5 levels of online content monetization

So you’ve got content and you want to make money from it. But how? There are lots of monetization models floating around online and this is an attempt to corral them into a taxonomy.

Online content monetization model #1 — Philanthropic: This is a fully free model. Content is written and given away absolutely free. This is frequently used for content which the creator hopes will go viral. It’s a valuable way to position a company. I think BMW did a great job at this with their BMW movies. I would put Wikipedia here because, although they do collect money, their work is free to everyone (while a small but loyal group of financial supporters keeping them free). The value someone derives from this philanthropic model might be referred to as “buzz”, “positioning”, “credibility”, “authority”. There is a value to this model, but it is not immediate nor easily connected to currency. However, it can build a foundation of perceived expertise that can lead to payment later.

Online content monetization model #2 — Philharmonic: This is similar to philanthropic except that there are strings attached :) In this model, content is fully free but there is a strong, clear message that money is heartily welcomed. However, the audience can enjoy the full content without purchase: Tip jars are a good example of this. Freely accessible knowledgebases are another good example. Business-specific social networks (like SAP’s EcoHub) are a third option.I would also include PPC ads in this category, since content might be offered free with the hope that someone will click an ad. A lot of businesses that create content with the intention of it becoming viral (but they slap their logo all over it with clear calls to action at the very end) do this… although the viral potential can often be muted because of the clear business purpose.

Online content monetization model #3 — Wheel Grease: This is ad-supported content in which the ad is paid up-front to the publisher (rather than after the audience takes action, as in PPC models). A lot of media is funded this way: Commercials, display ads, and sponsorships are good examples of this. In the offline world, this model once made Lance Armstrong’s bike wheels turning or the Cosby Show on the air.

Note: In the above three models, content has been fully delivered and the value to the publisher (in the form of positioning or cash) is collected after. In the next two monetization models, content is limited until the transaction is completed.

Online content monetization model #4 — Striptease: In this monetization model, some free content is revealed, but to see more the audience needs to pay. Free trials are a good example. Another common example in offline newspapers is to send a weekend edition to everyone but require pay for the weekly edition. Online, newspapers might provide some stories for free but other stories for pay, or the first page of a story for free and payment is required to read the rest of the story.

Online content monetization model #5 — “The Machine” Levene: Shelley “The Machine” Levene was a character played by Jack Lemmon in Glengarry Glen Ross. In this movie, he’s an old-school salesman who calls leads, presents a pitch, and closes deals. So the final model is named after him: It’s a fully paid model in which some kind of sales presentation is made and the buyer decides based on the pitch whether or not to pay to see the information. This has been a classic model for ebooks (although I think that’s changing… unless you have a reputation already established or you have a really good affiliate network).

There are a couple of must-read articles on this topic, both at Wired.com. In the article “Free! Why $0.00 is the Future of Business“, Chris Anderson talks about free and talks about some different monetization models. The article is a bit older, and fairly long, but it’s a good read. The other article is “Make Money Around Free Content“. In short, both of these articles offer options to content creators who want to profit from 4 of the 5 content monetization models above.

If you’re a business that creates content for money, give some thought to what your current content monetization is and whether it is successful. Could it be more successful if you modified the model and moved it up or down the taxonomy I’ve described here?

Published by Aaron Hoos

Aaron Hoos is a writer, strategist, and investor who builds and optimizes profitable sales funnels. He is the author of The Sales Funnel Bible and other books.

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