Paypal is a globally recognized and trusted brand for making payments. In fact, it is quite a familiar name for who is familiar with online payments, isn’t it? Started as a small startup, the company has grown as a large system that has apps, sites, and other companies. 

It’s no wonder if you have ever thought about how much money PayPal makes. But rather than that knowing the strategies that made it such a profitable company is important. Don’t you agree? 

Well, let’s see PayPal Business Model and how it makes money in this article. Shall we?

Before we get into the critical things that made PayPal successful, let’s start with basics.

What is PayPal?

PayPal is an American based fintech company that made payments to and from anywhere easy. It was founded in December, 1998 in Palo Alto, California. Within no time, it became a global money transferring platform for people across the world. 

Over 200 countries use PayPal and nearly 325 million users use PayPal for sending and receiving money. Not just making payments and receiving money, PayPal also offers lots of services like debit & credit cards, payment gateways, loans, digital wallet etc. Not to mention, it is no less than a bank. In short, it is a virtual bank for thousands of merchants, businesses and individuals worldwide.

As a fintech company, it has many sources for generating income (in fact, it should have). The major benefit for PayPal is that it understands people’s minds about online banking and its threats. Right from the initial days, PayPal tried delivering the best service by introducing fraud detection, easy checkout, etc. In short, it made revolutionary changes in the world of digital money transfer.

PayPal & eBay

Started in 1998, within less time, in 2002 it gained huge popularity after eBay had included it in its interface as a checkout option. However, even after PayPal became an independent company, it never looked back.

PayPal is a giant company that offers unbelievable features to take its services to the next level. Let’s see what are the features and how do they impact PayPal’s revenue.

Read: Github Business Model – How Github makes money

Features of PayPal

Digital Wallet

PayPal is a safe digital wallet that saves your credit and debit card information. It makes it easier to make payments whenever you shop or transfer from your cards. Users just need to have their PayPal user id and password to access their own accounts.

Money Transfer

PayPal lets its users transfer money to or from eligible countries (over 202 countries). Also, it allows transfers from more than 100 currencies to bank accounts in around 56 countries.

One Touch Checkout

Logging into your PayPal account every time you checkout for making online purchases is irritating. Therefore, PayPal introduced “One Touch Checkout” that saves your logins in your device. Hence, you need not enter even your username to make payments.

PayPal Debit Card

PayPal, like banks, issues debit cards for its users. Users can use the debit cards for withdrawing money from PayPal accounts, shopping and earning rewards for using the card.

No Interest Credit Card

PayPal introduced the Bill Me Later feature that lets users enjoy credit of $99 or more for zero interest (if the amount is paid within 6 months). The feature is commonly known as PayPal Credit, and Bill Me Later.

Payment Gateway

Merchants can create business accounts and receive payments through PayPal gateway. No matter, where businesses operate (either offline or online), PayPal helps you in receiving payments smoothly.

Business in a Box

PayPal launched a small tool kit for businesses called  Business in a Box. It helps merchants set up online business in simple steps.

PayPal Working Capital Loan

This is a daily payable loan that helps daily businesses to manage easy cash flow.

How does PayPal Make Money?

In 2002, eBay bought PayPal for $1.5 billion, after which it included PayPal as one of the payment gateways at their checkout page. It was then PayPal started making profit and gained huge popularity. However, eBay owned the revolutionary company PayPal only till 2005. PayPal is now owned by PayPal Holdings.

PayPal’s revenue was $17.7 billion as of 2019 as per PayPal reports. It has seen 1 14.4% year-on-year increase.

As said, there are many revenue sources for PayPal. Let’s see what are those in the below PayPal business model section. It’s business model clearly explains how the company makes money.

PayPal Business Model

• Transaction Fees

PayPal offers its services for two types of users. 1. Personal (individuals) 2. Business

1. Personal PayPal Accounts

This giant online payments system allows personal account users to send, and receive money either to their PayPal account or bank account. The money they receive goes to their PayPal wallet or bank account. Users can shop online or offline using their PayPal balance or their credit or debit cards. In short, they can make money payments to anywhere from anywhere for any purpose.

Now comes the actual part, when users make any payments to other countries or other than PayPal accounts, PayPal charges a certain transaction fee based on the countries and amount.

Nearly 87% of online buyers use PayPal for making transactions.

2. Business Accounts

PayPal charges fees for merchants with business accounts for using its services. When merchants sell their goods either online, they need to pay 2.9% and extra $0.30 of the sale amount. Yes, it charges only when the sale is made and the fee reduces with the increase in sale amount.

• International Payment Charges

As said in the above lines, PayPal allows transactions to & from over 200 countries. However, it doesn’t let it do for free. It charges from 0.3% to 3.9% and an additional small fee when you transfer money to different countries. The charges vary from country to country. Though there is much of a currency exchange rate, yet PayPal makes some profit from it.

• Business Account Charges

PayPal offers a few paid special services and features for business accounts. Hence, businesses can buy the special accounts with additional features known as Pro Account that costs $30/month.

It provides features such as access to design and host own checkout page, accept credit cards via virtual terminals etc.

• Withdrawal Fees

PayPal allows you to transfer money to your bank for free. But it charges a small fee when you want a check.

It charges around 2.9% and $0.30 USD in the USA and the fee varies for different countries.

• Interests Generated

PayPal puts all the user’s money that is in the PayPal wallet in liquid investments. The interest generated from such investments solely belongs to PayPal.

• Payflow

Payflow is a payment gateway service introduced by PayPal. Merchants using business accounts can integrate Payflow into their websites.

PayPal allows businesses to choose Payflow to their websites with two different plans. It charges a fee of $0.10 for credit card payments for both the plans as a gateway fee.

1. Payflow Link: This is a free plan that needs customers to enter payment details. Here the checkout page for PayPal is hosted by PayPal.

2. Payflow Pro: This is a paid plan that charges $25 where the user can design and host the checkout page on their own.

It also offers additional features such as Buyer Authentication, Fraud Protection and Recurring Billing that costs an extra amount.

• PayPal Working Capital Fee

So, as discussed in the features section, PayPal offers PayPal Working Capital for businesses who need daily loans. PayPal then charges a fixed fee instead of interest. Users can borrow upto 15% of the PayPal sales made in the last 12 months. The fixed fee is based on the daily sales made, hence the larger percentage of daily sales users make, the lower fee they need to pay.

• Business in a Box

PayPal offers an all-in-one business tool set for merchants to set up online stores with the help of Xero and WooCommerce. Therefore, merchants can access all the benefits that these sites offer. Wondering what’s in it for PayPal?

The websites pay an affiliate commission to PayPal.

• Debit Card Withdrawal Fees

PayPal deducts a small fee every time users withdraw money from their PayPal debit cards. The fee ranges between $1.50 to $3 for ATM withdrawals and upto 1% for foreign transaction fees.

• Credit Interest

The online payments system charges 19.99% as Annual Percentage Rate if the user doesn’t pay the credit bill within 6 months.

• PayPal Here Fee

This is an offline payment solution for businesses to accept payments through swiping. PayPal Here is a combination of card reader and a mobile application that lets you accept payments.

Again this is not a free service. PayPal charges from 1.5% to 2.5% of the amount received and some extra fees.

• Revenue from its Subsidiaries

PayPal acquired many other companies that truly contribute to its success. Of those many, a few are listed below.

• Braintree
• Xoom
• Venmo
• Honey
• iZettle

PayPal acquired Venmo and Braintree for $800 million. PayPal doesn’t reveal the revenue by its subsidiaries. 

Read: Trivago Business Model – How does Trivago makes Money

What Made PayPal Successful?

There are many reasons for the success of PayPal. It in fact, has grown as a most preferred online payment choice by most people across the world. However, let’s see the key points that made this popular fintech company successful.

• It is a globally recognized brand
• It created Trust among people
• Technology like fraud detection etc
• Successful acquisitions

Its key challenge is to grow its brands.

Bottom Line

So, finally as you have made it to the end, this is how PayPal makes money. As you see it has multiple income sources to add more value to its revenue. It’s incredible products like Bill Me Later, PayPal Working Capital Fee, Business in a Box etc., and the payment services it offers became successful as they focus on helping both individuals and businesses make transactions smoothly.

Nobody wants to pay extra money for something that they could get for cheap. This is simply because they want to get the best deal. What is the point of paying more for something you could have gotten for less? It doesn’t make any sense. But how would you know that you could get something for a cheaper price than what is actually being offered? Most people would not know. They have to do lots of research to find out where they could get for cheap. But in the current world, it has become easier to find the best deals for the products you like compared to the past. There are many websites and applications that offer the products you want. You can just simply go to each one of those websites and see where you are getting the best deal and from that website.

This is true not only to products but also for everything else. There are many websites that allow you to find flight tickets, books, and other stuff for cheaper rates. You can also find websites that show you the rates that are being offered by different websites for the same product. There is a similar website that allows you to find the best deals on hotels. This is a great thing because finding a good hotel in a city that you have never been to is a daunting task. Just imagine how hard it was for you to find a hotel when you have gone to a new place. You must have gone to at least two or three hotels before you decided to stay in one. But if you want to know the best that you could have gotten then you should use Trivago.

Let’s find out how this platform works and makes money.

What is Trivago?

Before getting to know the business model and it’s money generation methods you should first know about how it all started. This company was first launched in Germany. In fact, it is the first hotel search engine in Germany. It was founded by Peter Vennermeier, Malte Siewert, and Rolph Schrömgens. Before finding Trivago Rolph Schrömgens founded an online shopping website called Ciao. But he quickly realized that it was very costly to maintain the content on an online e-commerce platform. So he wanted to come within a platform on which the brands could manage their own content. After this, he teamed up with three of his college friends Malte Siewert, Peter Vennermeier, and Stephan Stunner, and founded Trivago in 2005. Shortly after the company was founded Stephan Stubner left it. The headquarters of the company is located in Düsseldorp and more than 90% of its employees work from there.

All of the major operations of the company are carried out at this place. But this was not the first site of its kind. Before Trivago was launched there were already some prominent hotel search engines like Orbitz and Expedia which were gaining popularity. Trivago got its idea from there. Even though it was younger than these other websites it has managed to gain popularity in a short period of time. People loved this website because they could see the prices for which they can get a hotel room. Not only that it would allow you to read reviews, look at high-resolution images of the rooms, and also see the other services they had to offer. Today Trivago is one of the most successful and popular hotel search engine sites in the world. Currently, it operates in 190 countries and covers more than 400 websites.

Business model of Trivago

As mentioned earlier Trivago is a hotel search engine it has to provide services to two types of customers that are hotels and customers. It offers big brands and other hotels to showcase what they have to through Trivago. These hotels would get the exposure that they otherwise wouldn’t have got if they didn’t make bookings available online.  But since the customers are the ones that have to book the hotel there are few things that they have to take care of if they want to run the business. Let’s look at the essential things that make up Trivago’s business model. 

Availability

This is one of the best decisions that Trivago has made. It makes itself available for all the clients. Instead of them writing about you they allow you to write about your own website. They allow you to include the content from your websites. Not only that it also allows you to include the brand that is not present on the website. You can depict your brand in the way you wish to. If your profile is unfinished Trivago allows you to complete it. If you don’t think your profile is a reflection of the quality of service you offer then you can change it too.

Customization

This is one of the things that Trivago offers that people don’t know about. Any brand or hotel is given the power to customize their profiles. This is a great feature as the brands don’t have to be worried about how they are showcased. It is also great because they can change their profiles whenever they want according to season. Hotels that in some tourist places are not always getting the number of customers they want. During off-seasons, they have to make sure that they attract enough customers to keep the hotel running. So they have to change their profiles in order to attract customers. Customers choose a hotel by looking at their profile. Through customization they can reach the customers they are looking for.

Accommodation

This is the main thing that Trivago was built for. It was founded so that people can find hotels in the destinations that they want to travel to. Trivago has enough hotels and brands to satisfy the requirements of customers belonging to all economic levels. So it doesn’t allow only some types of hotels to be a part of it. Trivago makes sure that it has enough hotels to pander to attract all types of customers. Customers can actually choose hotels depending on their needs. They can even filter the hotels according to their wish. 

Brand

Not just the things that it gas to offer but the name itself is one of the most important things that helps Trivago in its business. To attract more and more customers whether it is a hotel or a person it has to become popular. Trivago has been founded more than a decade ago and since then it has been successful in creating a name for itself. In the current market, Trivago is one of the most popular websites in the world to search hotel rooms. Not only hotels but it also give out information about tourist destinations. It offers millions of photos of thousands of hotels and innumerable reviews about them.

Subsidiary partners

Trivago partners with other people to promote their offers. They encourage third parties to show their offers on through the platforms that they own or associated with. These third-party users promote the listings on their websites. When the customers use their affiliate links to book a hotel these sites are offered a small percentage of the profit of Trivago as commission. 

Quality test partners

Trivago uses quality tester to provide better service to their customers in the future. These quality test partners are none other than the customers themselves. Who better to tell you about the quality of the hotel than the customers who stay in them? The customers can join to take surveys about the hotels they are staying in. Once they have finished their stay in a hotel they can take a survey and answer a few questions. By doing this they will be paid a through PayPal or get additional discounts and other exciting rewards. 

How does Trivago make money?

There are three ways in which Trivago makes money. Let’s look go through them one by one. 

Referrals

Many people think that Trivago is a place where people can book hotels. But it is not completely accurate. It is a website that allows the hotels to list their offers. People can go to Trivago and search for hotels. These people when clicking on the listed offers will be referred to the website of that hotel or an online travel agency. After they are referred to the advertiser’s website the customer has to select a deal that it has to offers. Once he does that the hotel pays money to Trivago for every successful referral. Most of the revenue generated by Trivago is through referrals. 

Subscription fees

Many people don’t know about this but Trivago has subscription fees. This is not for the customers but for the hotels. As mentioned earlier Trivago allows the hotels to customize their profiles according to their wish. This helps them to reach their target customers in a better way. Trivago charges a subscription fee from hotels who want these services. 

Listing fees

Not every hotel pays the subscription fee but they all pay a listing fee. Every hotel or brand has to pay a particular amount to list their services on Trivago’s website. 

Conclusion

This is the business model of Trivago. It is one of the fastest-growing hotel search engines in the world. The business model of Trivago is mostly an aggregate business model. You can look at our other articles to know about the other business models such as the business model of YouTube.

Quora is a platform to share and gain knowledge for people across the world. Millions of people ask questions, share knowledge and seek answers from the platform for free. The major highlight is that every single piece of information available on the platform is generated by users itself. In short, it is a purely for-user platform.

Quora works on a mission to share and grow the world’s knowledge. It is working towards providing high-quality answers to each question that a user raised.

So, this is a completely free platform for anybody who accesses it. But how does it make money? If you are bothered by the same question like many others, you have come to the right place. This article walks you through the business model of Quora, how it makes money and other interesting facts. So, stick till the end…

Short Story of Quora

Quora, an American question and answer website lets people ask questions, answer the questions, edit, like, and follow. Thus, it is generally a platform where web users can find opinions of different people for the topic.

This brilliant website that bridged the gap between users and untold information was founded in June 2009 in Palo Alto. As of 2018, it had generated a revenue of $20 million USD according to Wikipedia.

In 2009, two former Facebook employees, Ada, D’Angelo and Charlie Cheever created this brilliant platform to help people gain more knowledge about world events, life decisions and other important things.

In order to bring the knowledge that is buried in people’s heads, books and papers to the people who actually need it, Quora was designed. Though it is completely a Q/A site with content created by users, it also publishes knowledgeable articles.

Okay, enough said! Now, let’s see the business model of Quora.

What is Quora Business Model?

With over 300 unique million users, Quora has become one of the popular social media platforms that allows people to share their ideas and knowledge with each other. It has users of all ranges, niches that share knowledge to people who need it. Once the content is generated it remains forever, unless the owner deletes it.

Quora valuation is around $1.8 billion as of 2019, the company is growing so fast. 

The main motive behind Quora is to serve people with highly accurate and quality answers. For the same reason, it introduced features such as merged questions, translations, quora sessions, wikidata references to improve user engagement with the website.

The major advantage is that web users do not need to login to access the answers.

The platform is similar to Reddit where Quora’s community can upvote the answer. Thus the highly voted answer shows on top.

So, everything on Quora is for free. The only ways it makes money is through crowdfunding, advertisements and paid questions.

Moreover, Quora also lets its users make money through Quora Space and Quora Partner Programs.

Quora Space: Giant space for contributor community to create space for individuals. They can provide valuable content, build an audience and make money from the ad revenue. Currently, the program is in its beta version and is not generating any revenue as of now.

Quora Partner Program: A program for questionnaires, who can post interesting and unique questions on the platform. They get paid for how much traffic their question has generated.

Important Stats

• Quora has 300 million unique monthly active users
• There are over 400,000 topics on Quora
• Total number of questions asked as of 2020 is 595,410

In earlier days, Quora had no source to generate income. Hence, it only survived with the fundings. Nevertheless, its valuation never decreased. In its series D funding it was valued at $85 million. Moreover, Quora acquired Parlio, a platform for political debates, in March 2016 with seed funding of $1.7 million.

How does Quora Make Money?

So, here is the interesting part of this article – how does Quora make money? 

Quora is a vast space with a huge database. Millions of people engage with the website which made it a target for advertisers.

Quora launched ads in April 2017, a year later, it raised $85 million in Series D funding rounds. Thus it was made a Unicorn company with $1.8 billion revenue, though it was not struggling monetizing the product.

Quora then launched a self-serve ad platform, meaning advertisers can buy the ad space directly without need of middlemen.

Advertisements

It started showing ads from a limited number of advertisers. However, the story is completely different now. There are a lot of advertisers on Quora too.

So, like Pinterest, a social media service, Quora also makes money through advertising. Of course, it’s no different than other companies like Instagram.

Read: Pinterest Business Model

However, the only difference is it shows highly relevant ads. Quora helps advertisers launch ads within a few minutes. It states that the platform handles millions of questions and answers every month. With over 65% of users reporting a college degree, 37% users are more likely to be a manager and 54% report annual household income >$100k. Hence, the platform is much likely to generate leads for advertisers.

It charges from $5 per day to run ads. Advertisers can choose their target audience, optimize the ad and pay for clicks.

As the platform has a potential and highly targeted audience which is why the number of marketers investing on Quora has grown to 4X since last year according to Hanapin Marketing.

So, where do ads on Quora display?

Quora shows ads from relevant advertisers on home page and forum pages.

Also, it is clear that it limits the ads to homepage and forum pages as promoted posts are likely to disturb user experience. However, it makes money more than its competitors Stack Overflow, Fandom etc. Yet, user experience is a great challenge as users expect to view answers or answer questions without any obstacles on the platform.

Is Quora’s Business Model Sustainable?

With over $1.8billion revenue according to 2019 reports, Quora is gradually in terms of revenue. However, it is in the race of making profits along with mighty competitors such as Facebook, YouTube, Instagram, Pinterst. Hence, it has to face a tough competition as it has chosen the advertisements as its business model.

Read: YouTube Business Model – How YouTube Makes Money

Although, there is a huge market inside the platform with highly potential users and advertisers, it has to offer a smooth experience to users. A lot of ads might disturb users and force them to avoid visiting the platform again. Again, there are users who will visit the platform despite there being many ads. 

Also, the innovative Partner Program, and the Quora Space have scope to generate revenue. They are to be promoted well, so that the company makes more profit in the coming days.

Want to know if Instagram’s business model successful?

Bottom Line

Quora is not alone in its niche, it has many competitors like Reddit, Stack Overflow, Yahoo Answers, etc. However, Quora has made itself one of the best platforms for sharing and gaining knowledge. Also, it made advertisements as its business model.

As advertisers look at giant platforms where a large range of audiences exist, Quora is slowly able to attract the eyeballs of advertisers. The more it convinces them with proper stats and promises higher ROI, the faster it makes money.

Watching videos a couple of decades ago was considered a luxury. You would need a DVD player to watch a video on your TV. But today, it is completely different from what it was back then. Watching videos has become very easy. All you have to do is open your mobile phone and search for the video you want on the internet. You will be able to find tons and tons of videos on the topic you searched for. Sharing videos has become easier than ever before. You don’t have to buy an extra DVD to copy the content. People can just do it using their mobile phones. The rise of the internet and technology has contributed a lot to make this possible. In the current world, videos play a vital role in every field. People pay more attention to visuals than speech so people are using videos to communicate. 

But if you search for a video on a certain topic you would find a lot of videos from various websites. But there is one platform that will certainly see no matter what you search for. Can you guess what that platform is? It is YouTube ofcourse. There is probably no millennial in this world that doesn’t know about YouTube. YouTube is the most popular platform for sharing videos. Not less than a decade ago people could only access YouTube through a computer. But it is not the case anymore. The rise of the internet has contributed enormously not only to its popularity but also usage. Today you easily spot someone watching videos on YouTube using their mobile phone. But have you ever wondered how the platform actually works and makes it money? This article is completely about that. 

But first, let’s look at how it all started.

What is YouTube and how it actually started?

YouTube was founded in 2005 by Chad Hurley, Jawed Karim, and Steve Chen. All of them were working for PayPal before they went onto create YouTube. The idea for the platform came to the mind of Jawed Karim when you could not find a couple of videos on the internet. He thought that it would be great there was a platform where you could find videos. But that was not the main intention behind the creation of YouTube. The other founders Steve Chen and Chad Hurley wanted YouTube to be an online dating platform. They wanted to provide online dating services to people through videos. This idea was inspired by the website Hot or Not which was created by Mark Zuckerberg when was studying at Harvard University. They were serious about this and even posted advertisements on Craigslist asking beautiful women to upload their videos on YouTube to earn $100.

However, this idea did not work as there were only a few videos on the website. This forced them to change plans. So instead of dating videos, they decided that they would let people post all types of videos. YouTube was started as a venture startup. Both Sequoia capital and Artis Capital Management provided them with the initial investment of $11.5 million and $8 million respectively. After that, they started developing the website and uploaded the first video called Me at the zoo featuring the co-founder Jawed Karim. Nike’s advertisement was the first video tk hit a million views on the website and by the end of the year, YouTube was getting 8 million views every day. In 2006 the site was acquired by Google during that time YouTube was getting 100 million views every day. Currently, YouTube is the second most visited website in the world after Google.

Business model of YouTube

As mentioned earlier YouTube is the most popular video-sharing platform. Not only that it is also the largest video streaming platform to ever exist. The great thing about YouTube is that anyone could upload videos on its platform. But there are also some guidelines you need to follow. As long as you follow the guidelines you can upload any type of video of any duration. Another great thing about YouTube is that it is absolutely free to use. That is the most important reason why it became so popular. It is this step that made them the second most visited website. People upload 400 hours of content on YouTube every minute and nearly 5 billion videos are being watched on the platform every single day. Its business model depends on viewers and content creators. They are the reason YouTube is able to make money. 

So let’s look at what YouTube offers them that made it so successful. 

Viewers

Without viewers, it is absolutely there is no point in having the largest library of videos. YouTube knows this very well and took the best steps to keep them engaged. As mentioned earlier the main reason for YouTube’s popularity is because it is completely free. What more do you want from a video streaming platform? You have access to all of its content for free. Well, almost all the content. A viewer can open YouTube anywhere at any time and watch the videos they want. All they need is a mobile phone and an internet connection. YouTube is helping people in many ways. People are not only using it for entertainment but also for educational purposes. 

You can find videos where people would teach you to do different things like pottery, coding, repairing, painting, and etc. You can find videos on almost all the topics you could think of. People get to see news, music videos, and the latest film trailers for free. This is a great deal if you are a consumer. Not only that but it also included some new features which allow you to save videos so that you can watch them later. It constantly provides updates resolving bugs on the mobile application so that you have a great user experience.

Content Creators

Without content creators, there would have been no YouTube. But it is also true the other way around. YouTube and its content creators are interdependent. Without YouTube, the content creators wouldn’t be able to make money and without content creators, YouTube wouldn’t have a source to make money. But no one can deny the fact that if it is not for YouTube there wouldn’t have been any way for these content creators to earn money. The best thing is that YouTube does not put any type of restrictions on most types of content. Buf if these content creators want to monetize their content they have to follow certain rules. They cannot upload videos with nudity and graphic content if they want to monetize their videos. These are certain types of videos that cannot be monetized. 

YouTube is also great in providing money to the original content creators. If you use copyrighted material then your video will be demonetized and the money will be given to owners of original content. You can see this happening often when someone uses music created by other people. YouTube will put ads in between the videos to make money. After it makes money through those ads it will share some of it with the creators. The amount of money you earn money from the videos depends on various factors. Most people think that it only depends on views but it has more to it. The country you are located in also plays a major role in this. Two videos with the same number of views uploaded in different countries will earn different amounts of money.

How does YouTube make money?

If you think YouTube only makes money through ads then you are mistaken. Over the years YouTube has come with many ways to make money. Let’s go through them one by one. 

Planting ads between videos

This probably the most obvious and common way in which YouTube earns money. You can understand this as soon as you see an ad pop up when you are watching a video. Like any website, advertisements form a major chunk of YouTube’s revenue. All types of companies want to promote their products on YouTube. This is because they know that YouTube is used by more than a billion people. With nearly 30 million people visiting the site every day they will have great chances of reaching a wider audience. So they use YouTube to promote different things like products, services, films, video games, events, and music.

Advertisements on landing pages

You will definitely find advertisements as soon as you open YouTube. These are paid advertisements by companies so that they can get maximum exposure to their products. These advertisements can be videos or just an image. Since they are on the landing page they have to pay a good amount of money to get the spot.

Sponsored videos

This another way in which YouTube makes money. Sometimes when you open YouTube you will see the first video will have a sponsored ad Written on it. It can be used by anyone. This video is sponsored by the advertiser to get maximum exposure to their channels. At the end of the day, the advertiser pays YouTube depending on the views they get. 

Memberships in channels

Some of the YouTube channels these days have a join button. This is a button that is used by YouTubers who want to earn more than what YouTube offers them. Viewers can use this button to pay the content creators some money to support their channel. If you think all of the money goes to the YouTuber then you are wrong. YouTube keeps 30% of it gives the rest to the YouTuber.

Subscription

This is the latest addition to YouTube. You can pay a monthly subscription fee to YouTube to get a premium membership. This will give you access to exclusive content. Not only that it also comes with some great features. If you get a subscription then you can watch ad-free videos and also get access to YouTube Music premium.

YouTube TV

If you have not heard about it then don’t worry. YouTube TV is not available in every country it is exclusive to the US. This is also a subscription service that is growing at a fast pace. 

Conclusion

This is the business model of YouTube. It is a combination of crowdsourcing, advertising, and subscription business models. YouTube is undoubtedly a revolutionary idea and deserves all the praise it gets. With more and more people using the service every day it’s popularity is only going to increase. If you want to know about other similar business models then check out our other articles like the business model of Twitter.