Copyright © Houghton Mifflin Company. All rights reserved. 4-1 In the news………. YouTube Click Fraud

Copyright © Houghton Mifflin Company. All rights reserved. 4-2 Week 5 Analysis of e-business models Internet-based software and e-business solutions. Characteristics of Internet-based software and e-business solutions.

Copyright © Houghton Mifflin Company. All rights reserved. 4-3 What do we mean by a model? A plan In business, a model is a blueprint to emulate Using best practice models

Copyright © Houghton Mifflin Company. All rights reserved. 4-4 Business Model A group of shared or common characteristics, behaviors, and methods of doing business that enables a firm to generate profits through increasing revenues and reducing costs A method of doing business by which the company can sustain itself, i.e. make money The question to ask: how does the company generate revenue?

Copyright © Houghton Mifflin Company. All rights reserved. 4-5 Models in E-Business A descriptive representation of the fundamental components of a business that operates partially or completely on the Internet. So how does the company do business on the Internet? What is their model? Companies usually have more than one model.

Copyright © Houghton Mifflin Company. All rights reserved. 4-6 A History Lesson Content provider (AOL) Model Advertising Model E-Commerce Model of Tangibles E-Commerce of Non-tangibles

Copyright © Houghton Mifflin Company. All rights reserved. 4-7 e-Business Models Brokerage Advertising Subscription, Pay-per-View, or Membership Distribution Channel Member Affiliation Community Infomediary Portal Others…

Copyright © Houghton Mifflin Company. All rights reserved. 4-8 e-Business Models Intellectual property Protected by patents? America Online Ebay Netflix Yahoo

Copyright © Houghton Mifflin Company. All rights reserved. 4-9 Brokerage e-Business Model An e-business model that covers online marketplaces in which buyers and sellers are brought together in an organized environment to facilitate the exchange of goods.

Copyright © Houghton Mifflin Company. All rights reserved Brokerage e-Business Models Marketplace Exchange model - Orbitz Buy/Sell Fulfillment – carsdirect Demand Collection System – priceline Auction Broker – ebay Transaction Broker – Paypal or Escrow Distributor Search Agent - cheapesttextbooks Virtual Marketplace – Amazon

Copyright © Houghton Mifflin Company. All rights reserved Close Up of a Brokerage Model Target Audience? Primary purpose of website? What can you do on website?

Copyright © Houghton Mifflin Company. All rights reserved Advertising e-Business Model An e-business model based on earning revenues in exchange for the display of advertisements on a firm’s web site. Banner ads – major source of revenue Model works best when traffic is large or highly specialized

Copyright © Houghton Mifflin Company. All rights reserved Advertising e-Business Model Portal - Yahoo Classifieds - Craigslist User Registration - NYTimes Query-Based Paid Placement - Google Behavioral Marketing – Claria Content-Targeted Advertising - Google Intromercials – JaguarJaguar Ultramercials – Mercedes Benz Mercedes Benz

Copyright © Houghton Mifflin Company. All rights reserved Close Up of a Advertising Model CraigsList Target Audience? Primary purpose of website? What can you do on website?

Copyright © Houghton Mifflin Company. All rights reserved Advertising e-Business Model Under which circumstances would advertising online be a failure?

Copyright © Houghton Mifflin Company. All rights reserved Subscription e-Business Model An e-business model in which access to a site is controlled by a subscription fee.

Copyright © Houghton Mifflin Company. All rights reserved Subscription e-Business Model Content Services - Netflix Person to Person Networking Services - Classmates Trust Services – Truste Truste Internet Service Providers – AOL

Copyright © Houghton Mifflin Company. All rights reserved Close Up of a Subscription Model Target Audience? Primary purpose of website? What can you do on website?

Copyright © Houghton Mifflin Company. All rights reserved Pay-Per-View or Utility e-Business Model An e-business model in which access to a site is controlled by a charge to view single items. On-demand model based on pay as you go approach

Copyright © Houghton Mifflin Company. All rights reserved Pay-Per-View or Utility e-Business Model Metered Usage Model Metered Subscriptions – Slashdot

Copyright © Houghton Mifflin Company. All rights reserved Close Up of a Pay Per View Target Audience? Primary purpose of website? What can you do on website?

Copyright © Houghton Mifflin Company. All rights reserved Pay-Per-View or Utility e-Business Model For which online content providers would pay-per-view most likely succeed and for which would it likely be a failure? What advantages and disadvantages are there for selling one item at a time online?

Copyright © Houghton Mifflin Company. All rights reserved Membership e-Business Model Access to a site is controlled by membership fees. Similar to Subscription and Pay-Per-View Example: Netflix

Copyright © Houghton Mifflin Company. All rights reserved Membership vs Pay Per View For what kind of situations would the Pay Per View model be more successful than the subscription model?

Copyright © Houghton Mifflin Company. All rights reserved Distribution Channel Member e-Business Model An e-business model that includes activities of retailers, wholesalers, and manufacturers carrying on business through the Internet. Merchant models Direct (manufacturer) models Example: Dell

Copyright © Houghton Mifflin Company. All rights reserved Distribution Channel Member e-Business Model Merchant models: Virtual Merchant – Amazon Catalog Merchant – LandsEnd Click and Mortar – Barnes and Noble Bit Vendor – Apple iTunes Music Store Direct models: Purchase Lease (terms of use sale) License – software licensing Brand Integrated Content - BMWfilms BMWfilms

Copyright © Houghton Mifflin Company. All rights reserved Close Up of Two Distribution Channel Models Amazon.com versus Barnes & Noble How are these two the same? Different?

Copyright © Houghton Mifflin Company. All rights reserved Distribution Channel e-Business Models What advantages does an existing bricks-and- mortar retailer have over a new start-up if it should set up an online shopping site? What reasons might explain why an existing bricks-and-mortar retailer would choose not to create an online shopping site?

Copyright © Houghton Mifflin Company. All rights reserved Affiliation e-Business Models An e-business model that involves payments to website operators for customers who find their way to a company’s site and either buy merchandise or services or perform some other action, such as registering and providing certain information. Contrast with the portal model Examples are Barnes & Noble and Amazon.com

Copyright © Houghton Mifflin Company. All rights reserved Affiliation e-Business Models Banner Exchange Pay Per Click Revenue Sharing What risks and benefits are associated with an affiliation arrangement for both parties as well as any customers?

Copyright © Houghton Mifflin Company. All rights reserved Close Up of an Affiliate Target Audience? Primary purpose of website? What can you do on website?

Copyright © Houghton Mifflin Company. All rights reserved Community e-Business Model An e-business model built around the idea that a group of online users can be regularly brought together at a commonly used website for commercial purposes.

Copyright © Houghton Mifflin Company. All rights reserved Community e-Business Model Open Source – Red Hat Open Content - Wikipedia Public Broadcasting – WCPE.org Social Networking Services – Flickr, Friendster, Orkut

Copyright © Houghton Mifflin Company. All rights reserved Close Up of a Community Model Wikipedia Target Audience? Primary purpose of website? What can you do on website?

Copyright © Houghton Mifflin Company. All rights reserved Infomediary e-Business Model An e-business model based on the collection and sale of online information. Infomediaries include research firms that post their reports on their websites (Forrester.com) as well as firms that produce lists and directories with links to articles and websites (Clickz.com).

Copyright © Houghton Mifflin Company. All rights reserved Infomediary e-Business Model Advertising Networks - DoubleClick Audience Measurement Services – Nielsens/Netratings Incentive Marketing - Coolsavings Metamediary - Edmunds

Copyright © Houghton Mifflin Company. All rights reserved Close Up of an Infomediary Coolsavings.com Target Audience? Primary purpose of website? What can you do on website?

Copyright © Houghton Mifflin Company. All rights reserved Portal e-Business Model A type of infomediary that earns revenues by drawing users to its site and serving as a gateway or portal to information located elsewhere on the Internet. MSN, Yahoo!, and Google

Copyright © Houghton Mifflin Company. All rights reserved Close Up of an Portal Model Yahoo.com Target Audience? Primary purpose of website? What can you do on website?

Copyright © Houghton Mifflin Company. All rights reserved Horizontal Portals Portals that have a wide general reach into different informational topics. Examples include MSN and Yahoo! What are some other examples?

Copyright © Houghton Mifflin Company. All rights reserved Vertical Portals Portals that have a narrow focus into a particular informational topic. Examples include every college and university website as well as any corporate website where users are might be expected to begin their online activities

Copyright © Houghton Mifflin Company. All rights reserved Internet-Based Software Solutions: how do they fit? Website e-Commerce Customer Relationship Management Supply-Chain Management

Copyright © Houghton Mifflin Company. All rights reserved Customer Relationship Management (CRM) Software used to manage the tasks of communicating with customers and sharing this information with employees CRM requires a standardized approach to handling customers and information. Oracle, IBM, SAS What are the benefits of following a standardized approach to handling customers and information?

Copyright © Houghton Mifflin Company. All rights reserved Supply-Chain Management (SCM) Software used to improve communication between the suppliers and users Requires a standardized approach to handling suppliers SAP, IBM What are the benefits of following a standardized approach to dealing with suppliers?

Copyright © Houghton Mifflin Company. All rights reserved Fundamental Characteristics of Internet- Based Software and e-Business Solutions Efficiency and Productivity Quality, Standardization, and Customization of Products and Services Adding Value and Creating Competitive Advantage Online