The Internet is a treasure trove of sites and services that everyone can take advantage of. While some of these services charge a subscription fee, or some charge for their use, the vast majority are available for free. It’s an age-old question of the Internet: how do sites that are free to access, and in many cases offer free services, make money? Owning a website isn’t free and constantly updating a site is time-consuming. People wouldn’t run these sites and provide these services if it wasn’t worth it. So how are they making money at all?

Advertising

The primary way that free sites make money is through advertisements, which are displayed on their web site.

Internet advertising’s a big business, and Google AdSense is the biggest fish in the sea, generating over $13 billion in 2014. AdSense allows publishers to show advertisements that are individually targeted and that generate revenue through clicks. These targeted ads are more efficient due to widespread use of cookies to track the interests of any particular computer user.

Other forms of advertising include sponsored content, and affiliate marketing. Affiliate marketing is when a website, usually an industry partner, advertises products on another website and the advertising website gets a commission each time the partner makes a sale through a click from your site. This model is often used for digital products such as e-books, as well as more tangible products from everyday retailers.

Selling your information

If you’re on a website, you are either the customer, or the product. If the site isn’t attempting to convince you to purchase something and isn’t making money when you view their advertising, then, hate to break it to you, but you’re probably the product.

Sites like Facebook, Reddit, and LinkedIn, offer you a valuable service and force very minimal advertising upon you when using the services. Many sites make money by selling large amounts of their users’ information to advertisers. The site offers a free and useful service to you, and in exchange, the site takes the information you give them as the product.

Freemium

Different kinds of sites also make money by using a “freemium” model. They offer a free service, which provides a baseline level of functionality, but provide a higher quality upgraded service for a fee, usually on a subscription basis. Examples of this model include LinkedIn’s Premium account, and Tinder Plus. Another example of this freemium model in action are software sites such HubSpot.

The freemium model relies on getting customers hooked on using the service and getting attached enough to the program that they will pay for an upgraded service. This model is essential for services that people might refuse to buy if they were charged from the offset, but will recognize its value later after using it.

Most people wouldn’t have joined Tinder if they had to pay for the app, but once they started using the app more often, they were more willing to pay for the privilege of being able to take back a swipe, or swipe an unlimited amount of times.  Many people download a free antivirus program and then later decide to pay for a more extensive program.

Sponsorship/Donations

There are some free sites and services that don’t fall neatly into any of these categories for revenue generation. There are very rare cases where a site or service is truly being provided for free, but those are few and far between.

However, sponsorship and donations are often responsible for providing the rest of the web content that cannot be funded by the means above. Khan Academy, for instance, is sponsored by Google, which allows it to forgo other means of generating revenue.

Everybody who has seen the banner on the Wikipedia homepage knows that Wikipedia relies on donations to keep its servers running, and site going. Podcasts tend rely on either or both of these models. It’s gotten to the point where I expect to hear “This podcast was brought to you by” either SquareSpace or Audible.com, at the end of every podcast I listen to. Many other services, especially creative ones, use sites such as Patreon.com to collect donations.

There are many funding models and each can be effective in their own way. There’s very little information to decide which one is the best to monetize your free website or service. Depending on what a site is offering, any one of these, or a combination of multiple models, may be the best way forward to transform a free site into a successful business.