I think of it more as “buffered income”. If I stop working on my sites, as you said, the income would drop off gradually. But it is very nice to know I can take a week’s vacation without losing much of that week’s income.

The big draw of passive income is retirement income, but realistically if you want to retire, you are going to sell that 100 property rental portfolio or turn it over to someone else to manage. You could do the same with a blog. I’d say the goal should be to develop the blog into a property that will command a price when you are ready to sell. The big problem with that, as compared to older forms of ‘website’ is that blogs have usually been so intensely personal. Still, brokers and insurance agents regularly sell their book of business when they retire and those are intensely personal businesses also.

If passive income is a big goal, how about using the blog to drive customers to something that produces residuals rather than relying on the one time income of advertising. My experience with Adsense and blogs is that blogs are great at bringing in interested people and not so great at getting them to click ads. So, blog about insurance and sell them a policy. Blog about financial planning and sell mutual funds.

Final thought before I write a book here. If you want to take several weeks off (or have to) and literally can’t blog, there’s always the guest blogger option. You can return the favor when they vacation and it may build crossreadership for both blogs. One of the great things about blogs is that I can think of a dozen people offhand that I’d gladly let run my sites for a few weeks. (Whether they’d feel the same about me is the big obstacle.)