With the social media landscape still evolving despite heavyweights like Facebook and Twitter leading the way, there is still plenty of opportunity to exploit a niche and build a profitable startup that utilizes components like content, services and community to drive traffic either to these existing platforms or develops one of its own. However, having a great idea and large audience are no longer enough to ensure a sustainable business, unless you understand ahead of time how you’re going to monetize it.
Mashable examines five potential models and provides insights into each using real world examples:
Freemium: This business model works by offering a basic service for free, while charging for a premium service with advanced features to paying members.
Affiliate: This is a model in which a business makes money by driving traffic, leads, or sales to another, affiliated company’s website. Businesses that sell a product, meanwhile, rely on affiliated sites to send them the traffic or leads they need to make sales.
Subscription: Sites using the subscription model require users to pay a fee (generally monthly or yearly) to access a product or service.
Virtual Goods: Users pay for virtual goods, such as weapons, upgrades, points, or gifts, on a website or in a game.
Advertising: Sites that rely on advertising, sell advertisements against their traffic. In basic terms: the more traffic you have, the more you can charge for ads (additional demographics about your site’s visitors, such as age, gender, location, or interests, also affects the amount you can charge advertisers to place ads on your site).
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