The struggles of a platforms monetization
Tags: watercooler, scaling, policy, startup
Published: 2020-11-13 09:02:31

The big platforms like Facebook, Twitter and YouTube are the constant talk of the tech world. Be it the latest controversy or technical improvement that they have unveiled. Platforms for user generated content have shaped Internet services significantly. And most importantly it has come at an apparent zero cost to the user.
Well, the more observant know that is a lie. To maintain a massive world-wide infrastructure costs a lot, not to mention the top talent needed to make that happen. And so infamously the user base and user content was monetize. The saying "If you are not paying for the product, then you are the product." was born.
For all encompassing platforms like Facebook the public has yet to fully realize what that means and it is questionable that they ever, for the explanations of privacy advocates have (in my opinion) been either too hysterical or missed the mark to what a person who isn't in IT finds important. That is why the most common monetization practice is to turn to advertising.
Given the dominance of Google and Facebook in this area it becomes extremely hard for new platforms to go the same route unless they gain a significant user base. Not something that can be easily achieved, especially if you are started for money.
So smaller more niche platforms have turned to a different strategy. Wattpad for example is a reading platform where users can publish their stories. Again all for free. So how does Wattpad monetize? Besides helping the most read stories get contracts for publication and movie adaptations the first and probably still the biggest share is brand marketing. The motto on the brand website is "Promote your brand to Millennials and Gen Z". The focus here on a key demographics that brands seek after seem to have worked as Wattpad is going stronger than ever.
Some newer platforms have turned to crypto currencies to monetize. Steemit and LBRY come first to mind, but it seems that so far they have gained only traction by people who are privacy minded or crypto focused in the first place.
Finally there is the good old subscription model, but that one seem to work only under a freemium model where only the users who want to get the most out of the system or a specific professional would be interested (think LinkedIn, GitHub).

So to sum-up, the most common monetization practices for platforms are:
1. Advertising
2. Crypto
3. Freemium

So let's think that we are a platform that wants to attract the general public. At the same time we want to respect our user's privacy, so advertising is not an option for us (not to mention that it won't be good for us until we reach some critical mass). General public also doesn't care much about crypto, so that is not something that will attract people beyond a certain niche. So the freemium model remains. But will that be enough?
Obviously another source of income beside that might be good to do. Following the example of Patreon might be one way, or becoming a market place instead might be another.

What do you think? Any main monetization option that I missed?

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