Management 265Introduction to E-Commerce

Nicholas A. Davis

Session Two

09/22/2009

Auctions

• Fixed pricing – National price

• Trigger pricing – Based on consumer location

• Personalization pricing – based on how much a user values a product

• Consumer to Consumer – Auction house is an intermediary

• Business to Consumer – Auction house sells items it controls

Rise and Fall of Ebay

• Started as a comic book exchange marketplace• Moved to allow consumers to sell all kinds of

items• Moved to allow business to sell all kinds of items• Bulk sellers get more benefit• Small person being squeezed more• Threat of Craigslist• Vonage acquisition and sale

Differences

• Auctions

• Portals

• Online Communities

Intellectual Property and Digital Media

• What is intellectual property?• Does it have the same value as physical

property?• How do you accurately judge the value of

IP?• Case Scenario, Nick never buys a CD, but

loves music. Nick gets Napster and downloads 5000 songs he likes, but would never buy. What damage has been caused to the copyright owner?

Intellectual Property and Digital Media

• John regularly buys CDs. John gets Napster and downloads 5000 songs. What type of damage has been done?

• Should Nick and John be treated differently based on the fact that a different amount of damage has been done to the copyright holder, based on Nick and John’s shopping habits?

• Ethically speaking, what are the major issues here?

Online Content Revenue Models

• Marketing Tide.com

• Free content drives offline revenues

• May work for strong brands, or niche products, designed to enrich customer experience

Online Content revenue Models

• Advertising Yahoo

• Free content is paid for by online advertising

• Depends on growth in online ad volume and rates, as well as audience size

Online Content revenue Models

• Pay Per View / Pay Per Download

• Charge for premium content is a la carte

• Opportunities for unbundling digital products, work best with something like an MP3 player

Online Content revenue Models

• Subscription: Rhapsody

• Monthly charges for unlimited service

• This is the leading model (80%), very popular with high value products

Online Content revenue Models

• Mixed MSN

• Combination of all models

• Market segmentation opportunities make this a popular model, charging for some services, and providing others for free

Future trends in E-Commerce

• Anywhere availability of purchased content

• Intelligent outposts (Soda Machines)

• New payment methods (phones)

Additional Concerns