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Monetization Strategies for Internet Companies

Voigt, Sebastian (2016):
Monetization Strategies for Internet Companies.
Darmstadt, Technische Universität Darmstadt, [Online-Edition: http://tuprints.ulb.tu-darmstadt.de/5668],
[Ph.D. Thesis]

Abstract

Many Internet service companies such as providers of two-sided markets, social networks, or online games rely on the social interaction between their user base and thus capitalize from positive network effects. For such companies, a common strategy is to offer (basic) services for free (and thereby abolish entry barrier of a one-off or recurring price) and to charge their users for premium services. Companies such as eBay, PayPal, LinkedIn, or Skype added paid services to their originally free business models, either via subscriptions, PAYG, or direct sales of virtual items. Their strategy how to make money and whom to bill however differs widely. In the Internet business, ‘monetization’ has become a frequently used buzzword for all aspects of a company’s revenue strategy which includes the decision who should be billed (e.g., for a two-sided market: seller vs. buyer vs. advertisers only), with which price model (e.g., mandatory subscription vs. optional subscriptions vs. selling virtual currency or items) and price level (e.g., differentiated between user groups), and – in case of a freemium strategy – how a new (free) user can be converted most efficiently into a paying and remunerative customer (e.g., via effective CRM measures). The overarching objective of all monetization measures is to maximize the company’s revenue and/or profit. The field of monetization offers a wide field of research opportunities. Four of these are covered in this dissertation: The Name-your-own-price model, users’ spending behavior in virtual communities, the monetization of network effects in social networks, and the legal boundaries of social network usage. As a result, this dissertation solves a series of questions currently being worked on by practitioners and uses a wide range of methods from various disciplines such as economic, psychological, and game theory.

Item Type: Ph.D. Thesis
Erschienen: 2016
Creators: Voigt, Sebastian
Title: Monetization Strategies for Internet Companies
Language: English
Abstract:

Many Internet service companies such as providers of two-sided markets, social networks, or online games rely on the social interaction between their user base and thus capitalize from positive network effects. For such companies, a common strategy is to offer (basic) services for free (and thereby abolish entry barrier of a one-off or recurring price) and to charge their users for premium services. Companies such as eBay, PayPal, LinkedIn, or Skype added paid services to their originally free business models, either via subscriptions, PAYG, or direct sales of virtual items. Their strategy how to make money and whom to bill however differs widely. In the Internet business, ‘monetization’ has become a frequently used buzzword for all aspects of a company’s revenue strategy which includes the decision who should be billed (e.g., for a two-sided market: seller vs. buyer vs. advertisers only), with which price model (e.g., mandatory subscription vs. optional subscriptions vs. selling virtual currency or items) and price level (e.g., differentiated between user groups), and – in case of a freemium strategy – how a new (free) user can be converted most efficiently into a paying and remunerative customer (e.g., via effective CRM measures). The overarching objective of all monetization measures is to maximize the company’s revenue and/or profit. The field of monetization offers a wide field of research opportunities. Four of these are covered in this dissertation: The Name-your-own-price model, users’ spending behavior in virtual communities, the monetization of network effects in social networks, and the legal boundaries of social network usage. As a result, this dissertation solves a series of questions currently being worked on by practitioners and uses a wide range of methods from various disciplines such as economic, psychological, and game theory.

Place of Publication: Darmstadt
Uncontrolled Keywords: Monetization; Digital business; Internet; Social networks; Network effects; Two-sided markets; Online dating; Willingness to pay; Freemium; Online / MMO gaming; Customer lifetime forecasting; Name-your-own-price; Reverse pricing; Game theory; Server launch strategy; Counterfactual simulation; Police; Facebook; Tracing; Investigation; Legislation; Data privacy
Divisions: 01 Department of Law and Economics > Betriebswirtschaftliche Fachgebiete > Fachgebiet Electronic Markets
01 Department of Law and Economics > Betriebswirtschaftliche Fachgebiete
01 Department of Law and Economics
Date Deposited: 02 Oct 2016 19:55
Official URL: http://tuprints.ulb.tu-darmstadt.de/5668
URN: urn:nbn:de:tuda-tuprints-56680
Referees: Hinz, Prof. Dr. Oliver and Benlian, Prof. Dr. Alexander
Refereed / Verteidigung / mdl. Prüfung: 14 September 2016
Alternative Abstract:
Alternative abstract Language
Viele Internet-Dienstleister wie z.B. Anbieter von zweiseitigen Märkten, sozialen Netzwerken oder Online-Spielen stiften ihren Kundennutzen durch die Ermöglichung sozialer Interaktion ihrer Nutzer und profitieren somit von Netzeffekten. Die Unternehmen bieten dabei ihre (Basis-)Leistungen oftmals gratis an, um schnell einen großen Nutzerstamm zu gewinnen und generieren anschließend Umsätze über den Verkauf von Premium-Leistungen – entweder über Abonnements oder transaktionsbasierte Abrechnungsmodelle. Der Begriff „Monetarisierung“ beschreibt in der Digitalindustrie alle Aspekte der Umsatzstrategie eines Unternehmens: wer soll bezahlen (z.B. bei zweiseitigen Märkten: Verkäufer, Käufer oder beide), welches Preismodell wird angewandt (z.B. verpflichtende Abonnements, Freemium-Abos, transaktionsbasierte Abrechnung), welcher Preis wird aufgerufen (möglicherweise differenziert nach Nutzergruppe) und – im Falle von Freemium-Modellen – wie werden Nutzer, die den Service bislang gratis nutzen, effektiv zu zahlenden Kunden? Ziel der Monetarisierungsentscheidungen eines Unternehmens ist es am Ende meist, den eigenen Umsatz und/oder Gewinn zu maximieren. Das Thema Monetarisierung von Internet-Dienstleistungen bietet zahlreiche neue Forschungspunkte, von denen diese Dissertation vier betrachtet: das Name-your-own-price-Modell, das Konsumverhalten von Nutzern in digitalen Communities, die Monetarisierung von Netzeffekten sowie die rechtlichen Grenzen der Nutzung sozialer Netzwerke. Durch die Zusammenarbeit mit verschiedenen Internet-Dienstleistungsunternehmen hat diese Arbeit einen starken Praxisbezug und zielt darauf ab, Monetarisierungsfragen aus der Praxis mittels eines interdisziplinären wissenschaftlichen Ansatzes zu beantworten.German
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