The passive income scam

As anyone who’s tried this whole “passive income” thing out knows, passive income is not really passive at all. There is no such thing as income that requires zero effort, unless you are already extremely wealthy and living off of investments. And, in order to generate that kind of wealth, somebody had to do some sort of work, at some point in time.

You could also argue that even investment wealth isn’t zero effort, because it takes a lot of work to manage that kind of money-though, many people in that position tend to hire the financial management part out.

Anyone who tells you that making money for zero effort is possible is probably just trying to sell you on a get-rich-quick scheme. If it sounds too good to be true, it just might be.

Some quality info on the reality of the creator economy

This video recommendation made it onto this channel, because it illustrates that point very logically and pragmatically. And, it successfully cuts through the large amounts of scammy hype behind what it means to be an artist, and the creator economy in general:

The realties behind passive income, as told by a Certified Financial Planner.

While this video doesn’t constitute financial advice, its creator is a registered investment professional with a Certified Financial Planner (CFP) license. That’s an experts license that requires 6,000 hours of professional financial experience to obtain. Not an easy thing to do.

My favorite quote comes at the very end of the video:

“…be aware of the time and capital that you’re spending to make this money, to deem whether it’s worth it. And, maybe don’t add to your break-even hurdle by buying a $2,000 course on drop-shipping from someone who’s just trying to fund their own passive income strategy.”

Thinking through value propositions

Now, full disclosure: I’ve got some paid products for sale right here on this blog, including an educational course product. So, what’s the difference between me and the scammers?

Well, my course is reasonably priced, covers a valuable educational topic with practical real-world applications, and the results you get from the education are worth a whole heck of a lot more than the money that I charge for it.

It’s realistically possible for the majority of my audio production students to make the money spent on my audio course back quickly by working in the music industry, either through being paid as an engineer working directly with another artist, or through the savings they’d receive by DIY-ing their own artistic work.

Overall, my course is a much more legitimate value proposition than you’d get by learning the same audio production knowledge through a recording arts trade school program, or even a community college pro audio program.

I’m on faculty at several different community college music programs-I would know! So, you’re even getting the same level of high-quality music faculty to learn from, at a fraction of the price. See: even more value!

My course is a valuable product with real-world application for the majority of students using it, and it’s sold at a reasonable price that can pay for itself within a reasonable amount of time, by students working within the subject area that it teaches. The cost of the education is proportional to the problem being solved.

When considering any type of paid educational activity, that’s the question you should be asking of the educational provider.

Stay away from race-to-the-bottom, valueless products (like courses on drop shipping)

Drop-shipping, in contrast, doesn’t have a value proposition. It’s not a subject that’s valuable enough to charge any amount of money to teach anyone, for any reason.

A significant majority of students who take a drop-shipping course will never make the money they’ve spent back, because drop-shipping itself is a scammy, low-margin business model. It’s an appealing idea that just doesn’t really work out in practice-unless you’re trying to turn your small creative arts business into a gross multinational corporation like Amazon for some reason. This is especially true at the ridiculous prices that are sometimes charged for these kinds of courses ($2,000+).

That’s another way you can tell it’s a scam: just run the numbers.

How to recognize a race-to-the-bottom scam

Drop-shipping is a race to the bottom. Look at how much it costs you in fees to drop-ship a $20 T-shirt. Next, think about how many of those T-shirts you would need to sell just to break even, including those shipping fees, your production costs to make the shirts, taxes, and any other expenses.

Remember: all the while you’re drop-shipping you’ll be trying to compete inside of a marketplace that’s constantly being filled up with even cheaper, junkier items than what you’re trying to sell. That will make it almost impossible to raise your prices to offset your significant costs of doing business.

As artists, we don’t ever want to participate in these kinds of race-to-the-bottom deals. Instead, we always want to be selling items of excellent quality, at reasonable prices that accurately reflect the work and expertise we’ve put into making them, to smaller groups of people who really care about our work. We charge fair prices for high-quality artwork around here, not cheap prices for low-quality pieces of junk.

Is passive income actually passive? Hint: no

How does all of this passive income talk apply to the blog that you’re looking at right now?

DIY Music Guide the blog, and its associated email list, are indeed two common components of your typical “passive” income stream.

But, don’t forget: maintaining DIY Music Guide takes constant effort (and expense) on my part. Website maintenance, email list management, content creation, uploading, interviews, video editing, audio editing, course development, writing/updating educational resources…the list goes on and on.

Don’t get me wrong, I’m happy to do it all! My point is simply that there’s work involved here, and it’s not just one-time work. None of what you’re seeing on this channel is passive; maintaining this website requires constant effort (and money) being put into it, and it always will.

Efficient income trumps passive income

Here’s the trick, though: our modern tech tools have unlocked the ability to do all of the work required to run a small micro-business at very low effort. Not zero effort, but reasonable amounts of effort.

If you do it right, and are a very organized and efficient person, it really is possible to run everything a simple small lifestyle business needs from your laptop, at well under 20 hours per week, without needing to hire any employees.

But, remember, to do this successfully you will also need to do everything that any business needs to do to function: marketing, sales, fulfillment, scheduling, business development, systems design, financial work, etc. All of that business-ey stuff. As a creative business owner, you don’t get to focus solely on your creative work.

But, you do get to minimize your administrative time, and to do any administrative work on your own terms, to your own schedule. If you can get that part right, you then unlock the freedom to spend a large majority of your total time on the creative work that makes it all worth it for you.

Nobody gets to cook dinner without also doing a few dishes. But, nowadays, we can make those dishes quicker and easier to do than ever before.

How much work does it take to run this blog?

Generating the content for all of my promotional/educational work (including this blog, and the email list associated with it) takes me between 5-10 hours a week, typically. That’s a very reasonable amount of effort. But, it’s also perpetual effort that doesn’t end until the business shuts down. I certainly wouldn’t call that “passive”.

Especially when you consider the 20+ years of music industry experience that I’ve already had to put in, just to get to this point. That level of professional expertise is absolutely necessary, in order for me to generate the quality of information that makes the content here valuable to anyone else in the first place.

In summary: you should always expect ongoing work to be involved in any income stream. In my case, 5-10ish hours per week is quite a reasonable amount of effort to put in for doing something that I love to do. It’s especially reasonable compared to what I get in return: the opportunity to help independent artists succeed, while making their very best creative work. What a rewarding field to be a part of!

Applying entrepreneurial skills to an artistic career

If you’re trying to go the entrepreneurial route within your own artistic career, here are the questions you should be asking yourself.

Where can I find an intersection point between:

⬜️ What I’m passionate about.

⬜️ What’s needed by people.

⬜️ What takes a reasonable amount of effort to do.

⬜️ What I can get paid well for.

The good news for us as artists: we already have most of these taken care of!

✅ The passion should already be there: if you’re not passionate about music or the arts, don’t do it.

✅ Everyone in the world already needs more amazing, human-made artwork in their lives.

✅ With enough time, experience, and education, you can make the effort required to maintain your artistic career reasonable.

⬜️ This is the part you’ll have to figure out on your own; it’s different for everyone.

Non-entrepreneurial artistic careers

If none of this entrepreneurial stuff sounds interesting to you, no worries! You don’t have to do any of it. Just go work a chill side job to fund your artistic work instead. We all know many artists who are quite happy working a day job, and then using that income plus nights and weekends to do their own thing.

You can also split the difference: work a regular 9-5 job that’s creative enough to not be draining, but which also gives you the time flexibility and financial freedom to pursue your artistic dreams. Getting into graphic design as a photographer, doing creative small business or light-touch creative corporate marketing work, finding a low-pressure yet high-value coding tech job; these are all possibilities for working a non-draining 9-5.

Just don’t fall prey to the passive income scam when it comes to your creative business: there’s no such thing as income that requires zero effort.