This is part 2 of my series on generating passive income.

eBook’s and info products are a very popular passive income generator right now, and I have to say that yes they can really work.

To read more, I would recommend John Reese’s products (his Reese Reports in particular), Yanik Silver’s, and the Warrior forum where you can get a ton of free advice.

To me eBooks and information products are synonymous with the “internet marketing” community. Basically what these guys have figured out is that marketing is often more important than the product itself. If you love marketing, this could be a big area for you to explore.

How Does It Work?

Here are a few ways people create information products:

• Write an eBook yourself. This is the least intimidating and how many people start, but can also be the most time consuming.
• Hire someone else to do the research and write the book (outsourcing).
• Prepare a speech and record the audio on your home computer as an audio book.
• Create a video presentation using a screen capture program like Camtasia or by recording short videos with a digital camera or web cam. These can be edited together and made into DVD’s for about $2/each.
• Organize a conference where you will present. Record the video and produce a DVD.
• Organize a conference where you invite other speakers who know more than you! Record the video and produce a DVD.

As you can see, you can produce an info product on a topic where you’re the expert, or be the organizer who brings in other experts. You can compensate the guest speakers/writers monetarily, or offer them some form of paid promotion in the product such as mentioning their website.

Information products and seminars can command a very high price and a profit margin that would be considered absurd in any other business. A DVD which costs you $2 to make could be sold for $500.

Information, especially information that can earn you money or improve your life in some way, is one of the most valuable products you can sell. For example, think about how much importance some people would put on getting out of debt, making it through a divorce, becoming financially independent, or finding love. If that is the primary problem in their life at the moment, then they would be willing to give almost anything for your help. These educational or “self-improvement” type products are often easier to sell than say fiction or art which is subjective.

The advantage of the info product is that unlike a physical product, you carry no inventory. And it is truly passive because (if setup correctly) you do zero additional work for each item sold. It can often take a lot of effort to produce up front, but it can continue to pay you each week for years after that.

Is this really feasible?

Remember that the way I evaluate any claim behind a method of building wealth or generating passive income is this: how many people can I find who have used this method to accomplish what I’m trying to do?

While internet marketing and creating/selling info products has certainly created more than a handful of millionaires (far more then blogging for example), it wouldn’t be fair to call it easy. I have never seen a hard study on it, but my impression is that of say 100 people who try it, 80% never really come out with a product of any kind. Of the remaining 20%, probably 1% of those actually make enough money to quit their regular jobs.

By the way, if anyone knows of a real study on this or has information about how many internet marketing or information product millionaires there are, please post it!

I have a few other concerns with this approach as well. Many of the tactics used seem to be questionable ethically, and are designed to take advantage of unsophisticated buyers. Long over-hyped sales letters, false deadlines, and “last minute offers”, etc….you’ve seen them all. While I’m sure some of these work in the short term….the only really way to make money is to create something of value which helps other people. Some people creating info products understand this and create great stuff, but I dare say that the majority do not.

Conclusion

Creating info products could be perfect for you if you have a passion for a particular field (either you are an expert or know some) and enjoy studying the art of marketing. It can be quite a challenge (and take a bit of a budget) to get the word out once you’ve created your masterpiece. The majority who attempt it fail, and the field is constantly evolving and changing, but those who create a winner can end up really striking it big!

Stay tuned for parts 3, 4, and 5 on other methods of generating passive income.

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