Money online

New business models

How to make money on the web?  Here is the list:

 

Advertisement

Now this is the business model of the web for knowledge and information share.  Google and other large web portals use it. This is not a new thing, broadcasting (TV, radio) and newspapers also rely on advertisement as the primary source of income.  Web has the advantage that it can align adds to context and user preferences providing an even more targeted adverts.

Although a very straightforward and clear model, adverts also have their drawbacks:

·         Ads take away time and place from real content

·         Adds income is – often – realized for  search companies and portals and not for the primary content producer

As we see the first problem is the concern of the customer. For them the solution could be a subscription service. The second hits the content providers; in a similar manner they also can ask a fee for “reusing” their content.

Subscription

If you register to a website and pay for the access you have a subscription exactly like to a newspaper. Newspapers are actually information brokers, they collect, select, organize and distribute content. There is a broad specialization among publications from general magazines down to very specialized small circulation publications.  As a reader I can expect certain quality regarding the level and spectrum of articles. 

There are two problems with this model; the first is (revenue) free access via search engines and content aggregators and second the limited personalization.

Free access may make traditional journalism unsustainable, which is problematic because it may lead the loss of the values of traditional journalism. Although free journalism (e.g. blogs) often give better information on certain topics and details but professional journalists and editorial teams can give a better overall quality and coverage. (No wonder that as time is going on the structure of web site teams are more and more similar to traditional editorial organization). However free information is threatening this model and we may lose something on the way.  If there is need for quality journalism in the future I expect that content creation and content aggregation will come apart in the future and done in separate businesses in the same supply channel.

The limited personalization is the other problem.  In a media business a venture either can publish a journal with broad coverage or a series of specialized journals. Both have its natural limitation; either we try to reach everybody and not really satisfying anybody or go into every niche which is not very economical bellow a certain level.

Web sites try to resolve the limited personalization problem by giving the user freedom to select from different sources and styles. This approach also has its limitations:

•  Customers may find difficult to find all relevant sources
• There is no system for source qualification (e.g. topic, subtopic, quality, reliability, length…)
• The solution is static; for the user it narrows the potential sources and type of content which will be a barrier for the user to broaden her knowledge and find new, interesting information.

I suggest a three level model:

1.    Content providers

Content providers produce content (inclusive applications) probably in several format (long study, professional article, poplar article, news) and languages, and also take care for updates if needed.

Secondary content providers may also be involved e.g. translators, experts doing content enrichment, programmers implementing algorithms and models…

2.    Content aggregators

Content aggregators qualify the incoming content, regarding topic, subtopic, geography, importance, quality, reliability, importance, style, length, difficulty…  

3.    Customer support system

User may access the content typically through a portal and give their preference accordingly. However a recommender system makes a deeper profiling, even considering the time (e.g. during the day, in the evening, on the weekend, winter/summer…  It also takes care to propose new type of information and the opportunity for feedback.

 

Donation

That’s how Wikipedia works and this provides the best user experience (the only ads are the ones where the site asks for donations).  In my view the only limitation of this model is that people – who earn their money in a different way – spend money only on projects which they think serve some public good. (And they have fairly right of doing so!). However this limits the business usability of this model. People must believe in it. (I wonder if Apple could live on donations).

 

Web shop

Electronic shops are the modern variants of mail order. They have the advantage that they are easy to operate and have almost no physical limitations. In this traditional goods are sold in a new way. However web-shops can do personalization, but now it's also only a sales tool - naturally there is nothing wrong with sales - bur a real personalization would tailor the products sold to the customer. There are already some good examples like Threadless.com.

 

Appstore

Apple made this kind of distribution popular and now everybody who has an acceptable market presence is building something similar. The benefits seem to be obvious; developers have an excellent distribution channel, there is a certain level of quality and security maintenance, the applications is tailored to the platform and customers have a broad selections and the feel of ownership.  Modern applications can cleverly share local and cloud resources too.