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The Reality of Earning Money Online

Trent Hamm, Gawker Media

I hear every single day from readers who want to know exactly how I've made money with my blog, The Simple Dollar, or how they can make money doing a similar thing, whether it's starting a blog or posting Youtube videos or writing ebooks. I'm going to spell all of this out in detail so that the reality of it is as clear as possible.

This post originally appeared on The Simple Dollar.

Produce A Lot of Content

First of all, the only way to make money consistently online is to produce a lot of content on a very consistent basis. There's really no other way to do it with any consistency. Sure, someone might throw a video up on Youtube only to see it go viral and get passed around like crazy, but that type of phenomenon is often completely unexpected and heavily based on luck. The only way to make it work consistently is to produce content every day-or at least several times a week-and do it over and over and over again. You have to treat it like a second job.

Because you're going to be doing it so often, you need to either be producing stuff you're excited about or have an incredible work ethic. Ideally, you'll be doing both at the same time. If you can't do that, then anything you do online will be effectively like playing the lottery. You might randomly put up a hit every once in a while, but it won't be sustainable in any way.

Second, if you're concerned about earning money during the first year of putting in consistent effort, you're better off spending your time doing something like Mechanical Turk. Mechanical Turk can earn you a few bucks an hour right from the start, so if you're just wanting to earn a few bucks right now while clicking around, that's probably a better approach for you.

The Rules for Making Money

So, why aren't you going to earn a lot of money right away? It's because there are a few rules that govern how people make money online. These rules seem to be true for everything that makes money online.

First of all, almost all money made online by content creators is either through advertisements or through selling the writing itself (as a Kindle book, for example). The Simple Dollar is paid for by the advertisements that appear on each page, appear in the emails, and so on. That's how the service keeps running.

The same is true for Youtube videos. Youtube sells ads on the videos that appear there and split the money between themselves and the creators of the video. Generally, ads are paid for "per view," meaning that whenever you see an ad, the person running the site or the person that made the video or the person who wrote the article makes just a little bit of money (we'll get back to that in a minute).

Whenever you post something new, it gets a small burst of attention. That burst comes from your regular readers, which grow and change over time. When a new article appears on The Simple Dollar, regular readers usually read it within the next few days or so. That burst of traffic grows over time as you build an audience. That's why consistency is so important. People who find your stuff and like it are likely to come back for more, but if there's nothing new for them to see, they're not likely to come back. You need new stuff to get people to come back.

You also need to make sure other people see your stuff. That's usually done by sharing it on social media sites like Facebook or Twitter or Reddit or on topic-specific messageboards. That's how you pull in new readers for that initial burst.

The Long Tail

The second source of income-and it's often the biggest one-is what I call "the long tail." Your article or video gets listed on Google and when people type in the right search terms, they find your article or video. This can go on for years and years and years. Eventually, the "long tail" becomes your primary moneymaker, no matter how popular you are.

Think of it this way. Let's say for every 1,000 views your video or page gets, you earn $2. That's an approximation of what you might expect from most ad networks that new video makers and writers would be able to get into. If you have 100 people read each article you write, you get an initial burst of $0.20 per article. That's not really impressive.

But, let's say that each day, every old article you write gets 5 views. That's enough to earn one cent. So, you write an article, it gets $0.20 initially, and then you earn $0.01 per day for a long time afterward. You write another article, you get that $0.20 initially, and then it earns $0.01 per day for a long time afterward.

Let's say you have a daily schedule of this. Let's look at what that's like over the course of a month:

Day one: You earn $0.20 from that initial article.
Day tw You earn $0.20 from today's article and $0.01 from the "long tail" of yesterday's article, totaling $0.21.
Day three: You earn $0.20 from today's article and $0.02 from the "long tail" of the previous articles, totaling $0.22.
Day thirty: You earn $0.20 from today's article and $0.29 from the "long tail" of the previous articles, totaling $0.49.

You get the idea. It slowly builds on itself, though at this level, it's still not impressive.

Over time, what will happen is that all of the long tails will get just a bit stronger. So many people are just wandering onto your site-and some will stay and click around. The more material you have to click around on, the longer they're going to stay. This means all of your old articles will get just a bit more attention... and then a bit more... and then a bit more. Each article won't ever amount to a whole lot on its own, but if you have a thousand articles up there and each one earns $0.05 in ad revenue a day, you're looking at $50 per day.

Now, ideally, that first "burst" is also growing, too. As you get more and more content out there, you'll gradually attract more and more people and those people will start visiting regularly. (Of course, there's always a ceiling, as some people will stop visiting, too.) So, if you write for three years and have a thousand articles, you might have 10,000 regular readers who read your newest article. Also, each article is garnering 25 views per day on the long tail.

Here's what that month looks like:

Day one: You write article #1,001, which earns $20 from the initial burst, and the last 1,000 articles have 25 visitors each, which totals 25,000 views and thus earns you $50 from the long tail, totaling $70.
Day two: You write article #1,002, which earns $20 from the initial burst, and the last 1,001 articles have 25 visitors each, which totals 25,025 views and thus earns you $50.05 from the long tail, totaling $70.05.
Day thirty: You write article #1,030, which earns $20 from the initial burst, and the last 1,029 articles have 25 visitors each, which totals 25,725 views and thus earns you $51.45 from the long tail, totaling $71.45.

That's a little over $2,000 a month at that point.

Naturally, it won't be nearly that smooth. Some days will spike and other days will seem lower than usual. Your growth rate might be a bit slower or a bit faster. Still, regardless of all of that, the same principle holds true: you have to produce solid stuff consistently for a long period of time to earn money. It's only when you've produced a lot of it that it begins to earn money in a reliable fashion for you.

When I suggest to people that they should make Youtube videos or start a website to earn money online, I'm proposing a very long-term side business that takes very little initial cash investment, but a lot of time investment. It's also a side business that is going to have tiny returns at first and never go beyond that without a great deal of effort, but once the ball starts rolling, it builds on itself very nicely thanks to the "long tail."

This article almost perfectly describes my experience with The Simple Dollar. I have always pushed out more than an article a day and, early on, I produced several short articles each day. Still, for the first year or so of The Simple Dollar, I didn't earn very much. It wasn't until the second year when The Simple Dollar became enough of an earner for me to feel confident about focusing on it full time, and even at that point, it was due to having more than a thousand articles in the bank, accepting a significant drop in income, and having faith that it would continue to grow for a while.

If this doesn't sound like a good avenue for you, then online content production probably isn't for you. Consider other avenues that link to more immediate income, such as a traditional side job or something that converts your time more directly into revenue like the aforementioned Mechanical Turk.

Earning money online from writing and making videos is absolutely possible, but it requires a lot of work at the start for relatively little return. It's only when you break through that trend that you'll start seeing real returns on your invested time.

The Reality of Earning Money Online | The Simple Dollar


Trent Hamm is a personal finance writer at TheSimpleDollar.com. After pulling himself out of his own financial crisis, he founded the site in late 2006 to help others through financially difficult situations; today the site has become a finance, insurance, and retirement resource. Contact Trent at trent AT the simple dollar DOT com; please send site inquiries to inquiries AT the simple dollar DOT com.

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