Monetization
Monetization
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Monetization

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Monetization

Monetization (also spelled monetisation in the UK) is, broadly speaking, the process of converting something into money. The term has a broad range of uses. In banking, the term refers to the process of converting or establishing something into legal tender. While it usually refers to the coining of currency or the printing of banknotes by central banks, it may also take the form of a promissory currency. The term "monetization" may also be used informally to refer to exchanging possessions for cash or cash equivalents, including selling a security interest, charging fees for something that used to be free, or attempting to make money on goods or services that were previously unprofitable or had been considered to have the potential to earn profits. And data monetization refers to a spectrum of ways information assets can be converted into economic value.

Another meaning of "monetization" denotes the process by which the U.S. Treasury accounts for the face value of outstanding coinage. This procedure can extend even to one-of-a-kind situations such as when the Treasury Department sold an extremely rare 1933 Double Eagle. The coin's nominal value of $20 was added to the final sale price, reflecting the fact that the coin was considered to have been issued into circulation as a result of the transaction. In some industry sectors such as high technology and marketing, monetization is a buzzword for adapting non-revenue-generating assets to generate revenue.

Such commodities as gold, diamonds, and emeralds have generally been regarded by human populations as having an intrinsic value within that population based on their rarity or quality and thus provide a premium not associated with fiat currency unless that currency is "promissory". That is, the currency promises to deliver a given amount of a recognized commodity of a universally (globally) agreed-to rarity and value, providing the currency with the foundation of legitimacy or value. Though rarely the case with paper currency, even intrinsically relatively worthless items or commodities can be made into money, so long as they are challenging to make or acquire.

Debt monetization is the financing of government spending by the central bank. If a nation's expenditure exceeds its revenues, it incurs a government deficit which can be financed either:

In the latter case, the central bank may purchase government bonds by conducting an open market purchase, i.e. by increasing the monetary base through the money creation process. If government bonds that have come due are held by the central bank, the central bank will return any funds paid to it back to the treasury. Thus, the treasury may "borrow" money without needing to repay it. This process of financing government spending is called "monetizing the debt".

In most high-income countries the government assigns exclusive power to issue its national currency to a central bank[citation needed], but central banks may be forbidden by law from purchasing debt directly from the government. For example, the Treaty on the Functioning of the European Union (article 123) forbids EU central banks' direct purchase of debt of EU public bodies such as national governments.

Web sites and mobile apps that generate revenue are often monetized via online advertisements, subscription fees, or (in the case of apps) in-app purchases. In the music industry, monetization is achieved by placing ads before, after, or in the middle of content on a platform that supports this or posting the music on on-demand apps like Spotify and Apple Music. On-demand content sites like Spotify and Apple Music pay the artist a percentage of the monthly subscription fees they receive from their users. To put release music on streaming apps like Spotify and Apple Music, an artist has to reach out to a distributor like TuneCore or Distrokid. They are the one who do make the music available on streaming sites. This is usually done for a percentage of the revenue generation. For each public viewing, the advertising revenue is shared with the artist or others who hold rights to the video content. A previously free product may have premium options added thus becoming freemium.

Businesses monetize their value propositions to generate the resources necessary for continued operation through a business model or revenue model. Failure to monetize websites due to an inadequate revenue model was a problem that caused many businesses to fold during the dot-com bust.

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