Slide 5.1

Video 5 - Introduction to Online Business Models

IBMS Semester 6b Fall 2013Mr. George Szanto

Topics of this lecture

• Introduction to 10 different online business earnings models

• The rise of the “Freemium” business model on the Internet

3

Learning Goals For This Lecture• Be able to name 4 – 5 different online business

models• Name 3 technological changes over the past 20

years which have helped make the Freemium model viable

• Understand how cross-subsidies support Freemium off-line and online business models

• Be able to come up with 2 examples of online Freemium models which are NOT talked about in this lecture

Voettekst

Taxonomy of 10 Online Business ModelsBroker

Infomediary

Advertising

Community

Freemium

Manufacturer

Subscription

Utility

Affiliate

Merchant

• Off-line/On-line free models

• Cross subsidy model

Rise of Freemium Online Business Model Can it be really Free?

Cost of Web Services going to $0.00• In 2007 – unlimited Email Storage from

Yahoo

• Bandwidth getting cheaper (fiber optics) • Processing Power get cheaper (Moore’s

Law)

Software Economics – prices go down each year – until it’s FREE

• Open Source Free Software

Freemium Business Model Characteristics• Old - Off-line:• Give away a small

amount of free product

• Hope user’s get hooked and buy a LOT more

• Newer - On-line:• Give away LOTS of free

product;• Only a very small

percentage of users pay for premium service ~ 1%

• Create a huge community

Facebook & Twitter – Free?

• What is the trick when you are offered a free service online via a social media link?

End of Video - Thank you

Please take the online quiz associated with this video and join the online discussion about Freemium Business models as well.