Web business models have once again taken center stage. However, many of the predictions concerning the impact of the newer models will require several more years of maturation before they will influence most organizations.
In the most basic sense, a business model is the method of doing business by which a company can sustain itself, by generating revenue. The business model
spells-out how a company makes money by specifying where
it is positioned in the value chain. A company produces a good or service and sells it to customers. If everything goes well, the revenues from sales exceed the cost of operation and the company realizes a profit.
Profit = Sales - (Cost of Operation)
Other models can be more intricately woven and broadcasting is a good example. Radio and television programs have been broadcasted over the airwaves free to anyone with a receiver for much of the past century.
The broadcaster is part of a complex network of
- content creators,
- advertisers , and
- listeners or viewers.
Who makes money and how much is not always clear at the outset. The bottom line depends on many competing factors.
Internet commerce will give rise to new kinds of business models. In addition, the web is also likely to reinvent tried-and-true models and auctions are a perfect example. One of the oldest forms of brokering, auctions have been widely used throughout the world to set prices for such items as
- agricultural commodities,
- financial instruments, and
- unique items like fine art.
The Web has popularized the auction model and broadened its applicability to a wide array of goods and services.
have been defined and categorized in many different ways.
This is one attempt to present a comprehensive taxonomy of business models observable on the web.
The proposed taxonomy is not meant to be exhaustive or definitive and internet business models continue to evolve.