vs. Sermo
Doximity
Doctors free; hospitals and pharma pay for targeted reach
- What it did
- Recruiting from 200 hospitals, cash-flow positive January 2014
- Sermo
- Sold the doctors' conversation to hedge funds, then pharma
Strategy Map›Layer 5 · Go-to-Market Strategy›Monetization Strategy/Who pays, and for what+ from outside the named canon
Cross-Subsidy
What is Cross-Subsidy?
Users use the product free or below cost, and a different party (advertisers, recruiters, pharma, PBMs, market makers, agents, data buyers) pays for access to those users, their attention, data or transactions.
How Cross-Subsidy works
Free use builds the audience; a third party pays for access to it. It works when what the paying side buys is something the free side also wants.
How companies won with Cross-Subsidy
From the win chains in Strategy Canon case studies: what the winner did, and what its rival did at the same step.
vs. Trulia
Zillow
Sell local agents access to that audience
- What it did
- Premier Agent subscriptions from October 2008: 26, 2,764, 8,102 agents (2008-10). Rascoff: 'ad budgets follow eyeballs' (2013)
- Trulia
- Sold to franchisors and brokers until they cancelled in the 2008 crash
vs. Monster · 2008–12
Recruiters pay for seats to reach passive candidates; members stay free
- What it did
- Recruiter adds full-network search, InMail, projects and shared team notes
- Monster
- Employers paid for postings and keyword searches of seekers' resumes (2003)
vs. E*Trade · 2015–19
Robinhood
Market makers pay for the trade, not the customer
- What it did
- Market-maker rebates of about $0.00026 per dollar traded fund commission-free trading (Tenev, Oct 2018)
- E*Trade
- Took the same market-maker rebates and charged a commission on every trade (2018)
Also tagged: Credit Karma · GoodRx · Navan · Practice Fusion · Reddit · Sermo · Spotify · Tempus · Tripadvisor · Trulia
The question to ask of a company
Who uses it free, who pays, and what exactly does the paying side buy?
Who names it
| Author | What they call it / where it appears |
|---|---|
| Eisenmann, Parker & Van Alstyne + | Subsidy side and money side |
| Chris Anderson + | Cross-subsidies and three-party markets |
| NFX | Subsidizing the hard side |
Note. Near miss: An employer pays for its employees' physical therapy program. Does not count: Employer- or insurer-paid benefits; ordinary paid products; freemium where users themselves pay to upgrade.