What is revenue sharing

How they do it : All 3rd party apps that make revenue with the iPhone users have to give a specific cut to Apple. This applies for AppStore purchases as well as in-app purchases. How they do it : The revenue from iTunes purchases goes partly to Apple and partly to the rights-owner. Content publishers can earn revenue on a per-click or per-impression basis. How they do it : Amazon offers royalty options for publishers, authors, or other rights holders who want to sell their e-book or other content in the Kindle store.

In this model both the rights owner as well as Amazon get parts of the revenue from a sale. The 3rd party business can profit from more customers and shares part of that revenue with Groupon. Another form of revenue sharing is paying employees or contractors based on performance. For example, some online businesses pay freelance writers a percentage of revenue their stories generate from readers clicking on ads. YouTube allows contributors who generate at least 1, subscribers to monetize their videos and generate money via revenue sharing.

Profit sharing is a split of the profits, not revenues. Make sure you understand all of the profit-sharing advantages and disadvantages before you consider going this route. If you want to set up a profit-sharing program for your management team or employees, make sure everyone knows what will be considered an expense to avoid any hard feelings.

You can set up a profit-sharing plan for employees that contributes the money to their retirement accounts. Whichever route you choose, ensure you follow IRS guidelines for these types of payments, advises Group Management Services.

With a variety of online crowd-funding services available, you can post your project, give the specifics and attract investors who buy into your business in exchange for a piece of the revenues.

Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights.

Measure content performance. Develop and improve products. List of Partners vendors. Your Money. Personal Finance. Your Practice. Popular Courses. Table of Contents Expand. How Revenue Sharing Works. What Is Revenue Sharing? Types of Revenue Sharing. Tracking Revenue Sharing.

Key Takeaways Revenue sharing is a somewhat flexible concept that involves sharing operating profits or losses among associated financial actors. Revenue sharing can exist as a profit-sharing system that ensures each entity is compensated for its efforts.

The growth of online businesses and advertising models has led to cost-per-sale revenue sharing, which rewards every participant in an advertising network that contributed to making a sale happen. Compare Accounts. The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.

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