Chapter 3 Business Models and Strategies

1. Business model – a unique configuration of elements comprising the org’s goals. Strategies,
processes, technologies and structure, conceived to create value for the customer and thus compete
successfully in particular market.

Ecommerce – revenue production on the internet and refers to an economic exchange in which a
purchaser pays the seller for goods or services.

Only if all 4
conditions are met, an exchange can happen

Firms extract value – payments, info, engagement and provide superior value – delivery of goods,
services, content, communication

More info in book but mainly bullshit

Manufacturer – sells own brand products and services online

Merchant – wholesaler and retailer of goods, service (own and other manufacturers)

Brokerage – bring buyers and sellers together (platform type based) Commission fees are main
source of revenue

2. Advertising Model – extension of the traditional media broadcast model. Content on a website or
in an email can be sponsored, providing another type of advertising opportunity. The broadcaster can
be a content creator or a distributor of content created elsewhere. As a general rule, the more the
reach, the more likely the website is to be sustainable as an advertising business model for a
particular company.

 Broadcaster provides advertising space on emails, website and apps.

 Core content for free plus sponsored content
 Works best with high traffic volume or specialized audience
 Banner ads, sponsored search, digital video are source of revenue
 Performance-based (CPC, CPM, straight revenue share)

3. Infomediary model – website that gathers and organizes large amount of data and acts as an
intermediary between those who want the info and those who supply the info. The term is used
broadly to cover virtually any third party that manages and distributes data on the internet. They
provide digital market research services. Google and Facebook – behavioral targeting

4. Direct model – predicated on the power of the web to allows a manufacturer to reach buyers
directly and thereby compress the distribution channel. Dell

5. Affiliate Model – offering incentives to partner sites. Content sharing, revenue sharing, banner
exchanges, works if content is interesting for the audience of affiliate sites.
6. Community model – creates business based on user loyalty and repeat engagement. Users have a
high investment in both time and emotion. Wikipedia, Firefox, Crowdsourcing, Fund-raising

 Goal: user loyalty and repeat engagement

7. Subscription and Utility (On Demand) model