The Case Against Monetization — Or why your fear of launching is based on a serious misunderstanding

Has “monetization” made you nervous about pushing your business ideas to the next level?

The word “monetization” has a shadowy past in the world of business online. Bloggers have tried to monetize their audiences. Developers have tried to monetize free products. Old school media has tried to monetize their content.
Some people have made money through monetization. Some haven’t.

My problem with the idea of monetization isn’t that it doesn’t work but that it’s a destructive, extractive way to view your business. It lacks the innovation, disruption, and creativity that a value(s)-driven business model has.

Isn’t this all semantics?

Perhaps. But I put a lot of credence in the language people use. And when people use the word “monetization,” it blocks their creative juices and dampens their abundance receptors. Click to tweet it!

Here’s why:

Monetization is rent-seeking.

In economics, “rent-seeking” is basically trying to get a bigger piece of the pie. It assumes that there is a finite set of dollars or customers and that you need to through your weight around to get some of it.

The business owners I work with & that read this [site, blog, email] don’t think that way about their business growth. They want to serve. They want to contribute. They want to create things of great value. But they are often following strategies that were devised for monetization & rent-seeking.

And they see a false causality between monetization strategies & success.

For instance, blogs were never designed to be businesses. Blogging grew out of the human desire to record & reflect on life. They became communities out of the human desire to connect and cultivate intimacy.

At some point, people realized there was commercial opportunity in blogging. And I don’t blame them at all! Those early professional bloggers were creating something truly valuable, generating fresh wealth on a daily basis, creating connective threads through communities. As others wanted to get on the growing market, they wanted to learn how to duplicate the success those early bloggers had.

What started as genuine value creation became “monetization strategy.” Here, it was not only the business model that got copied but the content, communities, and outreach. Look around the blogosphere and you’ll see layer upon layer of sameness. Again, what was genuine value is now fluff designed to make money, generate traffic, and simulate credibility.

So when I see people tell you to create lots of free content, build an email list, reach some magic number, and then launch your first digital product, I want to throw up a little. It’s backwards because it’s a strategy that was reverse-engineered from a misunderstanding.

What will you do to generate new, stick-to-your-ribs value? Don’t worry if what you have in mind can’t be “free.” Who cares? Creating value creates buzz. Even when it’s for sale. Especially if it’s for sale. You can build a community or movement from a product that people pay for. Below are three examples of vibrant, profitable communities built on paid products.

Remember Tara Mohr from yesterday’s post? She was amazed at how her audience grew when she launched the very first session of Playing Big. Beyond reaching her sales goal, she added hundreds of new fans. People took notice because she was generating fresh value.

Danielle LaPorte didn’t grow a massive blog and then launch products & services to serve her readers. She sensed she had wealth to offer the world, packaged it as a Fire Starter Session and offered it to anyone who could use it. I believe that the massive value she delivered through those sessions was much more the catalyst of her growth than the awesomeness of her blog. To this day, she continues to create fresh value first instead of extract monetary reward from her audience.

MailChimp created a great email service that companies paid for before they started giving free accounts away to microbusinesses by the drove. They had a profitable business long before they started growing through the freemium model. When they went freemium (you can have a robust email marketing account with them for FREE), they actually noticed a sweet uptick in larger, paying customers as well. That’s not because MailChimp started offering free accounts, it’s because they were delivering a great product.

Why on earth could going freemium bring in these larger and larger paying customers?
Because we did everything totally bass-ackwards.
– MailChimp blog

MailChimp regularly adds 2,000 new accounts per day, most of which are free, but that initial community grew because of the greatness of the product not because it was free.

A small percentage of a very large number is indeed a large number, but can your startup stay solvent while you wait for the conversion to kick in? Freemium only offers the hope that non-paying users will fall in love with your product and start paying for it.
– Rags Srinivasan, Gigaom

You’re looking for impact and growth. You’re hungry to make a difference in as many people’s lives as possible. But free first isn’t the only way.

Your greatest asset to growth might be the product or service you’ve been waiting so long to create.

Click to tweet it!

Your fear of “monetization” is justified. It’s your fear of having something to sell that’s not. If only you had a framework for knowing whether you were truly creating a remarkable product with stick-to-your-ribs value or launching yet another rent-seeking monetization strategy, you could fix it, change it, launch the damn thing already.

If you find yourself questioning the products or services you’re considering launching, it’s probably because you see so much rent-seeking around you.

Here are some questions to ask yourself to determine whether your idea falls under true value creation or whether it’s just a monetization strategy:

• What is the impact of this product on my customer’s life right now?
• What is the impact of this product on my customer’s life over the next 1-5 years?
• How does this product address a genuine frustration or desire that my customer has?
• Would my customer seek out alternatives if my product didn’t exist?
• Who do I want my customer to become as a result of using my product?
• Will my customer want to tell his/her friends about my product?

Create something that people are willing to pay for first.

And let them pay for it! Let them tell their friends.

Don’t rest your success on your ability to convert the masses. Use your early adopters to recruit & court your next wave of customers.

Don’t rely on monetization strategies that seek to collect rent from a community you’re sharing with others in your niche. Generate fresh value that solves a problem or fulfills a need for the customers you want to serve.

There’s plenty of room in the kitchen to build a bigger pie. There are plenty of ways you can serve, needs you can fill.

You’ll create a more robust movement of customers who are engaged, motivated, and results-driven. You’ll get feedback you can actually use. You’ll see opportunities as they present themselves.

It might take longer to grow. But your growth will be more sustainable, longer-lasting, and less dependent on you.

And you can take that to the bank.