Names matter.

Years ago, back in the salad days of the late noughties/ early teens, there was a conversation I had  with a whole lot of startup founders. It was a conversation about money, specifically how they would make some. Their investors were starting to ask for returns. As is my way, I sat down with some of these founders and talked through their propositions, working to identify some of the points of greatest value to users, so that we could design monetisation models that were both fit-for-purpose and had a chance at success. This was all predicated on the rather basic notion that while everyone loves some free shit, people are also quite happy to pay for things that make them happy/ make their lives easier/ help them do what they need to do. 

Investors hated this.

Overwhelmingly, founders would take our ideas to their investors and get shot down. The investors were not interested in new business models. They wanted something tried and true, something well-worn and well-understood. They wanted advertising. Never mind that advertising degrades experiences; never mind that growing ad revenue means (first) aggressive user acquisition and (then) aggressive user data mining. Never mind that the former can’t go on forever and the latter has limited viability once users get wise, regulators get involved, or both.  

So here we are, a dozen or so years later, and we’re all painted into this rather claustrophobic corner. The prevailing monetisation model for any and every tech business is advertising. And the biggest tech businesses, led by Google and Meta, have seen their growth slow dramatically as we creep closer and closer to every human on the planet already being online and on at least one of their services. What’s next? AI, obviously. Not everyone is on the AI train yet so it’s the new market for explosive growth. But how will it be monetised? It’s unclear. So far, it’s mainly subscriptions, and the stakes are high – for AI to be truly helpful, it needs to know a lot about its mission, and when we are the mission, that can get pretty creepy pretty quickly.

And in the meantime, how about all those other things that run on ad revenue? There are often better ways to earn revenue. The best way is to find the points of greatest value to users/customers and find ways to monetise those. I don’t mean sticking up interstitials demanding cash in the middle of a task flow. I mean thoughtful, considered models that price according to customer value and business requirements. 

One of the great things about value-based monetisation is that it’s extensible. Have you had a new idea for a feature that people are going to love? Has technology evolved to the point where you can offer something great to your customers that wasn’t possible before? You can look into premium pricing for that thing and hey presto! There’s a nice new revenue stream. It’s a pretty straightforward concept: people will still pay for what makes them happy. They’re just a little more suspicious these days, and not necessarily immediately convinced by every new piece of tech. The shiny has grown tarnished.

So why don’t more businesses think this way? Because it’s not easy. It’s a straightforward concept, but doing it right takes focus and attention. You have to understand your customer and how they think about you as well as the other things in their worlds that are adjacent to whatever you offer. You have to understand the system you’re a part of. You have to be realistic about which of your ideas drives the most value for the people at the other end. You have to balance customer considerations with commercial, regulatory, technical and sustainability concerns. You have to revisit all of this regularly to make sure you stay on track. It’s work, but it’s rewarding work.

Real value is worth it.