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Why Passive Income Will Earn You More Than Upfront Payments

Updated on June 4, 2012

Writing online articles allows authors to reach a wide audience, and earn money from their efforts. However, with the invention and widespread success of online advertising, there are now two incentive options for authors; they can sell their work for an upfront, lump sum payment, or they can earn passive residual income from advertising on their own blog or another website.

Hubpages is one such website; they offer revenue sharing of Google Adsense ads and other various CPM (Cost Per Mille, or amount of money earned per 1,000 viewers) advertisers. This allows users to collect revenue from their work, and is relatively low risk for Hubpages itself, as authors will only be rewarded if Hubpages also makes money.

However, this approach to writing online is not as lucrative as many would gusta. Users tend to see small earnings, and limited growth of their earnings over time. The average daily earnings of most authors are likely below $1.00 a day, as they simply do not receive that much traffic. Many authors, including myself, have at times thought and acted upon the idea of writing to be paid upfront; this process basically means that the rights to your articles are purchased upon completion and review by an editor, and you are paid a lump sum fee, likely a relatively large some when compared to revenue sharing incentives. However, you lose all rights to that article, and usually that article is used to generate revenue from ads by whoever purchased your writing.

What does this mean?

Basically, if someone is willing to pay you $5-$15, or even more, for an article that you have written, it means that the article is worth even more to them, and that they will likely earn more money from that article than you will by accepting that payment. When you sell your article, you no longer have the rights to it – you cannot republish it, monetize it, or otherwise use it as it is no longer your property. As such, your earnings potential is quite limited.

Revenue sharing, on the other hand, could potentially earn you hundreds of dollars from a single article. As an example, I am going to do some math based on my own statistics with Google Adsense:

My CTR is 1.11%, which means that 1.11% of all of my viewers will click on an ad on one of my articles.

My average CPC is $0.15, which means that I earn, on average, fifteen cents per click on my articles.

My average CPM is $0.99, which means I earn just under a dollar for every 1,000 ad views on my articles.

These statistics are actually below average for Google Adsense, which means that this is a slightly conservative estimate.

Now, let’s say I get 1,000 views a day, or 30,000 a month. This converts to 360,000 views a year, which is a respectable but not amazing amount of views.

This views, based on my average statistics, will equate to 11 clicks a day, plus $0.99 in CPM. This means that you will earn roughly $2.64 each day. This works out to $79.20 a month, or $950.40 a year.

This means that you can earn quite a bit more from revenue sharing than you can from upfront payments. However, upfront payments do still have an appeal; payments are usually quicker, rewards per article tend to be greater, and less time has to be dedicated to promoting and updating past work.

While these numbers are supposed to represent an accurate representation, they are only based off of one author’s experiences and as such real results and earnings will vary. Of course, the larger problem with revenue sharing is that to achieve 1,000 views a day often requires more than a single article, which means that more time has to be dedicated to writing. With upfront payments, the reward is instant and will often overshadow the majority of revenue sharing rewards.

How do you prefer to be paid for your articles?

See results

Like to write? Want to earn some extra cash talking about things that you love? You can sign up with Hubpages and connect with a network of thousands of writers who are read by millions each day, and make some extra money while doing it! Sign up here.

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Get Paid to Write for Knoji

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    • Mr Archer profile image

      Mr Archer 5 years ago from Missouri

      As I am relatively new, and have only a finite amount of hobs yet, my payment is low. But, as you stated, I fully expect it to grow with time. Thank you for your hub, and the explanation. This will keep me posting. As the movie said, "If you build it, he will come".

    • Cathleena Beams profile image

      Cathleena Beams 5 years ago from Lascassas, Tennessee

      Thank you for sharing your insights on passive income and how it can be more lucrative over time than selling your work outright one time and losing your resell rights to it. You have done an excellent job explaining the advantage of revenue sharing.

    • supermom_in_ny profile image

      supermom_in_ny 5 years ago from NY

      I love the way you explained the difference between upfront payments and revenue share. Great hub. Voted up and useful! ;)