Passive Income: Algorithmic Content Creation

How Does Algorithmic Content Creation work?

Let’s talk about several examples where I have set up simple systems which use algorithmic content creation to produce lots of quasi-original content that can be monetized to create passive income.  The basic idea is to start with some data source like a free public API for stock prices or newspaper RSS feeds. Then set up a script which regularly looks at that data and creates some kind of content from it. This content should be verbose and optimized for search. Then the content needs to be monetized, and voila; passive income.

Spur gear differential (Manual of Driving and Maintenance)

There are several directions we can go with this. Let’s break it down.

Basic Access To Data

A few months ago, I learned about an interesting stock metric called the relative strength indicator. It can be used to measure certain types of potential stock price changes and help investors plan to take advantage of those changes. Calculating RSI is fairly complex and takes some work to do. Using RSI suggests a particular strategy. I was curious if it would work so I wanted to test it. I got access to the past year’s stock prices and calculated the effect of using this strategy on lots of different stocks. I found four stocks in particular which showed huge gains with this strategy. The problem is, it is very difficult to get access to RSI data. Every site has some proprietary version of it, and none of them tell you how it works. There needed to be a simple transparent way to see the RSI of stocks and to be alerted when this metric suggested action.

Enter, RSIAlert.com. I built a simple site which does a daily check on the RSI of those four stocks I mentioned earlier. If action is suggested, it emails the subscribers to let them know. Anyone can sign up for free and get access to the data.

This product uses algorithmic content creation to produce verbose daily content which serves the purpose of giving users basic access to data.

Condense Fact from the Vapor of Nuance

Montage pour distillation

There is a lot of noise in the news today.

I find it very challenging to keep up with current events because of how hard it is to separate the noise from the facts. To that end, I built TopStoryReview.com. This site adds another layer to the model above. First, it fetches all the RSS feeds from the top 25 newspapers in the US and a few from around the world. Then, it searches the list of headlines to find the most popular topics being reported on and selects the freshest headline from each topic. This means that only the most widely reported stories are shown, and commentary and opinion pieces fall through the mesh. Algorithmic content creation takes that data and turns it into nice looking pages which are easy to read and understand. This means we are not just providing basic access to the data, but providing higher quality access.

The Future of Algorithmic Content Creation and Passive Income

Many media outlets have started using algorithmic content creation as a primary source of writing copy. This is going to become a huge driver of content leadership online. As these techniques advance and become more sophisticated, these algorithms will produce better and better content. This is a great business to get into now, and start raking in the passive income.


Passive Income: Cryptocurrency Arbitrage

How Does Cryptocurrency Arbitrage Work?

Cryptocurrency arbitrage means simultaneously buying and selling cryptocurrency on different exchanges in order to profit from price differences. We are in a unique wild-west position because this industry and technology are brand new.  Hundreds of companies are opting for initial coin offerings rather than the more traditional funding rounds. In addition, lots of exchanges are buying and selling cryptocurrency all over the world. This means we can leverage cryptocurrency arbitrage to make a great deal of money which will not be as available once more people are using this strategy. Cryptocurrency arbitrage will generate lots of passive income for anyone using this strategy, so long as it is properly implemented.

Cryptocurrency Arbitrage
Investopedia defines Arbitrage as “…the simultaneous purchase and sale of an asset to profit from a difference in the price. It is a trade that profits by exploiting the price differences of identical or similar financial instruments on different markets or in different forms. Arbitrage exists as a result of market inefficiencies.”

40,000 Feet

There are lots of exciting passive income possibilities here. Bootstrapping this one is a little more complex. Some amount of capital will be required in order to execute arbitrage, but hopefully not much. Once we have some data and evidence of our success, we can start putting other people’s money through arbitrage. This will greatly increase our earning potential.

Ironically, cryptocurrency itself can provide the vehicle to using other people’s money. Initial coin offerings are a great way to raise capital for projects like this. Those very coins then become yet another element traded throughout the ecosystem.

The Wild West

Conestoga wagon
Cryptocurrency is still in it’s “wild west” phase as a technology. It has mostly been embraced only by high-tech early-adopters, but there are lots of businesses springing up to serve early-adopters by buying and selling cryptocurrency. These companies are betting that the market for cryptocurrency services will continue to grow. Executing cryptocurrency arbitrage means we are serving the market function of equalizing prices between exchanges. The more people do this, the less effective it will be. But for now, the opportunities are vast.

Validation

First lets look at some data. CryptoCoin Charts has some great real-time data on opportunities they have found for cryptocurrency arbitrage. There is a huge amount of income to be made from simply looking at sites like this and manually executing the opportunities they outline. But we are not here for some pedestrian, manual process. We want to automate passive income!

Making it Concrete

Stockage de ciments
Luckily for us, there has been a tremendous amount of work done on automating this process. If it wasn’t such an esoteric and intimidating topic, everybody would be doing it.

A quick Google search will show lots of different systems which have been built to automatically execute cryptocurrency arbitrage.

For this exercise, I have chosen Blackbird. This is consistently the top rated platform for executing cryptocurrency arbitrage, and it is written in C++ so it will be very easy to execute on any system.

If you are not familiar with Github, C++, or basic programming, you will need help setting this up but the directions are very clear on their Github page. Start with their demo so you can get familiar with how the platform works, and then sit back and count your coins.

 


Passive Income: Marketing Automation

How Does Marketing Automation Work?

For the last few years, I have worked with a Sacramento-based tech support company that has a large database of past customer data. I taught myself data analytics and marketing automation by building a platform which uses marketing automation driven by data analyses and automatically sends out marketing material to customers. This immediately became a great source of passive income for me and the company. The project ended up with around 20 automatic daily emails and several old-fashioned direct mailers.

This post is part of my larger effort to explain how to build passive income sources in innovative technical ways. Check out this post for more detail about how and why I am doing this!

Striking Oil

I started out by exploring what data was available. I got access to the database that their CRM was connected to, and started looking around.

You may have heard the saying, “Data is the new oil.” Data analytics requires large amounts of data to make effective analyses. I had around a hundred-thousand work orders to look at, with all the items sold, the dates and payments, and information about each customer.

Lucas gusher

I explored online to learn how I could leverage this data for marketing automation and what kinds of data analytics work was already done that I could build upon. I was surprised how hard it was to find good, free information on this topic. I found lots of sites that purported to have the answers, but they all wanted me to buy their E-Book or take a seminar.

<rant>

By far my favorite resource I found was Wikipedia. Every teacher and armchair philosopher will rush to tell you Wikipedia is not a source. That said, it is a great way to explore connected topics, and find links to high-quality sources which are not trying to sell you things.

Wikipedia can be a better search engine than Google.

</rant>

Define an Opportunity

Before I could improve things, I needed to understand them. First, I built a simple virtual machine that would let me run PHP scripts connected to the database. This meant I could quickly report on data in real time. But what data?

I started out by developing metrics around common data analytics problems I had seen online for basic business principles like churn and attrition. To the best of my knowledge, this was the first time anyone had attempted to measure these things at this company. I was surprised to learn that these numbers were very very high. More than half of all monthly customers churned, or never came back.

Improving this metric seemed like a great opportunity to focus on.

The next step was to understand what was different about customers who churned versus customers who returned. I developed a report which showed all the activity for a group of customers, and then compared this data for churned customers versus retained customers. When I compared the lists, I noticed one huge difference. Customers who bought products with lifespans were much more likely to return.

One product, antivirus software is licensed in one-year increments. So we know the date when customers would need to purchase a new one.

I compared the behavior of customers who had purchased this product, and found that they churned at a lower than average rate. I was on to something!

But how could I increase retention in this group?

The answer seemed simple, remind them to come back!

Setting Sail

I have heard software engineering defined as the building of technical solutions to business problems. Now that I had defined an opportunity, it was time to build a solution.

Segelboot Bodensee Mainau (Foto Hilarmont)
I explored the best ways to leverage marketing automation to effectively convert customers. There is a lot of information online on this topic, but almost all of it is a sales pitch. Eventually, I landed on Drip Marketing.

The concept is simple, send several emails to the same person over a period of time to encourage them to convert. (But stop if they do convert.) I came up with three weekly emails to send to people with expiring antivirus products. These emails contained progressively more urgent and intense language.

Results

In this case, once the foundation was laid, the data analytics is happening automatically. The marketing automation side of the platform takes the data and turns it into content that is sent directly to the appropriate customer. These automatic emails are still going out daily after several years. They have grown to bring in over $10k/month in passive income for the company. I was able to negotiate a monthly percentage of that passive income for myself. Remember that these cost nothing to send, since all the work was done in a few hours, years ago.

This is a simple strategy that any competent software engineer can implement as long as there is data to query.

Moving Forward

I expanded this tool to a platform that can be used to send emails based on any query. So now there are lots of other emails being sent out along with these. And this idea led me to build two other data analytics tools called Securities Science and RSI Alert which use similar methods to apply data analytics to public datasets and then send that data to marketing automation tools, hopefully for profit. :]

One of my favorite examples at the tech support company is an email that says, “We miss you, we’re thinking of you…” and automatically goes out to all churned customers every six months.

This platform also expanded into direct mail. Some customers prefer not to provide emails, but any mobile service company knows customers’ addresses. I started sending out postcards for similar lists where we did not have email addresses on file. These had a higher cost to send, but even with postage, we got a direct return of over 300% and the lifetime value of that customer who we had un-churned.


Passive Income: Examples

Today, there are many fascinating examples of people using successful techniques to create passive income online. My favorite examples are the ones that can be bootstrapped, or built with little to no initial investment.

Those of us who grew up coding and  then took that perspective to business have a unique advantage. You might call it a super power. Neil Stephenson calls us, “The Digital Priesthood,” because from the outside, we look like magicians.

We, the digital priesthood conjure passive income from the ether with the aid of new information technologies.

Let’s explore the ways in which engineers are the new pioneers and magicians, drawing the first maps of the digital frontiers we create and using esoteric knowledge to pluck money out of thin air.

The Oxford Dictionary defines ‘Exotic(3)’ as, “Of a kind not ordinarily encountered…” and defines ‘Weapon(2)’ as, “A means of gaining an advantage… in a conflict or contest.”

This blog is about the technical side of how to build passive income sources. These machines have the power to transform our lives and free us to live the way we want to.

I will hold nothing back. I will give you all the details and step-by-step guides to duplicate what I have done. All of the examples we discuss will come with enough information to do it yourself. Hopefully they can inspire the stories playing out beyond the edge of the map (Your stories!)

A Few Passive Income Strategies We Will Explore

 

Data Analytics and Marketing Automation

For the last several years, I have worked with a company that has a large database of past customer data, and explored ways to turn that data into new revenue.

One of the biggest new revenue sources I found was Marketing Automation. I started looking at different customer behaviors and finding ways to encourage those customers to spend new money. I set up around 20 types of automatic emails to go out every day to lists of customers who met certain criteria.

This equated to tens of thousands of emails with a very high conversion rate. The project brought in over a million dollars in revenue over the course of a few years. This income was completely passive. The only cost was the time it took for the initial set-up. I would consider that a great example of bootstrapped passive income. Also, I was able to negotiate a monthly percentage off the top for myself. This example will generate a healthy amount of passive income for a long time to come.

I will go into great detail on exactly how I did this. Examples will be provided including blueprints so you can do it yourself!

Cryptocurrency Arbitrage

Currency/ Cryptocurrency Arbitrage

Investopedia defines Arbitrage as “…the simultaneous purchase and sale of an asset to profit from a difference in the price. It is a trade that profits by exploiting the price differences of identical or similar financial instruments on different markets or in different forms. Arbitrage exists as a result of market inefficiencies.”

There are lots of exciting passive income possibilities here. Bootstrapping this one is a little more complex. Some amount of capital will be required in order to execute arbitrage, but hopefully not much. Once we have some data and evidence of our success, we can start putting other people’s money through arbitrage. This will greatly increase our earning potential.

Cryptocurrency is still in it’s “wild west” phase as a technology. It has still mostly been embraced only by high-tech early-adopters, but there are lots of businesses springing up to serve early-adopters by buying and selling cryptocurrencies. These companies are betting that the market for cryptocurrency services will continue to grow. I will provide the story of how I have used cryptocurrency arbitrage to generate passive income. I will also provide easy examples that anyone can duplicate to bootstrap their own passive income using cryptocurrency arbitrage.

Algorithmic Content Creation

I have several examples where I have bootstrapped simple systems which use algorithmic content creation to automatically produce lots of quasi-original content. This can be monetized to create passive income.  Check out my Github for some of the tools I have built to that end. These tools aggregate various data sources and rss feeds, analyze them, and produce lots of great quasi-original content. This process happens automatically, so these systems are constantly generating content for search engines to index with no marginal cost. This content can then be monetized to generate passive income.

This concept can theoretically generate infinite passive income. And as long as you can keep coming up with ideas for how to generate high-quality content, you can increase the income your content generates.

 

Stay Tuned

Once we explore all of these topics, there will be many more. If we can generate enough interest, this project will expand to include a podcast and a community so we can all share our stories!