Now look at the list of business models below and describe the features of each of these business models, on your blog page, giving an example of each. The basic categories of business models discussed in the table below include:
Brokerage
Brokers can be described as market-makers. “They bring buyers and sellers together and facilitate transactions” (Rappa, 2005). The World economy is made up of brokering. Certain industries have brokers such as, insurance brokers and stock brokers. “The web is inherently suited for brokerage. That is large numbers of buyers can be connected up with potentially large numbers of sellers, taking advantage of what is most powerful about the web, its network structure that enables people to connect up with each other relatively cheaply” (Rappa, 2005). Ebay is an example of an online broker. In that it connects buyers and sellers.
Advertising
The features of advertising on the web is that for the first time “people recognized that you had an opportunity to understand a whole lot more about what effect the advertising was having on the viewer, on the potential consumer” (Rappa, 2005). Online advertising has developed over the years from in the early days using ‘banner’ advertising which we learnt was not very effective. To today’s “so-called paid placement approach of advertising within search, and also the placement of search links, or advertising links, within various kinds of websites” (Rappa, 2005). Google and Yahoo have had great success offering this type of advertising on there search engines.
Infomediary
“Data about consumers and their consumption habits are valuable, especially when that information is carefully analyzed and used to target marketing campaigns. Independently collected data about producers and their products are useful to consumers when considering a purchase” (Rappa, 2009).
- Advertising Networks, feed banner ads to a network of member sites, thereby enabling advertisers to deploy large marketing campaigns. Ad networks collect data about web users that can be used to analyze marketing effectiveness.
- Audience Measurement Services, online audience market research agencies (e.g. Nielsen//Netratings).
- Incentive Marketing, customer loyalty program that provides incentives to customers such as redeemable points or coupons for making purchases from associated retailers. Data collected about users is sold for targeted advertising (e.g. Coolsaving).
- Metamediary, facilitates transactions between buyer and sellers by providing comprehensive information and ancillary services, without being involved in the actual exchange of goods or services between the parties (e.g. Edmunds).
Merchant
“A merchant is simply a wholesaler or retailer of a good or service” (Rappa, 2005). Merchants are buying an inventory, such as books or apparel and then attempting to sell that inventory at some markup. “The key here is that the merchant is taking a risk” (Rappa, 2005). A merchant business model can be high cost and laden with complexity (Rappa, 2005). An example of a merchant business model would be online trading company Amazon.
Manufacturer (Direct)
“The manufacturer or "direct model", it is predicated on the power of the web to allow a manufacturer (i.e., a company that creates a product or service) to reach buyers directly and thereby compress the distribution channel. The manufacturer model can be based on efficiency, improved customer service, and a better understanding of customer preferences” (Rappa, 2009). An example of the manufacturer model would be Dell computers.
- Purchase, the sale of a product in which the right of ownership is transferred to the buyer.
- Lease, in exchange for a rental fee, the buyer receives the right to use the product under a “terms of use” agreement. The product is returned to the seller upon expiration or default of the lease agreement. One type of agreement may include a right of purchase upon expiration of the lease.
- License, the sale of a product that involves only the transfer of usage rights to the buyer, in accordance with a “terms of use” agreement. Ownership rights remain with the manufacturer (e.g., with software licensing).
- Brand Integrated Content, in contrast to the sponsored-content approach (i.e., the advertising model), brand-integrated content is created by the manufacturer itself for the sole basis of product placement.
Affiliate
“In contrast to the generalized portal, which seeks to drive a high volume of traffic to one site, the affiliate model provides purchase opportunities wherever people may be surfing. It does this by offering financial incentives (in the form of a percentage of revenue) to affiliated partner sites” (Rappa, 2009).
- Banner Exchange, trades banner placement among a network of affiliated sites.
- Pay-per-click, site that pays affiliates for a user click-through.
- Revenue Sharing, offers a percent-of-sale commission based on a user click-through in
which the user subsequently purchases a product.
Community
“The viability of the community is based on user loyalty. Users have a high investment in both time and emotion” (Rappa, 2009). Examples of the community model are;
- Open source, software developed collaboratively by a global community of programmers who share code openly (e.g. Red Hat).
- Open Content, openly accessible content developed collaboratively by a global community of contributors who work voluntarily (e.g. Wikipedia).
- Public broadcasting, user-supported model used by not-for-profit radio and television broadcasting extended to the web. A community of users supports the site through voluntary donations (e.g. WCPE.org).
- Social networking services, sites that provide individuals with the ability to connect to other individuals along a defined common interest (e.g. Flickr).
Subscription
A subscription is where the customer “is charged a periodic fee, whether it’s daily, or monthly, or annual to subscribe to a particular service. Subscription is a very important facet of the internet, because we’re seeing more and more things which were formerly products, things that were sold to the customer as a product – and in particular in the area of software, like various applications sold as products installed on your computer – are now starting to transition quite rapidly to services” Rappa, 2005). Businesses and industries that have in the past only operated through offline business models are now turning to online subscription models. A great example of this is the DVD industry. Netflix is an online rental subscription company.
Utility
The utility model is based on metering usage, or pay as you go approach. Metered services like what are used in the utility model are based on actual usage rates (Rappa, 2009). The two types of usage are;
- Metered usage, measures and bills users based on actual usage of a service.
- Metered subscriptions, allows subscribers to purchase access to content in metered portions.
An example of these would be Slashdot.
What is the business model for Twitter?
The business model for Twitter would be the community model. It is a Social networking service.
1) What is the Mobile phone use /100 population - compare
2) Internet use / 100 population - compare
Rank Country Score
8 United States 71.94
25 Australia 54.19
78 China 15.81
99 India 6.93
3) Compare main strengths and weaknesses of
4) What does the survey suggest to you about the Information Technology readiness of Australian business compared to Australian consumers?
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