How Digital Platforms Earn Money

Here’s where the business models kick in—most platforms pick one or a mix of these:

1. Advertising: 
   • The big one for free platforms like X, Google, or Facebook. They sell ad space to businesses targeting users based on data (age, interests, location). X’s promoted posts or Google’s AdWords are examples.
   • Revenue comes from impressions (views) or clicks—e.g., cost-per-click (CPC) or cost-per-mille (CPM).
2. Transaction Fees/Commissions: 
   • Platforms like eBay, Etsy, or Uber take a cut from each sale or ride. Amazon charges sellers a percentage (8-15%) per item sold.
   • This works well for marketplaces or service-based apps.
3. Subscriptions: 
   • Some platforms charge users directly for access. Netflix and Spotify offer monthly plans; X has X Premium for exclusive features.
   • B2B platforms like Slack or Salesforce also use this for enterprise clients.
4. Freemium Model: 
   • Offer a free basic version, then upsell premium features. Dropbox gives free storage but charges for more space; LinkedIn has premium tiers for job seekers or recruiters.
5. Selling Data (Indirectly): 
   • While not always direct sales, platforms monetize user data by packaging insights for advertisers or partners. Facebook’s ad targeting thrives on this, though raw data isn’t sold outright.
6. Product Sales: 
   • E-commerce platforms like Amazon or Alibaba earn by selling goods directly or acting as a middleman. Amazon’s private-label products (e.g., AmazonBasics) add another layer.
7. Licensing or Partnerships: 
   • Platforms like Google Maps license their tech to other businesses (e.g., apps using Maps API) for a fee.

Examples in Action

• X: Free to use, earns via ads (promoted posts) and X Premium subscriptions. It analyzes posts and profiles to target ads.
• Amazon: Takes commissions from sellers, sells its own products, and offers Prime subscriptions.
• YouTube: Ad revenue (pre-roll ads), plus YouTube Premium for ad-free viewing and creator monetization cuts.