The leading authority on how to earn an income with a blog is Derrick Rowse's Problogger.com. That is, according to Google, which has put his Problogger.net into the top three sites on their searches for related keywords for as long as I've been looking into the business. When I began writing for income several years ago, chasing after freelance contracts only so-so, Derrick's continual stream of resources helped me a great deal with beginning the process. Now that I've begun to build a blog of my own, his is among the first sites I check for tips on how to get it done.
Rowse's blog focuses on the content of the blog and gives tips on how to keep more readers coming in. The base of earning income on any blog, though, is dependent upon ad and donation solicitation placements. So while the first step is to find a niche market to which you can write consistently, passionately, and in such a way that it's engaging to your pre-existing audience, it's equally as important to grow that audience in the case that they might click on some of the ads surrounding whatever the content is in your blog.
The first step, then, is content. Rowse found a clever niche early on: making a living as a blogger. He knew that, with all of the crazy hacks like you out there, who knew how to write but not necessarily how to monetize your writing (as good as it might be,) there could be a ready-made stream of traffic that would automatically be searching for ways to make their online writing careers work for them. The second step is to master some of the technical aspects of the online marketing world specifically, so that you can recruit new readers and thereby increase the chance of their clicking on some random ad on the page or, better yet, of being so moved or entertained by your writing that they donate to your site directly.
Some sites, like upstartblogger.com, offer paid subscriptions with tips to optimize your traffic and, consequently, your potential for maximizing your revenue online. Others, like Rowse's blog, or like sardonic online business advice writer Steve Pavlina, offer more concrete, to-the-point guides to help the aspiring blogger to make the most of their start-up.