Monetize. Monetization. How It Works + Examples (2023) |
The famous Luis von Ahn created CAPTCHA-you know, those tiny letters you need to type to prove you're a human, he created one of the most brilliant model of monetization ever. The software would choose several random phrases from the archives of the New York Times, and the user was required to type what they had seen. It was not known that they had contributed to the digitization of newspapers and old books, and those companies paid for that service.
It was a creative way to add a second revenue stream to the secure digital data.
In this post this article, we'll take you through the words monetize and monetization. We'll also explain what each one means before guiding you through the different forms of monetization, and the best way to create a strategy to monetize your brand.
What exactly is business monetization?
The process that generates revenue from items or acts that currently don't bring you profits. It is typically the way in which we look at how individuals and companies that create software and content can be compensated for their efforts. With any product, service or application there is a variety of options to earn money depending on how people use the product or service.
Sometimes monetization is intrinsic to the creation of digital content. A content gate might make people buy a product direct. This happens if the New York Times or Netflix requires subscriptions.
However sometimes, monetization may require including extrinsic materials. In traditional newspapers advertising, ads took up more space and necessitated the addition of pages. Companies paid for advertisements where they were sure that readers were already watching at, thereby generating sufficient revenue to carry on their work of reporting the current news. Television works in the same way. The same is true for internet advertising, as well as YouTube advertisements.
Online monetization
If we're talking about the monetization of our websites, we're typically discussing different methods users can make money online, such as a YouTube Channel, a TikTok following, or even a blog or website. It's led to a variety of phrases like "Are you monetized?" or "I need to monetize." Of course, we've been told about the influencer or blogger who earns $50,000 per month.
There are a variety of ways of making money from on the internet. As an example, a blogger could monetize their website using advertising, affiliate products, and courses they market. Social media firms monetize their user's data rather than giving the users a free service, while charging businesses to display advertisements in front of users.
Because there are many different methods to monetize, monetization requires creativity about how you monetize something-which is what Luis von Ahn came up with in CAPTCHA. There are ways to monetize that are all over the place. For example that the market for stocks lets shareholders monetize their ownership of corporations, however the derivatives market adds even an additional way to monetize the stock market with things like options and calls. (If you've watched the film The Big Short, it compares these to "side bets .")
When you are thinking about your monetization model and monetization strategy, you should be imaginative when tackling the issue and finding a monetization method that works for you.
Monetize means "to transform something into money." When you've got something you've created: digital products, content such as apps or software, to monetize is turning that item into cash. However, it's taking this action in a literal sense. In most instances, you're figuring out how you can earn money through your product. You're turning uses, views, subscriptions, members, etc. into money.
What is a monetization strategy?
A monetization plan is a method or methods by which you earn money from a product, service or creation intellectual property perhaps your personal branding. There may be many components in your model of monetization. All of them need to work together to create the revenue that you require.
For example, if you are creating an application it is possible to include in-app purchases or charge downloads for downloading, incorporate advertisements, or all of the previously mentioned. If you've created software, you can select from a variety of monetization options. You can "white label" the software and then license the software to clients to make use of their logo. You could sell access through your company's brand, or create free access with a "freemium" upsell.
A monetization strategy is the method by which individual (or multiple) streams of revenue are combined to form an entire brand's revenue.
Types of Monetization
They are among the most well-known methods of monetization. However, they're not the only means to earn money. Ultimately, there are ways to monetize that are being created constantly. Note that these are also not mutually exclusive-many brands use more than one of these (and there's a cross-over ).
Members monetization
Growth driven by members is among the best ways to monetize. The future generation of high-growth companies are going to be those who can convert customers, users as well as subscribers to subscribers. And they'll do it in a large the scale of.
Membership-led monetization is easy as just creating a membership fee for a community. But doing this creates valuable regular revenue. Additionally, your members produce content and tell others that they are part of your community, allowing it to grow on autopilot.
Here are a few examples of how member-led monetization work:
- An entrepreneurship org. The app was branded and launched for 5,000 members and made over $30,000 in 2 1/2 weeks.
- Health-related launch for 100 members with high-tickets also added $40,000 to the ARR.
- An author & speaker promoted for 4 weeks within their community of members and earned an additional $30,000 in revenue.
- Author and podcaster offered 5,000 tickets to an $997 class in just 10 days to existing members.
- A community has launched a 13-week add-on course and brought in an additional $100k of revenue in 2 months.
When you have an item that is based on membership, you'll find that you typically earn revenue from both your memberships and any other things your members buy-a business model McKinsey refers to as the Flywheel for communities .
Digital Subscriptions
The way you can earn money with subscriptions is similar to a membership model. But your customers do not add benefit. Instead, they consume the content or programs which you've created or licensed. This is a common model used by software companies as companies like Microsoft or Dropbox have made subscriptions their bread and butter.
And it works for the content, too. Netflix and Disney+ have built empires around subscription services. Subscriptions even saved from the New York Times; in 2020, there were 8 million subscribers to print and digital.
Freemium
The model of freemium monetization that is extremely popular among software companies, since it lets users try a product for free before signing up. In this case, the system of monetization takes responsibility for the trial period and eliminates the requirement for things like "money back guarantees" since the payment isn't made up front. However, it also lets members, users, etc quickly upgrade their accounts to go over the paywall after a certain period of time OR to get additional features.
Content monetization
There are many ways to monetize content, such as digital subscriptions, memberships and even digital ones. However, for creators of content there are endless options. Here are a few most popular choices:
- Affiliate marketing: If you promote the products you sell on your website or social media feed when someone clicks on a brand-approved tracking link, you may make commissions. Many blogs and websites monetize through affiliates.
- Ads: Monetizing with ads is another tried and true monetization model for content-heavy brands, from websites to TV channels and apps (more on this in a minute). Advertising can be paid per advertisement, or per visit (usually called RPM=revenue per mille ).
- Sponsorships: The term "sponsored content" is used to mean an article that was sponsored by a blog. The majority of sponsorships are content created by an influencer.
Social media monetization
Most of us think of social media monetization being the ways people make money through their social media platforms. The majority of social media owners are able to monetize their channels using a variety of options included in this list: advertisements, affiliate marketing and sponsored content.
However, there's also the matter of how the social media platforms actually make money, and they're creative. Here are two examples of the ways that social media giants earn profits:
- Meta: By leveraging its most popular brands of Facebook and Instagram, Meta makes money by selling attention-and with 2 billion people using it every day, there's lots to offer. Meta gathers data from users and gives companies the possibility to get the right ads to their customers, with highly targeted data on demographics. The company generated the amount of $32 Billion in the fourth period of the year 2022. Meta's data gathering is so effective that it's been the focus of numerous controversy (think the efforts of Cambridge Analytica to influence the outcome of elections).
- LinkedIn: LinkedIn is much smaller than Meta which has the number of users who are daily 141 million. It has developed a unique monetization model that is in line with the strengths of an application. Because it's a career-focused and networking site that sells Premium plans to job seekers (giving them a competitive edge on job applications), and then offer exclusive plans to recruiters and employers for a higher price. This lets every type of user access the features they require from the platform, and it also sells advertising. LinkedIn made over $13 billion in revenue in 2022.
When you examine all the social media channels there's some things that they share. They don't charge users to join the website to begin with. Their aim is to gain huge engagement and attention or to convert customers to premium plans, or more usual-simply to offer their customers' attention to advertisers.
App monetization
App monetization is a world by itself. We've written a detailed guide for this. Let's say there are a variety of methods to increase the value of apps through subscriptions, memberships, and ads. What makes apps unique is the category of In-app purchases.
There are 13 ways mobile apps could be made monetizable in the future, so be sure to read our guide to Mobile app monetization to take an in-depth look at every one of them.
- Freemium
- Ads and Premium
- ads only
- Ads + In-App Purchases
- Subscriptions
- Memberships
- Courses
- Events
- Product (physical as well as digital)
- A one-time payment
- Services
- Selling user data
- Crowdfunding
Monetization based on product
Sometimes, the best method of monetization is to create an item. This could be a digital 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 to an online course of $997 in just 10 days. This is a great digital product monetization model.
The selling of physical goods is a tried and proven monetization model too, and there are some truly amazing brands that have discovered the art of turning digital hype into actual product sales.
Take a look at Peloton in the form of a physically-based bike that connects in to workouts and other fitness buffs at any time. Also, Peleton was born during the pandemic, when many were seeking an exercise option. Celebrities have also launched physical goods and utilize their brands to boost them-like Ryan Reynolds' Aviation Gin brand which he has recently sold at $600 million.
The integration of products with internet-based attention is just beginning, but we'll see more of it in the coming years.
Licensing
It's an underrated monetization model, but for those with an intellectual property, licensing can be an incredible option to earn money. Essentially, licensing means you are the owner of a particular procedure or model, and then you license others to make use of the model. If you come across anyone selling "Trademarked X method to X", you're probably thinking about a licensing plan.
As an example Many thinkers will create their reputations around the TED Talks or op-eds However, they may grant permission to use their ideas to companies.
Consulting and services
It's similar to licensing, however those who develop expertise on their content online can often sell the application of the content. In the case of LinkedIn, for instance, lots of creators on LinkedIn and YouTube who share their knowledge could be hired by other people as well as companies to utilize their content directly. If you owned a YouTube channel that was dedicated to helping entrepreneurs expand their business, it stands to reason people might be interested in hiring your services as a coach. This is why services and consulting are usually a good business model for monetization.
Data
One final monetization model is to make money from data. In this example the platform gathers information on its users and sells it to third parties-often advertisers. This is the norm for social media companies (above) However, they're not the only ones collecting and selling user data.
In almost every field that includes health care and finance, firms are capturing and making money from the data of their customers. However, while selling data is an monetization strategy used by a lot of tech companies however, it's not a model that many smaller creators and brands use-for good reason. It's complex, complicated, must be carried out on the scale of a company, and there are lots of legal implications.
Which monetization strategy is best?
Each model comes with benefits and drawbacks. The freemium model lets users test the product or service prior to charging and help in selling more easily. The upfront charging process requires more sales effort, but can result in more cash flow early upon. A subscription monetization model brings in revenue month after month, yet requires constant customer service. Plus you need customers to be loyal enough to ensure to reap the real value of the recurring revenue.
There are dozens of ways to monetize any creation, product, or service particularly in the realm of digital which is why choosing a monetization model that allows you to manage access, user growth, and your own objectives is really essential.
Monetization model examples
- Vikrim creates an internet-based group with Vikrim and then decides to charge a one-time fee at for the first year that gives annual access, and include everything under that.
- Ali creates a paid monthly newsletter that includes advice and deals that she sends out each month.
- Charles has been a major influencer, and offers Social tokens to allow people who want to gain access.
- James is an app that has been developed and makes it free with In-app purchases.
- Jen is an author and thought leader who monetizes her work through book sales and speaking.
What is the best way to create an effective monetization strategy
When you decide to market your business, here are some tips to develop your strategy:
- Understand your strengths: Many marketing efforts don't succeed because they don't know the strengths of their brand. Let's take an example: you have a small number of members who are committed. Advertising isn't the best way to monetize, since they need to be in large quantities. A targeted product might be perfect. However it's possible to have an undefined website subject matter and a large number of visitors advertising might be more appropriate. The product won't succeed without a clear market. Choose your strengths and choose the best model for your business.
- Ask your members In the event that you are thinking of developing a service or product to make money from, request your members find out what they most want from the company. In an online community the process could be as simple as asking a question.
- Be sure that it is appropriate the target market: Many monetization efforts fail because people misunderstand their target audience. There's an instance of an account of a blogger who gave career advice to unemployed millennials who decided to launch a high-ticket product. It was a disaster. The crowd was 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 monetizing an online community, it could be as easy as turning into a membership or a bundle. However, every monetization strategy needs some preparation. Do you want to self-publish an eBook? It is necessary to know the how to format, design and layout of your cover, and 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 as well as Ezoic and then set it up.
- Learn about the business aspects If you are doing business on the internet, making cash is something that the IRS has some strong opinions about. You must be aware of what you need to do to report the earnings. If you are in the area, a visit to your local small business center could be in order. They can often show you what you need.
- Test, adapt and improve Try different monetizations: The first one you try might not be the right one. Don't be afraid to try various options (and let things go) until you discover what works best for you and your audience.
Conclusion
While you search for the best monetization strategy, pay attention to the things that work for your brand and your members. Do not force it. The process of monetizing needs to be handled carefully, without risking your customers' loyalty, or damaging the experience for users of the product.
If you want a great method to create a community-driven growth business, come build upon Mighty! The community can be monetized through or courses, as well as content and live occasions. It is also possible to trial it during 14 days!