The success of passive income sources on the net has now produced an industry in its own right, dedicated to promoting sources of passive income. It really is a minefield, and like anything which promises the Earth, most of the hype is of very dubious quality.

Revenue is paid per click, for example:

• Like on many sites using Google advertising, per click, a percentage of revenue.
• For hits on an article or blog, which can pay for years afterwards.
• Sale of electronic rights, generating a payment for each sale by a third party.
• Sale of information, or 'infopreneurial' work. Ironically information on 'How to make money on the internet' is a very common commodity in this field, to the point of saturation.
• Affiliate or invitation systems whereby a person recruits others, usually for direct sales of things like Amway, Tupperware, and gets a percentage of their sales, or for online or other commercial content.

Online business, of any sort, also contains an element of actual marketing, both direct and indirect. Passive income works best when operating through sites which get a lot of traffic.

Most important: Passive Income is generated by volumes of traffic.

There is now a virtual science devoted to generating traffic to web sites, and anyone considering passive income streams should know the basics before starting. The need for volumes of traffic has created a need for a range of tools and practices like:

• Search engine optimization, (SEO),
• adwords,
• Page rankings,
• Tagging,
• Other methods of defining the 'reach' of a site, meaning its market status and size of clientele.
• Tailoring of ads to website content

The list is almost infinite, and the effects of these methods are very much a matter of debate. Some people swear by Google?s Adsense as a passive income stream, some wish they'd never heard of it. Many people say Ebay is the greatest thing they've ever done, and some people are almost allergic to the whole online auction thing after using it.

Both Adsense and Ebay are the big reach sites in their fields, and both relate to passive income streams which can generate a lot of money. So you can see that passive income involves a very mixed range of possibilities.

The ranking agency of the internet is Alexa, which provides information about the traffic going to web sites, and allows current and historical comparisons with other websites in the same niches. Alexa is the Nielsen of the net, useful in getting an idea of what's hot and what should be shot, for passive income earners.

That's how seriously the volume of traffic is to those doing the advertising which generates that form of passive income. Billions of dollars are spent on advertising on the net, and a result is expected to be achieved for that sort of money. As the internet absorbs more mainstream business, opportunities will expand, but so will the demand for cost effectiveness. That could be very good for passive incomes, because the less cost effective sites tend to drop out faster, leaving fewer timewasters.

Passive income can work, and work well. People do make fortunes on the net, but they tend to be the people who've done their homework, and know what will sell and generate income. Just sticking Adsense on your site and hoping for a few million to drop in out of the blue isn't a good idea.

In terms of time management, passive income is a very good, very useful, idea. It is quite possible to operate many different passive income sources, without having to do much more than set up the product or service.

The most common misconception about passive income is that it's a one way process.

The classic case is the blog scenario: The blogger gets paid, and paid advertising revenue for clicks? and has signed away the rights to his own material in the process. Doesn?t even own the work any more. The new owner can modify, on-sell, adapt, and continue to use the material. That's a passive ripoff, and it shouldn't be viewed as anything else. You?d be better off just doing commercial writing, getting paid a set amount for a specific piece, and leaving it at that. There is an advantage in getting an online profile as a blogger, but that has to be weighed against costs in terms of practically giving away what might be good material.

Similarly, selling goods online through a third party can contain some serious risks. If you're the supplier, you're obliged to supply what the agreements says you're supplying. That can get tricky, and people can find holes in agreements when it comes to paying you.

It is vitally necessary to be sure of your payment sources, and methods of payment. Do not, ever, persist with a deadbeat payer, or an 'income source' which hits you for money.

Writers of online content, which is a major passive income stream for many, will be pleased to hear that an organization called Essayfraud.org has identified no less than 515 bogus sites for writers alone, and that can apply to any media work. Another site, Writer Beware.org has an ongoing monitoring of ripoff publishers and so called literary agencies which habitually charge writers a fortune for the privilege of paying to publish their own books. Legitimate publishers never require authors to pay for publication. Agents get paid for results, under contract.

The bottom line

• Make sure you understand what your passive income stream involves in terms of obligations.
• Make sure your payment source actually pays, how it pays, and when it pays. No exceptions.
• Make sure you're dealing with a site or organization that actually delivers a decent reach to a good volume of possible clients. Alexa will know, and you can compare with the competition. Do not trust site hit counters. They're usually inaccurate, and can easily be rigged.
• Make sure that any outlay by you is reasonable, absolutely necessary and unavoidable for a good reason, like law, and minimal. If someone else is offering the same service for nothing, look out.
• Always look for better options. Compare agreements. Don't just jump in.
• Do not ever sign away any intellectual property rights or entitlements to your products or services at all, until you're sure what you're doing, and you're happy with the deal.
• Remember you are entitled to payment for your own content, product and services. They aren't doing you a favor. You start with 100% ownership of your materials, and that's what you're selling, in part or in whole.
• Make sure you can pull the plug on any arrangement that isn't working. All providers have 'out' clauses, be sure you do, too.
• Don't sign yourself up to provide something you don't have. Don't over-commit, either. You may find yourself tied to some useless thing and obliged to supply a non performer. Another good reason for point 8.
• Be realistic. If you happen to become a billionaire in five seconds, great. But watch what's actually happening with your passive income. If it doesn't deliver, try another approach.