Understand the Various Internet Business Models

If you want to start and run your own successful Internet Business than you have to understand the basics of the various Internet Business Models. Business Model is one which is the main revenue generating strategy for your Business. Here are different Internet Business Models.

Internet Business Model # 1 Brokerage Model

Brokers are market-makers: they bring buyers and sellers together and facilitate transactions. Brokers play a frequent role in business-to-business (B2B), business-to-consumer (B2C), or consumer-to-consumer (C2C) markets. Usually a broker charges a fee or commission for each transaction it enables.

Examples are – eBay, Paypal, Flippa, SitePoint, Escrow, Amazon…etc…

Internet Business Model # 2 Advertising Model

The web advertising model is an extension of the traditional media broadcast model. The broadcaster, in this case, a web site, provides content (usually, but not necessarily, for free) and services (like email, IM, blogs) mixed with advertising messages in the form of banner ads. The banner ads may be the major or sole source of revenue for the broadcaster. The broadcaster may be a content creator or a distributor of content created elsewhere. The advertising model works best when the volume of viewer traffic is large or highly specialized.

Examples – Yahoo, NyTimes, About, Craiglist, Monster, Google, My Journey To Billionaire Club (This Blog)

Internet Business Model # 3 Infomediary Model

Data about consumers and their consumption habits are valuable, especially when that information is carefully analyzed and used to target marketing campaigns. Independently collected data about producers and their products are useful to consumers when considering a purchase. Some firms function as infomediaries (information intermediaries) assisting buyers and/or sellers understand a given market.

Examples – Doubleclick, Coolsavings

Internet Business Model # 4 Merchant Model

Wholesalers and retailers of goods and services. Sales may be made based on list prices or through auction.

Examples – Amazon, Apple iTunes Music Store, Land’s End

Internet Business Model # 5 Manufacture (Direct) Model

The manufacturer or "direct model", it is predicated on the power of the web to allow a manufacturer (i.e., a company that creates a product or service) to reach buyers directly and thereby compress the distribution channel. The manufacturer model can be based on efficiency, improved customer service, and a better understanding of customer preferences.

Examples – Dell, Compaq, HP

Internet Business Model # 6 Affiliate Marketing Model

In contrast to the generalized portal, which seeks to drive a high volume of traffic to one site, the affiliate model, provides purchase opportunities wherever people may be surfing. It does this by offering financial incentives (in the form of a percentage of revenue) to affiliated partner sites. The affiliates provide purchase-point click-through to the merchant. It is a pay-for-performance model -- if an affiliate does not generate sales, it represents no cost to the merchant. The affiliate model is inherently well-suited to the web, which explains its popularity. Variations include, banner exchange, pay-per-click, and revenue sharing programs.

Example – Barns & Noble, Amazon

Internet Business Model # 7 Community Model

The viability of the community model is based on user loyalty. Users have a high investment in both time and emotion. Revenue can be based on the sale of ancillary products and services or voluntary contributions; or revenue may be tied to contextual advertising and subscriptions for premium services. The Internet is inherently suited to community business models and today this is one of the more fertile areas of development, as seen in rise of social networking.

Examples – Wikipedia, Flickr

Internet Business Model # 8 Subscription Model

Users are charged a periodic -- daily, monthly or annual -- fee to subscribe to a service. It is not uncommon for sites to combine free content with "premium" (i.e., subscriber- or member-only) content. Subscription fees are incurred irrespective of actual usage rates. Subscription and advertising models are frequently combined.

Examples – Listen, Netflix, Classmates, America Online

Internet Business Model # 9 Utility Model

The utility or "on-demand" model is based on metering usage, or a "pay as you go" approach. Unlike subscriber services, metered services are based on actual usage rates. Traditionally, metering has been used for essential services (e.g., electricity water, long-distance telephone services). Internet service providers (ISPs) in some parts of the world operate as utilities, charging customers for connection minutes, as opposed to the subscriber model common in the U.S

Example – Slashdot

Thus, the understanding of all of the above business models is very useful for successful Internet Business.