I really have been thinking lately about monetization. And the difference between people when they are “the user”, “the consumer”, and “the public”
You can have a super useful site for the user, but they aren’t willing to pay for it. They’ve come to expect it for free and won’t try unless you give them a free option. You can certainly have a Fremium model, where you add premium features for money. Or you can have a very valuable model for a particular vertical, building it really deep and have a great niche business being just an entrepreneur.
There is no doubt you can provide a service to the user for free that is of tremendous value to the user. If you can get a community aspect going, so that one person will recommend it to another, you can go viral. You can get a ton of awareness. You definitely can put in advertisements.
Notice, I did not put the word consumer in there at all, because to be a consumer you have to be in the mindset to consume. Pretty much every long term multi-$$$Billion success catered to people when they were consumers. Amazon, Diapers, Zappos, Groupon (for now), Google (when you searched for something to buy, the rest is a loss leader).
Models that were successful catering to the public and monetizing via advertising generally worked on the awareness principle, charged a subscription fee (cable, magazines) and layered on advertising for profit. Yes you were not a consumer at that moment in time, but you would remember when you turned into a consumer. In general these were content businesses serving the public. Content kept your awareness and you could mix in marketing messages. They weren’t things you could digest quickly and ignore the advertisements (a great example is free email).
I’m not saying you can’t have a successful model by providing a valuable service to the public and getting companies to advertise for awareness. Facebook is super powerful because people are both users producing their own content and the public viewing others content.
I am saying its very hard to have $$Billion Dollar companies not based on either charging “the user” for their value: Microsoft, or having the power to directly deliver “the consumer” to the seller: Google, or producing at great expense professional material for “the public”: Hollywood. The reason is that everything you do to monetize goes against the very grain of making your site useful to the public.
I don’t want to watch an ad because I am doing something else at the moment. So you can have a really nice business, but if you are looking for a “thunder lizard” you eventually put in so much annoying shit, that the next company “steals your heat” by leveraging off the awareness you built, uses the next generation of technology to deliver the service at a lower internal cost with a better interface, and comes in with a lean structure. All of which means they can disrupt your model, and since you’ve grown to the size of the fishbowl, because the biggest fear of your investors is that you don’t “scale ahead of the curve” its brutal and dis-heartening for you to make the cuts you need to compete.
Technology makes it easier and easier for the users or the public to strip out advertising or falsify their information or use mailinator.com or some other service to obscure their identity. It also meant that the users or the public could see what you did with their data. I think most people would be appalled at how their data is whored out in the list industry but its hard to see versus privacy settings.
None of this is saying that these businesses are not valuable, just that when somebody says, they haven’t even started to monetize the users they are serving, I wonder if people are mixing up words user and consumer..
You can move me from my consumer state to my public/user state easily. They let me make comments….cool! They have a forum where I can look for answers? Great! They are trying to add value not trying to extract value. They’ve already extracted value.
Moving me from my user/public state to my consumer state is much harder and causes much annoyance. Stop sending me fucking emails in the middle of the day clogging up my email box telling me there is some new book about herb gardening, because I stupidly told my wife my pay phrase. I hate mowing around that thing. I’ll show you. Bam….Report Spam Button, you’re ass is gone forever.