Week 5 - Questions

Business Models

Brokerage Model
The "market makers". Brokers bring together buyers and sellers, and can take part in the negotiation and sales process on behalf of either or both parties. They generate revenue by charging a commission on all sales attributed to them. The best known example would be eBay

Advertising Model
An advertising business generates revenue by - you guessed it - advertising! This covers a wide variety of different sub-sects (as does brokerage) but the main types would be paid placement advertising where a company (generally a search engine) with high traffic will charge companies a fee to get favourable positions in search results or prominence in sidebar advertisements. The obvious choice for an example here is

Infomediarie Model
A business that sells information to gain revenue. Call lists, purchasing habits, etc are all compiled into large chunks of data which are then sold off to other companies, usually to aid them in product development or consumer behaviour studies. Infomediaries also run sites of their own where people can subscribe to register opinions. These opinions are then collated into reports and sold off to other companies with a vested interest in the opinions. http://www.google.com/ would most likely fall under this category.

Merchant Model
Wholesalers and retailers of good and services. Basically an electronic version of a bricks and mortar shop. http://www.woolworths.com/

Manufacturer (Direct) Model
Allows a manufacturer to directly sell their goods and improve efficiency and profitability by cutting out the intermediary (usually a wholesaler) and taking some of the profit margin that a wholesaler would otherwise get for themselves.

Affiliate Model
Provides a purchase point click through service for affiliated merchant sites. This is growing in popularity, as it is relatively low cost. It is a pay-for-performance structure, so if the affiliate does not generate increased revenue, the merchant incurs no costs.

Subscription Model
Generates income by charging users (subscribers) a periodic fee to stay registered with the site and gain the benefits obtained for being a subscriber (e.g downloading articles, music or movies). These fees are generally charged at a flat rate, so regardless of if you are downloading 300GB or 300Mb, the charge remains the same.

Utility Model
Also known as the "on-demand" model. It is the reverse idea of a subscription model, this model charges users for what they actually use ("metering") rather than charging a flat rate for subscription. iTunes is probably a good example of a metered service, as you pay individually for what you choose to download.


References

http://digitalenterprise.org/models/models.html#Brokerage