Your Monetization Is Not Your Business

What is a “business”? Google defines it as “the activity of providing goods and services involving financial and commercial and industrial aspects.”

That’s still accurate, but the underlying methods for accomplishing financial goals have changed significantly in the past 10 years. It used to be that the “providing goods and services” and the “financial and commercial aspects” were closely related. The value you provided was to (for example) sell cars. People gave you money in return for cars.

But today, just about every product in the world is a commodity. There are more than a million websites where you can buy a Mercedes Benz. So providing me a Mercedes no longer counts as “providing value”. You have to give me extra value, to entice me to buy it from you.

What Business is Amazon In?

Amazon.com makes money selling books, everyone knows that. But that’s really not their value. I can get most of those same books from my friendly local bookstore, or from Barnes&Noble.com, or from Better World Books. And yet Amazon is far and away the #1 bookseller on the web. Why?

Because Amazon provides information. If I need a new book, I don’t have to browse randomly through a genre hoping to find something I like. Amazon will pull out and show me books it thinks I might like. If I’m interested enough to take a look, it will give me ratings of the book, ratings of the author, reviews from readers, and “people who bought this book also bought”. All of that allows me to more quickly find books that I like, including some new stuff I might never have found in my random-genre-browsing method. And, despite the excellent service at my friendly local bookstore, I can’t get all that information from anywhere except Amazon.

If Amazon.com decided to stop selling books, they could still monetize their information: they could sell ads to related products & services, they could join an affiliate program with other booksellers, they could charge a membership fee for anyone who wanted access to the information, or a per-book lookup of $.25 per review, or $1 to get a personalized recommendation list. They could forget about dead-tree books and push hard for the use of their Kindle. There are lots of ways to make money on the information, because it’s valuable information.

But…
If Amazon.com decided to eliminate the information part of their site, they would quickly lose their book sales as well. There would be no reasons to choose them over BarnesAndNoble.com or my local Barnes & Noble. And most people, given the option, would rather support their friendly local bookseller and get their book immediately.

Amazon is not in the book-selling business. They are in the book-information business.

Your Monetization Is Not Your Business

Let’s look at the top 25 websites (according to Alexa.com):

Assorted Googles
Value: make it easy for you to find content on the web
Make money by: selling ads to people who want to sell to you

Facebook
Value: make it easy for you to keep in touch with friends and family, yet also easy to ignore Uncle Arnie’s repeated invitations to Farmville.
Make money by: selling ads to people who want to sell to you

YouTube
Value: entertainment (some education)
Make money by: selling out to Google

Yahoo!
Value: make it easy for you to find content on the web
Make money by: selling ads to people who want to sell to you

Windows Live
Value: make it easy for you to find content on the web
Make money by: selling ads to people who want to sell to you

Wikipedia
Value: easy-to-find information that’s as reliable as the Britannica on basic academic topics, and far more reliable on pop culture topics.
Make money by: asking for donations

That’s the first one on the list — at #6 — that even comes close to asking you to pay for the value they provide. And they’re still not using the traditional business model of selling you the information. You can have the information whether you pay or not.

The next one that even comes close to making you pay is #25 — ebay.com. And ebay doesn’t charge you for its major value: helping buyers & sellers find each other. It doesn’t charge you for browsing auctions to determine the fair market value of an item you may have. It only charges you a tiny fee to actually sell the product.

This is the new model of business: provide value, but don’t charge for it. Figure out who your audience is, and what they would pay money for. Find a way to get a piece of that action. Repeat.

Your Value Is Your Business

Provide value for people. It’s not an afterthought to your business, it is your business. If you provide value, I can help you monetize it. But if all you have is a monetization method, I can’t help you create value.