Many wannabe online entrepreneurs strive to build income that will perpetuate itself on essentially an autopilot without any work. Although this desire may seem more like an unrealistic dream or only a wishful thinking, the truth is that to some extent and with some modification that dream can be achieved. What is not realistic is to think that to achieve this goal is possible without working very hard. It is not! But, if one works hard, eventually, one can earn continuous income almost on an autopilot. The type of income our dreamer entrepreneur must seek has been referred to by various terms including residual income, passive income and recurring income.
Internet marketers use these terms interchangeably. Does it matter? Does anybody care? This article is taking a shot at determining that.
Well, from the perspective of a user that searches for specific terms it seems to matter as is clearly shown in the table below:
The term without a bracket indicates a broad keyword search and the one in the bracket reflects an exact match keyword search.
Notice that the search for recurring income is small at the broad level and that it is negligible at the exact match level. It would suggest to me that likely most of the searches are done by internet marketers that have the keyword on their site and not by too many “civilian” searchers.
On the other hand the search for passive income and residual income keywords, although not robust, is pretty significant with 60, 500 and 14, 500 for passive income broad and exact matches, respectively. The keyword search for residual income is somewhat smaller but still significant at 40, 500 broad and 14, 8oo exact match.
From the perspective of American Internal Revenue Services (IRS) it does not matter, as it only recognizes 3 types of income:
- active (earned) income
- passive income
- portfolio income
And, IRS only defines passive income as an income coming from two sources: rental activity and a trade or business activities in which one does not actively participates. The source of this information is Wikipedia. What surprised me was that Wikipedia actually does not even have a definition of residual income anymore as it was redirected to passive income (that I found quite bizarre).
Obviously, from a perspective of an internet marketer and advertisers it does matter as gazillion pages of discussion on these subjects have been written and advertisers pay good money to advertise using these keywords.
Recurring, Residual and Passive Income: IM definitions
Residual Income Definition
Income or compensation received for work that that has been completed. This income stream allows a person to receive income for the same work done on continuous basis. A good and simple example of this type of an income would be royalty payments that accrue to the owner of an intellectual property, such as music, artwork and books.
Recurring Income Definition
Same as residual income.
Passive Income Definition
Internet marketers define this type of income as earnings from sources in which the earner does not take an active part. Some also refer to this type of money flow as “unearned income”. A good example of this type of an income would be rent in the offline world and hosting of one’s website in the online world. As well, I have noticed that a lot of definitions include writing ebooks in this category.
These definitions seem pretty overlapping and I see no real reason why in the online world the terms could not be used interchangeably. One way or the other the searchers will find your site.
The bottom line is, that whether you think of it as residual income, passive income, recurring or even unearned income it does not really matter. As long as you end up being paid basically on autopilot and for an indefinite period for your hard work that you have done initially.
At this point you are probably screaming, OK Dita show me the money! I was going to include a section here on the different types and ways to generate passive or residual income online. But the article would just be way too long. Instead I am breaking it off here, so we all can take a break. If you want to continue reading, just click here to find out how to make passive, residual income online. And don’t forget to drop me a line and let me know your opinion.