How Passive Income has Become the Internet’s Biggest Sham

Here are 4 reasons why you’ll never earn money ‘while you sleep’.

Photo by NeONBRAND on Unsplash

There’s no such thing as passive income. At least, not in the way your favorite Internet influencer tells you.

I first heard the term “passive income” about five years ago while on some travel blog. They promised that if done right, I could make money while I sleep and travel the world.

After 5 years on the pursuit of this elusive dream, I now know it was all a lie.

Let’s zoom in on the aspects of passive income that first enticed me as a young college student.

First, what is passive income?

Passive income is money you earn passively — meaning without doing any direct work. In theory, if you can earn passive income, you can earn it in your sleep. Because, by nature, it doesn’t require any direct action on your part.

Let’s take, for example, an online store owner and his (her) quest for passive income.

A store owner would earn passive income once his store is up and running. Online, products listed, and with an automated transaction system in place.

Then, people all over the world could shop for his merchandise. Supposedly, if he has the correct system in place, he may never have to lay a finger on his business again.

The theory of passive income is: put in the leg work now, reap the rewards later. That’s awesome at surface-level. But it’s hardly the truth.

The store owner had to do a lot of work to ensure his store would succeed. That includes building the website. Creating the product. Sourcing the supply chain. Listing the merchandise. Driving traffic to his business. Launching his company. Emails. Troubleshooting. Conflict resolution. Customer support. And many more details we don’t see.

As an online business owner, you have to wear a ton of different hats.

But the fact of the matter is, that online store owner is hardly ever receiving money passively. Even when his shop is successful.

Why is passive income a sham?

Here are a few reasons I’ve found out the work never ends:

You’ll stay busy.

Even when operating an online business meant to earn passive income, the work never stops. Let’s stick with the shop owner from above.

He has just gotten his first sale and feels pretty good. Now, he watches the transaction process. He must ensure the shipping process is carried out as planned. He must wait for customer feedback. And he must quickly turn focus to his next sale. That’s a lot of stress, for starters.

But, then, he has more work to do. To keep customers coming to his site, he has to give them a reason. Running sales, providing helpful information, attracting them with sleek advertisements. It’s all a part of a business owner’s duties.

The same goes for travel bloggers who claim they make enough to travel the world. Still, they have to keep providing the content.

The online world is a place where content is king. If you’re not churning out new content or products, you quickly become irrelevant. Then, the customers quit coming.

Those dirty algorithms will put you on the back burner forever. I learned that the hard way right when I thought I had it all figured out. If you quit writing, the customers quit coming. If you get lazy and your content isn’t as useful as it once was, the customers quit coming. As a digital content creator, you must provide to earn.

You have to stay up-to-date with trends.

Most passive-incomers work online. It has proved to be the most convenient way to work toward this dream as no physical presence is required.

Learning what it took to succeed with a blog or social media in 2017 is not the same secret sauce it requires in 2021.

The online spectrum is a forever-changing landscape. Always improving, despite what your old school mentality tells you.

It’s no wonder you don’t like change. Especially as someone who has learned and mastered the platform in its previous form. Of course, you don’t want to change your tried and true processes. But that’s what it takes. Forever adapting. You have to grow with the platforms on which you sell with.

If you’re not willing to do that, you’ll never succeed.

Competitors are forever hustling.

You think because you made your first sale, you’ll be able to kick back and watch the dollars fly in?


Actually, it’s quite the opposite. Now, with proof that you can succeed, you’ll have to start turning the wheels harder or else someone else will. With the spotlight on you, your customers will keep you chasing. Even the most organized business owners get caught in the frenzy.

The problem with the Internet, with as great as it is and the opportunities it provides, your competition is no longer local. You’re in a global race. There will always be someone, even new up-and-comers, who are out-hustling you.

Income sources dry up.

Lastly, and I experienced this the hard way, sometimes the income sources go dry. What do I mean? Take my example: I was receiving income from affiliate marketing. Not familiar with affiliate marketing? It’s when you promote a brand or product and take home a percentage of the sales originating from your promotion.

In my example, a main source of my ‘passive’ income hailed from one startup company. To get things rolling and gain traction online, the company offered a pretty lucrative affiliate program.

There were bloggers and vloggers from all over who saw it as an easy stream of income. Even if they weren’t dedicated users of the platform. And, for the company, it worked!

They were sacrificing a large part of their profits to the program, though. Sill, through their affiliates, they found a sizable customer base. Exactly what they needed.

Once their customers were locked in, they no longer needed the affiliate program. Thus, ending the partnership and a good chunk of my income. This isn’t uncommon in the game of affiliate marketing.

There is one solution: Outsourcing.

Outsourcing is delegating lower-level tasks to others. Tasks that somebody else can do as well, if not better.

Many business owners I’ve spoken to have sworn by outsourcing. They say it will spare you your sanity in the pursuit.

I believe in outsourcing but I’m also a perfectionist. In the businesses I’ve built, I always want things operating in a uniform way; the way I’ve built it to be. And, trust me, it takes a lot of work and time for outsourcing to be as effective as it sounds.

But, once you find reliable team members who are capable of listening, outsourcing can be worth it. Still, you’ll have to then make more money to pay your contracted help. It can be a vicious cycle if you don’t have goals.

Only 2 sources of truly passive income.

Over the years, I’ve discovered passive income does exist. But not in the way people online sell it. In reality, it only exists in 2 ways and it’s actually pretty boring and not possible for everyone.


Ah, the trust fund babies. Or those who have recently experienced tragedy and have come upon an inheritance. Of course, this is a source of effortless income. Though, you can’t exactly choose when this happens to you.

Stock market.

The stock market, namely dividends, is the only true-true source of passive income. And, while it’s awesome when you’ve invested enough to earn a sizable monthly income in dividends, you have to work a long time before getting to that point. With dedicated personal finances.

This isn’t a near-sighted type of income. Think of this type of passive income as a later-in-life goal.

With a dream of passive income behind me, I can say I’ve come to terms with reality. Even if true passive income doesn’t exist in the way I had hoped, there is still partial passive income. Maybe I have to keep churning out product, but if it’s doing something I love, such as writing, I guess earning money while I sleep is pretty cool.

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