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Lecture 2 - Revenue Models

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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

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