(Originally posted in 6/05/2018)
Passive income using platforms like Gumroad, Society6 or Zazzle sounds like fun.
If you are a content creator, you can use Patreon first as your main hub and later release content via Gumroad and earn something extra.
But is this concept really viable?
How much do most people earn and how much work is involved here?
Why is it that you find 100 ideas on how to get passive income on google, but not one survey that shows how much content creators really make?
First off, the ugly truth is not a subjective opinion thing, it is a matter of fact and it depends on a rule.
If you know the rule, you know what you can do to earn more or to change your circumstances.
First thing first:
Since I am an artist, I will speak from an artist point of view, and like many, I had plenty of merchandising sites online, like Zazzle, Redbubble, DeviantArt prints and InPrnt.
I closed them all down – read on to get an idea why.
Then later I got Patreon, or better said, I signed up to Patreon when nobody used it and later when other artists made a living from it, I jumped at it and saw if it was any good.
After 3 years I have tried many things and what follows is my personal solution. I wanted to share it in this article, to inspire others to see things differently.
So, lets say you are somehow stuck with Patreon, or Gumroad or whatever, because artist xyz makes $2000 a month or more and you receive $67.80.
Depending on your resilience you try for half a year or a full year to raise the bar…
Let me tell you, I tried exactly that for 2,5 years and didn’t get past $70-$80 a month, with Gumroad combined, maybe $100 in total, that is $1200 a year which equals to 960 €.
Lets agree, that is not enough to make a living.
One could argue that passive income is not meant to make a living out of it. OK, while this is true for most platforms like Cubebrush, Gumroad or zazzle, you could very well do this on Patreon.
You could say, I have not tried hard enough, or better rewards, better content, exclusive offers, etc.
I tried everything that is possible, believe me, so I’m with at least 80% of frustrated Patreon or Gumroad users and that gets me a step closer to the ugly truth:
Let this sink in for a minute.
These numbers are not made up, they roughly follow a power law distribution called Pareto principle or 80/20 rule.
The interesting thing is that it applies perfectly to these platforms as it does for rich/poor people in real life, but that is not the ugly truth as you might think. This is just a rule.
The ugly truth is that you can try as much as you want, if you are one of the crowd who has to share their 20% income with 80% of other content creators out there, you can work your ass off, but you will never be one of the 20% crop if you keep doing what you do now. Ever. Forget it.
This might read like the words of an old Eremit or a Mr. Spock in exile, but this is a matter of fact.
I researched this topic a lot and successful artists on Patreon or other platforms are not “made” like record labels made their stars or a gallery “made” their signature artists. These platforms follow patterns of democracy and thus the critical mass decides what is good, not the creator.
Vitamin-B can help and being presented in their newsletter helps, but eventually only to the extent of people that are into what you do, not more.
As creator, you either are good or you are not. Your talent and your 20 awards do not count.
If you have a huge social media following, this can help but not much.
I started my Patreon campaign with a following of over 15.000 followers on deviantArt and I posted and linked to my content like a maniac. And others do so too. Without effect.
The one thing that is also a truth; you will never find out if you are one of the 20% or the 80% if you do not try. But the trial period should be set accordingly, maybe a year is a good timeframe to experiment a lot.
If you are stuck and don’t know what to do, there are two solutions to this problem:
The active one:
This involves a lot of hard work. It requires you to do a lot of market research, do a complete rebranding, change your style, work, look, niche, whatever and start from scratch. Be a different person or artist. For whatever you do, it could take 2-3 years, just to make it into the top 20% on whatever site.
Is that really what you need?
In my case I could have catered to an audience that liked more NSFW content or furry/yiff stuff or tutorials. But that is essentially not what I wanted to do.
The passive solution involves thinking outside of the box:
This is something that happened with me and got me rather by surprise and observation. I found that I initially am one of the 20% top earners at conventions, because visitors want to hang what I do on a wall. Naturally I do more work towards this audience, from branding to communicating, everything.
As a result having a solid online presence to build an image and order works online is logical.
So my solution is to see the equation in the correct light.
With the money from Patreon and Gumroad combined, I thought it makes sense to use a better platform than Storenvy to host a new shopping website.
Now a good package like Shopify or any other SaaS-option costs a fixed yearly fee, lets say 400€ for this. Another 100 for add-ons, support, whatever. Maybe 300€ for advertising campaigns throughout the year and then there is around 100€ left for other promotional material like flyer, business cards, etc.
Now this is 900€ for a web-shop business on liabilities, opposed to 960€ in assets from passive income, this means even some wiggle room for unforeseen events.
This also means I don’t have the need to sell at all cost like a regular vendor. If I sell one thing, I have made a turnover.
The Ars Fantasio online-shop I’m talking about is not just another outlet, I created that with the intention of being an inspiring and interactive experience as well as a work of art (or design) in itself.
At this point I want to thank my supporters who have made this possible.
It may sound as if I use Patreon only as passive income source, but that is not true; one of my core-policies is still to “post on Patreon first“, so whenever I have a new artwork, patrons see it first and also exclusive works and more behind the scenes info.
Why bother, I get my cheque from zazzle every other months or so?
Sure thing. In fact, everytime you get a cheque with $100 from zazzle, they have earned $300-$400 or more with your creation at least. Sum this up. If you are one of the top 20% crop that makes $3000 a month from InPrnt or society6, these companies have made 10k revenue from you.
You could argue that this is passive income because you don’t need to do anything for this money.
Of course you have to do! More work, new work, constantly, otherwise they won’t feature you in their mailings and without that they don’t sell much. As some famous admiral once said:”It’s a trap”.
Conclusion / TL:DR
The term passive income is very misleading, done right, it is an enormous pile of work, but it is done upfront, with lagged payment. The payment can add up over the years, but essentially if you are a top earner, the companies earn a premium on you and if you are one of the low performers, you invest a lot of time and energy for very little in return – and it does not say anything about the quality or quantity of your work.
One solution is to use passive income that is generally low but steady, to jumpstart other business venture ideas with that.
The other solution requires to completely rethink your approach, start from scratch and build a complete new business catering the exact audience that you want to target.
Tip#1: Give yourself an exact goal and timeframe to achieve that goal. This way you don’t waste your time
Tip#2: Do your research and see if a rebranding, new style and new campaign could give you a necessary boost.
Tip#3: If you don’t have the time for that, see if you have fixed liabilities that you can allocate to the passive income assets. This gives you a structured overhead over what is left and frees your mind a bit. This way you can focus on what is really important to you.
Ultimately, passive income is meant for the long run and requires steady work. Not as much as active income, but if you write on a blog and want an ebook, you have to compile all your articles, otherwise you won’t have a book and that is work for passive income.
Sometimes, in rare cases, such a book can become a bestseller, but I would not rely on it.
If you do what you do with passion, most of the side hustle come easy to you and it can add up. If it adds up, see it as a jump-start for new business ideas that help you kick off things without much risk.
What are your experiences? How do you deal with this kind of democracy that can make or break a venture?
I’d like to read that in your comment.