The revenue models

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At first, the idea of outlining Internet revenue models may seem impossible. After all, there are billions of websites, and they cover the breadth of human experience. Sites take the form of stores, games, magazines, meeting places. "Content" sites alone can be splintered into a million subcategories: art exhibits, travelogues, recipe collections, and so on. So while it's impossible to anticipate the goals of every web developer, we can outline their financial options. In observing the range of successful strategies used over the last 10 years, it's possible to categorize them into five basic revenue models, each of which have been used by a startlingly wide range of companies and individuals. 5 online revenue models:

  • Generating leads for an off-line business
  • Product sales
  • Advertising
  • Subscriptions and user fees
  • "Match-making"

Whatever your business, you'll do well to follow one of these approaches. And you'll find you have a lot in common with other, seemingly unrelated businesses—in different industries—that make money the same way online.

Considering your options

Figuring out how to make money is like deciding what to do with your life. It's an overwhelmingly broad question until you find a system for making choices.

If you run an existing business or organization, the smartest way to approach the money question is to begin with your current customers (or members, or readers—however you define them) and what they need from you.

Ask yourself:

  • What do your customers need from you? Will they be willing to pay you for any of these services?
  • What would your customers buy from you? Is there anything you could sell that they would want to buy?
  • What do your customers need from each other? Are there ways you can help them connect with each other? Would they be willing to pay for this service? If so, think about a match-making service (not just for dating, but also for jobs or products).
  • What do other people need from your customers? Are there other people or companies who want to reach your audience?

Now, if you don't have an existing business—if you're just dreaming up your next venture—you should also, of course, begin with someone's needs. Ask yourself: How can you harness the power of the Internet to make something easier, faster, or better?

eBay, for example, took classified advertising and made it work on a vast grassroots scale. You, however, should start smaller. Think of a specific problem for a smaller group of people, and solve it.

Why pick just one?

Although it's always best to start small and simple, it's also smart to grow over time, gradually adding all the revenue models that make sense for your customers and your business.

For example, BlackPlanet (now the Number 1 site for African Americans) makes money from three of the five available revenue models. They run advertising throughout their site and collect user fees for their dating service. They also recruit volunteers for market-research studies and earn some additional revenue that way.

BabyCenter followed a similar approach. They started by defining their audience: pregnant mothers and parents of small children. Initially, they made money entirely from advertising, but they later added a store to sell the products that new parents need.

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