The Marketplace Monetization Map: Complexity and Asymmetry

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.

Asymmetry in value between demand and supply: Typically, the value created by a marketplace is asymmetrically distributed across participants. In other words, marketplaces are often more valuable for one type of participant— either the supply or demand side. However, the level of asymmetry is not consistent across marketplaces. For example, supply ... See more

Marketplace monetization depends on two factors — Transaction complexity and the asymmetry in value to the demand and supply sides

Docplanner sells a SaaS product to doctors to help them digitize patient records and scheduling. This approach helped it attract a critical mass of doctors (the more valuable side) and allow patients to book appointments on its healthcare marketplace. OpenTable, Treatwell, and Lantum also monetize similar complementary products.

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.

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

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.

In addition, a paywall creates barriers to entry (and liquidity) on the marketplace. As a result, it is best used when having sufficient demand and supply (liquidity) does not automatically unlock transactions, i.e. marketplaces with very high transaction complexity. In other words, paywalls need both high complexity and high asymmetry.

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.