Are you an aspiring tech entrepreneur who wants to understand the business model of digital media companies? Are you running a media business but want to know more ways to generate revenue? Do you want to know how do these media companies make money? Well, if these questions piques your interest then you have come to the right place. We try to get these complex questions answered in this detailed article here.

There are 6 main types of business models to generate revenue from a digital media company.

They are as follows;

1) transactions,

2) subscriptions,

3) licensing,

4) content marketing,

5) advertising.

6) sponsored/featured posts

Let’s read about each of these business models in detail now;

1. Transactions

This is one of the simplest and most used models by some of the major media companies. Transactional business models may prove to be the most effective way to make money off content that you produce.

Simply slap a price tag on your content, report, analysis or whatever form of content you create and charge for I by licensing or selling it to other distributors. This works brilliantly for the type of content that people love to consume. Let’s just say you have access to unique content or reports that is not easy to get elsewhere. You may easily leverage it by partnering with a company who is looking for it and are ready to pay you. Guess what? win-win for both. This type of model thrives when you have good presence and dominance in your niche.

To help you understand more. Let’s take a look at few more ways of how some of the major media companies take optimum use of this type of business model. It can be divided into two further types:

Buy or Download the content.

Remember how we used to buy CDs, cassettes, books e.t.c to own the content. Similarly in this digital age, you would have noticed that some online media companies ask you to download the content for a charge. That’s exactly the model we are talking about here.

Pay-to-Unlock

The alternative model which is increasingly common for most of the digital media companies  – is to buy temporary or permanent access to the content by signing up for it.

Why is it best from a media company’s point of view? Lets understand why! Pay-to-unlock approach reduces the chances of potential theft or piracy. Since the content is not available until you buy it there is no possibility of it being copied by someone else. You would have to noticed many big media houses opting for this model.

2. Subscriptions

This is another very good business model for digital media companies where subscriptions are based on access to content for a certain period of time and it is recurring in nature. If your digital media publishes quality content, exclusive reports or curated articles then you might as well prefer to opt for this type of business model.

It is good because your subscribers will continue to pay you regularly against the value you provide. Keep in mind the value here because no one would want to compromise on the quality of content they get. So, depending on the niche of your content, you should strive to provide value to your subscribers at all times.

You would see this type of model being commonly used by newspapers and magazines. Also by popular OTT players like like Netflix, Amazon Prime, ZEE5, ALT BALAJI and more platforms such as Hulu, VRV, fuboTV.  These players have gained huge traction because people now prefer watch enough content through video.

Good news! Internet users are projected to grow multifold hence there is great demand particularly in emerging markets like India and China. Indian market is projected to have an internet user base of c600 Million by 2021 as per a report by KPMG.

3. Licensing

This type of business model is preferred by media houses which are primarily into films, Television.

Here is how it works:

Example 1)  Production house/company sells the film to a studio that does the marketing of the film and also promotes it further with the help of partners (i.e. cinemas/theatres) and online streaming platforms to distribute across all the channels for optimum results.

Example 2) Television shows are created by production companies who sells it to other networks, and further distributes it through a number of networking and partnerships with players such as cable companies.

This type of model gives optimum returns when you work on a small number of projects- let’s say quarterly/bi-annually/annually/ or your have a set number.

Doing it on your own may be ineffective and require a lot of work from your end hence it is best to license the content because that way you don’t have to worry much about all the process that you may be required to go through.

What is the drawback of such a model? Let’s have a look!

The main downside of licensing is that the performance/ ROI of your content is largely dependent on middlemen, and you collect no footprint of what is going on. You may not know who your audience is and how is your content being consumed by your target audience. Therefore it is tougher to build relationships with your audience that way.

4. Content Marketing + Affiliate Marketing

Content marketing is, simply put, using content as a tool to market some other products or services from which you make money. (Content marketing may also be done by individuals to market/promote their personal brand, with the ROI coming from the benefits the notability brings to their career which they can monetise later on in the form of selling their own products and services). You would have noticed many digital media houses faraying into other verticals to monetise.

It has gathered a lot of steam in recent years primarily in the marketing departments of companies across every industry. Be it Media, Digital Media or others.

So content marketing model also starts with media, and then expands into other relevant products/services to sell once you’ve crafted a brand and audience.

A common content marketing model for independent media players is using IP from the content to do e-commerce For e.g. selling merchandise. May media companies such as WaitButWhy and BuzzFeed have done this. Publications like the Wall Street Journal have curated products in place. many more are now following suit. Next time you read an article or watch a video that upsells something, you should know what we are talking about here.

5. Advertising

It still remains one of the key business models to generate hefty revenues long as you have significant volume of traffic on your digital media assets.  You create content that draws significant number of readers/viewers, then you also make advertising revenues by also showing promotional content of other brands in various places of your digital asset (on websites, podcasts, events e.t.c)