A proprietary revenue stream is a revenue source unique to your business model. By creating a proprietary revenue stream, you’ve figured out how to monetize something that your competitors haven’t. As you can imagine, this isn’t easy to do. However, if you can find one, a proprietary revenue stream is usually a big winner. Here are some examples:
Dallas Cowboys owner Jerry Jones revolutionized the way the NFL made money. Jones added revenue streams like $30 million for Pepsi to become the official soft drink sponsor, Victoria’s Secret stores in the stadium, sponsored club levels, 100,000-seat stadiums, and selling admission to watch a giant TV outside the stadium.
Ironically, Jones missed the chance to sell the rights to the demolition of Texas Stadium. The city of Irving got Kraft Macaroni and Cheese to pay $150,000 for the privilege.
General Motor’s OnStar system not only helps sell GM cars, but also creates a proprietary recurring revenue stream as long as the car is in use. OnStar’s premium plan costs $299 per year. General Motors may make more profit on a ten-year OnStar subscriber than on the sale of the car.
Greenlight, the collectible car maker, spent years creating a loyal following. It turned this following into a collectors’ club whose 5,000 members were willing to pay for special access, higher-end products, and events.
Hospital newborn wards charge extra for live video feeds of the newborn to faraway relatives and offer high-end photography of your newborn in case you still have money left after paying the hospital bill.
iTunes isn’t a big moneymaker for Apple, but the portal has created a unique revenue stream.
JP Morgan Chase holds billions of dollars in customer deposits. Rather than make money the old-fashioned (and risky) way by lending these deposits to consumers and businesses, JP Morgan Chase uses the money in complex trading operations. Despite a recent trading loss of 7.5 billion, Chase has outperformed most other banks’ return on assets.
Movie studios have been highly creative at creating proprietary revenue streams. Revenues from theater ticket sales continue to rise, but Hollywood hasn’t stopped there. Movie properties are leveraged in dozens of ways, including DVD sales, character licensing, product placements in the movie, sequels, television rights, on-demand rights, hotel movies, digital streaming, toys, clothing, and more.
Movies like Star Wars and Transformers bring in hundreds of millions of dollars from ticket and DVD sales and even more from toy and clothing licensing.
TiVo sells digital video recorders and subscription services. While TiVo is helping you decide what show to record, it’s also tracking what you watch. This data is collected and analyzed. When TiVo knows your preferences and viewing patterns, it sells targeted advertising on your TiVo to advertisers. You may have noticed this advertising when you hit the pause button.