather than be the writer, be the creator.
Coupled with the fact that these tools have much less competition (i.e. than blogging), it’s easier to stand out and be discovered. By thinking on the forefront of niche problems, perhaps you can escape the crowd and find success.
If you can figure out how to get your tool in front of your target audience, then perhaps you can attract enough attention to generate revenue. Post about your digital assets online (i.e. social media) to get the attention of your potential users.
I hope that this post inspired you to create something valuable for others. While blogging and online side hustles will increase in competitiveness, digital assets will continue to evolve and expand in value.
If you’re looking for more ideas on generating passive income, follow me on Medium.