1. 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
Complete Activity 2.3 on page 79

2. 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

3. Figure 2.13 Alternative perspectives on business models

4. Revenue Model- Publisher Example
Advertising CPM (cost per thousand/mille) is a single instance of an ad appearing on a website.
Advertising CPC (cost per click) means you pay for each click your ad receives. If you are spending $1 for each click, then 10 clicks will cost you $10.
Sponsorship of section, content, or widget is a specific and distinct section of content located on a Web site that is often sponsored by a single advertiser.
Affiliate Revenue from CPA or CPC
Kick back part of a sale to the third party website that drove a customer to your site.

5. Revenue Model- Publisher Example
Transaction Fee are the charges a company pays for using their service.
Subscription access to content or services allow customers to access a library of information or entertainment, or receive an on-going service for a set-free.
Per-per-view Access to document determine how much advertisers will pay for their advertisements.
Subscription Data Access for Marketing

6. Figure 2. 15 Example spreadsheet for calculating a site revenue model
Figure Example spreadsheet for calculating a site revenue model. Available for download at
Continued …

7. 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 Example spreadsheet for calculating a site revenue model. Available for download at (Continued)

8. Figure 2.16 Econsultancy (www.econsultancy.com)

9. 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
Read the Case Study 2.1 on page Discuss the questions.
Research on the web to find Reverse auction examples in Canada

10. 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