Monetize. Monetization. The Mechanism and Examples (2023) |
In the year Luis von Ahn famously developed CAPTCHA, you know those tiny letters you need to type to prove you're a human being-he devised one of the most innovative monetization models ever. The application would pick several random phrases that were found in the archives of New York Times, and the user would type in the words they were shown. Little did they know they contributed to digitizing old books and newspapers, and those companies paid for this service.
It was a creative method of adding a new revenue stream to the cybersecurity via digital.
In this article we'll explain the concepts of monetization and monetization. We'll explain what each one means before guiding you through different types of monetization and how to build a monetization strategy for your company.
What is monetization?
Monetization is the process that generates revenue from items or actions that don't currently make you money. In internet-speak, monetization is usually the way we look at how individuals and companies that create software or content are paid for their work. In any kind of product, service or application there is a variety of options to earn money depending on how people make use of it.
In some cases, monetization is integral to the digital process. For instance, a content gate might make people buy a product direct. That's what happens when you are using the New York Times or Netflix require subscriptions.
However it is possible that monetization involves adding extrinsic material. In traditional newspapers, the advertisements took up extra space and required adding pages. But companies paid to insert the ads where they knew viewers were already looking at, thereby generating sufficient revenue to carry on their work of reporting the information. TV is the same. The same is true for internet display ads as well as YouTube advertisements.
Online monetization
When we speak of the monetization of our websites, we're typically talking about the different ways users can make money online, such as a YouTube Channel, a TikTok following, or a blog or web site. The result is common phrases like "Are you monetizing?" or "I need to make money." And-of course-we've all been told about the influencer or blogger who makes $50,000/mo.
There are a variety of methods to make money online. As an example, a blogger may monetize his website through advertisements, affiliate products, and a course that they sell. Social media companies monetize their user's data rather than offering users a no-cost service, while charging businesses to put advertisements in front of users.
Because there are many different methods to monetize, monetization requires imagination in the way you market something-which is what Luis von Ahn has done with CAPTCHA. There are ways to monetize that are all over the place. As an example, the stock market let's shareholders monetize their ownership of companies, but the derivatives market provides additional monetization options to the stock market through items like calls and options. (If you've ever seen The Big Short, it compares these to "side bets" .")
As you think about the monetization strategy and model you are considering for your strategy, you should be imaginative in approaching the problem and finding a monetization method that works for you.
Monetize means "to transform something into money." When you've got something that you've developed, such as digital goods, content, an app, or software, to monetize means to convert that product into cash. Of course, you're not doing this literally. The majority of the time, you're figuring out how to make money out of the use of your thing. You're turning uses, views, subscriptions, members, etc. into money.
What exactly is a monetization model?
A monetization plan is a way or method that you can earn money from a product, service invention, creative work intellectual property or even your personal brand. There could be different components in your model of monetization. All are required to function in tandem to generate the income you need.
In the case of example, if you are creating an application it is possible to add in-app purchases or charge downloads for downloading, incorporate advertisements, or all of the above. If you've created software, you could select from a variety of monetization options. You can "white label" the software and then license it to users for use under their own branding. You could sell access under your own brand or create free access with the "freemium" or upsell.
A model of monetization is the process by which a single (or multiple) streams of income come together to make up the total income of a brand.
The types of Monetization
They are among the most well-known methods of the monetization. But they're not the only ways to make money. There are even innovative monetization strategies being developed all the time. It is important to note that these methods are not mutually exclusive. Many brands employ more than one of these (and there's a cross-over ).
Member monetization
Member-led growth is one of the most effective ways of monetization. The future generation of companies that are growing fast are likely to be those who can convert customers, users, and subscribers into subscribers. It will be done at the scale of.
Membership-led monetization is simply as easy as establishing a membership fee for a community. This can result in regular revenue. Additionally, the members contribute contents and share it with others that they are part of your community, allowing it to grow by itself.
Here are a few examples of how member-led monetization work:
- An entrepreneurship org. It launched a brand-new app for 5,000 members and made over $30k in just 2 1/2 weeks.
- A health-focused launch to 100 members with high-tickets increased the ARR by $40,000.
- Author and speaker announced a promotion for four weeks in their member community. They saw an additional $30,000 in revenue.
- An author and podcaster sold 5,000 seats to the $997 course within 10 days, to members who are already in.
- One community launched a 13-week add-on course and added $100k to revenue in 2 months.
If you're running members-only products, you'll find that you usually earn money from the memberships and the additional items your customers purchase-a business model McKinsey calls an Flywheel for communities .
Digital Subscriptions
Subscriptions and monetization work similar to a membership model. But your customers don't add any value. Instead, they consume content or software which you've created or licensed. It's a popular model for firms that offer software, as organizations like Microsoft as well as Dropbox have created subscriptions as their bread and butter.
And it works for media too. Netflix and Disney+ have built empires with subscription services. The subscriptions have even helped save the New York Times; in 2020 there were 8 million print and digital subscribers.
Freemium
Freemium monetization is one of the models which is very popular among software businesses, because it allows users to try out a product for free before making a decision to purchase. In this case, the monetization structure takes charge of a free trial and eliminates the requirement to provide things such as "money back guarantees" because the purchase isn't made upfront. It also allows members, users, and so on quickly upgrade their accounts to go past the paywall, either within a set duration or gain access to additional features.
Content monetization
There are a variety of ways to monetize content, like digital subscriptions or memberships. But for content creators, the options keep going. Here are some of the typical ones:
- Affiliate marketing: When you talk about products on a website or feed for social media, when someone clicks on a brand-approved tracking link, you can earn commissions. Many blogs and websites monetize by utilizing affiliates.
- Ads: Monetizing with ads is another well-tested and reliable monetization method for brands that rely on content, ranging from websites to TV channels to applications (more about this in a minute). Ads can be paid per ad, or paid per click (usually described as RPM=revenue Per Mille ).
- Sponsorships: Sponsored content usually refers to an article that was sponsored by a blog. The majority of sponsorships are created by influencers.
Social media monetization
Usually we see social media monetization as the method by which people can earn money from their social media platforms. Most social media publishers monetize with different options already on this list: advertisements, affiliate marketing and sponsored content.
But there's also the question of how social media platforms actually make money, and they're also creative. Two examples illustrate how social media giants make money:
- Meta: With its flagship brands of Facebook as well as Instagram, Meta makes money by selling attention-and with 2 billion users every day, the company has lots to offer. Meta gathers data from users and offers companies the opportunity to get the right ads in front of their users and with highly specific data on demographics. This led to a staggering an estimated $32 Billion in the final third quarter in 2022. Meta's collection of data is so powerful that it's been the target of investigations (think Cambridge Analytica's attempts to influence elections).
- LinkedIn: LinkedIn is much smaller than Meta which has 141 million daily users. It has developed an unique model of monetization that is in line with the strengths of a platform. Since it's a career and networking site that sells premium plans to job-seekers (giving the job seekers an advantage when applying for jobs) as well as offer unique plans to recruiters and employers at a premium. The platform lets all types of user get what they need on the platform. However, it also sells advertising. LinkedIn made over $13 billion in sales by 2022.
When you examine all the social media channels and you'll notice they all have one thing to be able of. Almost none of them charge users for access to the platform in the first place. Their aim is to gain huge engagement and attention or to convert customers to premium plans, or more common-to sell their users the attention of advertisers.
App monetization
App monetization is a world in itself, and we've written a detailed guide for it. But let's just say that there are lots of ways to monetize apps, including subscriptions, memberships and ads. But what's unique for apps is the option of purchase in-app.
Here are 13 methods that mobile apps can be monetized in the future, so be sure to read our article on Mobile app monetization for a deep dive into each.
- Freemium
- Ads and Premium
- ads only
- Ads + In-App Purchases
- Subscriptions
- Memberships
- Courses
- Events
- Products (physical and digital)
- A one-time payment
- Services
- Selling user data
- Crowdfunding
Product-led monetization
The most effective monetization model is the creation of a product. This could be digital or a product such as a major online course. As an example, we've have mentioned that a podcaster and author on Mighty sold 5,000 seats for the $997 course within 10 days. This is a great way to monetize digital products.
But selling a physical product is a tested and true method of monetization, too. And there are some truly amazing companies that have figured out how to turn digital buzz into real-world success for their products.
Just look at Peloton, who created a bicycle that can connect users into workout routines as well as others who are fitness-minded at any time. It also helped that Peleton came of age during the pandemic, when the population was looking for ways to get fit. We've also seen celebrities launch physical items and then use their brand names to promote them, like Ryan Reynolds' Aviation Gin brand which he has recently sold for $610 million.
The incorporation of services with online attention is just beginning, but we'll see a lot more in the near future.
Licensing
It's a largely under-valued monetization strategy however, for people who have any kind of intellectual property, licensing can be an incredible method of monetizing. In essence, licensing is when you have a specific method or design and sell the rights to others to utilize the model. If you come across anyone selling "Trademarked X method to X" You're likely looking at a licensing model.
As an example, a lot of thinkers will create their reputations around Op-eds, TED Talks and other TED Talks, but will allow the use of their ideas to companies.
Services and consulting
It's similar to licensing however those who develop expertise around their online content can often sell the application of it. For example, a lot of the creators have their own channels on LinkedIn and YouTube who share their knowledge can be hired by people or companies to make use of it directly. If you had a YouTube channel that was dedicated to helping entrepreneurs expand their businesses, it stands to reason some might want to hire you as a coach. Consulting and service are usually a good business model for monetization.
Data
Another monetization strategy is to monetize data. In this example, a platform collects data on its users and sells this data to third-party advertisers. This is the norm for social media firms (above) however, they're not the only ones who collect and selling users' data.
In almost every field that includes health care and finance, companies collect and sell user data. Although selling user data is a model of monetization used by a lot of technology companies but it's not one small-scale creators and brands make use of - and for reasons that are legitimate. It's difficult and complicated. requires an extensive scale, and there are lots of legal implications.
Which monetization strategy is best?
Each monetization model has pros and cons. Freemium models let users try products or services before paying and could make selling easier. The upfront charging process requires greater effort to sell, but could bring in more cash flow early in the process. A subscription monetization model brings an increase in revenues month after month, however it requires continuous client service. Additionally, you require customers to stay long enough to reap the true value from regular revenue.
There are many methods to make money from any of product, service, or other, especially within the digital realm which is why choosing a monetization model that allows you to manage access, user growth, and your personal goals is important.
Monetization model examples
- Vikrim creates the first internet-based forum and then decides to charge one fee up for the first year that gives yearly access and to include all the items under.
- Ali creates a paid monthly newsletter that includes advice and deals that she sends out every month.
- Charles is an influencer who sells social tokens to allow people who want to gain access.
- James develops an app and offers it for free through In-app purchases.
- Jen is a thought leader and writer who makes money through speaking and book sales.
What is the best way to create a monetization strategy
If you are planning to monetize HTML0, here are some guidelines to help you develop your plan:
- Learn your strengths. A large portion of monetizing efforts fail because people don't understand the strengths of their brand. As an example, suppose you have a small number of members who are committed. Advertising isn't the best method of monetizing, as they require volume. A targeted product might be ideal. On the other hand it's possible to have a website with no clear area of focus and lots of users, ads might seem more sensible. The product won't be successful without a clearly defined niche. Choose your strengths and choose the model that fits best.
- Find out what your members want When you're thinking about developing a service or product that you intend to sell, request your members determine what they need from your company. In an online community the process could be as simple to conduct a poll.
- Be sure that it is appropriate the target market: Many monetization efforts fail because people misunderstand their customers. There's an instance of an account of a blogger giving job advice to young people who are unemployed who planned to launch an expensive product. It failed miserably. The audience were enthusiastic, but they had no money (remember, they were unemployed! )
- Align your tech: Monetization-especially done online-usually takes some sort of tech solution. If you're looking to monetize the community of your choice, it might be as easy as turning to a membership program or a bundle. However, every monetization strategy requires some planning. Are you planning to self-publish your ebook? You'll need to understand the format of the book, its cover design as well as how to use the KDP platform (or hire someone who does). Do you want to place ads on your website? You'll need to get into an ad-based network like Mediavine or Ezoic and set it up.
- Understand the business side: Even if done online, earning money is something that IRS is a bit of a skeptic on. Make sure you understand how to claim the income. If you are in the area, a visit to your local small business center could be in order. They can frequently provide you with the information you need.
- Test, adapt to learn Learn, test, and adapt: The first method of monetization you try might not be the right one. Do not be scared to test various options (and take things slow) until you discover what works best for you and your customers.
Conclusion
While you search for the most effective monetization method be aware of the things that work for your brand and your members. Do not force it. Monetization needs to be done carefully, without risking your members' loyalty or destroying the user experience of your product.
If you want a great method to create a community-driven expansion business, then join us upon Mighty! The community can be monetized through and content such as courses, classes, as well as live occasions. And you can test it for free in 14 days!