Revenue Model Types

A "revenue model is the system design by which a business monetizes its services." (Wikipedia via Fred Wilson). In other words, it's the overall mechanism and process by which a business makes money. For some products, the applicable revenue model will be obvious. But for others, a path towards monetization may not be clear, so a good understanding of common methods to monetize your service is helpful. This section covers these methods.


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Revenue Model Types

Fred Wilson 

Gaming isn't a revenue model itself, but it does offer a number of interesting revenue models and is worth discussing in a post in this series.

 

Fred Wilson 

As attractive as selling apps and running ads on them is, I believe the biggest and most attractive model in mobile is the transaction. Slowly but surely, our phone is becoming our wallet. And I don't mean wallet in the way that Google and PayPal think. I don't think we will necessarily have a mobile wallet. I think the apps on the phones will just have native transaction capability in them.

 

Fred Wilson 

The Internet is a data generating machine. According to Eric Schmidt, every two days now we create as much information as we did from the dawn of civilization up until  2003. It's also incredibly good at presenting that data, both to humans and machines. So it makes sense that collecting and publishing data is one of the primary business models on the Internet.

 

Fred Wilson 

Licensing, according to wikipedia, is an authorization (by the licensor) to use the licensed material (by the licensee). Of all the business models listed on the revenue model hackpad, licensing is the least net native business model. There is very little about the internet that makes licensing work better and there is a lot that makes it work worse. 

 

Fred Wilson 

The thing that all of these forms of transaction processing have in common is the processor handles a transaction that was generated by another product or service and provides some form of completion service and charges a fee for doing so. That could be processing a credit card transaction, handling a banking transaction, shipping something to someone, completing a call originated on another network, or distributing a third party app on an internet or mobile platform.