Because of huge acquisitions like Facebook’s billion dollar purchase of Instagram, it’s easy to assume all tech companies are making a ton of cash. And so it may bewilder you to find out many popular web-based services are not turning a profit. There are also many online services that are earning money — some we did not expect at all — but we’ll get to that later.
If tech industry funding is something that interests you, How Do They Make Money can answer quite a few questions for you. The site lists a large number of different companies like Facebook, Tumblr, Pandora, and Netflix. When you click on one, a window pops up containing funding information. On the left-hand side it shows whether a web service is profitable or not and the information on the right gives examples of how it is funded. These money-making methods include things like advertising, subscribers, and selling data, among others. If one long list seems overwhelming, How Do They Make Money lets you filter choices by service or revenue type.
For instance, Dropbox is listed as “profitable” by offering paid subscriptions and freemium content. Instagram is apparently not profitable, but the following clarification is included: “Before selling to Facebook they were not making money.”
Spotify is not profitable either, despite offering advertising and paid subscriptions as part of its service. Competitor, Rdio, is also listed as not profitable. It’s extremely odd considering Instapaper is allegedly profitable through advertising and subscriptions. If an offline reading application, which has many free alternatives, can turn a profit then why can’t a music streaming service?
One drawback to the site — and it’s a pretty big one — is that it doesn’t provide sources for the financial information listed. Actual earning numbers are omitted as well, only giving a thumbs up or down to indicate profitability but never listing how much money is brought in. This makes it difficult to take anything on the site without a considerable amount of salt. Unfortunately, if you’re after cold, hard facts and solid numbers then you’ll need to look elsewhere.
But despite the lack of transparency with its data, How Do They Make Money is still worth checking out. It certainly made us look at the free services we use in a different light. It’s unbelievable so much hard work and dedication can go into a product that may never make a dime.
Did any companies on the list surprise you? Maybe we were shocked by the same ones!