Spotify is a two-sided marketplace where artists and music fans encounter on a single platform. Founded in 2008 with the belief that music should be universally accessible with a seamless experience based on streaming audio and video. It generated over €4 billion in 2017, of which almost 90% based on premium memberships and 10% based on a free service that is ad-supported. The company recorded an operating loss of €378 million in 2017.
Freemium
The freemium is usually a growth and branding strategy rather than a business model. A free service is provided to a majority of users, while a small percentage of those users convert into paying customers through either marketing or sales funnel. The free users not converting in customers help spread the brand.Dropbox generated over 90% of its revenue via its self-serve channels to convert users in paying customers through in-product prompts and notifications, time-limited free trials of paid subscription plans, email campaigns, and lifecycle marketing. Dropbox generated over $1.1 billion revenue in 2017, with an average revenue per paying user of $111, $305 million in free cash flow and 11 million paying users
Subscription-based
Netflix is a subscription-based business model making money with three simple plans: basic, standard, and premium, giving access to stream series, movies, and shows. The company is profitable, yet it runs on negative cash flows due to upfront cash paid for content licensing and original content production.
Consumption-based
Amazon AWS is a business unit of Amazon which sells cloud services, which are primarily consumption-based.
Commission-based
Airbnb is a platform business model making money by charging guests a service fee between 5% and 15% of the reservation, while the commission from hosts is generally 3%. The platform also charges hosts who offer experiences with a 20% service fee on the total paid amount.
Hidden revenue
In an hidden revenue generation the service provided is free, in so targeted or relevent that the average user doesn’t even realize how the platform makes money.
Razor and blade
In a regular razor and blade revenue model, the company sells the “razor” product at cost, while selling the “blade” at extremely high margins.
Direct
Tesla is vertically integrated. Therefore, the company runs and operates the Tesla’s plants where cars are manufactured and the Gigafactory which produces the battery packs and stationary storage systems for its electric vehicles, which are sold via direct channels like the Tesla online store and the Tesla physical stores.
Indirect
While Apple uses a hybrid distribution approach. A good portion of Apple’s products are sold via indirect distribution channels, like third-party cellular network carriers. This matter to understand, how, for years Apple has been able to sell expensive tech products at a wide audience, as it leveraged on indirect channels.
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