What is residual income and who earns it? Residual income is money is a continuous stream of money that comes from a body of work that has been completed or may need regular maintenance. It can be earned by anyone who chooses to do work that earns this type of revenue.
Most of us are familiar with the concept of royalties as a type of residual income. Authors are perhaps most known for receiving royalties on their work. Generally, they are paid by the publisher an advance fee and then they get continuous payments of royalties which might correspond to a small percentage of the price each book is sold for.
Musicians are another group of people for whom royalty payments provide a substantial part of their income. Musicians responsible for creating a piece of music will get paid every time copies of the music are sold on CD or downloaded in MP3 format.
Music producers get royalties each time the piece receives radio airplay and any time it is rerecorded by another artist. Actors receive royalties in a similar way and get paid any time their movie is broadcast for public viewing.
Another form of residual income is earned by patent owners. An inventor may create a new invention and registers ownership of the invention by securing a patent on it. Every time the patent is used in any product that is marketed and sold the inventor is paid royalties. Royalties paid for books, music, film and patents can continue to be paid long after the owner is dead. Whoever inherits the royalty ownership will carry on receiving payments. Clearly, substantial amounts of money can be earned from royalty payments but not all residual income is earned by rich and famous celebrities and their families.
Today, it is not just the rich and famous or technological geniuses earning residual income. With the onset of the information age, whole new leagues of residual income earners have been created in its wake. This is mostly through website ownership. It is now possible for some webmasters to be away in some exotic location on vacation while their websites continue to earn them money.
Website owners mostly earn money from advertising placed on their websites. This is often through affiliate marketing where products related to the website content are advertised on the site. Visitors to the site provide a targeted stream of potential buyers for that product and thus help the site owner generate an income each time their visits convert into sales. Adsense is a type of affiliate marketing run by Google. With Adsense, the webmaster does not have to do any work sourcing relevant ads. Google Bots are able to read the content of a website and thus automatically select the most appropriate ads to appear.
Although website ownership can earn very attractive residual incomes for their owners there is an important difference between this and the royalties earned from a book or movie or a patent. Generally speaking, moneys earned as royalties are paid on work that has finished or is complete entity in its own right. However, website owners may have to continuously update their websites in order to earn a residual income. Websites have to be seen as up to date in order to attract the volumes of traffic that will make them profitable from advertising. However, maintenance of a website is comparatively little work compared to the potential income that can be earned from it.
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