There are several methods to generate passive and residual income using the Internet. For now we will be dealing with generating income from a website though it is very possible to make money without using your own website at all.
Passive income is different than residual income and there are fewer methods that I would classify as truly passive.
Passive income rarely involves customers directly. The idea is that you build automated systems that can function on their own with little or no input from you. Most websites will require some form of continued content creation to insure or even improve traffic from search engines. Automated content data feeds are available but will rarely help with search engine traffic so they pose their own set of problems.
The passive income concept is about feeding the system on occasion and the system generating profit rather than the, more typical, direct customer or client based business model such as is used in the residual income model below.
This allows far more variety in business models. As we now are usually interacting with customers and clients the business possibilities are far broader. The idea of the residual income model is to escape the one time fee or project based model such as some website design companies utilize. A steady flow of monthly or yearly fees is the goal and is a far more powerful method of business growth than the “one off” or project based system.
To achieve some form of “passive income” feel from this method it will be necessary to hire employees or contractors to perform the work for you but in today’s world this may not be that difficult. However even if you do the majority of the work your self this is still an excellent model to work with as it provides a steady flow of revenue and you aren’t finding yourself starting from ground zero at the start of every month. Excellent for the self employed and home based workers as we unusually have little time or budget to do effective marketing.