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This is pretty common and it CAN work but it can also fail.
If you're an SEO wiz and can achieve decent organic traffic then it's a much smaller risk and bigger profit.
I'm not entirely sure it's ethical.
Sounds like most of the parked domain pages I see.
Having said that, I do know of some domains that seem to be getting away with it.
This is a fairly dull way to earn a few cents a day. repeat 100 times, and you can earn a few bucks a day -- still not enough to keep you in headie herbs. Repeat 10,000 times and now you're talking about some real money, but believe me there are easier ways to make a living.