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.
Royalty payments are the most recognised form of residual income earnings. Many well know personalities are extremely rich from the royalties they receive from their creations. For example, JK Rowling will earn a payment from every copy of Harry Potter that is ever sold. The payment on each sale might not be very significant but as millions of copies are sold the combined amounts make her a multimillionaire. Each book is a completed body of work but JK Rowling potentially stands to earn royalties from that finished work beyond the foreseeable future.
In the same way, musicians earn royalties from the music they create. Every time a piece of music is sold it earns royalties and every time it is played on the radio or used for any other commercial purpose, the creators will be paid.
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.
Perhaps a much less considered means of royalty payments is paid to inventors and patent owners. Any new invention belongs to the person who invented it and he can protect his ownership by securing the patent on it. Once that invention is used to create commercially available products the patent owner receives residual income from the sales of that product. It could even be later used as an ingredient for another product not invented by the patent owner but still warrants royalty payments. The patent on pharmaceuticals is a typical example. Royalties are still payable even after the owner is dead. The ownership of the music, person's image or patent get passed down through inheritance.
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.
Royalty payments are the most recognised form of residual income earnings. Many well know personalities are extremely rich from the royalties they receive from their creations. For example, JK Rowling will earn a payment from every copy of Harry Potter that is ever sold. The payment on each sale might not be very significant but as millions of copies are sold the combined amounts make her a multimillionaire. Each book is a completed body of work but JK Rowling potentially stands to earn royalties from that finished work beyond the foreseeable future.
In the same way, musicians earn royalties from the music they create. Every time a piece of music is sold it earns royalties and every time it is played on the radio or used for any other commercial purpose, the creators will be paid.
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.
Perhaps a much less considered means of royalty payments is paid to inventors and patent owners. Any new invention belongs to the person who invented it and he can protect his ownership by securing the patent on it. Once that invention is used to create commercially available products the patent owner receives residual income from the sales of that product. It could even be later used as an ingredient for another product not invented by the patent owner but still warrants royalty payments. The patent on pharmaceuticals is a typical example. Royalties are still payable even after the owner is dead. The ownership of the music, person's image or patent get passed down through inheritance.
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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