Business models - it's revenues minus costs. There is no shortage of discussion about Internet business models these days.
And they almost always focus on revenues. But revenues are only half of the value creation equation. The other half is costs. Let me explain. Businesses are worth the net present value of future cash flows. So with that simplification, the value of a business is approximated by 10 x (revenues – costs). Chris Anderson wrote a very good piece in today's WSJ called The Economics Of Giving It Away. Meanwhile YouTube is still struggling to match its popularity with revenues and Facebook is selling commodity ads for pennies after its effort to charge for intrusive advertising led to a user backlash. Chris goes on to suggest that Internet entrepreneurs are going to have to get people to step up and pay for something instead of just giving everything away for free because advertising isn't going to foot the bill for every company.
Let's look at Craiglist. The web can do that in more than one company. Patience - Google did not always have a biz model. TC Teardown: 13 Ways To Get To $10 Million In Revenues (Part I) After last month’s TechCrunch Disrupt, and to provide a business companion to the popular “Lean Startup” customer development methodology, this TC Teardown focuses not on how one specific company makes money but rather seeks to provide a breakdown of the main general ways consumer Internet startups try to make money.
Consider it a guide to Internet business models. If you are currently thinking about or are in the process of developing your own consumer startup idea, these key business models will help give you a working knowledge of what it takes to get to $10 million in revenues (assuming you have a good product that the market wants). (Before you post in the comments about how unique your startup is, this list is not meant to capture every consumer business permutation. There are always going to be exceptions. And the breakaway companies like Zynga, Groupon, Facebook, Twitter, and Foursquare, to name just a few, inevitably introduce nuances to pre-existing models.) 1. 2. 3. TC Teardown: 13 Ways To Get To $10 Million In Revenues (Part II) Editor’s note: This post is the second part of an analysis of different consumer Internet business models by guest author Steven Carpenter.
It is suggested that you first read Part I. Most consumer Internet startups fall into a baker’s dozen of possible business models. In the first part of this post, I tried to lay out the three main buckets those business models fall into (media, paid service, and physical commerce) and then began to sketch out the first four business models (search, gaming, social networks, and new media). In my analysis, I include a rough financial model showing the key drivers necessary for each different type of business model to generate $10 million in annual revenues.
In this post, I continue with the final nine business models (marketplace, video, commerce, retail, subscription, music, lead generation, hardware and payments). Type 5: Marketplace Key Drivers: ListingsListing FeeSalesCommission Type 6: Video Unique ViewersAd ImpressionsSellthrough RateCPM. Web 2.0 monetization.