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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

NCC Education - End Slide Master