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"Passive Income or Payment Upfront?  Which is Best?" 

Passive income describes a task that generates future income without further effort, compared to upfront payment where the worker is paid immediately or shortly after completing the task. 

A good example of passive income is Google’s AdSense program, where participants are paid for every click made on an AdSense unit on their websites and blogs. 

We’ll take writing as our speculative task and Writer A who writes an article and uploads it to his blog.  The article is search engine optimised for keywords earning a dollar or so for every click on an AdSense unit placed alongside.   Imagine the article takes two hours to write and upload, and begins generating income from AdSense when it’s spotted by search engines a few days later. 

Once search engine indexed, the article can continue attracting traffic and generating AdSense income for many years to come.  Writer A is earning ‘passive income’, and while daily income might be low, over time it can add up to sizeable earnings for articles that take just a few hours each to write.

Now look at Writer B who has pressing bills to pay and can’t afford the luxury of working now and being paid later.  In his case, payment upfront might be a better alternative to passive income, and means he’ll be paid shortly after his article finds a new owner.  This is how most writers work at sites like Constant Content and eLance, where typically they’ll set their own rates for articles sold off the page or written to client specifications.  Earnings can be high, with writers setting their own rates, and sometimes earning one hundred dollars or more for every article sold. 

Which writer earns more for two hours or so crafting an article?

Writer A making passive income, or Writer B who gets paid upfront?

The answer depends primarily on how much Writer A receives for clicks on AdSense units accompanying his article, and how long he is prepared to wait to generate adequate payment for his work.  Another factor is how much money Writer B can expect for his article and how long it takes to sell.

Let’s say Writer A earns an average $1 for every AdSense click, and clocks up three clicks a day from search engine traffic, resulting in $3 income each day, and more than $1,000 dollars in the article’s first year online.  That income should continue, making potentially $10,000 over ten years, and rising exponentially from there.

Now back to writer Writer B who is competing for work with thousands of other writers on most freelance writing websites.  Competition is immensely tough and he needs to keep his rates low to tempt buyers for his work.  But B is a long-established writer and most of his articles sell within days.  He writes ten articles every week, about five hundred over twelve months, and banks around $50,000 annually, compared to Writer A who earns pretty much the same from just fifty articles.

So here’s that question again: Which is best: passive income or payment upfront?

I’ll leave you to ponder the answer!