There aren't many freelance writing topics that get under my skin as much as residual income sites. I've heard all the arguments in their favor. Hell, I've made those arguments in the past. But today I'm going to get real with you about residual earning, why I don't feel it's worth it in the vast majority of cases, and how you can earn a siginificant residual income (hint: it's doesn't involve writing for someone else).

My Residual Income Background

Every time someone posts in the freelance writing community saying residual income sites are a bad idea, they get bashed by a lot of writers who chose that route. What amuses me is that they often throw out the same arguements (many of which don't make sense when you crunch the numbers). One of the biggest is that those of us criticizing residual earning sites haven't been there.

So let me start by clarifying. I have. Quite a bit. In fact, I was even an editor with one of these networks for a little over a year, where I very actively recruited writers under residual income schemes. I heard all the arguments. I convinced myself it could be a good deal for writers. I drank the Kool-Aid and became a friggin' evangelist. I even still have a few lingering articles up in a few places from years ago that still earn a bit of money every month. So please, don't comment here saying I don't understand. I understand it much better than you might think - what it feels like as a writer to crunch the magic numbers to see what you could hypothetically earn over the years, as well as knowing what the content sites intentionally say and highlight to suck you in. If you disagree with me, fine. But don't accuse me of being ignorant on this one. Let's get to those "highlights."

Residual Income: The Promises

Here are some of the things content sites tell writers in order to recruit them, with little to no up front pay:

  • You'll make a name for yourself and be viewed as an expert in your niche.
  • You can make a lot of money over time (equal to or greater than writing for independent clients).
  • You can keep earning more with little to no work.
  • You'll have a steady gig.

Residual Income: The Realities

Those promises are a bit of a stretch in most cases. Here's reality for you:

  • In the vast majority of cases, you're not taken as a serious professional because you write for XYZ network. In fact, I can only think of one that lends any true credibility to its writers' names. Can they give you visibility and lead to more work? Sure they can. But most of that work won't be top-tier gigs. When you demonstrate you'll work for peanuts, you'll get plenty of those offers (and I've often seen low-budget webmasters say they'll go to such and such a network to pitch a writer because it's easier for them than advertising). What's the point of working for next to nothing up front in the hopes of getting lots of mediocre gigs later, when you could be getting those mediocre gigs right now and working to earn even more?
  • Will you make money over time? Maybe. But maybe not. Here's another common problem I see from writers supporting this pay method. They'll say something like, "I made $xxxx last year in residual payments, so that proves it works!" Of course they usually neglect to tell you that they had to write 100+ articles to earn that income. Do the math and tell me how fair that pay sounds (especially when other networks will pay you the same in flat fees, so there's less risk involved with every single article).
  • Um, no, you won't keep earning (significantly at least) by sitting back and doing nothing. When you take these gigs, you're not being paid to write. You're paid more the more you invest time into marketing those articles (and therefore marketing someone else's site). Therefore that's what you're primarily being paid for. And that's constant work if you want to constantly earn, nonetheless more.
  • The steady gig promise is the biggest joke out there. I've worked with three content networks. One folded (despite being around for quite a few years - you never know when it's going to happen). Another removed half of the editorial team without much notice (bet they felt somewhat "secure" too), and then changed the pay model (those writers comfortable with being paid for traffic, who had done a lot of promotion to get that traffic, suddenly were being paid based on ad revenue -- how much work do you really want to put in thinking your pay model is stable?). And in one of the sections of the third network, the editor for that section started bringing in people with new, higher professional qualifications (not a requirement in the past). They assured existing writers they didn't have to worry about being replaced because of the change. Then within a few weeks, existing writers were dropping like flies. This was the same network that had previously released a lot of their most dedicated writers, including writers who had been with them for years and even since the company started. Don't buy the security myth. Know that if you choose to write for content sites with residual pay, everything you do is a risk. You. Are. Replaceable.

Residual Income: The Numbers

Let's get into some of the good stuff now -- the numbers. I love numbers, because they shed so much light on things. But sometimes they can mislead you. When I first worked for a pageview-based residual income site, I remember crunching the numbers. I'd ask myself, "How much traffic would I have to drive in order to earn $xxxx per month?" Or sometimes I'd look at it the opposite way and ask myself, "If I can realistically, or even ideally, drive this much traffic to the site, how much will I be paid?"

Example time. Let's say you're being paid $2.00 per 1000 pageviews (at the time, that would have been a decent amount with the network -- quite a few people earned less). Let's run through some hypotheticals. Here's what you'd earn with the following pageview stats each month:

10,000 pageviews -- $20
25,000 pageviews -- $50
50,000 pageviews -- $100
75,000 pageviews -- $150
100,000 pageviews -- $200
200,000 pageviews -- $400
300,000 pageviews -- $600
400,000 pageviews -- $800
500,000 pageviews -- $1000
1,000,000 pageviews -- $2000

Oooh! That's kind of fun, right? You keep plugging in new numbers, and you get to watch the potential income grow, and grow, and grow! You might call it goal-setting. I call it crazy. $2000 per month is only $24,000 per year -- not all that much if you're considering writing full-time. On top of that, do you have any idea how difficult it would be for most writers to hit 100,000 pageviews (nonetheless a million)? It's not a quick process. Most people will work long and hard to ever hit their dream numbers.

And that's so silly! Why should you write dozens to hundreds of articles in the hopes that you might eventually earn a few hundred to a few grand each month, when you can write far fewer articles each month and earn even more money. Currently I charge $105-200 as the base rate for my Web content articles (up front). The price depends on the length. Let's assume we're talking about pretty short articles (no more than 300 words each, which is less than some networks require per piece) and even round it down to an even $100 just to keep things simple. Here's a breakdown of how many short articles I'd have to write each month to earn the same dollar amounts listed above (guaranteed, and minus any post-writing marketing work) [2014 update: My current lowest base rate for blog posts is now $250, for anything less than 400 words; a typical 1000 word post is billed at a minimum of $600 per post.] :

$20 -- 1
$50 -- 1
$100 -- 1
$150 -- 2
$200 -- 2
$400 -- 4
$600 -- 6
$800 -- 8
$1000 -- 10
$2000 -- 20

None of that is terribly difficult, even at a very modest rate (I have colleagues who would slap me repeatedly for even suggesting $100 per article as a relatively "high" rate -- and were we talking about magazine features, I'd wholeheartedly agree with them). But even at 20 articles per month, that's just one article a day Monday - Friday. And we're not talking about detailed features here; we're talking about relatively simple Web content (it can take me anywhere from 20 minutes to an hour to put most of them together writing-wise because I almost always write in my specialty area where I don't have to spend hours researching -- I suggest any other writer do the same).

I currently know writers who were sucked into the $5 per article market. They too originally thought they were getting a fair deal. Eventually though, they start to burn out - writing ten or more articles every single day. Yuck! I don't know about you, but that kind of lifestyle sure as hell isn't why I decided to work for myself. Let's look at the above numbers one more time, but with even lower pricing expectations. Let's say that $5 article writer grew some cajones and decided to increase their rate five times to $25 per article. Any way you cut it, it's a significant increase for the writer. Here's what they'd have to write each month to earn the above figures (the prices in parentheses are what they would have earned for those same articles at their original rate).

$20 -- 1 ($5)
$50 -- 2 ($10)
$100 -- 4 ($20)
$150 -- 6 ($30)
$200 -- 8 ($40)
$400 -- 16 ($80)
$600 -- 24 ($120)
$800 -- 32 ($160)
$1000 -- 40 ($200)
$2000 -- 80 ($400)

Eighty articles a month sure doesn't sound like fun to me, but figuring four weeks a month and five work days a week, that's only four articles a day -- not so awful when again we're talking about articles that can easily take less than an hour to write and be ready for delivery.

It's really not that bad when you factor in that they'd previously had to churn out more than twice that many articles each day at their old rate. For them, four articles could be a real relief. There's also no risk involved (as in will or won't these articles eventually lead to them getting paid each month), and gigs at those rates aren't difficult to find (especially if you bother to know your market and the middlemen clients operating within it).

It's an even better deal when you stop thinking only about the time residual income writers spend writing, and also factor in the hours many of them spend promoting their sites or articles (meaning the guaranteed pay writer, even at pretty low rates, could easily be earning more money). Not only could they be earning more, but they could be earning those rates much more quickly than someone trying to build a million pageviews monthly (or an equivalent in ad revenue share).

Let's look at another set of numbers now -- the kind residual income writers like to throw around. Hypothetically, let's say you're thrilled to be earning $200 per month from a residual income site. You think it's the greatest gig in the world (well, until the next Google algorithm change or other cause of lost traffic - which affects not only pay per pageview models, but also ad revenue sharing models). You have 100 articles up on the site. Let's say the number's static instead of you adding more for simplicity's sake.

How much are you really earning? Um, $2 per article. Yes, that's $2 per article every month. A big pat on the back to you! Oh wait. That's only $24 per article per year. Hmmmm.

You might (big might since your income is never guaranteed) earn more than that $25 article writer... after a year. But to earn as much as even one of my shorter, lower-end articles, you'd have to leave that article online for four years. Four years! Not all content networks even survive that long! But wait. If you want to earn the $200 per article on my upper end for Web content (my more typical base rate), your article would have to be live and earning consistently for eight years. Now you're just friggin' insane if you think you can earn more that way. Ad networks change, merge, and fold. Content networks change their payout policies often enough (even the big guys). And content gets outdated, meaning many articles run the risk of losing traffic over the long run. You'd have to keep publishing more and more articles just to earn consistently or make modest increases. On top of that, what's that $200 going to be worth eight years from now. Hell, I'd rather have it all up front to spend, save, or invest as I please (potentially turning it into even more money -- truly effortlessly).

I'm not sharing my base rates with you to rub it in. They're publicly available on my business site, and I don't try to hide them. I'm sharing them here as an example. They're far from "high" rates in the professional spectrum. The lowest rate I currently charge anyone is for a client who's been with me for ages. Even on an old rate they came in with, it's still more than $70 per article). [2014 Update: I stopped working with the client mentioned here back in 2012. You can find out why by reading "Why I Gave Up a $37k Writing Gig Over Professional Ethics."]   I have to turn down clients almost daily because my schedule is so consistently filled. There are people out there willing to pay you guaranteed amounts, and more than a pittance.

I tell you how to do it here on this blog. I tell you how to do it at I tell writers how to do it on forums. But do you know what? More often than not I just get the same "woe is me" crap from writers who don't value themselves.

There's nothing special about me. I earn what I earn because I decided what my time was worth. I chose a specialty area where I have credentials and experience to back me up. But do you know something else? Even when I was new to Web writing, I didn't settle for many garbage jobs. One of my earliest was $.35 per word, because I knew how to use my network and make a case for hiring me. My point in sharing my rates isn't to gloat. It's to say "Wake the hell up! You can do it too!"

Residual Income: The Solution

Stop and crunch the real numbers -- not the traffic or ad revenue ideals. What can you realistically expect? How long would it take you to go full-time using residual pay models as opposed to getting paid outright? While there may be very few exceptions to the rule (and no, the $2000 per month crowd aren't exceptions), most writers can earn significantly more (and soon enough that they can actually put the money to good use) by writing for private clients. Whether or not you actually do depends entirely on you.

Lazy writers won't do it. Leave them to the content networks. Writers who undervalue themselves probably won't do it either. Leave them to residual earnings too. But I honestly don't believe most writers working for these sites are lazy. I think they're misled. I think there's a little bit of fear involved with some who haven't gone out and "sold themselves" before. And I think there are plenty who really want to earn more but who don't know where to start (in fact, I know there are as I'm still friendly with quite a few network writers I used to work with over the years).

Look. If you're happy with residual sites, because you don't want to be bothered finding clients (or building your visibility in more productive ways to help them find you), then good for you. Residual sites might be fine and dandy for hobby writers or those who don't want to go out there and work their asses off to grow their businesses.

But if you're a serious professional who wants a thriving career where you earn what you want to earn, get to pick and choose your gigs because you're never desperate for them, and don't have to constantly prowl the job boards any more, then residual sites are not your best option. And newsflash: professionals find ways to work smarter. If you're not getting the best return for your time (and a predictable and measurable return at that), then you're doing something wrong and you need to re-think your business plan.

For those writers who do want to make a change, but who still like the idea of residual income, or more flexibility in what or when they write, be sure to check out my next post. I'll share a story about how I took one of my blogs from launch day to earning over $2000 per month in just a few months. I'll tell you how you can earn more with a blog or niche content site of your own (while never having to worry that you might be let go, with all of your marketing work being for nothing in the end). And I'll hopefully be able to show you why earning residual income writing for yourself beats residual income writing for others every time (as long as you know how to do it -- and I'll help you with that).