Linkedin Business Model
1 – Explain the LinkedIn Business Model
LinkedIn follows a platform model; multiple parties perform transactions across the linkedin.com site. The three-sided market is made up of (1) Companies (recruiters, HR, employment agencies) (2) Advertisers and (3) Job Placement (job seekers, professional groups).
LinkedIn’s model exemplifies a virtuous cycle feedback loop as its user base grows. It attracted users by providing free (subsidized) tool to individual users (not recruiters or advertisers) to build their network. Eventually LinkedIn monetized job seekers group by developing and offering premium subscriber services, in the chart below we see that in 2009 it actually was 47% of revenue while the others were around 26% each (I suspect that was because it was the largest group of users) and in 2012 it is the smallest revenue source. The growing pool of job seekers and professionals attracted the fee based services users made of up recruiters and advertisers, which is now the largest growth market. Each platform is a revenue source:
- Talent Solutions – This is a fee based subscriber service targeting companies and recruiters. Businesses are able to source potential employees, post job opening and promote their own brand (employer of choice rather than customer product). Currently this makes up 55% of total revenue.
- Marketing Solutions – This is a fee based advertising service targeting potential customers while they are thinking about their business and networking with other industry professionals (forum to discuss industry issues). This is 25% of total revenue.
- Premium Subscriptions – Most job seekers (active or passive) have a free account on LinkedIn, however premium subscriptions is a fee based service that gives job seekers extra access and tools to assist with their job search such as viewing profiles of people who have viewed you and organization tools. This is 20% of total revenue.
Choices – As I’ve already mentioned
LinkedIn follows a platform model; multiple parties perform transactions across the linkedin.com site. The three-sided market is made up of (1) Companies (recruiters, HR, employment agencies) (2) Advertisers and (3) Job Placement (job seekers, professional groups).
LinkedIn’s model exemplifies a virtuous cycle feedback loop as its user base grows. It attracted users by providing free (subsidized) tool to individual users (not recruiters or advertisers) to build their network. Eventually LinkedIn monetized job seekers group by developing and offering premium subscriber services, in the chart below we see that in 2009 it actually was 47% of revenue while the others were around 26% each (I suspect that was because it was the largest group of users) and in 2012 it is the smallest revenue source. The growing pool of job seekers and professionals attracted the fee based services users made of up recruiters and advertisers, which is now the largest growth market. Each platform is a revenue source:
- Talent Solutions – This is a fee based subscriber service targeting companies and recruiters. Businesses are able to source potential employees, post job opening and promote their own brand (employer of choice rather than customer product). Currently this makes up 55% of total revenue.
- Marketing Solutions – This is a fee based advertising service targeting potential customers while they are thinking about their business and networking with other industry professionals (forum to discuss industry issues). This is 25% of total revenue.
- Premium Subscriptions – Most job seekers (active or passive) have a free account on LinkedIn, however premium subscriptions is a fee based service that gives job seekers extra access and tools to assist with their job search such as viewing profiles of people who have viewed you and organization tools. This is 20% of total revenue.
Choices – As I’ve already mentioned