Revenue sharing is the distribution of

revenue In accounting, revenue is the total amount of income generated by the sale of product (business), goods and services related to the primary operations of a business. Commercial revenue may also be referred to as sales or as turnover. Some compan ...

, the total amount of income generated by the sale of

goods and services Goods are items that are usually (but not always) tangible, such as pens or Apple, apples. Services are activities provided by other people, such as teachers or barbers. Taken together, it is the Production (economics), production, distributio ...

among the stakeholders or

contributors Contributor may refer to: * Author, the originator of any written work which is contributed to a publication ** Freelance writer, an author working as an independent contractor for a publication *** Contributor network, a freelance writing arrangem ...

. It should not be confused with profit shares, in which scheme only the

profit Profit may refer to: Business and law * Profit (accounting), the difference between the purchase price and the costs of bringing to market * Profit (economics), normal profit and economic profit * Profit (real property), a nonpossessory inter ...

is shared, i.e., the revenue left over after costs have been removed, nor with stock shares, which may be bought and sold and whose value may fluctuate. Revenue shares are often used in industries such as game development, wherein a studio lacks sufficient capital or investment to pay upfront, or in instances when a studio or company wishes to share the risks and rewards with its team members. Revenue shares allow the stakeholders to realize returns as soon as revenue is earned before any costs are deducted. Revenue sharing in

Internet marketing The Internet (or internet) is the global system of interconnected computer networks that uses the Internet protocol suite (TCP/IP) to communicate between networks and devices. It is a network of networks that consists of private, publ ...

is also known as cost per sale, in which the cost of advertising is determined by the revenue generated as a result of the advertisement itself. This method accounts for about 80% of

affiliate marketing Affiliate marketing is a marketing arrangement in which Affiliate (commerce), affiliates receive a wiktionary:commission, commission for each visit, signup or sale they generate for a merchant. This arrangement allows businesses to Outsourcing, ...

programs, primarily dominated by online retailers such as Amazon and eBay. Web-based companies such as Helium, HubPages, Infobarrel, and Squidoo also practice a form of revenue sharing, in which a company invites writers to create content for a website in exchange for a share of its advertising revenue, giving the authors the possibility of ongoing income from a single piece of work, and guaranteeing to the commissioning company that it will never pay more for content than it generates in advertising revenue. Pay rates vary dramatically from site to site, depending on the success of the site and the popularity of individual articles. In professional sports leagues, "revenue sharing" commonly refers to the distribution of proceeds generated by ticket sales to a given event; the amount of money distributed to a visiting team can significantly impact a team's total revenue, which in turn affects the team's ability to attract (and pay for) talent and resources. In 1981, for example, the

Scottish Premier League The Scottish Premier League (SPL) was the Scottish football league system, top-level league competition for professional Association football, football clubs in Scotland. The league was founded in 1998, when it broke away from the Scottish Foo ...

changed its policy from splitting a match's receipts evenly between its two competing football teams over to a system in which the hosting team could keep all the proceeds from matches hosted at its facilities. This move is generally believed to have negatively affected the league's parity and enhanced the dominance of Celtic F.C. and Rangers F.C. In contrast, the

National Football League The National Football League (NFL) is a Professional gridiron football, professional American football league in the United States. Composed of 32 teams, it is divided equally between the American Football Conference (AFC) and the National ...

distributes television revenue to all teams equally, regardless of team performance or number of viewers. In July 2023, Twitter distributed the first ad-sharing payments to Twitter creators.

References

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