1. Lecture 2 - Revenue Models
eBusiness
Lecture 2 - Revenue Models
NCC Education - Title Master

2. Introduction to Lecture 2
Topics covered:
Different types of revenue models
Changing revenue models to meet the needs of users
Revenue strategy issues
Mobile commerce
NCC Education - Slide Master

3. Summary of Different Revenue Models
Web catalogue
Digital content
Advertising-supported
Advertising-subscription mixed
Fee-for-transaction
Fee-for-service

4. Web Catalogue Revenue Model
Key characteristics:
Adaptation of mail order catalogue
Mail order businesses expanding operations to the web
Firms with physical stores offering online capability
Access to customers throughout the world
Enable customers to complete payment via phone or mail if required

5. Businesses Using Web Catalogue Models
Computers and consumer electronics
Books
Music and videos
Luxury goods
Clothing
Flowers and gifts
General discounters

6. Digital Content Revenue Model
Key characteristics:
Used by firms that own rights to information
Highly efficient distribution mechanism
Flexibility in purchasing information, including subscriptions or one-off payments
Information can be customised to meet user’s requirements
Electronic distribution offers cost benefits over printed matter

7. Businesses Using Digital Content Models
Providers of legal information services
Access to digital copies of published documents
Subscriptions to academic journals
Access to bibliographic databases
Subscriptions to digitised news sources and magazine content

8. Advertising-Supported Revenue Models
Key characteristics:
Similar to that used by network television
Advertising revenue pays for content development and delivery
Requires specific groups of visitors and targeted advertising messages
Problems with how to measure and charge for number of site visitor views

9. Business Using Advertising-Supported Models
Web portals
Yahoo!
Google
AOL
MSN
Newspaper publishers
Targeted classified advertising

10. Advertising-Subscription Mixed Revenue Models
Key characteristics:
Model originally used by traditional print newspapers and magazines
Subscribers pay a fee and accept some level of advertising
Level of advertising is far less than on advertising-supported sites

11. Businesses Using Advertising-Subscription Mixed Models
Online editions of newspapers and magazines
Advertising used to part fund the website
Payment for articles retrieved from archive
Subscription to print version of magazine gives free access to online version
Access to member-only sections of sports news sites

12. Fee-for-Transaction Revenue Models
Key characteristics:
Business offers service for which they charge
Scale of charge dependent upon number or size of transactions processed
Provides personal service
Provides service at competitive rates compared to traditional providers
Commonly referred to as reintermediation

13. Businesses Using Fee-for-Transaction Models
Travel agents
Car sales
Stockbrokers
Insurance brokers
Event tickets
Estate agents
Online banking services
Online music

14. Fee-for-Service Revenue Models
Key characteristics:
Fee charged for service offered
Fee based on the value of the service provided
Often related to entertainment and leisure activities
Increasing interest from professionals

15. Businesses Using Fee-for-Service Models
Online games sites
Delivering video content to subscribers
Professional services offering advice:
Doctors
Lawyers
Accountants
Engineers

16. Changing Revenue Models
Revenue models change to meet changing behaviour of web customers
First wave of eCommerce saw reduced investment, leading to revised revenue models
Second wave of eCommerce will require further adjustments

17. Multiple Transitions of Encyclopaedia Britannica
Print
publisher
Selling
information
on the web
Advertising
supported
website
Mixed
advertising
subscription
model

18. Revenue Strategy Issues - Channel Conflict
Website sales can have a negative impact on established outlets and networks
Known as cannibalisation
Requirement to coordinate presence across all distribution channels

19. Revenue Strategy Issues - Strategic Alliances
Companies join forces to sell on the web
Can increase speed of entry into a market
Websites can join with channel distribution management companies
Channel distribution manager develops specialist knowledge of a product line
Channel manager takes a percentage of the sales volume as a fee

20. Mobile Commerce Laptops, PDAs and mobile phones linked to the Internet
M-Commerce applications include
Stock quotes
Travel directions
Weather forecasts
Airline flight schedules
Short news reports
Few companies have yet to generate significant revenue

21. Summary Wide variety of eCommerce revenue models
Different revenue models are appropriate for different types of business
Businesses can adjust revenue models to meet changing needs of customers
Important to coordinate activities across all distribution channels

22. NCC Education - End Slide Master