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Business Model Canvas Examples

Linkedin business model.

Linkedin Business Model Canvas

The LinkedIn business model is a multisided platform that connects professional users that want to create their own professional network with recruiters and advertisers. Due to its large community of professionals from every line of business and everywhere on the planet, LinkedIn is known as “the professional network”. Currently, LinkedIn has more than 660 million users, from more than 200 countries.

The main goal of the people who join LinkedIn is to build a professional identity and develop useful contacts for business, with the purpose to broaden their career frontiers. The greatest benefit is the convenience: instead of having to physically move for seeking human resources, aiming for recruitment and selection, training, or networking, one can simply connect to the internet and login on to LinkedIn.

LinkedIn is a multi-sided platform , which offers several solutions for different customers. It is based on a freemium business model (there are plans for free, but the best resources are charged), but also on recruitment and advertising. So, let’s explore LinkedIn’s Business Model .

What is LinkedIn?

LinkedIn calls itself the “ largest professional network in the world ”, and it is founded on its five pillars: “ transformation, integrity, collaboration, humor, and results ” to make people’s jobs easier. On LinkedIn, every profile stands for a kind of résumé: every person who checks one’s profile will have information such as current and former jobs and positions, education, experience, skills and abilities, courses, training, aspirations, etc.

Besides, the platform offers space to market available jobs in more than 9 million businesses all over the globe. And, like any other social network, one can connect to other LinkedIn users by sending them friend requests.

A brief history of LinkedIn

LinkedIn was officially released in 2003, by the investor Reid Hoffman (who had been on the board of Google, eBay, and PayPal before that), along with Allen Blue, Konstantin Guericke, Eric Ly, and Jean-Luc Vaillant. Less than one year later, the network would already count more than 1,200,000 members. But the bog jump would come in 2005, with over 4 million members, after the launching of the jobs and subscriptions paid options.

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Two years later, LinkedIn really became seen as a business by the founders. The result: More than 17 million users at the start of 2007. The next year, the platform began its expansion to other countries and reached the mark of over 33 million members.

In 2010, the company opened offices around the world, with a team counting more than 1,000 employees. And, the following year, LinkedIn was listed on the New York Stock Exchange. When LinkedIn was celebrating its first decade, the platform lowered the age of entry and totalized 225 million users all over the globe.

The team increased to 5,400 employees, distributed in offices in 27 cities, to serve its users scattered in over 200 countries. In December 2016, it was acquired by the giant Microsoft, in a purchase of over 26.2 billion dollars! Currently, LinkedIn has over 750 million active users.

Who Owns LinkedIn

As just mentioned, LinkedIn has been acquired by Microsoft in December 2016. Even with the acquisition, the company’s founder , Reid Hoffman, remains the chairman and Jeff Weiner is still the CEO since 2008.

LinkedIn’s Mission Statement

LinkedIn’s mission statement is: To connect the world’s professionals and make them more productive and successful.

How LinkedIn makes money

According to LinkedIn’s User Agreement , its “services are designed to promote economic opportunity for our members by enabling you and millions of other professionals to meet, exchange ideas, learn, and find opportunities or employees, work, and make decisions in a network of trusted relationships”.

Some services the network provides in order to make its users achieve all their possibilities are charged. Its Paid Features include: Premium Accounts, Talent Solutions, Marketing Solutions, and Sales Solutions.

The company revenue had a steady growth in the past years. In the fiscal year of 2019, LinkedIn’s annual revenue amounted to almost $6.8 billion, up from $5.26 billion during the preceding fiscal period.

Let’s take a closer look at each of them.

Talent Solutions

These solutions encompass the resources offered to both recruiters/employers – that search for qualified candidates for their available positions — and individuals, who seek improvement through courses and training. For the ones who are selecting professionals, LinkedIn offers a portfolio of solutions, which allow employers to connect to a wide network of candidates, also by advertising their available jobs. Furthermore, there’s the Recruiter Account, which guarantees:

For the individuals, LinkedIn offers the Learning platform, a premium subscription model , that provides access to more than 15,000 video courses, with instructors from several areas of expertise. These Talent Solutions account for more than 65% of the company’s revenue, due to premium resources for both businesses and workers.

Marketing Solutions

This second service is about driving advertising campaigns to LinkedIn’s audience, composed of its users. Businesses can deliver content to a targeted audience, generate leads, and, after all, measure their ROI (return on investment). Businesses can also develop sponsored content and advertisement, even though InMails, the direct messages that one can send to users they are connected.

Sales Solutions

These solutions are about creating a professional brand and engaging prospects through the network. The objective is to get sales insights, such as company and job changes or updates. Furthermore, through the Sales Navigator tool, one can find prospects, by using specific filters. According to LinkedIn, it’s a “powerful way to find and reach more decision-makers”.

Premium Accounts

Premium Career and Premium Professional accounts stand for 17% of LinkedIn’s revenue. They are paid subscriptions, which allow users to enhance their searches, get in touch with people out of their personal network, and have premium information access (such as people who have viewed their profiles, video courses, InMail messages, etc.), and many other special features. There are four different plan options, and the fees go from $30 to $100 per month. Most users, however, chose the Basic Account, which is free.

LinkedIn’s Business Model Canvas

Let’s take a look at the LinkedIn  Business Model Canvas  below:

Linkedin Business Model Canvas

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business model canvas example linkedin

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LinkedIn’s Customer Segments

LinkedIn is a multi-sided platform. Thus, all three sides can be considered its customer segments : The users, who are part of the community by their profiles, the employers/recruiters, who search for candidates, and the advertisers, who want a targeted and more qualified audience for their campaigns.

LinkedIn’s Value Propositions

Again, as a multi-sided platform, there is a different value proposition for each customer:

LinkedIn’s Channels

The biggest distribution channels of LinkedIn are, no doubt, its website, and mobile app. Besides, some places have physical offices.

LinkedIn’s Customer Relationships

As it is a social network, the more people in the community, the more value the platform has for everyone. So, the customer relationship is, indeed, more important than the platform itself.

LinkedIn’s Revenue Streams

LinkedIn’s Key Resources

LinkedIn’s key resource is the platform, the base for the business. Without it, there is no community.

LinkedIn’s Key Activities

“The one” is developing and updating the online platform. But other key activities include retaining (avoiding churn) and growing the number of users, protecting information and privacy, and building partnerships with businesses.

LinkedIn’s Key Partners

LinkedIn’s key partners are data centers (which provide the whole structure that support the online platform), employers, universities, Learning course developers, and companies that utilize LinkedIn’s APIs to connect their marketing and sales apps to the platform (e.g. Zoom, Adobe, and Oracle).

LinkedIn’s Cost Structure

LinkedIn’s cost structure is completely associated with platform development, maintenance, and growth. That encompasses employees’, developers’ and consultants’ salaries, branding and marketing expenses, legal and administrative costs, investment in infrastructure and equipment, and others.

LinkedIn’s Competitors

LinkedIn’s SWOT Analysis

Below, there is a detailed  swot analysis  of LinkedIn:

LinkedIn swot analysis - LinkedIn business model

LinkedIn’s Strengths

LinkedIn’s Weaknesses

LinkedIn’s Opportunities

LinkedIn’s Threats

LinkedIn’s business model is entirely built on job search, and network relationships and connections. Plus, they have a massive market share against their competitors. With some innovations, LinkedIn can keep its domination of the market, but also contribute to the world in a more meaningful way, such as expanding the methods of helping users — who simply cannot pay for a subscription — to find and get a job.

Daniel Pereira

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Denis Oakley & Co

Denis Oakley & Co

I HELP BOLD LEADERS TRANSFORM THEIR BUSINESSES AND THE INDUSTRIES THEY COMPETE IN

January 25, 2016 By Denis Oakley

LinkedIn Business Model Canvas

LinkedIn is one of the most successful social networks. In this case study, we dissect its business model and produce the LinkedIn business model canvas .

Some figures:

LinkedIn is pretty good company now that it has been around for over a decade, and has now been bought by Microsoft . Now we ask how is the LinkedIn business model composed and how do we capture it on a business model canvas?

The LinkedIn Business Model Canvas

LinkedIn Business Model Canvas

LinkedIn Customer Segments

The LinkedIn business model has 3 customer segments . The most obvious one is all the internet users who go to the site and create a profile on it. These are business people who use it to connect and interact with other business professionals.

Then there are the recruiters who are looking for talent, and finally, advertisers who are looking to reach either a wealthy B2C audience or senior B2B decision-makers.

LinkedIn Value Proposition

LinkedIn Business Model Canvas

Next on the LinkedIn business model is the value proposition . Like most companies, it has distinct value propositions for each customer segment.

Business Users

For the normal internet user, it offers them a showcase for their professional skills and talent. It allows them to network and to build relationships.

LinkedIn does all this for free. Users don’t pay anything for this. There is a whole range of additional smaller value points but these can be boiled down to – what does LinkedIn have to do to keep user engagement high and for users to increase the value of their profile and content. It’s a classic Freemium model.

For recruiters LinkedIn providers a superb tool for finding and evaluating candidates. Essentially it has 400 million CV’s in its database together with references and a wealth of information that is not normally available in a standard CV. Even better all the CV’s are structured and easily sortable and searchable.

The value of this to recruiters is immense. No longer do they have to go out and build their own candidate lists from word of mouth and networking. Now they are able to identify and sell a much wider pool of talent.

This provision of free CVs to recruiters is at the heart of the monetisation of the LinkedIn business model

Advertisers

Finally, advertisers can use the same structured data to reach a highly targeted audience. If you want to target adverts that will only go to the CIO’s of pharmaceutical companies with more than 5,000 employees you can set up the advert and get it running in minutes without even having to buy a list of their contact details

LinkedIn Business Model Customer Relationships

How do customer relationships work on the LinkedIn business model? Like most social networks, LinkedIn relies on network effects. The more people who are in the network the more valuable the network is to ALL participants. For normal users, it is a same-side network effect. That means that the more normal users are on the site the more valuable the site is. The presence or lack of advertisers and recruiters doesn’t affect this value. This is all done on an automated self-service basis. LinkedIn provides the platform, sets the rules and lets users get on with it.

On the other side, the recruiters and advertisers are there for the cross-side network effects . They don’t benefit from there being additional recruiters or advertisers. They benefit from normal users. The more users there is the more value LinkedIn provides to them. Again this is pretty much automated.

LinkedIn Marketing & Distribution Channels

The main channels are the Website and LinkedIn’s mobile apps. This is how people reach and engage with LinkedIn. In the early days, there were sales teams going from city to city to encourage users to sign up but now the volume of users on the site and the number of links that users put back to their profiles means that it has a commanding SEO position. Where it does still have active sales is in going out and selling its talent solutions to large corporations and recruitment companies.

LinkedIn Monetisation

So how does LinkedIn make money? For normal users, it makes some money by selling them additional services on a subscription basis. These are mainly targeted at salesmen and job hunters looking to get access to people they don’t know.

Recruitment companies and corporations pay for the ability to post jobs, to search the database for talent and to establish a strong branded presence on the site for recruitment purposes. Advertisers pay on a pay per click or pay per view basis.

LinkedIn Key Activities

The key activity for LinkedIn is all about platform development. Its essential value is in the number of monthly active users. So it needs a platform that increases the number of users over time, and which keeps them engaged and active on the site.

Everything else is subservient to this as it needs to keep those numbers up and to keep raising the value bar to stop other companies from disrupting the market or displacing it.

LinkedIn Key Resource

So the key resource for the LinkedIn business model is the platform. If you take the platform away LinkedIn has nothing. The networks and the connections that everything else is built on are nothing without the platform.

In this case, the staff, the branding, indeed many of the monetisation channels and value adds aren’t critical.

LinkedIn Business Model Key Partners

The main groups of key partners for LinkedIn are the data centres (which it now has three) and all the ancillary infrastructure that keeps the platform online.

Increasingly with LinkedIn Pulse and influencers it also acts as a content distribution network (not a CDN) using the content of thousands of experts to engage users and keep them on the platform.

LinkedIn Costs

The costs are mainly those associated with keeping the platform online and then R&D for platform development to find ways to increase its product value to its customer segments. Marketing and sales is a small but significant cost as it works to increase revenue streams.

This is the LinkedIn business model canvas . In this case, we’ve used Alexander Osterwalder’s original template and the descriptive text is a bit small. Feel free to download and reuse the image.

LinkedIn Business Model Canvas

About Denis Oakley

Explorer | Trail Runner | Mountain Lover

'Big' companies are civilisation. I stay in the wilderness guiding entrepreneurs and startups on their journey to becoming 'Big'.

Then I head back to the frontier

Strategy | Marketing | Operations

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LinkedIn Business Model Canvas

I help entrepreneurs transform their industries through wiser choices

Outcome : More Traction, Bigger Rounds, Better Products

Method : Problems, Customers, Business Models, Strategy

business model canvas example linkedin

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LinkedIn Business Model (2022)| How does LinkedIn make money?

Last updated: Out 9, 2021

Company: LinkedIn (a subsidiary of Microsoft Corporation) CEO:  Jeff Weiner Year founded: 2002 Headquarter:  Sunnyvale, California, USA Number of Employees (Dec 2018):  13,000 Members (2020) : 722 Million Acquisition cost (Dec 8, 2016): $ 27 Billion Annual Revenue ( June 2020): $ 8.05 Billion

Products & Services:  LinkedIn Company Pages | LinkedIn Groups | Marketing & Development Campaigns | LinkedIn Recruiter | LinkedIn Job Slots | LinkedIn Career Pages | LinkedIn Recruitment Ads | LinkedIn Sales Navigator Competitors:  Zip Recruiter | Indeed | Career Builder | Glassdoor | Hired | Jobs2Career | Monster | Dice | Simply Hired

The benefits that a site like LinkedIn has provided to the business world is limitless. Instead of having to go outside for recruitment, business expansion and maintenance of professional network, people can simply log on to its site and enact the same deeds.

As online presence continues to expand among Internet users, so does the necessity of LinkedIn.

As of November 2020, LinkedIn is the 57 th biggest website in the world in terms of engagement and ranked 24 th in terms of global traffic. LinkedIn user statistics indicate that it increased by over 32 million in 2020 alone from 690 in Q1 to 706 in Q2 and 722 in Q3 . The company is projected to attract users more rapidly once the ongoing crisis is over, and companies start rehiring. [ 1 ]

Let’s explore the business model canvas of LinkedIn in more detail.

business model canvas example linkedin

Table of Contents

Business Model Canvas of LinkedIn

Business Model Canvas of LinkedIn

1. Customers of LinkedIn

LinkedIn operates under four customer segments.

2. Value Proposition of LinkedIn

LinkedIn has different value propositions for its various customer segments.

3. Customers Relationships of LinkedIn

4. Channel of LinkedIn

5. Key Activities of LinkedIn

6. Key Resources of LinkedIn

7. Key Partners of LinkedIn

LinkedIn has managed to cement its partnerships to expand its business. Some of its partners are: 

8. Cost Structure of LinkedIn

LinkedIn’s cost structure is primarily tied with its platform development, maintenance, and expansion.

  Product Development – Its product development cost includes:

Sales and Marketing – It’s sales and marketing cost includes:

General and Administrative – it’s General, and administration includes:

Cost of Revenue – its cost of revenue includes:

Depreciation – Finally, depreciation cost includes the depreciation of:

9. Revenue Stream of LinkedIn

According to the annual report, LinkedIn’s revenue increased from about $5.3 Billion in FY2018 to $6.74 Billion in FY2019 and $8.05 Billion in FY2020 . [ 7 ]

Let’s see how LinkedIn makes money in more detail:

How Does LinkedIn Make Money?

LinkedIn primarily has three sources of revenue or monetized solutions:

Let’s explore each in more detail:

1. Talent Solutions

The LinkedIn business model would not be able to function without $2.3 billions of its revenue. This amount is mostly contributed to its Talent Solutions which serves as its most important premium recruiting tool .

Talent solution mostly operates for companies to help them locate their targeted employees and potential partners for their business. Some of the common services offered by Talent Solutions include job posting , career pages , referrals , recruitment media , etc.

Talent Solutions basically acts as the employee poacher of LinkedIn and drives a competitive environment in its domain.

Moreover, LinkedIn is considered internationally authentic , it allows recruiters to trust different brands with less suspicion and make the recruitment process more convenient. This is why LinkedIn has managed to get the best of its competition whether it be in the form of job portals like Monster Jobs or Indeed.

Learning & Development

Lynda.com – Lynda operates as an eLearning platform . It utilizes a subscription-based model that enables its users to learn everything they want through videos whether it be about technology, business, software or creative skills.

Talent Connect – Talent Connect is an event organized by LinkedIn to give professionals with unique business ideas and hiring strategies to share their practices. The event brings together a wide variety of radical, disruptive, and innovative ideas to address the key challenges and shape the trends in the corporate world. Talent Connect 2020 was expected to be held in Boston from October 14 to 16 and focus on talent acquisition, learning and development, and HR practices. [ 8 ]

2. Marketing Solutions

LinkedIn is also a social networking site besides being a recruitment platform. It is currently the most sought-after site by marketers who seek to expand upon their marketing campaigns.

Their Marketing Solutions services provide various features which allow companies to create their own respective pages and create sponsored content to advance their marketing prospects. This also includes sponsored InMails, Ads API and text ads.

3. Premium Subscriptions

Mostly catered to users of LinkedIn, Premium subscriptions allow them to access certain features. Some of the more prominent features in the premium subscription are:

The price point for different premium subscription options are:

The features offered under each subscription vary. For Premium Career, subscribers get 3 InMail messages per month, an option to see who viewed their profile, and information on companies that post jobs. They can also access learning material like video tutorials and use Resume Builder to create CVs. For Premium Business, subscribers get 15 InMail messages, advanced search filters, unlimited searches, on-demand learning, and additional company data. Subscribers on the Sales Navigator Pro plan have access to personalized lists of potential clients, 20 InMail messages, exclusive information about competitors, and some features offered under the Premium Business plan. Lastly, Recruiter Lite offers 30 InMail messages , automatic tracking of candidates, view unlimited profiles, tools for talent pool organization, up to eight premium search filters, and the features offered in previous plans like advanced search. [ 9 ]

How does Linkedin make money?

In Conclusion

LinkedIn has become inseparable for the business community especially those who wish to reach the pinnacle of their careers. Its business model has been constructed with excellence and will continue to hold merit for its users in the long run.

All in all, it’s good will always outweigh the bad.

 References & more information

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Yelp business model | how does yelp make money, airbnb business model | how does airbnb make money.

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business model canvas example linkedin

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Why linkedin's business model is so successful.

business model canvas example linkedin

LinkedIn business model canvas

business model canvas example linkedin

LinkedIn’s Company Overview

LinkedIn is a business and employment-oriented social networking service that operates via websites. Founded on December 14, 2002, and launched on May 5, 2003, it is mainly used for professional networking, including employers posting jobs and job seekers posting their CVs. As of 2015, most of the site's revenue came from selling access to information about its users to recruiters and sales professionals.

Country: California

Foundations date: 2002

Type: Public

Sector: Information & Media

Categories: Internet

LinkedIn’s Customer Needs

Social impact: self-transcendence

Life changing: provides hope, self-actualization, affiliation/belonging

Emotional: rewards me, badge value, fun/entertainment, attractiveness, provides access, design/aesthetics

Functional: organizes, connects, variety, informs, integrates, organizes, saves time, avoids hassles, sensory appeal, makes money

LinkedIn’s Related Competitors

Linkedin’s business operations.

An additional item offered to a customer of a primary product or service is referred to as an add-on sale. Depending on the industry, add-on sales may generate substantial income and profits for a firm. For example, when a customer has decided to purchase the core product or service, the salesman at an automotive dealership will usually offer an add-on sale. The pattern is used in the price of new software programs based on access to new features, number of users, and so forth.

Curated retail:

Curated retail guarantees focused shopping and product relevance; it presents a consumer with the most appropriate options based on past purchases, interactions, and established preferences. It may be provided via human guidance, algorithmic recommendations, or a combination of the two.

Channel aggregation:

Consolidating numerous distribution routes into one to achieve greater economic efficiency. A business model for internet commerce in which a company (that does not manufacture or warehouse any item) gathers (aggregates) information about products and services from many competing sources and displays it on its website. The firm's strength is in its power to create an 'environment' that attracts users to its website and develop a system that facilitates pricing and specification matching.

Advertising:

This approach generated money by sending promotional marketing messages from other businesses to customers. When you establish a for-profit company, one of the most critical aspects of your strategy is determining how to generate income. Many companies sell either products or services or a mix of the two. However, advertisers are frequently the source of the majority of all of the revenue for online businesses and media organizations. This is referred to as an ad-based income model.

Blue ocean strategy:

The blue ocean approach is predicated on the premise that market limits and industry structure are not predetermined and may be reconfigured via the actions and attitudes of industry participants. This is referred to as the reconstructionist perspective by the writers. Assuming that structure and market boundaries exist solely in managers' thoughts, practitioners who subscribe to this perspective avoid being constrained by actual market structures. To them, more demand exists, primarily untapped. The core of the issue is determining how to produce it.

Benchmarking services:

Benchmarking is a technique for evaluating performance and gaining insights via data analytics. It may be used to conduct internal research on your firm or compare it to other businesses to enhance business processes and performance indicators following best practices. Typically, three dimensions are measured: quality, time, and cost. In this manner, they may ascertain the targets' performance and, more significantly, the business processes that contribute to these companies' success. The digital transformation era has spawned a slew of data analysis-focused software businesses.

Collaborative production:

Producing goods in collaboration with customers based on their input, comments, naming, and price. It represents a new form of the socioeconomic output in which enormous individuals collaborate (usually over the internet). In general, initiatives based on the commons have less rigid hierarchical structures than those found on more conventional commercial models. However, sometimes not always?commons-based enterprises are structured so that contributors are not compensated financially.

Digitization:

This pattern is based on the capacity to convert current goods or services into digital versions, which have several benefits over intangible products, including increased accessibility and speed of distribution. In an ideal world, the digitalization of a product or service would occur without compromising the consumer value proposition. In other words, efficiency and multiplication achieved via digitalization do not detract from the consumer's perceived value. Being digitally sustainable encompasses all aspects of sustaining the institutional framework for developing and maintaining digital objects and resources and ensuring their long-term survival.

The aikido business model is often characterized as using a competitor's strength to get an edge over them. This is accomplished through finding weaknesses in a competitor's strategic position. In addition, it adds to marketing sustainability by exposing rivals' flaws, finding internal and external areas for development, and attracting consumers via specific product offers that deviate from the norm.

Customer data:

It primarily offers free services to users, stores their personal information, and acts as a platform for users to interact with one another. Additional value is generated by gathering and processing consumer data in advantageous ways for internal use or transfer to interested third parties. Revenue is produced by either directly selling the data to outsiders or by leveraging it for internal reasons, such as increasing the efficacy of advertising. Thus, innovative, sustainable Big Data business models are as prevalent and desired as they are elusive (i.e., data is the new oil).

A digital strategy is a strategic management and a business reaction or solution to a digital issue, which is often best handled as part of a broader company plan. A digital strategy is frequently defined by the application of new technologies to existing business activities and a focus on enabling new digital skills for their company (such as those formed by the Information Age and frequently as a result of advances in digital technologies such as computers, data, telecommunication services, and the World wide web, to name a few).

Community-funded:

The critical resource in this business strategy is a community's intellect. Three distinct consumer groups comprise this multifaceted business model: believers, suppliers, and purchasers. First, believers join the online community platform and contribute to the production of goods by vendors. Second, buyers purchase these goods, which may be visual, aural, or literary in nature. Finally, believers may be purchasers or providers, and vice versa.

Cross-subsidiary:

When products and goods and products and services are integrated, they form a subsidiary side and a money side, maximizing the overall revenue impact. A subsidiary is a firm owned entirely or in part by another business, referred to as the parent company or holding company. A parent company with subsidiaries is a kind of conglomerate, a corporation that consists of several distinct companies; sometimes, the national or worldwide dispersion of the offices necessitates the establishment of subsidiaries.

Combining data within and across industries:

How can data from other sources be integrated to generate additional value? The science of big data, combined with emerging IT standards that enable improved data integration, enables new information coordination across businesses or sectors. As a result, intelligent executives across industries will see big data for what it is: a revolution in management. However, as with any other significant organizational transformation, the difficulties associated with becoming a big data-enabled company may be tremendous and require hands-on?or, in some instances, hands-off?leadership.

Consumerization of work:

Consumerization of IT (consumerization) is a term that refers to the process by which Information Technology (IT) begins in the consumer market and then spreads to business and government organizations, primarily as a result of employees utilizing popular consumer market technologies and methods at home and afterward bringing them in the workplace.

Corporate innovation:

Innovation is the outcome of collaborative creativity in turning an idea into a feasible concept, accompanied by a collaborative effort to bring that concept to life as a product, service, or process improvement. The digital era has created an environment conducive to business model innovation since technology has transformed how businesses operate and provide services to consumers.

Data as a Service (DaaS):

Data as a Service (DaaS) is a relative of Software as a Service in computing (SaaS). As with other members of the as a service (aaS) family, DaaS is based on the idea that the product (in this instance, data) may be delivered to the user on-demand independent of the provider's geographic or organizational isolation from the customer. Additionally, with the advent[when?] of service-oriented architecture (SOA), the platform on which the data sits has become unimportant. This progression paved the way for the relatively recent new idea of DaaS to arise.

Online lead generation is the technique of gathering or gaining a user's information ? often in return for an item, service, or information ? and then reselling that information to businesses interested in advertising to or selling to those gathering leads.

Freemium is the sum of the words free and premium and refers to a business strategy that provides both free and premium services. The freemium business model works by providing essential services for free and charging for enhanced or extra capabilities. This is a typical practice among many software firms, who offer imperative software for free with restricted functionality, and it is also a popular approach among game developers. While everyone is invited to play the game for free, extra lives and unique game features are accessible only once the player buys.

Reputation builders:

Reputation builders is an innovative software platform that enables companies to create, collect, and manage positive internet reviews. It was a pioneer in the utilization of user-generated material. The website services are provided for free to users, who supply the majority of the content, and the websites of related businesses are monetized via advertising.

Unlimited niches:

Online retailers provide specialized content to various niche client groups via continuing mass-customized customer relationships. The sector of technical content providers is a second client segment. Combining these two factors may result in an infinite number of niches. New material is produced and distributed through online channels, which implies that online retailers must prioritize platform maintenance and marketing in addition to service delivery.

Markets are conversations:

For professional services firms, the difference will be made by converting non-engaged customers into engaged customers. Product development will be obsolete. Customer relations and conversations will replace it. By sharing modular and beta products and services with your current and future customers, companies and their customers interact and collaborate in ongoing conversations. Not only will customers find and follow companies in online social networks, but it will also be the other way around as well.

The long tail is a strategy that allows businesses to realize significant profit out of selling low volumes of hard-to-find items to many customers instead of only selling large volumes of a reduced number of popular items. The term was coined in 2004 by Chris Anderson, who argued that products in low demand or with low sales volume can collectively make up market share that rivals or exceeds the relatively few current bestsellers and blockbusters but only if the store or distribution channel is large enough.

Tag management:

Tag management refers to the capability of the collaborative software to handle both your own and user-generated tags. Marketers use various third-party solutions to enhance their websites, video content, and mobile applications. Web analytics, campaign analytics, audience measurement, customization, A/B testing, ad servers, retargeting, and conversion tracking are examples of such systems. At its most fundamental level, tag management enables new methods for your business model to use data.

Trading data:

Combining disparate data sets enables businesses to develop a variety of new offerings for complementary companies. Robustness is a property that describes a model's, test's, or system's ability to perform effectively when its variables or assumptions are changed, ensuring that a robust concept operates without fail under various conditions. In general, robustness refers to a system's capacity to deal with unpredictability while remaining practical.

Self-service:

A retail business model in which consumers self-serve the goods they want to buy. Self-service business concepts include self-service food buffets, self-service petrol stations, and self-service markets. Self-service is available through phone, online, and email to automate customer support interactions. Self-service Software and self-service applications (for example, online banking apps, shopping portals, and self-service check-in at airports) are becoming more prevalent.

Two-sided market:

Two-sided marketplaces, also called two-sided networks, are commercial platforms featuring two different user groups that mutually profit from the web. A multi-sided platform is an organization that generates value mainly via the facilitation of direct contacts between two (or more) distinct kinds of connected consumers (MSP). A two-sided market enables interactions between many interdependent consumer groups. The platform's value grows as more groups or individual members of each group use it. For example, eBay is a marketplace that links buyers and sellers. Google connects advertising and searchers. Social media platforms such as Twitter and Facebook are also bidirectional, linking consumers and marketers.

Fast fashion:

Fast fashion is a phrase fashion retailers use to describe how designs travel rapidly from the catwalk to catch current fashion trends. The emphasis is on optimizing specific supply chain components to enable these trends to be developed and produced quickly and affordably, allowing the mainstream customer to purchase current apparel designs at a reduced price.

Featured listings:

A highlighted listing is more important and noticeable than a regular listing, providing maximum exposure for your workplace to consumers searching in your region. In addition, customers are attracted to these premium listings because they include more pictures of your home ? and its excellent location.

Technology trends:

New technologies that are now being created or produced in the next five to ten years will significantly change the economic and social landscape. These include but are not limited to information technology, wireless data transmission, human-machine connection, on-demand printing, biotechnology, and sophisticated robotics.

User design:

A client is both the manufacturer and the consumer in user manufacturing. For instance, an online platform could offer the client the tools required to create and market the product, such as product design software, manufacturing services, or an online store to sell the goods. In addition, numerous software solutions enable users to create and customize their products to respond to changing consumer requirements seamlessly.

Disruptive trends:

A disruptive technology supplants an existing technology and fundamentally alters an industry or a game-changing innovation that establishes an altogether new industry. Disruptive innovation is defined as an invention that shows a new market and value network and ultimately disrupts an established market and value network, replacing incumbent market-leading companies, products, and alliances.

Network builders:

This pattern is used to connecting individuals. It offers essential services for free but charges for extra services. The network effect is a paradox that occurs when more people utilize a product or service, the more valuable it becomes.

Sponsorship:

In most instances, support is not intended to be philanthropic; instead, it is a mutually beneficial commercial relationship. In the highly competitive sponsorship climate of sport, a business aligning its brand with a mark seeks a variety of economic, public relations, and product placement benefits. Sponsors also seek to establish public trust, acceptability, or alignment with the perceived image a sport has built or acquired by leveraging their connection with an athlete, team, league, or the sport itself.

This model collects data and connects it to others; it is suggested to investigate the impact of advertising on consumer purchase dynamics by explicitly linking the distribution of exposures from a brand's media schedule to the brand purchase incidence behavior patterns over time. The danger is that we may be unable to react productively and cost-effectively to technological and market changes.

Hidden revenue:

A hidden revenue business model is a revenue-generating strategy that excludes consumers from the equation, preventing them from paying for the service or product provided. For example, users of Google do not pay for the search engine. Rather than that, income streams are generated via advertising dollars spent by companies bidding on keywords.

Infomediary:

An infomediary acts as a personal agent for customers, assisting them to regain control over the information collected about them for marketing and advertising purposes. Infomediaries operate on the premise that personal data belongs to the individual represented, not necessarily the person who manages it.

Subscription:

Subscription business models are built on the concept of providing a product or service in exchange for recurring subscription income on a monthly or annual basis. As a result, they place a higher premium on client retention than on customer acquisition. Subscription business models, in essence, concentrate on revenue generation in such a manner that a single client makes repeated payments for extended access to a product or service. Cable television, internet providers, software suppliers, websites (e.g., blogs), business solutions providers, and financial services companies utilize this approach, as do conventional newspapers, periodicals, and academic publications.

Pay as you go:

Pay as you go (PAYG) business models charge based on actual consumption or use of a product or service. Specific mobile phone contracts work on this principle, in which the user may purchase a phone card that provides credit. However, each call is billed separately, and the credit balance is depleted as the minutes are used (in contrast to subscription models where you pay a monthly fee for calls). Pay as you go is another term for pay & go, pay per use, pay per use, or pay-as-you-go.

Take the wheel:

Historically, the fundamental principles for generating and extracting economic value were rigorous. Businesses attempted to implement the same business concepts more effectively than their rivals. New sources of sustained competitive advantage are often only accessible via business model reinvention driven by disruptive innovation rather than incremental change or continuous improvement.

Product innovation:

Product innovation is the process of developing and introducing a new or better version of an existing product or service. This is a broader definition of innovation than the generally recognized definition, which includes creating new goods that are considered innovative in this context. For example, Apple launched a succession of successful new products and services in 2001?the iPod, the iTunes online music service, and the iPhone?which catapulted the firm to the top of its industry.

Layer player:

Companies that add value across many markets and sectors are referred to be layer players. Occasionally, specialist companies achieve dominance in a specific niche market. The effectiveness of their operations, along with their economies of size and footprint, establish the business as a market leader.

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LinkedIn Multi-Sided Platform Business Model Explained

Linkedin mission and vision .

LinkedIn’s mission is to: 

Connect the world’s professionals to make them more productive and successful .

While its vision is to: 

Create economic opportunity for every member of the global workforce.

LinkedIn achieves its mission and vision by enabling a two-sided online marketplace whose aim is to connect professionals with career opportunities. 

On the other hand, LinkedIn has successfully transitioned, over the years, into a B2B advertising platform, which, in 2022, generated over $5 billion in revenues! 

For some context, by looking at the advertising landscape, LinkedIn’s advertising machine is still small compared to Google’s over $148 billion and Facebook’s over $114 billion. 

Yet, LinkedIn’s advertising machine has been growing at an increasingly steady pace, and in 2022, it generated as much as Twitter and almost double Pinterest’s revenues from advertising! 

advertising-industry

The LinkedIn business model explained

Back in 2002, former PayPal Mafia member Reid Hoffman together with Konstantin Guericke, Jean-Luc Vaillant, Allen Blue, and Eric Ly, created the professional social network that would grow until it was acquired by Microsoft for $27 billion in December 2016.

A well-designed business model is one of the primary drivers of value for any company in the long run (together with the product, distribution , and organizational structure ).

So how did LinkedIn become a company worth $27 billion?

We’re going to focus on two aspects. First, how LinkedIn makes money. Second, what customers it serves.

Third, we’ll see how, when, and why it makes sense to build a multi-sided platform , just like LinkedIn has done.

Freemium, subscription-based, and advertising

LinkedIn’s primary growth tool is its freemium model .

freemium-business-model

Breaking down LinkedIn’s Two-Sided Network Effects

As a professional social network, anyone can join the platform, thus enabling its viral growth .

LinkedIn’s success is based on its value as a professional network where people can manage their brand while recruiters can find candidates to fill job vacancies.

This is known as two-sided network effects . 

In other words, the value of the network increases based on two different players, which are connected from a value chain standpoint. 

The more business professionals join the platform, complete their profiles, and improve their skills. The more the platform becomes valuable to HR professionals. 

And, in reverse, the more the platform comprises companies and brands, the more their HR teams look for talent. The more LinkedIn becomes valuable to business professionals. 

This is how the network reinforces itself. More talented business professionals attract more companies. More companies attract more business professionals. 

And when the network becomes valuable, this enables LinkedIn to have flexibility in terms of how to generate revenues. 

In other words, LinkedIn can now offer various services, which enables it to grow in multiple directions. 

Breaking down LinkedIn’s educational platform

Indeed, LinkedIn also has a platform related to education and skills development. This platform was based on the acquisition of Lynda.com  in 2015. 

LinkedIn paid over $1.5 billion for Lynda.com, which has become LinkedIn Learning. A key piece of the puzzle for LinkedIn’s business model . 

LinkedIn has also kept expanding its education offering by, for instance, acquiring (in June 2022) another EdTech company called EduBrite , a platform that specializes in creating, hosting, and deploying professional certificates.

Therefore, the educational journey helps LinkedIn create a clear path for professionals in its acquisition funnel. 

You first join LinkedIn to look for career opportunities, then you’re prompted to join the learning platform and get more certifications so that you can enable HR professionals to understand you might be qualified for a specific job. 

This, in turn, reinforces the value of the professional network, speeding up its flywheel. 

Breaking down LinkedIn B2B Advertising Platform

The other key component of LinkedIn’s business model is its B2B advertising platform. 

In 2022, this has become an over $5 billion yearly behemoth, further expanding. 

In short, LinkedIn offers the opportunity to sponsor products or services with paid advertising campaigns.

With more than 850 million users, LinkedIn is a strong platform that enables brands to build their sales funnels. 

LinkedIn enables brands to build advertising campaigns for both top and bottom of the funnel (from brand awareness to conversions), making into another great option for advertisers. 

With the cost of advertising on platforms like Google and Facebook going substantially up. 

LinkedIn, which has been considered quite expensive from the advertising standpoint, has now become a much more viable option. Thus, gaining momentum. 

Recap of LinkedIn’s business model

LinkedIn’s business model is organized around four pillars:

Let’s look at each of them in more detail.

Talent Solutions

As specified by the LinkedIn annual report for 2016 (before the stock got delisted as part of Microsoft), the talent solutions comprise:

Hiring and Learning & Development products. Hiring provides innovative recruiting tools to help our customers become more successful at talent acquisition and professional development. Our products aim to be the most effective way for enterprises and professional organizations to efficiently identify and acquire the right talent for their needs. Learning & Development provides online education courses that aim to make it easy for professionals to accelerate their careers and realize their potential by learning new skills.

The Talent Solutions platform can be broken down into:

LinkedIn Recruiter

That allows enterprises and professional organizations to find, contact, and hire highly qualified passive and active candidates based on three main features:

There are other features and products within the hiring process, such as referrals, job slots, job postings,s and more.

The primary business model here is subscription -based, combined with pay-as-you-go, for companies that want to post job offerings.

Learning & Development

In 2015, LinkedIn bought an online learning company, Lynda, for $1.5 billion.

Lynda was integrated into LinkedIn as the learning and development platform for professionals.

In short, subscription members can get access to thousands of professional courses. Thus, this segment of the business is subscription -based as well.

In 2022, LinkedIn further expanded its educational platform with the acquisition of EduBrite, focused instead on professional certification.  

The marketing solution is the part where LinkedIn uses its member’s user base to let other businesses advertise their products or services.

There are six products in this area:

The last segment is related to the premium subscription members.

Premium Subscriptions

The differentiation between the subscription -based and advertising models is not as simple as it seems.

In fact, within premium subscriptions, you can access advertising features (like InMail Messages); therefore, even though the LinkedIn business model is mainly subscription-based.

That is more diversified. It is undeniable that part of the value of the professional network comes from the leverage the businesses can make of the LinkedIn members’ base.

LinkedIn in numbers

Back in December 2016, LinkedIn was acquired by Microsoft for over twenty-six billion dollars. As Microsoft CEO Satya Nadella put it at the time:

Today is an exciting day, one I’ve been looking forward to since June. It marks the close of the agreement for Microsoft to acquire LinkedIn and the beginning of our journey to bring together the world’s leading professional cloud and the world’s leading professional network.

Therefore, it’s hard to say in hard numbers how much this integration benefits Microsoft.

Having LinkedIn is more than just a way to generate new revenue streams; but is also a new avenue to “hit refresh” on Microsoft’s brand value .

In addition, given the unsuccess of Microsoft in building a social media tool, the LinkedIn acquisition enabled it to still follow along successfully into he social media space. 

Also, many have argued that one of the reasons for the acquisition was to bring on board LinkedIn’s founder, Reid Hoffman:

Our CEO @jeffweiner ’s reflections on today’s announcement that LinkedIn will be joining forces with Microsoft. https://t.co/TV43SkvXK5 — LinkedIn (@LinkedIn) June 13, 2016

Is LinkedIn one of the best acquisitions of the last twenty years?

Before Microsoft bought LinkedIn, the professional network was listed.

When the acquisition was announced, the company’s stock jumped to $195.96 to align with the price of the offer from Microsoft.

It was a premium of over 40% compared to the market capitalization of LinkedIn previous to the announcement; when the acquisition was official LinkedIn also delisted its stock to join Microsoft.

In short, today, if you want financial information about LinkedIn you’ll have to dig into Microsoft’s financials.

In fact, by delving into Microsoft’s financials , there is no doubt that LinkedIn is one of the “products” that bring revenues, as you can see from the graphic below: 

microsoft-business-model

In 2017 LinkedIn’s revenue was $2.3 billion, which primarily comprised revenues coming from LinkedIn Talent Solutions.

In 2018, the revenue surpassed five billion, primarily from the talent solutions offering.

By 2022, LinkedIn passed over $11 billion in revenues, distributed across talent and marketing solutions! 

Indeed, as we’ve seen, LinkedIn offers three categories of monetized solutions:

Talent Solutions comprises two elements:

Marketing Solutions allows companies to advertise to LinkedIn’s member base.

Premium Subscriptions enable professionals to manage their professional branding.

Where does LinkedIn get its value ?

Undoubtedly, the platform it was able to build serves both hands of the professional industry: HR managers and Professionals.

LinkedIn is a Multi-Sided Platform

Based on the 2022 numbers, this is how revenues are broken down:

linkedin-revenue-streams

As many multi-billion dollar companies, LinkedIn has two main revenue streams 

Regarding the business model , LinkedIn could be defined as a Multi-Sided Platform .

One of the key aspects of a business model is the customer segment your organization serves. In short, to whom you’re selling your products or services. 

In short, although LinkedIn serves different target customers. They are highly dependent on each other.

LinkedIn gets its overall value by offering services for both HR managers in need of qualified candidates, and professionals looking for career opportunities.

Therefore, LinkedIn hiring would help me find qualified candidates if I were an HR. 

At the same time, the Learning & Development platform allows LinkedIn members to get more qualified. Which, in turn, increases the value of the hiring services as more qualified people are available. 

Summary and Conclusion

Read Next: Microsoft Business Model , Who Owns Microsoft? , Microsoft Organizational Structure , Microsoft SWOT Analysis , Microsoft Mission Statement , Microsoft Acquisitions , Microsoft Subsidiaries , Bill Gates Companies .

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