Derived products leverage network engagement and interactions to generate an asset that can be productized and monetized directly. These usually take the form of market intelligence or aggregated data products.

Uber is the quintessential example of a marketplace with low transaction complexity and asymmetry. Matching demand and supply is simply a function of availability and pickup time — commissions are the obvious fit here. On the other hand, marketplaces like Classpass and Scoutbee avoid commissions entirely.

Classpass attempts to match consumers with open spots in fitness classes. The scarcest resource in this marketplace is the availability of open spots, not the availability of demand. Since supply is much more valuable than demand, it becomes easy to charge demand for access.

Commissions (or interaction taxes) are viewed as the “obvious” way to monetize a marketplace.

Transaction complexity: This is a measure of how complex it is for the demand and supply sides to find a “match” on the marketplace and then complete a transaction. This can depend on a range of factors including the nature of supply and the density of supply by region or category. For example, both Upwork and Preply are labor marketplaces with... See more

Derived products are rarely seen in marketplaces because this data is better used internally to improve matching on commission-based marketplaces or lead generation in paywalled marketplaces. In rare cases, marketplaces targeting complex and opaque markets, like Leaflink, can provide aggregated and anonymized market data as a part of a paid tier.

Paid advertising can be a tricky monetization model for marketplaces. On one hand, it holds promise as a high margin revenue stream. However, it can also interfere with supply curation.

Paywalls are the primary alternative for startups that cannot monetize with a commission. A paywall charges one side — either supply or demand — for access to the marketplace.

Unlike the other monetization models I have explained so far, a complementary product does not generate revenue from access to or interactions on the marketplace. Instead, it involves selling a standalone product to enhance the marketplace’s value proposition.