Business model An architecture for product, service and information flows, including a description of the various business actors and their roles; and a description of the potential benefits for the various business actors; and a description of the sources of revenue. Key elements – Value proposition-products & services to offer – Market or audience – Revenue models and cost base – Competitive environment – Value chain and marketing positioning – Representation in the physical & virtual world – Organizational structure – Management

Business Models & Revenue Models Business model- Alternative Perspectives – Marketplace position perspective – Revenue model perspective – Commercial arrangement perspective Revenue model – It describes how a business generate revenue – What are traditional ways? – The New Ways

Figure 2.13 Alternative perspectives on business models

Revenue Model- Publisher Example – Advertising CPM (cost per thousand/mille) – Advertising CPC (cost per click) – Sponsorship of section, content, or widget – Affiliate Revenue (CPA or CPC) – Transaction Fee – Subscription access to content or services – Per-per-view Access to document – Subscription Data Access for Marketing

Figure 2.15 Example spreadsheet for calculating a site revenue model. Available for download at Continued …

Figure 2.15 Example spreadsheet for calculating a site revenue model. Available for download at (Continued) Online Business Revenue Calculation- What factors to consider? Number and size of ad units, Ads Capacity to be sold, Fee level negotiated for different ads models, Traffic, Visitor engagement (time to stay)

Figure 2.16 Econsultancy (

Revenue Model- Auction Example Roles for auction (Klein 1997) – Price discovery – Efficient Allocation mechanism – Distribution mechanism—attracting audience – Coordination mechanism Types of auction – English—forward or upward, initiated by seller this is more of conventional auctions we commonly seen in physical world and on virtual market – Dutch—Reverse, downward, initiated by buyer This is more commonly seen in large manufacture procurement

Business Model-Start-ups Many dot.com start-ups failed. Some succeeded and newer ones are still created. Value the Internet start-ups (pp ) – Concept – Innovation – Execution—promotion, performance, availibility, security – Traffic – Financing – Profile—publicity and awareness in the market