Fred Wilson says:
Most web apps will be monetized with some kind of media model. Don't think banner ads when I say that. Think of all the various ways that an audience that is paying attention to your service can be paid for by companies and people who want some of that attention.
This is the core of FREE, at least as it exists online. Both media and most online businesses are based on "software economics", where the cost of creating something of value is relatively high but the marginal cost of distributing it to each consumer is very low. So you can look at the web as the ultimate extension of the media business model to a wide range of other industries.
But when people think of the "media business model", they usually just think of advertising. That's a big part of it, to be sure, but as those of us in the media business know, it goes far beyond that.
Here's my start at a list all the revenue models you can find in the media industry, all based around a core of free or almost-free content:
- CPM ads ("cost per thousand views"; banner ads online and regular ads in print, TV and radio)
- CPC ads ("cost per click"; think Google ads)
- CPT ads ("cost per transaction"; you pay only if the customer brought to you from a media sites becomes a paying customer. Here's an example.)
- Lead generation (you pay for qualified names of potential customers)
- Subscription revenues
- Affiliate revenues (think: Amazon Associates)
- Rental of subscriber lists
- Sale of information (selling data about users--aggregate/statistical or individual--to third parties)
- Licensing of brand (people pay to use a media brand as implied endorsement)
- Licensing of content (syndication)
- Getting the users to create something of value for free and applying any of the above to monetize it. (Like Digg or our own Reddit)
- Upgraded service/content (ed: aka "freemium")
- Alternate output (pdf; print/print-on-demand; customized Shared Book style; etc.)
- Custom services/feeds
- Live events
- Co-branded spinoff
UPDATE2: Fred Wilson adds: (see his comments section for even more)
- Cost Per Install (popular with top Facebook apps who can help others get installs)
- E-commerce (selling stuff directly on your website)
- Sponsorships (ads of some sort that are sold based on time, not on the number of impressions)
- Listings (paying a time based amount to list something like a job or real estate on your website)
- Paid Inclusion (a form of CPC advertising where an advertiser pays to be included in a search result)
- Streaming Audio Advertising (like radio advertising delivered in the audio stream after a certain amount of audio content has been delivered)
- Streaming Video Advertising (like streaming audio but in video)
- API Fees (charging third parties to access your API)
Finally, one of my commenters gave this example, which speaks to how much more diverse the media business model is than people think:
"My main business is a site that sells classified advertisements. I can make money from any of 4 sources:
- The people placing the advertisements, or
- The people paying to see the advertisements (in my niche market, this is possible, although in most advertising markets it isn't), or
- Commission from sales for related products, or
- Direct sales of related products"
What other revenue models am I missing? Additions and other suggestion in the comments, please, and I'll update this list accordingly.