The first two decades of this century will be marked by digital entrepreneurs upending traditional business models in search of new ways to generate revenue and serve customers.
This has been made possible by the emergence of several new waves of technology, from desktop computers to the internet to mobile devices to the cloud. These waves of disruption are sure to continue, as new breakthroughs such as artificial intelligence (AI) continue to redefine how we shop, work, play and live.
These business models are often used in combination. For example, software providers make available “freemium” versions that are supported by advertising revenue, while also offering paid, ad-free premium services. Alternatively, e-tailers like Amazon may generate revenue from e-commerce while also functioning as a marketplace where other sellers can offer goods in exchange for a portion of the profits.
Anyone who wants to do business today, or understand how they will make money tomorrow, needs to understand the fundamental model that underpins the digital economy. Here’s an overview of some of the most successful and important, and how technology made each possible.
ad support
The advertising-powered business model is one of the most successful of the digital age. They are behind the rise of companies like Google and Facebook that use AI and analytics to match users with products and services. This is possible due to the vast amount of user data available from online users. The success of these businesses is due to the concept of “If you don’t pay, you are the product.” In the days of newspaper, radio and television advertising, the data that could be collected was limited to information gleaned from audiences and market research. Currently, every click, follow, like, share, and information you provide directly to our Sites and Services can be used to learn about us. This data is collected from our audiences and users and sold to advertisers. Advertisers use it to predict the products and services they want to buy.
e-commerce
Simply put, it refers to a company that offers products and services directly to customers online. This can represent giants such as Amazon and Alibaba that not only sell their products directly to consumers themselves, but also act as a marketplace. It also describes the thousands of small, niche businesses that exist today that commonly operate through. E-commerce offers a very convenient and affordable way for almost anyone to start selling their products globally without worrying about the logistics and costs of setting up a physical store. Platforms and marketplaces make the job of setting up stores and listing products into one job for him. Ecommerce operators often leverage the power of advertising platforms like Google and Facebook to reach niche customers. The value of global e-commerce is estimated to be around $10 trillion in 2020, expected to grow $27 trillion by 2027.
Freemium
Freemium business models typically offer a basic, no-frills version of a product or service for free, but charge users if they want access to premium features. Examples include Spotify, which limits how users can listen to music unless they are a subscriber, Dropbox, which offers limited storage and transfer speeds to free users, anyone can view job ads and list vacancies, but Includes LinkedIn to enable advanced analytics capabilities. There are subscribers to help find and hire jobs, and Zoom to limit the length of meetings and the number of participants for free users.
Productivity and workplace software-as-a-service providers also frequently use the freemium model, offering individual or corporate licenses to users who want access to the full feature set without restrictions. It’s also popular with game publishers who use the free version to get players hooked and then either initiate a subscription or entice them to purchase individual features and perks on a “paid” basis.
Marketplace/Platform
This model covers both e-commerce providers such as Amazon and Alibaba, which have grown into markets where anyone can launch their own business. We also cover more specialized platforms such as eBay, Uber and AirB’n’B. Users benefit from the prominence and financial clout of these platforms his providers. These providers often use analytics and advertising campaigns to drive traffic to their customers’ stores or listings. The advantage for marketplace or platform owners is that they don’t even have to offer a product or service themselves, they can easily profit from all the businesses that sell through them.You can also include “gig economy” sites such as fiber, freelancerand Amazon’s mechanical turk Because this category offers a platform for individuals to offer their own one-to-one services to businesses.
subscription
This refers to businesses that charge their customers for recurring payments. Originally, it generally referred to service providers. Netflix offers movies on demand, and Microsoft and Adobe offer software-as-a-service subscription packages such as Microsoft 365 and Adobe Creative Cloud. However, product retailers and manufacturers are also increasingly offering merchandise and consumables through subscriptions. This includes the fresh food home delivery business. hello fresh and GustAmazon is an example of a business that offers digital services such as video, music, cloud computing infrastructure, and also offers product subscriptions that deliver physical goods directly to customers’ doors. This business model allows organizations to generate recurring income while building ongoing customer relationships. This means that we can offer different products and services according to the changing requirements of our customers. Niche and independent businesses can also choose to generate revenue through subscriptions with platforms such as: sub stackwhich allows viewers to connect with individual creators.
Aggregator site
This business model scrapes the web of companies that offer products and services and aggregates them into a convenient portal where shoppers can compare prices, features, and benefits. Some well-known examples are: price runner, price grabberand shopping.comOther aggregators specialize in specific markets such as: Compare markets and money supermarket (insurance and financial services) and Expedia (holidays and travel). Rather than charging fees to businesses that promote products on their site, these businesses generate revenue from referrals that are paid when we purchase products through them.
crowdfunding
The last digital age business model that we cannot ignore is crowdfunding.Major crowdfunding sites, etc. kick starter, indie gogoand Gofundmeis also a platform that offers other companies the opportunity to raise funds through small donations from large numbers of individuals. The crowdfunding business itself is one that uses the funds generated through these platforms as a revenue stream, often launching niche or prototype products. Other sites like Patreon allow creators to develop personal relationships with their audience, often creating ongoing products and services such as music, videos, and writing.
