1 IME 375 Metrics Models Markets February 28 – April 1, 2007 Note that we will move freely back and forth amongst the three topics of Analytics (metrics), Business Models, and Web Markets The Web has no geography, no landscape. It has no distance. It has nothing natural in it. It has few rules of behaviour and fewer lines of authority. Common sense doesn’t hold there, and uncommon sense hasn’t yet emerged. No wonder we’re having trouble figuring out how to build businesses in this new land (Weinberger “Small Pieces Loosely Joined” 2002, p. 8).

2 Metrics, Models, Markets Metrics represent raw data Metrics require analysis by the site owners or management Metrics may mean more after we understand business models An understanding of business models will help you get started with you project sooner

3 Metrics, Models, Markets “As many more BUSINESSES of each INDUSTRY are Started than can possibly survive; and as, consequently, there is a frequently recurring struggle for existence among businesses, it follows that any business, if it vary however slightly in any manner profitable to itself (that is to say if it somehow differentiates itself to its advantage), under the complex and sometimes varying conditions of competition, that business will have a better chance of being naturally selected by customers and thus will have a better chance of surviving”

4 Metrics, Models, Markets The term business model came into usage after Dan Bricklin invented the first ‘Killer App’…VisiCalc VisiCalc Source:

5 Definitions Metrics, Models, Markets Business Models By Business Category By Revenue Generation Mechanism By Simplicity ‘A business model is the method of doing business by which a company can generate revenue to sustain itself’ Turbin “Electronic Commerce:A managerial perspective (2004, p. 11)

6 Metrics, Models, Markets Business ModelRevenue SourceExamples Metamarket SwitchboardTransaction fees  Product sales  Advertising  Affiliate deals Babycenter.com  CarPoint.com  FashionMall.com AuctionTransaction feesEbay  Amazon auctions  Covisint Freshest Information  Product and service sales  Subscription  Advertising NYTimes.com  Salon.com  Business 2.0  Zagat.com Highest Quality  Product, service and information sales  Advertising  FAO.com  Ashford.com Widest Assortment  Product sales  Amazon.com  CDNow  Sephora.com  EBags.com Lowest Prices  Product sales  Lowest-fare.com  Allbooksforless.com  Outpost.com Most Personalized  Product sales  Subscriptions  Reflect.com  Sevencycles.com  EDiets.com

7 Mike Rappa’s Models Brokerage Advertising Infomediary Merchant Manufacturer (Direct) Affiliate Community Subscription Utility Metrics, Models, Markets

8 The concept of Simple Business Models grew from this question: If the Web is a complex system and if one of the attributes of complex systems is that new entities should emerge, then what types of new business entities are emerging in the Web? Simple Business Models

9 Simple Business Models One cell models = Level One SBMs Buying domain names Selling goods on e-Bay These require no Web presence. They leverage the technology that others have developed. They require very little or no “up front” investment

10 Simple Business Models cellular division models = Level 2 SBMs Domain Name Parking Opening an e-Bay market presence or store This requires a slightly higher investment in technological skills. You need to know how to transfer your domain name to another DN server Usually this assistance is provided by the host. You still leverage technology others have provided Now you begin to have an interest traffic to your page. Metrics become an important part of your business.

11 Site Dependent Business Models Complex elementary structures = Level 3 SBMs Strategic Redirection to Affiliated Sites Simple Retail Site Linked to Business Affiliate This requires a still higher investment in technological skills. Also requires a wider variety of skills… Design skills – as you actually need to develop or provide content for a site You may still leverage technology others have provided as third party companies may become more important to your enterprise Purchase/Download design templates Analytics provided by 3 rd party developers Marketing assistance from other sites. (For example: Google, Ask, Yahoo) Now you begin to have a very serious interest in analytics. Metrics become a much more important part of your business. How do we drive people to our site? What do they do when they get there? How do we keep them coming back?

12 E-Commerce Business Models Complex sophisticated structures = Level 4 SBMs This requires a still higher investment in technological skills. Also requires more time and attention … Web business strategy becomes a factor. Design skills are a factor – as you actually need to develop or provide content for a site. You may still leverage technology others have provided as third party companies may become more important to your enterprise: Purchase/Download design templates which now include shopping carts Ability to process credit card or Paypal accounts from Hosting sites Marketing assistance from other sites. (For example: Google, Ask, Yahoo) Access to Web Markets (For example Alibabba, Global Source) Might need still more sophisticated analytics and now strategic tools: High level analytics Link analysis tools