Have side projects ever been a good way to generate passive income? For some people, sure. For most people, I'd argue it's a terrible financial decision. Most side projects fail and never generate any revenue. To stray from the software focus, how many people actually make money trying to sell Avon products (or Amway, etc.)? How many people lose money becoming a realtor to attempt a side job? Set up a booth at a flea market to hawk wares? Advertise their gutter cleaning service and never get customers?

The vast majority of non-mainstream money-making ventures fail. That doesn't mean they're a waste of time, especially if you enjoy the activity anyway. And there's something to be said for taking a chance. I applaud entrepreneurs on all levels. The idea that a side project in any field makes good financial sense is unfounded, though.