Transforming Your Blog Into Really Big Business
Photo by wannes deprez / ony one.
The idea of blogging as a source of passive income has always seemed a little off to me (and others). In fact, I’d suggest that most bloggers earning significant money from blogging devote as much time to it as a part-time or full-time job. That’s not as close as we can get, though: passive income should be just that, passive, meaning income for no hands-on work, or income that is hugely disproportionate to the hands-on work required.
If you’re writing blog posts each week, moderating comments, answering email and trying to propel your content forward on social media, you’re not earning passive income. You’re still exchanging time for money.
I’m also skeptical about people who claim to earn passive income from dozens of small niche, SEO and AdSense optimized blogs. Despite some question marks about the value being provided to visitors, I’m also not sure this is passive income, either. Most of those maintaining dozens of these blogs do seem to spend a lot of time on them! Darren Rowse has said it can be a full-time job and more.
The precedent
The above scenarios show bloggers running their blogs in a traditional small-business style: cutting costs by doing everything themselves. The only way to create genuinely passive income is to flip this model on its head and remove yourself from the equation.An inspiring real-life example of this is the entrepreneur Derek Sivers (who runs an amazing blog, despite stolen Favicon… tsk tsk), who created a hugely successful music service in CDBaby.com. However, Derek wanted more time to share his marketing knowledge with musicians and travel as he did it. After working long hours, seven day weeks and sleeping in his office, Derek decided to re-invent his life by removing himself as much as possible from CDBaby.com. He still owned the company, was still profiting from it, but he hired someone to do all the hands-on work for him. Assuming this resulted in work commitments being cut down to just a couple of hours a week–enough to keep the company humming along smoothly on autopilot–he had created a genuine source of passive income.
I have no idea how much the owner of something like CDBaby earns, but I’m guessing the total amount was initially less than what he would have earned doing everything himself. After all, you have to pay people to replace you. I’m also guessing that pay-cut became a phantom compared to huge percentile increase–probably over 1000%–in time he freed up to enjoy the money he had (by riding around Vietnam on a motorbike, for example). Someone else might have used the time to start up yet another entrepreneurial venture and repeat the process again.
Real passive income, not delayed rewards
Let’s look at how we could translate this scenario into what we are all in the business of: blogging. The end point is to own a blog that you can run like big business: hands-off, by employing others to do your work and taking the left-over profits.
If you start out half-way there by employing writers for content creation but managing the blog personally (answering email, promoting and so on) you will initially run at a loss, which might be $250 a week if you are publishing one feature article each week-day. If you take yourself out of the equation completely from the beginning, that loss will run deeper, as you’ll need to cover the cost of a manager. This isn’t something to be overly afraid of: the same goes for any business–small or large. You should be comfortable with running at a loss initially, and be careful to ensure the blog moves out of the red as it grows. After all, entrepreneur literally means someone who is accountable for both outcomes and risks in the business they own.
Alternately, you might choose to run the blog on its own profits alone if you don’t have available capital (or aren’t willing to put it at risk). This model might see you follow a classical small business trajectory, wherein you start off doing everything and gradually reinvest your blog’s earnings into replacing yourself. You might start off writing five articles a week, then four, then three, then two, then one, then none, paying for staff writers from your blog’s earnings. When you have enough left over from paying staff writers you could then promote one of them to an editor role: someone who will manage the other writers, answer email, moderate comments and keep the blog running smoothly from day to day.
Regardless of which route you take, either re-investing profits or starting with seed capital, the end point to aim for is to assume a ‘director’-type role, where you spend a couple of hours a week checking in with the editor and providing feedback and instruction. If you’re brave, you might relinquish this role to someone who knows your vision and can limit your involvement to a weekly progress report. If your bank balance is climbing at the rate you hoped for, then you have no reason to be any more involved than this.
To reach this point, though, your blog will have to be successful and well trafficked. At a minimum content will cost $200 a week. An editor will cost another $200, at the least. To turn a profit, your blog will need to be making at least $400 a week, or about $1600 a month. This is equivalent to six banner ads costing about $270 a week each. Your blog doesn’t need to be in the Technorati Top 100 to reach this kind of level, but you will need either a) around 300,000 page views a month, or b) a niche that encourages the spending of money (it will either be highly productized or read by those who’re willing to spend money to make it). Niches that create a higher ROI for advertisers mean that you can charge more for your advertising impressions, even if you have less traffic.
Once you have on blog running passively in this way, you can start another, and repeat the process. The two key elements of success here are, firstly, your own savvy for creating popular blogs, and secondly, your sense for good people and good content. You shouldn’t abide an editor who lets your blog stagnate, or a writer who rarely receives more than a lukewarm response. Work with them to rectify the situation, or find someone else: either way, never let yourself become complacent.
Photo by wannes deprez / ony one.
If you’re interested in running a big business model blog, here are some principles to keep in mind:
- Small niches probably won’t work here unless you’re selling an expensive product or service. If you’re relying mainly on advertising, you need to have broad appeal (which = good traffic). This isn’t to suggest you blog about ‘business’ or ‘technology’, but rather that you don’t blog about super-specific topics.
- Always think about ways to weave in income streams that go beyond advertising. This includes job boards, eBooks, products, subscription-only content, courses and video seminars.
- If you earn most of your profit via privately negotiated advertising based on page views, search out and treasure writers with a knack for social media optimized content. You don’t necessarily have to charge advertisers for social media page views, but charging the same price for more traffic can make your advertising plans much more attractive.
- Your writers are the lifeblood of your blogs. Eventually you will want your editor to handle the hiring and (if necessary) firing of them, but initially you will probably be in charge of putting a writing team together. Scrimping on your authors is like scrimping on fresh ingredients in a restaurant–it only lowers the quality of your product.
- The best writers are people who run their own flourishing blog. You should also look to have a social media maverick amongst them: someone who knows how to write headlines that kill.
- You should pay a minimum of $30 for a 500 word article, and at least $50 for a 1,000 word article. A good strategy is to work out your pricing based on a minimum rate or more. I think $50 posts that are 750 words or more is perfect if you’re publishing long-ish feature posts.
- Don’t always look for the cheapest deal. If an author is asking for $75 or $100 per article it probably means they’re receiving a lot of offers and can afford to have you say no–which probably means they’re also bloody good. Don’t be afraid to pay more for writers with that certain star quality.
Most important of all is this: treat your blog like a real business. Invest money in it. Hire a good consultant, hire a marketer, get a professional design and logo. If you want to play it safe, only re-invest what you earn. Fundamentally, though, the old saying is as true here as it is anywhere else: you have to spend money to make money. Business owners who boast about their miniscule expenditures are probably only talking about money: usually, they trade time in its place. Sadly, they don’t believe their time is worth anything. The web is at the forefront of a new culture that says time is infinitely more valuable.
***
Those of you who read Skelliewag regularly will know that I usually don’t talk about business here. Those of you who read Anywired will know I usually do talk about business there. The truth is pretty simple: I like weekends. I don’t think it’s possible for me to work full-time, have weekends and do everything on two blogs with time left over to focus on other entrepreneurial projects–at least, not in the long-term. My aim is to transform Anywired into the kind of big business model outlined above, though initially I will start off doing everything and then begin to use advertising revenue to find writers and, eventually, a manager (though I still want to write one or two posts each week for fun).
The new Anywired is going to be related but significantly different to what it was before. The old Anywired will be absorbed into Skelliewag, so that I have the freedom to talk about online business, time-minimal income, entrepreneurship and marketing alongside blogging and social media (though all the content will still be written for bloggers). Will this become another ‘make money online’ blog? Definitely not. I’m not really interested in AdSense and affiliate programs, but in using blogs to support and fuel your entrepreneurial projects. In the mean-time, I’ll let you know when the new Anywired is ready.
…because at the end of the day, all I wanna do is enjoy my friends and family, travel and help people succeed.
Et tu, Skellie?
:) Brilliant blog post! I’ll be very interested to see the direction that anywired takes and if you’d incorporate your own freelance projects into the ‘very big business.’
Would you consider offering information products on Skelliewag? I thought that a DIY Blog Usability kit would come in really handy - there is an audience there, and it would remove a large amount of your time from the equation.
Once the blog transition is complete, I’d love to read case studies about it. You do see many people creating extra blogs - its curious to observe how they evolve along with the writers vision.
Thank you for such an inspirational post.
That’s a great post, Skellie. The advertising model of blogging is extremely flawed and I like to think of a blog as a platform for other opportunities rather than a business in itself.
Question for you though. Where did you come up with the $30 minimum for paying bloggers? I would imagine that rates would depend on the industry and from what I’ve seen in the past, the average is much lower than the $30-50 you mention.
Great stuff, how long does it take you to write a post?
I like to think in terms of productizing yourself for passive income. For example, turning your insights into books. Information products really do seem like the way to go.
I’m looking forward to watching you transform your business. If you haven’t read the E-Myth, I highly recommend it. There’s beautiful metaphors like - the manager, the entrepreneur and the technician and there’s key concepts about making your business a system. My favorite lesson though is — working on your business, is working on your life.
Brilliant summary of all the things I need to do right now. Thanks for sharing the ideas!
Looking forward to the new Anywired!
Sounds good, Skellie, and I’m looking forward to it.
What you outlined is exactly what I’m in the middle of doing with my blogs. I have a formula that I’m honing and I’m currently filling in a team of people although I will do the management and tech stuff initially (simply because I enjoy it and am good at it).
Skellie -
I like the long post format you’ve got going on here. I agree that it’s difficult to call blogging a source of passive income, because I know I spend a good amount of time working on (and in) my blog - too much to call it passive at all.
Fortunately, building additional income streams that are driven by the blog makes it a little more passive. :-)
(stumbled)
Excellent post!
I’m a fairly new reader to this blog, and I must say that this was a topic I’ve been hungry for. I’m in the planning phase for my first (”real”) blog launch, and the things I’ve been wondering about most are covered here — actual traffic numbers that translate to actual dollar numbers, and actual costs. Everything else I read seems so vague.
That said - I’m not sure my primary goal for my new blog is to shift all work to someone else… I feel I’m in it for some income just as much as I’m in it to dive into the world of web writing.
Looking forward to checking out Anywired…
Honored by the link, Skellie! Sorry about the favicon - I was just testing out ideas the day you linked. The one that’s there is original now.
What’s nice about setting things up in the passive-income way that Skellie is describing - is you can do things because you CHOOSE to, not because to HAVE to.
In my case, I still loved doing all the back-end programming, so there were 80-something employees running every other aspect of the business, but I still did most of the PHP/SQL development from my laptop from wherever I was travelling.
@J.D.: totally agree with you about E-Myth Revisited by Michael Gerber, and also about “productizing” your writing into a book. I took a bunch of old posts I’d written over the years and put them into a PDF (http://sivers.org/pdf) - and hundreds of people who’d never bothered to click through to all of those posts before now were finally reading them for the first time, and gushing thanks.
Highly recommended for anyone who’s written a lot of great stuff that is scattered around.
So many articles out there that promise easy money from home. Your article stated the facts and what the real world of blogging looks like. Unfortunately, even constant, good, relevant content doesn’t always turn into dollars, but we keep trying. Thanks.
Thanks Skellie - this article has really inspired me to start properly investing in my online work. Or, more to the point, to invest my money efficiently rather than to invest my own time inefficiently.
Just one small nitpick though - your maths is slightly off. Six banner ads at $270 per week would raise $1,620 per week, rather than $1600 per month!
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Hey Skellie, I’m looking forward to seeing the new Anywired (I was enjoying the old one a lot!)
My one concern with the stepping-back-from-your-blog model of business is that I love the actual blogging itself — writing articles in particular — and I feel I’d never find writers/editors who shared my vision enough for a particular blog to manage it for me. I’m maybe showing my perfectionist/control freak side here, but something in me is very uncomfortable with the idea of creating a successful blog then handing over the reins.
Do you think there are some niches where this would work and others where it wouldn’t? I would think a self development blog, or any blog with a strong personal brand, would struggle (I’m thinking Steve Pavlina, ProBlogger, Seth Godin etc…)
wow, I just started blogging and i never knew people were making money off it. thanks, you opened my eyes a bit. still not sure how it works but it all sounds real good.
Btw. it is possbile to run a site without paying participants. It is not always possible. You have to give any kind of value back. This could be self-promotion, pure fun with the topic and the site, community.
@ Joshua: All good things, though I get value from my job beyond income, and I do enjoy being the sole blogger here. I’d just rather benefit from 2 - 3 blogs while only working on one :) More time for the stuff you mentioned!
@ Jadecraven: The book is coming out in 2009 so I’ll be offering that here. Probably don’t have more information products in me until after that :)
@ Gyutae: You’re right, most jobs offer less than that but that’s why freelance blogging has a bad name. The best blogs pay their writers better and thus the content is better :) If people are rushing to fulfill a word count then the content is simply going to be poor. Having worked as a freelance blogger I think less than $30 would be exploitative. Different industries can offer more though. I’d be inclined to pay more than that for better writers (or to help turn them into better writers by helping them like the job).
@ J.D.: I’ve struggled with the writing in the E-Myth a bit, but the core principles are great. Once Anywired is set up I’ll explain the philosophy behind the new direction :)
@ Brian: I’d actually suggest you have the experience of running your own blog first, as you’ll learn bucket-loads about what it takes to create a success. I’d keep 1 blog that you write on personally, then expand into a 2nd and 3rd, or more, run as business models. Do this after you feel you ‘get’ blogging :)
@ Derek: Great point! Sometimes it’s not a matter of doing no work at all, but simplifying down to the work that doesn’t feel like work. I know I would never want to give up this blog to someone else, for example.
@ Andy: I tend to round-down and up almost without thinking… probably should be more specific! :)
@ Ali: I think it’s not a matter of giving up all your blogs but maybe having one blog (or even two if you can manage it) that you update for the love of it, and then starting others that you run as business models that don’t need much hands-on effort. I definitely wouldn’t hand Skelliewag over two a team of writers and an editor :)
@ Nemo: http://www.problogger.com is really a mind-blowing resource for any blogger who wants to learn about making money through blogs. Good luck!
@ Myrko: I think if you’re big enough you can get to the point where you can subsist off the guest-posts of other writers (I think ProBlogger + Zen Habits are mostly guest-posts now). But if you’re only a small site I think you should expect to pay, as you just don’t have that much to offer in return. Plus, good writers will be able to get paid jobs, so you’ll need to match that to get them.
Great article, Skellie. It’s been great watching your development. It sounds wise to make a profit from all your experience. Why shouldn’t you? :-)
I seldom read long posts but this one is really informative.
I really hate blogs that obviously says that they are money making blogs but they do not realized what making money on line is.
I thought you will not mention the last principle. I think this ends up by saying - If you to earn from business, invest on quality instead of plain money.
Skellie - the point was that you’ve rounded down from months to weeks, not from $1620 to $1600 :-)
@ Andy: Oooh, I get you. I meant $270 a month. Doh!
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Dear Skellie (of Nazareth),
I paid Derek to post here (well okay, not really). But seriously, he paid me to post here. One “Siver-dollar” is the equivalent of 10,000 United States dollars.
Virtually *
:P
I would like Caviar with your next post please.
Reductively & Succinctly,
- Ss
As a reader of your posts this one is just another terrific read my blog littlenomads has got so much to learn from your wisdom. When is the book due?
Cheers James
Hi Skellie - it does take a long time to replace yourself in your business - usually years rather than months. And there’s lots of other things to consider, aside from making a decent amount of profit.
You’ve offered some great advice but I would hate for people to think it was something they could achieve overnight.
I’ve tried to hire writers. It can be iffy. Some of them are good, others are much less so. I have all my writers submit their posts, then I go through and edit the hell out of them. It can sometimes take me longer to edit a post by someone else than it does to write my own post.
There are some voices out there that I do like to read. Yours is a good one, which is why I subscribed to your feed a while back. But it’s very hard to find a good writer that you don’t have to edit much. Very hard. Of course we can’t afford to pay much so that might have something to do with it.
[...] Skelli at Skelliwag.org, Transforming Your Blog Into Really Big Business. If you’re trying to earn a living directly from your blog this is a [...]
This too means more money to be made for those who are in the editorial and writing business. Right? :)
Awesome post Skellie, for many people free time is better than money. What good is all the money if you don’t have the time to spend it? You laid out a great outline to help people move away from the simple self-run blog.
How interesting! This was a very informative & helpful post. I really got a lot out of this! Thank you!
Very interesting business model you layout. Very educational.
[...] mushin published a blog post. Steve Rubel (friend of ~C4Chaos): Transforming Your Blog Into Really Big Business (via FriendFeed) [...]
[...] shares insight on Transforming Your Blog Into Really Big Business and strikes a chord at least in of me. This is bound to happen here too, at some point as we are [...]
Very good idea to make money..
KSK
Wow. That elequently stated exactly what I am planning, though my plan didn’t sound nearly as, well, coherent. ;-) My goal is to write 10-or-so series regarding my niche that are all foundational to change, achievement and the like. After building popularity, I plan on hiring the new posts to be written by others — I’ll cut costs down by allowing the authors to keep 100% of the AdSense earnings, as well as the $50 or so for the content. (I am looking for super quality freelancers, not lots of articles. Three or four per week is plenty.)
What do you think of the “scheme”? Should I be willing to fork more out?
[...] many popular blogs seem to be in on this mini-conspiracy, trumpeting the low barriers to entry, and the low expectations many people have for the content on [...]
Great post but it is a far future that I can follow this. Thanks
Excellent “star quality” post Skellie.
Thanks for this paragraph in particular: “Don’t always look for the cheapest deal. If an author is asking for $75 or $100 per article it probably means they’re receiving a lot of offers and can afford to have you say no–which probably means they’re also bloody good. Don’t be afraid to pay more for writers with that certain star quality.”
As an SEO copywriter, I charge $35 - $50 per 350-450 word article. I started at $25. Good writing is what drives traffic and sales. A lot of smart website owners are starting to realize this - and gladly pay for it.
Good luck with the new direction of Anywired.
I started goofing with a blog back in 2003…That’s a long time ago in computer/internet years… If wish I had been more persistent… I could have been at least able to get ahead of my bills…
I have started over now with a couple of new blogs. I ams dilegently working and reading tips on how to build it up… But I have only earned about $50.00 in several months…
I have re commited myself to at least supplementing my income to cover hosting and other costs and to pay for premium cable TV
Great Post…
Very insightful - thanks. When you’re starting out, it’s just exciting to actually be able to earn money from running a website, but once you’ve been doing it for awhile, you realise it can be a treadmill, and not really provide the freedom you first thought it would. I think this is very important advice if you want to be in it for the long haul - whatever that is! Be honest, how many sites do you know that have been around for more than a handful of years? Google only just turned 10, after all!
One word: interviews!
As a new reader to this blog I was really impressed with this article.
Thank you.
More than anything it forced me to think beyond my natural instinctive reasons for creating a blog (which was essentially a “one person diary”).
Now I’m thinking bigger and more directly about how to turn a blog into a bonafide business.
Great stuff.
All the best.
[...] Transforming Your Blog in to Really Big Business - Skellie shares some thoughts and tips. [...]
Great post!
It’s always nice to hear from another person who is jumping through the same hoops.
I’m working on building my blog into an actual business, and having run a handful of businesses before, I can tell you the learning curve is higher than I expected!
I’d be interested to hear about any experiences you’ve had with different revenue sources…Adsense, affiliate programs, one-on-one ad sales, job boards, etc.
Great article on this issue. There are so many posts that praise you the way to earn money with your blog, but none of them elaborates it in this depth.
[...] Transforming Your Blog Into Really Big Business (SkellieWag) [...]
Great advice Skellie, I will follow your advice in future!
Hey there !
It is all the right things that you have put up in your post. But has any one of you ever thought why people don’t blog in the first place.. Here is a post describing 10 Reasons why people don’t blog
Relationship between fashion and Technology This is my another blog.
I just like blogging
Your web page does not correctly work in safari browser
Hi Skellie - it does take a long time to replace yourself in your business - usually years rather than months. And there’s lots of other things to consider, aside from making a decent amount of profit.
You’ve offered some great advice but I would hate for people to think it was something they could achieve overnight.
Hello,
thanks a lot for all the useful hints on you site,
keep on doing,
greetings from germany
Tom