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CHAPTER 6 - Monetization Capturing the Value created by Network Effects,…
CHAPTER 6 - Monetization
Capturing the Value created by Network Effects
Network Effects
Positive
Network Effects
a large, well-managed
platform community
(+)
value created
for each user
main source of value creation
HOW TO CAPTURING THE VALUES?!
Ad World
charge the Ad companies?!
charge the firms that are seeking Ad services?!
Problems:
building a base of users
encouraging interactions
charge for posting a deak?!
should be levied on deal completion
charge ad agencies for postmortem service
THE CHALLENGE OF MONETIZATION
charging for access?!
lead people to avoid the platform
charging for production?!
reduces value creation
charging for usage?!
inhibit frequent participation
charging for consumption?!
reduces consumption
FREE PRICING
Gillette
blades > razors
Printer Market
cartridges > printer
Freemium Model
premium services > basis services
Two-sided Market Pricing
Nestcap
web servers > browsers
Microsoft's/Apache
web servers for free
SMART
MONETIZATION STRATEGIES
(Excess values - without Negative NEs)
For consumers:
Access to value created on the platform
YouTube/Android/Skillshare
For producers or third-party providers:
Access to a community or market
Airbnb/LinkedIn/Alibaba
For both consumers and producers:
Access to tools and services that facilitate interaction
Kickstarter/eBay-PayPal/Youtube
For both consumers and producers:
Access to curation mechanisms that enhance the quality of interactions
right consumers - right producers
FINDING THE VALUE
IN NETWORK EFFECTS
attract more users
Zvents
1 more item...
generate more excess values
Meetup
1 more item...
Negative
Network Effects
a poorly-managed
platform community
(-)
WAYS TO MONETIZE
(1) Charging a transaction fee
percentage of the transaction amount
fixed fee per transaction
Which fee level
is appropriate?
The transactions are carried
outside the platform
reduce direct contact
between seller and buyers
more information
standardized goods and services
rating goods and services
interaction facilitator