LinkedIn’s business strategy is known as a “freemium business model”, as it offers it’s basic service to users for free. According to Forbes Magazine, the freemium strategy allows the company to acquire loyal users, further enticing them to purchase the premium packages to enhance their experience on LinkedIn (Patel 2015). The freemium model also allows an increased market exposure (Patel 2015). Consequently, LinkedIn’s basic free service creates a plethora of users, circulating their experience and their usage of LinkedIn through word of mouth amongst their peers (Patel 2015). New digital media, such as LinkedIn allows the ease of communication between users, businesses and marketing organizations across vast distances (Vukanovic 2011).
LinkedIn generates it’s revenue from three main sources, talent solutions (recruitment), marketing solutions (advertising) and premium subscriptions (Johnston 2013). In the third quarter, meaning July, August and September of 2015, LinkedIn’s leading source of revenue was generated from their talent solutions (Johnston 2013) This produced sixty-four percent or 502 million dollars of their overall revenue (Johnston 2013). LinkedIn’s marketing solutions produced eighteen percent or 140 million dollars (Johnston 2013). Similarly, premium subscriptions generated around eighteen percent or 138 million dollars of LinkedIn’s overall revenue. Although LinkedIn utilizes the freemium business model, the company is able to produce a competitive market share (Johnston 2013).
Johnston, M. (2013). How Does LinkedIn Make Money? – MonetizePros. Retrieved December 14, 2015, from http://monetizepros.com/monetization-basics/how-does-linkedin-make-money/
Patel, S. (2015). 7 Examples Of Freemium Products Done Right. Retrieved December 14, 2015, from http://www.forbes.com/sites/sujanpatel/2015/04/29/7-examples-of-freemium-products-done-right/3/
Vukanovic, Z. (2011). New Media Business Models in Social and Web Media. Journal of Media Business Studies, 51-67.