[G1]-PR-6 – Monetization:
Capturing the value created by the network effects
how
whom
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charging one side while subsidizing another
charging most users full price while subsidizing stars
charging all users
charging some users full price while subsidizing users who are price-sensitive
sometimes enhance network effect
most of case, discourage participation
high membership quality club
A highly value the opportunity to make contact with users form B
through super star attract people
difficult to predict which side is price-sensitive
not simply to pump up the numbers of participants and interactions
also take the steps to encourager desirable interactons and discourage undersirable ones
a mistake to assume that network effects can always be optimized bysimply refraining from charge users
a better approach to analyzing the monetization challenge to ask
how can we generate revenues without reducing our positive network effects?
can we devise a pricing strtegy that strengthens our positive networks effects while reducing our negative effects?
can we create a strategy that encourages desirable interactions and dis courages undesirable ones?
ways to monettize
charging a transaction fee
charging for access
charging for enhanced access
charging for enhanced curation
all four culminate in some kind of interaction
involves an exchange of money
facilitate such monetary transactions can monetize the value created by charging a transaction fee
calulated as either a percentage of the transaction price
or a fixed fee per transacton
particulary appealing
when high frequency of transactions is expected without a significant variation in the transaction size
simpler to administer
What kinds of Money that Platform Business Makes
Considering the forms of value created by platforms, and determining which sources of value can be exploited
Generate revenues without reducing positive network effects
Strengthen positive network effects while reducing negative network effects
encourages desirable interactions and discourages undesirable ones
WAYS TO MONETIZE
Charging a transaction fee
Only charged when an actual transaction occurs
Maintain facilitator position
Provide additional value to keep activity
Create tools and services removing friction and mitigating risk
Charging for access
Charging third-party producers for community access
Newly added contents enhance the value of the platform to its users
Charging for enhanced access
Help producers stand out from the crowd on a busy platform
Better targeted messages
More attractive presentations
Interactions with particularly valuable users
Charge for lowering barriers
Charging for enhanced curation
Pay for access to guaranteed quality, helping find the content they want.
Ensure positive network effects
a powrerrful way
without hampering the growth of network effects
chargee only when an actual transaction occurs
manager's challenge
experiment with various levels of fee to find the rate
captures a fair percentage
capture on the platform itself all the interactions facilitated by the platform
create tools and services that benefit both parties
creates interactions that benefit both parties
protect the long-term value
charging third-party producers for community access is effective
enhance the value of the platform to it's users
charging producers fees
charging users
for enhanced access to consumers
for lowering barriers that otherwise exist between users
dosen't harm network effects
allowing a portion of that value to be captured by the platform business
the additonal value of enhanced access is particularly great can pay for that extra value
the provision of tools
enable a producer to stand out above the crowd
for better targeted messages+more attractive presentations +interactions with particularly valueable users
ensure that
highlighted as part of a paid access program
content whose high ranking or prominence is organic
consumers can easily distinguish between content that has been elevated
not to created the impression that users access is being restricted
ensure that their usual curation principles are applied rigorously to content from producers who pay for enhanced access
positive network effects are driven not simply by quantity but also by quality
when consumers willing to pay for access to guaranteed quality
why
when
producers
consumers
profit
Take ownership
Access to use
platform
profit
Maintain operation
Service upgrade
contact users
Reduce barriers between users
enhanced access
using the service
upgrade the service
joining the platform
transaction
value exchange