1. Emer Dooley University of Washington

2. What is a Business Model  2 elements  What does a business do?  How does it make money?

3. What rights are being sold?  Ownership of an asset  Those that significantly transform the asset: Creator  Those that don’t: Distributor  Right to use an asset: Landlord  Right to be matched with the buyers and sellers of something: Broker  Assets can be Physical, Financial, Intangible or Human

4. Start with…  Revenue  Expenses  How much capital you’ll need  What will the cash flow look like?  Do some sensitivity analysis

5. Revenue Sources and Streams  Single  Multiple  Interdependent  Loss Leader  Subscription  Unit-Based  Ad-based  Licensing  Transaction Fee

6. London-Barcelona $70

7. Other Business Models: ExampleModel Health Club Trials Apple Store Classes But one Get on Free 800 Free 411 Calls “Free” TV Skype Linked In Museum entrance Fees MIT/Stanford Free Classes online Model Simple Cross-Subsidy Ad-Supported Freemium Non-monetary markets

8. Free DVRs $500 $450 $400 $350 $300 $250 $200 $150 $100 $ 50 0 061218243036 Months Total DVR Subscription Revenue Profit Months Loss$250= Cost of DVR

9. Direct Cross-Subsidy Product One (Paid ) Product One (Free ) Producer Consumer

10. Cross-Subsidy

11. The Three-Party Model Ad Space (Paid ) Content (Free ) Producer Consumer Advertiser Paid Product

12. Three-party Model

13. Freemium Basic Product (Free) Premium Product (Paid) Producer ConsumerMany Consumers

14. Cost Drivers and Structures  Fixed  Variable  Semi-Variable  Non-Recurring  Direct Payroll  Inventory  Space  Advertizing

15. Read Free: The Future of a Radical Price by Chris Anderson