Wikipedia:Reference desk/Archives/Miscellaneous/2017 March 3
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March 3
[edit]Name of a particular monetization model?
[edit]Let's say there is a product X which both involves and benefits parties A and B, but only one of them is charged for the service (the other getting a "free ride" of sorts in the process). Is there a name for that particular monetization model? And more generally, where detailed descriptions of different types of models might be found (on Wikipedia or otherwise)? Earl of Arundel (talk) 15:28, 3 March 2017 (UTC)
- The normal term for this is a revenue model (monetization is a word that has been stretched in colloquial speech beyond its original more specialized definition. The way monetization is used today is pretty much a perfect synonym of the old word "revenue". To "monetize" something is merely to generate revenue from it). Wikipedia's article has a long list of revenue models, perhaps one of these will suit your purposes? --Jayron32 16:30, 3 March 2017 (UTC)
- From Public good: "In economics, a public good is a good that is both non-excludable and non-rivalrous in that individuals cannot be effectively excluded from use and where use by one individual does not reduce availability to others." Loraof (talk) 17:14, 3 March 2017 (UTC)
- I don't think that's quite right, since everyone pays and everyone benefits from a public good, versus A paying and only A and B benefiting. One example of what the OP asked might be where stores will sell item X and give away another item X, with every purchase. I don't have a name for that model, though. I think Panera Bread does it with their Panera Cares locations. StuRat (talk) 17:37, 3 March 2017 (UTC)
- What is described is specifically the Toms Shoes business model. For every pair of shoes sold, a pair of shoes is given away. Because there was no accepted name for that business model, the founder referred to it as the "one for one" business model. If you relax the rules of the question, you can get to a social business model in which a product or service is given away for free if enough people purchase the product or service at cost. Most companies do that. For example, hospitals in the U.S. would give free health care to those who could not pay by using profits made from those who could pay (before the ACA - it is not legal to do now). It could be government run. Use food taxes to support food stamps. It could be completely private. Sell coats at a markup to fund giving coats to people who need them. All in all, it is more charity and less a business model. Even Toms Shoes, with the one for one model will do a charity write off on all the donated shoes in taxes to help the company turn a profit. 209.149.113.5 (talk) 19:53, 3 March 2017 (UTC)
- Another variation of that would be the loss leader promotion strategy. That's a bit different from what I was talking about, but the motivation is more or less about the same: a short-term loss in hopes of higher returns (revenue) in the long-run. Earl of Arundel (talk) 20:21, 3 March 2017 (UTC)
- What is described is specifically the Toms Shoes business model. For every pair of shoes sold, a pair of shoes is given away. Because there was no accepted name for that business model, the founder referred to it as the "one for one" business model. If you relax the rules of the question, you can get to a social business model in which a product or service is given away for free if enough people purchase the product or service at cost. Most companies do that. For example, hospitals in the U.S. would give free health care to those who could not pay by using profits made from those who could pay (before the ACA - it is not legal to do now). It could be government run. Use food taxes to support food stamps. It could be completely private. Sell coats at a markup to fund giving coats to people who need them. All in all, it is more charity and less a business model. Even Toms Shoes, with the one for one model will do a charity write off on all the donated shoes in taxes to help the company turn a profit. 209.149.113.5 (talk) 19:53, 3 March 2017 (UTC)
The revenue model article does mention some related concepts but nothing really concerning what I was specifically referring to here. The scenario I'm thinking is more along the lines of how certain "classifieds" publications work: One party (A) pays a fee to list their merchandise and the potential buyer (B) picks up the publication for free from a news-stand. Clearly both parties benefit from the service (X), but only one of them is charged. Of course, the reason for adopting that model over a dual-party fee requirement is that it arguably leads to a higher percentage of seller-buyer transactions. And so my question is if there an actual name for this principle? Earl of Arundel (talk) 20:09, 3 March 2017 (UTC)
- For the specific example you have in mind, newspaper revenues are typically composed of two revenue streams: circulation and advertising. A free newspaper relies entirely on the advertising revenue stream and not at all on the circulation revenue stream.
- While not traditional in newspapers, the revenue model is quite common in the Internet age. Many commercial websites and apps are provided "free" to users, the revenue coming from advertising. Looking for "advertising revenue model" on Google Books finds a few hits, like "Advertising-Supported Revenue Model", which is the term used in this book to describe this type of revenue models. --165.225.80.125 (talk) 15:33, 6 March 2017 (UTC)
- Thank you, that definitely helps! Earl of Arundel (talk) 04:35, 8 March 2017 (UTC)