Passive income and Open Source

Everyone dreams of making money while asleep. The term "passive income" is often defined as income that is received on regular intervals without requiring a great deal of work to sustain it. Usually some effort has to be put in upfront, but the payoff from passive income can last for years. Passive income is particularly relevant when it comes time to retire. Two techniques often recommended by financial planners are (a) rental properties and (b) dividend investing. Both can work well, not only as a retirement plan, but as a way to build steady income. Certainly the idea of collecting checks for the rest of your life with minimal effort sounds appealing.

Quite a few people that try to retire early are documenting their journey publicly. For example, Jason is trying to retire by 40 by investing in dividend growth stocks and Mr. Money Mustache retired at the age of 30 through rental properties. Many other great examples exist online; I love reading up on their stories and progress. There is a lot to like about their lifestyle too; a common theme among them is that they live frugally.

So what does this have to do with Open Source? I love Open Source and Drupal and would like to see even more contributors. I think a lot of developers would love passive income so they have the freedom to contribute to Open Source more, preferably even full-time. Many developers also live a frugal life; passive income may be a good option to explore. But also, what about a third passive income technique: (c) websites? I know several people who have a number of websites, some of which they haven't touched for months, yet they still bring in around $500 a month. Owning a few websites could provide a wonderful chance to earn passive income, and it so happens that many of us in the Drupal community have a talent for building websites ... Food for thought.

Comments

Ryan Szrama (not verified):

This idea was the impetus behind eating my own dog food with Drupal Commerce. I partnered with a friend to build a cheese website that's been on cruise control since he had a baby... but we still love getting those transaction complete e-mails as repeat customers come back for more. There's obviously much more we could do to the site, but in the meantime I've been encouraging team members within Commerce Guys to be thinking about actually using what we write to get firsthand experience as merchants and to set that passive income engine a-purring. Also, I love Mr. Money Moustache... I regularly recommend his "cost of commuting" blog post to friends. ; )

June 14, 2013
Joaquin Bravo (not verified):

Money Mustache++

I really like that blog, and also been using the bike whenever I can to commute, besides also living as frugal as I can.

June 14, 2013
juliangb (not verified):

Passive income websites are already around and there are people who are (claim to be) getting by using them.

For example: Pat Flynn (http://www.smartpassiveincome.com/) talks about making money from informational websites.

To turn your article around, it is also possible to build Drupal websites that generate a steady income. I founded a rowing informational website (http://www.rowingnews.org) originally to test the Managing News distribution. Now it is quite well established (based on Drupal 7 core) and provides a steady stream of income that covers costs and a little more.

June 14, 2013
Larry Garfield (not verified):

"Owning a web site" doesn't make you money. "Owning a link farm site on a squatted domain" can, but I wouldn't call that an ethical form of passive income.

Real web sites take effort to maintain and keep useful for people (and free of spam) so that they'll bother doing whatever it is that gives you money. The number of web site concepts that you can "fire and forget" and still make money off of is extraordinarily small, and the concepts themselves transient.

"Build a website, then wander off and work on open source while it makes you money" is 99.3% of the time a fantasy. To be sure, it's a fantasy I'd love to have as my reality but it's simply not realistic. Funding open source development requires a bit more cleverness than that.

June 14, 2013
Dries:

Not true. The Dividend Mantra, the blog that I linked to, makes about $600 a month from Google. Drupal.com makes money with minimal effort. (I use the money to offset the Drupal trademark costs.) I know some individuals that make $10.000+/month from their site. I'm not saying it is easy, but I believe you are too pessimistic about this.

June 14, 2013
Dividend Mantra (not verified):

Dries,

Thanks so much for linking to my blog. I'm glad that you have found some inspiration in my journey. This is the main reason I blog; to help others reach for their dreams.

However, I don't make anywhere near $600/month from Google. I didn't even make $600 last month. Of the $600 in income I earned as Bonus/Online income, $457 was from Google. This was much higher than normal. My usual month's AdSense income is closer to $185, but I do hope to increase this over time.

I hope that helps!

Stay in touch. :)

Best wishes.

June 15, 2013
Edward Zwart (not verified):

I'm reminded of a great read: Fooled by Randomness by Nassim Taleb. http://en.wikipedia.org/wiki/Fooled_by_Randomness

By all means, read success stories that inspire. But read this book too. It's short and entertaining, and it reveals a serious bug of human psychology by which even our wisest can be trapped.

Put simply, pointing to a few successes without accounting for the sheer volume of failures leads to purely made up (aka, wrong) statistics (approximately 93.7% of the time).

June 27, 2013
Shaun Dychko (not verified):

I have an enormous amount of gratitude to the Drupal community for making my passive income stream from http://www.giancolianswers.com possible. I was a high school physics teacher in 2008 with a "4 Hour Work Week" inspired dream, coming fresh off an 8 month epic vacation with my wife, who had never built a website. Through books, videos, and mostly http://drupal.org, Drupal was a key part of making Giancoli Answers, which provides a sustaining income for my family. $500 per month is actually quite a low estimate of what's possible. From what I learned in this process, I'm now freelancing (http://www.checkmarkmedia.com is my humble portfolio site), and enjoying the flexibility of that combine with passive income while waiting for the imminent arrival of our second child. I love Drupal! I'm a Drupal Enthusiast.

June 14, 2013
Pete (not verified):

Great to see this being discussed. I think its also important to expand the idea. Once you develop that website for passive income (Pat Flynn and SecurityGuardTrainingHQ.com is a great example!), it's easy to switch it to a passive gear for yourself. I think it's important to note, passive doesn't have to mean 0 hours, it just means a lot less work - like the 4 hour work week.

With regards to the site developed, it doesn't mean it becomes dormant, useless or less ethical, you can simply start outsourcing it's maintenance. Using Pat as an example (I followed the development of his security guard site and arguably, his Green Academy Exam site is another example), he put in a bunch of time to develop the site, rank it (methods were admittedly quasi-ethical) and now it serves quality content, he outsources the maintenance and develop of new content and he's making great money passively.

There definitely isn't a day that goes by where I don't wish I was making more money passively so I could do more with and for Drupal.

June 14, 2013
Joe (not verified):

Somebody give me a hint. I've been struggling for years to make a few extra bucks passively through websites. I've always had bad ideas and/or lost my shirt on advertising :) Sucks... still working a day-job I despise and up late at night hacking away on Drupal... Long gone are the days of success by keyword-stuffing metatags - that's for certain.

June 15, 2013
Garrett Albright (not verified):

Huh. At first glance from this post, I thought perhaps a spambot had managed to hack Dries' blog.

A web site which makes "passive income" is a great thing if you can get it, but a gamble to get that far - who knows if the thing you're spending time building will catch on, much less make enough money to live off of. Think I'll stick with the more sure money I can get from developing for others for now. If I come up with a weekend project that can make a profit, so be it, but for me to count on it would be crazy.

June 15, 2013
Robert Douglass (not verified):

Passive income and Products. So many people in Drupal are still "just building websites", but many more are starting to build products. Look at RedHen, ERPAL, Rooms, and http://walkthrough.it/

Of course I've been preaching products for several years. Believe it more now than ever.

June 15, 2013
Richard (not verified):

Finally a post that combines two of my greatest interests :) I think this is a natural idea for the Drupal community.

As developers we aren't happy to just do something once and then have to do it all over again. Instead we write code so the computer will do it for us next time. Apply the same idea to helping people and getting paid for it, and you can get interesting results.

It doesn't have to be a gamble because you can test the level of interest early on so you know if it's worth spending your time on. And finding the right thing can make up for a lot of false starts.

The current websites and businesses online are covering less than 1% of the needs that people have. Get creative and see what happens!

That said, options (a) and (b) are still very powerful and provide a (slightly slower) form of scalable income that is available to everyone.

June 16, 2013
Susan MacPhee (not verified):

I'm dedicated to building and designing sites on the DaaS (Drupal as a Service) subscription model. Particularly, Drupal Gardens. I'd like the opportunity to earn recurring revenue from my partnership and client's subscriptions with this or another commercial product. Sort of like this company does it: http://www.lightcms.com/resellers. I think subscriptions are a great way to create passive income, even for individuals like me.

June 18, 2013
Jeremy Epstein (not verified):

So, Dries, should we be expecting an ad block on this blog sometime soon? I certainly hope not.

I personally have no plans to ever place advertising on my blog; and very few developer blogs that I'm familiar with have them either. Let's keep it that way.

I have no problem with people making some easy cash from their web sites. But all webmasters and web writers should remember three things. One: content is king (original, informative, well-written content - NOT SEO-engineered content). Two: advertising detracts (or should I say distracts?) from the content experience. Three: advertising looks unprofessional.

Think long and hard before placing ads on a site with quality content. What's more important: a few extra monthly $$$ from clicks, or you / your company's reputation?

June 18, 2013
Dries:

I've no plans to add advertising to my site.

I read a lot of high quality sites / blogs that have ads on them. It doesn't actually bother me. Having said that, I do like the aesthetics of a clean ad-free site.

June 18, 2013
Ales Rebec (not verified):

It's so clean and empty on a big screen that it makes you feel agoraphobic ;)

June 20, 2013
Mike Gifford (not verified):

I do think that there are ways to generate actual income through micro-payments. Using tools like Flattr could allow community members to show appreciation for a great module, documentation, theme that we rely on for our work.

Flattr isn't the only micro-payment option, but it does seem to work pretty well. I was inspired by this to write up the following blog post on micro-payments detailing this idea a bit more.

Contributors could receive benefits from their work, directly from individuals who have benefited from it.

June 20, 2013
Quevin (not verified):

Dries, thanks for bringing this up. It's certainly on my mind, and it's not easy to find time to develop a project that generates some passive income while busy building Drupal sites (and raising a baby). We have to start somewhere, even just a few minutes a day.

June 20, 2013
James (not verified):

Freedom to do whatever I want sounds good to me. But I'm not sure it would be healthy for Drupal if everyone was in that position.

Given total financial freedom, how many talented Drupal folks would choose to contribute the boring, painstaking work that makes software great?--like small optimizations, QA, or detailed, clear documentation. They would probably work on building cool new things instead. (Isn't that already a challenge with Drupal now?)

And would they build the most useful things? I tend to think open source software evolves best when it must solve real-world problems. That is usually the domain of the professional who is on the hook to deliver something great for a demanding client or employer.

Look at Linux. Big companies need new functionality, so they pay staff or contractors to develop it. They pay lower-level staff to meet corporate standards for documentation and testing. Then they contribue it back to the community and pay the Linux Foundation to coordinate.

Linux is now so valuable to big companies that it is in their best interest to choose to fund its ongoing development at a highly professional level. Drupal has a long way to go in that regard...but I think that's the right direction.

June 21, 2013
Drew (not verified):

Agreed. Passive income through websites is one option. Income through products is another viable alternative.

I have often heard a business 'doctrine' which says that service companies can't do products and/or vice-versa. I believe that to be oversimplified and not necessarily perfectly applicable to people who design and build websites as a 'service'. Websites are, in a very real sense, 'products'. So are Drupal modules.

The web disrupts many things, and I think the line between products and services is another one of those things. If there is any truth in that product-vs-service advice, it's possibly better stated as "don't abandon a business you're good at in order to try something you don't know much about"

In our case we're headed down the path of passive income by blurring those product/service lines, and one of the explicit reasons we created NodeSquirrel was to give us the ability to earn money that could be put directly back into Drupal. That's already working and we expect it to continue and grow. NodeSquirrel, which does cloud backup for Drupal sites, is also a natural extension of our work with Backup and Migrate - which is a 'product' we've already been supporting for 200,000+ sites. We're not the only example of this, either. Nate's work with Webform.com is similar. I don't know how many other examples are out there, but I think many more of us have the skills and expertise to pull off this kind of product/service hybrid.

June 21, 2013
Chris M (not verified):

Our website makes around $10,000 a month out of affiliates - no effort required. It's the easiest money in the world...

June 22, 2013
Quevin (not verified):

Do share more! I worked at ebates.com for a few years, and learned how many millions are possible simply from affiliate relationships. They even had enough to pay people cash back to click through (after buying, of course). Wondering if I should try this for myself.

June 24, 2013
Paul Barnett (not verified):

Certainly true.
Passive income from websites is a set and forget method.
I've done it for years and sold the same items from the time the internet was just starting out. Find your niche market and the problems they may face and build your site & products around that. Tweak if need be as the years go by.

June 29, 2013
Resei (not verified):

It is true that you can make money online - digital marketing (SEO/SEM) does generate money. So can real estate, dividends, selling books, selling shoes, selling cellphones, selling underwear, selling what ever you like to sell.

But it's also fact, that the phrase "passive income" is many times misinterpreted.

I wrote about that specific topic and published an article, you can find here:
http://www.rieder-enterprises.com/passives-einkommen/

Fact is, passive doesn’t seem to be passive all the time ! And we want to keep that in mind.

Who doesn’t know the heads behind some passive income sites, saying they are generating passive income. But wait a minute, is it really passive ? Spending 80-100 hours a week in front of the computer and trying to keep an audience to generate more traffic and sales ?

Well.. not quite sure how everybody else sees it, but in my opinion that’s actually the opposite. Should we better re-phrase it and name the baby: hard working active income ?

Most of the time people are building a specific niche-audience tailored for a specific topic. And then, they sell their audience (customers) everything... between some hopes, hosting packages, software tools, ebooks, real books, board games, meetings, or what ever. They affiliate pretty much everything.

Some make a living with it, some don't. Some do understand the system - some don't. And some are saying they want to make the internet a better place with better content - but building tones of useless blogs and sites to support and backlink just their target money making niche site.

Is that really for a better internet ?
Creating tones of absolutely useless sites and blogs to push one "polished" money making site in the SERPS ?

Well.. well.. there is not much to say I guess - but you get the picture, right ?

So finally, also please check out my comments on Forbes:
http://blogs.forbes.com/people/berndrieder/

especially the one that says:
Why passive income is a dangerous fantasy

It will for sure help you to see it more transparent.
Well then.. happy blogging and all the best with all your income streams.

September 18, 2013

Add new comment

© 1999-2014 Dries Buytaert Creative Commons Attribution-NonCommercial-ShareAlike 3.0 License.
Drupal is a Registered Trademark of Dries Buytaert.