Monetization is about making an asset or a product eligible as legal tender. Generally, it involves the conversion of a non-revenue creating product into cash. This term may have several meanings in different areas. Considering the government, they monetize debt with a view to lower down interest rates on loan and to minimize the chances of financial crisis, while business organizations monetize offerings and services in order to make a profit.
A Little More on What is Monetize
Monetization and capitalism work simultaneously, and both concepts are equally old. Monetization process can be crucial for the growth and development of any business, and can help it in creating strategic plans in the long-run.
Types of Monetization
The U.S. Federal Reserve deals with the monetization of the debt of a country by purchasing treasuries including bills, bonds and notes, that are regulated by the U.S. Treasury. The government uses credit issued by the Fed, in the form of cash for carrying out its activities. This way it doesn’t require to print any additional money. This monetization policy records the loans of government on the official books of Fed, and places money back in place. Government can also purchase their own borrowings by printing money that shoots up the money supply, but at the same time, leads to inflation. And because of this, it becomes a less preferred alternative.
Several e-commerce and online activities have made average Americans aware of the concept of monetization. Bloggers and online owners succeed in monetizing their blogs or websites by exposing these spaces to advertisers. This helps them in making money by publishing different forms of content on their website. Other methods of online monetization include making sales funnels from subscribers and making online books using the content published before.
Government Debt Monetization Example
For instance, the government wants to run a social program worth of $50,000. It has succeeded in arranging $45,000 of the amount from taxation, but still, it is short of $5,000. The government can raise this money by taking loan, printing money, enhancing tax rates, or decrease expenditure. The government issues $5,000 in bonds, and chooses to take loan from the public. These bonds provide with amazing rates of interest to the buyers. Hence, the government has now managed to raise funds of $50,000 for the social event.
Monetization in Commerce
Website owners receive a small margin every time a person browses through their website, and clicks on the given ad links. These e-owners may receive payment based on the number of times visitors view promotional content without any engagement. This amount will depend on the arrangements made with marketers. In case, the number of visitors for a website are more, advertisers will pay more money to the owner. If a website maintains a record of consistent and huge traffic, then the advertisers won’t mind paying huge amounts for positioning their ad or promotion on the homepage or any other page of the website. Businesses can also monetize their content through subscriptions, applications, multimedia content such as podcasts, videos, etc.
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