Internet based Business Models
In the most basic sense, a business model is the method of doing business by which a company can sustain itself — that is, generate revenue. The business model spells-out how a company makes money by specifying where it is positioned in the value chain.
Business models have been defined and categorized in many different ways. This is one attempt to present a comprehensive and cogent taxonomy of business models observable on the web. The proposed taxonomy is not meant to be exhaustive or definitive. Internet business models continue to evolve. New and interesting variations can be expected in the future.
An Internet based business models has several dimensions:
1. The technology aspect primarily comprising of telecommunication, networking and other infrastructure issues.
2. The software domain that includes programming languages, web page design, customer interface and transactions management, security and privacy management, and large scale data mining.
3. The management aspect that deals with the business strategies for value creation, growth and customer development and retention.
4. The statutory and legal dimension that addresses various cyber laws dealing with security, crimes etc. and government policies for nurturing the Internet based E-commerce.
The basic categories of business models are discussed below:
1. Brokerage
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. The formula for fees can vary. Established businesses that utilize the brokerage model include EBay,Paypal and Amazon etc.. To operate a successful brokerage, you need to be adept at uniting consumers to a product or services that they would not otherwise be able to easily find. EBay brought the garage sale to the Internet, and Amazon pioneered online one-stop shopping, making it possible to search multiple merchants and view results side-by-side. In exchange for this ease of access, the brokerage model business will generally charge a small commission fee on each sale to either the seller, buyer, or both.
2. Advertising
In this model, the website offers content, generally free of charge, to the consumer. This can be in the form of news articles, blogs, or even services such as instant messaging or a search engine. The website features banner ads to pay for the service that is provided. The more hits a website receives throughout a given period, the more the business can charge advertisers for ad placements. Successful advertising-based Internet businesses include Monster.com, Yahoo!.
3. Infomediary
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.
