MEGA Business Model: How Does MEGA Make Money? [UPDATED 2020]
How does MEGA make money? MEGA Business model

MEGA Business Model: How Does MEGA Make Money? [UPDATED 2020]

MEGA offers 50 GB free cloud storage for all new users! But how does MEGA make money? During my research, the MEGA business model turned out to be one of the very interesting business models out there.

Keep reading to know why MEGA is still in business and how does MEGA make money….

Update 2020: MEGA makes money with its freemium business model offering a very lucrative free plan with end-to-end encrypted storage to attract users to their platform. Also, their business plans are offered at just EUR 10 per month for unlimited data storage making them an amazingly low-cost alternative to other cloud storage companies.

Quick summary of the MEGA Business Model: How Does MEGA Make Money?

  • Kim Dotcom, who was Megaupload’s initial founder, created Megaupload 2.0 or Mega up or just MEGA to replace his first venture
  • His following helped him raise over a million dollars for the venture and also created the much needed initial traction
  • Their free offering was lucrative enough to grab the attention of hundreds of millions of users
  • With a 1-2% conversation rate, we can expect at least 1 million paying customers for the platform
  • The MEGA team is very lean and their operating costs are lower due to their existing infrastructure and experience from Megaupload

What is MEGA or mega.nz?

MEGA is a dedicated cloud storage company much like Google drive with the additional benefit that it offers 50GB for free to every single user that signs up. Yes, that’s right. It’s 50 Gigabytes.

This service was started by Kim Dotcom who’s one of the very well known names in the internet business industry. His initial company, Megaupload, which was taken down by the government for copyright infringement, was replaced by Megaupload 2.0 or just MEGA.

Features of the MEGA drive - MEGA business model
Features of the MEGA drive – MEGA business model

Features offered by MEGA Cloud Storage

  • 50 GB free encrypted cloud storage for all new users
  • Cheap (10 EUR per user per month) business plans that offer virtually unlimited storage
  • Encrypted business conference calls
  • Desktop and Mobile auto-sync apps

But that’s not it.

Apart from being “just another cloud storage” company, Mega promises end-to-end encrypted data storage for all the uploaded files and confirms that the keys to decrypt the file are only available to the user.

And if you’re worried about your business meetings and video calls being “tracked” by companies like Zoom and the likes, you’re in luck. Mega offers business plans that allow end-to-end encrypted business conference calls too.

Let’s move on to understanding MEGA’s business model and how MEGA makes money.

MEGA Business Model

What is MEGA business model - How does MEGA make money?
What is MEGA business model – How does MEGA make money?

Megaupload 2.0 (MU2) or MEGA planned out on earning with microtransactions with the use of their blockchain “Bitcache”. The initial business model (see what is a business model) was to allow content creators to monetize every file that they upload to the platform and distribute it without worrying about their content getting stolen.

Now in 2020, this doesn’t seem to be MEGA’s source of revenue.

  • He raised > $1million for MEGA when it all started out.
  • The initial plan was to earn revenue through microtransactions using Bitcache
  • The addition of business plans was an idea that was implemented later

But Kim has a raving fan following. And that fan following benefited MEGA a lot. Let’s understand the elements of the MEGA business model and dive into how does MEGA make money.

What Problem Does MEGA Solve?

Cloud storage has been a risky business for most privacy seekers. People do not want their storage companies knowing what data is stored on the cloud and using that for any sort of analysis.

Kim knew this since the beginning and decided to create a service that offers complete data privacy. This helped gain mass appeal from users who were frustrated with the existing cloud storage solutions and helped MEGA make money in a market the people had lost trust in.

Who are MEGA’s Customers?

MEGA customer base
MEGA customer base

MEGA has a user base of around 100 million in 2020 (estimated based on Wikipedia page), and there are three kinds of customers that sign up for the MEGA drive service:

  • Privacy enthusiasts
  • Startups looking for low cost storage solutions
  • People looking for free cloud storage

The first two kinds of customers are the ones that potentially convert to being paid users for the platform and that offsets the costs of sustaining the users looking for free storage.

What Products Does MEGA Offer to Solve These Problems?

MEGA’s main product segment is their cloud storage service. But here’s how they address the issues that they created the company for:

  • Their cloud storage is end-to-end encrypted which encourages privacy seekers to use the storage
  • The encrypted data cannot be decrypted by anyone apart from the user
  • All video conferences are end-to-end encrypted

How Does MEGA Make Money?

Coming back to our topic of understanding how does MEGA make money, let’s see the different sources through which MEGA as a service is being promoted by their users.

1. Affiliate Program

MEGA business model offers a lucrative affiliate program
MEGA business model offers a lucrative affiliate program

I came to conclude that one of the main reasons why MEGA is still in business is because of the very streamlined and seamless affiliate offering.

  • If you have an account on MEGA, you are already an affiliate.
  • If you have ever shared a file link from your MEGA account, you’ve already shared your affiliate link with someone.
  • If someone has accessed your file and has signed up for a paid subscription within 1 year of clicking the link, you’ve already given MEGA a paid customer as an affiliate (and also earned 20% commission)

No other cloud storage service has such a simplified and streamlined affiliate program. Most require you to share a special link rather than just any link from your account.

Also, they have the affiliate dashboard integrated within your storage account which makes it way easier to view your earning details and motivates existing users to share more of their files.

Oh yes! Kim Dotcom’s fan following helps a lot too.

2. Very Low-Cost Subscriptions

Compared to all the other cloud storage services out there on the internet, MEGA stands out because of their low cost subscription rates.

For just €10 per month per user, you get access to unlimited storage along with encrypted video conferencing for business purposes.

MEGAGoogle DriveOneDrive
€10 per user per month$1.99 per user per month$6.99 per user per month
Unlimited Business Storage100GB Storage1 TB storage
All-accessCost of storage onlyStorage and Office 365 access
End-to-end encryptedNot encryptedNot encrypted
MEGA vs Google Drive vs OneDrive pricing comparison

Though you might consider Google or OneDrive to be cheaper in terms of pricing, remember MEGA is giving unlimited storage with the only consideration that the storage is used for genuine business purposes. If you are wondering how does MEGA make money, this is the product that they sell to earn their revenue.

3. Generous Free Offer

By giving out 50 GB of free storage, MEGA gained large word of mouth popularity in multiple forums. People who had no idea about any other cloud storage apart from Google Drive and OneDrive started moving their files onto MEGA after learning about this offer.

This in turn increased their sign ups significantly.

A very well known metric for online businesses is an expected conversion of 1-2% for all the visitors that ever hit the website.

Let’s calculate how much money does MEGA make based on these averages.

Even though the data is old on Wikipedia (MEGA user count was around 35 million), it’s safe to assume that in 2020, MEGA has at least 100 million signed up users.

With a very conservative estimate of 1%, it accounts for over 1 million users paying on an average of €8 per month. Not bad at all!

So even the most conservative estimates suggest that MEGA earns around €8 million per month! And for such a lean team working on the platform, this amount is huge even after considering the cost of storage and maintenance.

MEGA’s Marketing Strategy

Marketing Strategy of MEGA
Marketing Strategy of MEGA

Okay, so we now have a fair idea of how does MEGA make money and what the MEGA business model is all about, let’s understand their marketing strategies.

1. Fundraising

Being an expert at fundraising, Kim Dotcom was able to raise more than $1 million for their initial startup costs. Now the people who invest in a startup automatically become their initial promoters since they want their investment to grow.

This helped MEGA gain a lot of the initial traction pretty quickly.

2. Kim Dotcom’s Popularity

Megaupload was a hit. In the peak time, Megaupload was heading towards a billion dollar IPO when the feds took the company down. But Kim promised the users that there will be a Megaupload 2.0 that will be better.

When the existing fans found out that Kim had launched the promised Megaupload 2.0, there was a flood of traffic to the website without much help needed on the outside.

3. The Initial Plan – Bitcache for Content Monetization

Though I don’t really see this on the website now in 2020, Kim’s initial plan was to use MEGA or Megaupload 2.0 as a platform to help content creators monetize their content through microtransactions. The sheer volume of downloads and sharing would have automatically earned a lot of money for MEGA.

Though the plan hasn’t worked out due to blockchain limitations, it was enough for the platform to get a surge in content creator traffic.

4. Affiliates

As we already discussed before, affiliates are also a major source of revenue for the company. The biggest reason being that they have one of the longest duration cookies (12 months) compared to all the affiliate programs out in the market.

5. Generous freemium

And finally, MEGA still is a name in the cloud storage industry because of the one and only fact that they offer free 50GB cloud storage for all people who sign up.

Finally…

That’s it for today! I really enjoyed understanding how does MEGA make money and the MEGA business model and will continue to create a lot more articles on business models as we go along. If you haven’t already checked it out, do have a look at the simplified Sodexo business model article that I wrote last week. Also, if you’re interested, do check out some of the more recent SaaS business case studies for Duolingo and Discord.

See you next weekend!