If you’ve ever thought about ways to generate a little extra income, chances are that digital assets have crossed your mind.
One of the most appealing aspects of building digital assets is that while they take a certain level of time and effort, you generally have a lot of flexibility in determining when to put in that effort.
In fact, a lot of people work on these types of projects in the evening after work, or early in the morning.
What’s more, you can generally work on digital assets from the comfort of your own home, or pretty much anywhere that has a WiFi connection.
While digital assets aren’t without their issues and challenges, they can be very lucrative. I’ve offered my thoughts on the pros and cons of some of the most compelling online business models below.
Contents
Content Site
Content sites go by a lot of different names. Authority site, niche site, blog, etc. For the sake of simplicity, what I’m talking about here is a website that receives organic search traffic, and is primarily monetized with ads or affiliate relationships.
These sites can be fantastic digital assets to build and own. When they are working properly, they can generate a significant amount of revenue, and don’t require a huge amount of time to manage.
In fact, a lot of site owners outsource content creation to talented writers.
For that reason, a lot of people believe these sites generate passive income. While I don’t believe content sites are actually passive, the revenue that they produce is not directly tied to the hours that you put in.
So, if you stop working on a site for a few months (or even years) your site will likely still continue to generate revenue. That said, if you neglect it for too long, the revenue will fall off.
The Challenge With Content Sites
Content sites are not without their issues.
For starters, it takes a TON of time and effort to get a new site to generate a significant amount of traffic. And traffic tends to be a prerequisite for revenue. If you’re starting from scratch, it can easily take a year of steady work before you start to see meaningful results.
These sites can also be fairly volatile due to Google algorithm updates. It’s not uncommon for a site to lose half its traffic overnight when a new algorithm update is rolled out.
Of course, some sites actually benefit from algorithm updates. Still, the volatility can be a lot to stomach.
YouTube Channel
If you’re more inclined toward video than the written word, YouTube provides a powerful platform to build an audience.
YouTube channels can be monetized with affiliate relationships and advertisements, and can be quite lucrative for creators.
Though it does take a lot of time and effort to build a YouTube audience, you should start seeing results sooner than you would if you were building a content site from scratch.
In addition, video content has been experiencing significant tailwinds for years, which means video consumption is increasing pretty dramatically. In fact, 78% of people watch online videos every week, and 55% watch them every day.
A Few Things To Consider Before Starting A YouTube Channel
Some people are reluctant to start a YouTube channel because they don’t like the idea of being on camera. While it’s certainly possible to build a successful channel without appearing in videos yourself, it’s much harder. Viewers tend to feel like they are building relationships with YouTubers, and relationship building is enhanced when the content creator appears on screen.
It’s also worth keeping in mind that whenever you build an audience on someone else’s platform, there is always some risk that the platform owner might change the rules. For example, what if YouTube decides to change the way that videos receive traffic? Or what if they adjust the way that advertising revenue is shared?
This can easily lead to a sudden decrease in revenue, and is a risk worth keeping in mind.
Podcast
Podcasting is all the rage these days. At times, it might feel like everyone you know is starting a podcast on one topic or another. There are a lot of good reasons for this.
One of the great things about podcasting is that that content is relatively easy to produce, at least for people that enjoy talking.
There is no requirement to appear on video, or to crank out lengthy blog posts. You simply hit record, and start talking.
There are also a few different ways to monetize podcasts. Advertising is fairly common, and affiliate relationships are possible as well.
But, podcasts are also often used as a means of building an audience and selling other products. For example, a lot of online course creators produce podcasts in order to cultivate an audience, build a brand, and demonstrate the type of value that they have to offer.
Building A Podcast Audience Is HARD
While podcasts might be fun to create, it is remarkably difficult to build an audience.
The average person listens to 8 podcasts. However, people tend to subscribe to the ones that they like, and aren’t always in the market for something new.
Further, podcasts simply aren’t as discoverable as YouTube videos. When someone finishes a video, YouTube prompts them with other videos that they might like, enabling discoverability.
In contrast, when someone finishes a podcast, they generally move on to another one of the podcasts that they already like. So, the opportunity to discover new podcasts organically is somewhat limited.
Online Course
If you have a significant amount of knowledge about a particular skill or hobby, creating a course can be a great way to monetize it.
Courses come in a variety of different formats. There are video courses, email courses, large comprehensive courses, and small niche courses.
Most courses take a lot of effort to build. However, depending on the subject matter, you may or may not need to update them regularly. For example, a course on How to Learn Piano probably won’t change much in the next 10 years, but a course that outlines How to Run A Shopify Store will.
When executed well, courses can be extremely lucrative. It’s also possible to generate revenue much more quickly by selling courses than it is with some of the other ideas in this post. This is in part because the margins on courses tend to be pretty good, which allows you to run ads to promote them.
Courses Can Be Daunting
A lot of people shy away from creating courses initially, since they do take a considerable amount of effort to produce.
Some creators have also had the unfortunate experience of investing a ton of time in building a course, only to find that there were no buyers.
One way to mitigate this risk is to build an audience first, or to run ads to a landing page that is designed to sell the course even before it’s ready, just to see if there is demand.
Still, this type of business is usually better suited to people that already have a bit of online business experience.
eBook
If courses seem like too much work, eBooks can be a great way to get your feet wet. While the price tags on eBooks are not nearly as high as full courses, the level of effort is considerably lower as well.
If you have expertise in a niche area, an eBook can be the perfect way to share it. There are plenty of options for distribution as well. Not surprisingly, Amazon is a big one. But, it’s also possible to distribute your eBook through one of your own websites, email lists, or through affiliates that have built an audience in a similar area.
If you produce a quality eBook on a good topic, it can generate a significant amount of revenue for years after it is initially produced.
Why Not Write An eBook?
The barriers to producing an eBook are pretty low. Essentially, you just need to be a good writer, or to hire a good writer to produce content.
The bigger challenge is distribution. Unless you discover a need that is currently being unmet, it can be really difficult to get people to discover and read your eBook.
Some of the most successful eBook publishers that I know are people that have built an audience through a website, podcast, YouTUbe channel, or email newsletter. If you have an audience that likes you, at least you have a good chance of getting some initial traction with your eBook.
Online Store
The shift from physical retail to eCommerce has been a major trend that is showing no signs of letting up. While it might feel like you do all of your shopping online these days, statistics show that eCommerce still makes up less than 20% of total retail sales.
In addition to having strong tailwinds, Shopify has made it easier than ever for people to build their own online store, and sell products.
Online stores also have the potential to scale relatively quickly. Most of them utilize advertising in order to drive traffic. So, assuming you get your ads dialed in, and have a product that people want, the sky’s the limit.
eCommerce Is Harder Than It Looks
In the early days of eCommerce, it was possible to build an online store around a particular area of focus and to sell third party products. While that might still be possible today, it generally takes a fair amount of time and capital in order to do this properly and stand out.
The most successful online store operators that I know have gone out and developed their own proprietary products. This helps differentiate against competitors, and provides online shoppers with a reason to visit your store.
Even with a great product, seasoned eCommerce operators will tell you that the logistical side of the business can be a huge headache. Maintaining a warehouse, and dealing with shipping and returns means that these businesses are far more operationally challenging than some of the others mentioned in this post.
Email Newsletter
Email newsletters have grown in popularity in recent years for a number of different reasons.
One of the biggest benefits of running an email newsletter is that you truly own the relationship that you have built with your readers. This is a real point of differentiation relative to running a content site, where a single algorithm update can wipe out your business overnight.
Newsletter businesses can also be fairly straightforward to run. Essentially, the business boils down to attracting subscribers, and then sending them helpful or interesting content.
Monetization options include advertising and affiliate marketing. In addition, many newsletter operators sell their own digital products (courses, eBooks, etc.). Some newsletter producers even sell a premium version of their newsletter and charge for it.
Running On A Treadmill
One of the downsides of running a newsletter business is that it can feel like you’re running on a treadmill. Whether you produce content daily, weekly, or monthly, there is always pressure to create more content.
Newsletters are also a bit more challenging to monetize than content sites. With a content site, running ads simply means working with an ad network like Mediavine. Newsletter operators on the other hand often need to go out and find their own ad partners.
So, while many of the same monetization options exist, they are a little harder to execute.
Which Digital Asset Is Right For You?
There are pros and cons to each of the digital assets outlined above. However, I believe that all of them are viable options.
One thing to keep in mind is that these are not mutually exclusive.
It’s very common for someone running a content site to produce a companion newsletter to go along with it. This helps deepen your relationship with readers, strengthens your brand, and also provides some insulation against algorithm updates.
Similarly, a lot of YouTubers also have blogs or podcasts. In fact, depending on the style of the channel, a lot of YouTube content can easily be repurposed and repackaged into podcast form. This can help broaden your reach, and find audience members that listen to podcasts but don’t spend time on YouTube or vice versa.
I could give a few more examples, but you get the picture.
