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Online Business Models
Transcript of Online Business Models
Online Business Models
The Long Tail
Chris Anderson, editor of Wired
Also by Chris Anderson
basic services are free; premium is paid. Can survive with a small % of premium subscribers (1%)
Gary Vaynerchuk, 2009
"Embrace your DNA, be yourself and put out awesome content"
No more "lowest common denominator" fare
No longer live with physical shelf space
Getting more than just "the hits"
80-20 rule - Pareto Principle
"Misses," on a larger scale, make money
We want MORE
No longer driven by economics of scarcity
Culture of diversity - ends the tyranny of the "hit"
Rules of the Long Tail:
Make everything available
Cut the price
Help me find it
You can make money by giving away free content
Some "free" economic models
Different sort of "free" - the web!
Marginal cost of digital
Also based on abundance, not scarcity
Psychological gap between free and 1 cent
Traditional models - 3-party system: Media, advertising, consumer
"Free" model - advertising does not pay for everything
Many, many different options to support free content
Ex: Flickr, Twitter, DropBox
give away product for free, people pay for other products
companies, bands, organizations will pay to personally advertise to you
Ex: Facebook ads, YouTube commercials, Google Ad Words
Zero Marginal Cost
creating free content for reasons other than money, expect nothing in return
Ex: buy "at cost" for a printer, pay high prices for ink
Ex: bands make music for art's sake
do something in return for something else; barter
Ex: Yahoo! Answers, Digg - everyone's contributions create value
altruism: concern for the welfare of others
Ex: Wikipedia, couch surfing - "I share with you, you share with me"
"Legacy is greater than currency"
Personal Brand - authentic you, thing that differentiates you from everyone else
Convey your passion
You and your brand are one and the same; everyone has one – depends on how you communicate it
Social media gives everyone a shot at extending his/her brand
Take five minutes to write down answers to these questions:
Ways to Monetize:
Books and TV
Requires authenticity, hustle, patience
Blog - essence of brand
Social Media - sharing mechanisms
Close relationship with customers
How is your personal brand perceived right now?
How would you like it to be perceived?
What are three things you could do to better convey your personal brand?
Other Business Models
Subscriptions - Netflix, New York Times
Royalties - Apple iTunes, Groupon
Selling Data - LinkedIn, PatientsLikeMe
Pay What You Like - Radiohead (In Rainbows), Humblebundle (gaming)
Combination Plate - Kickstarter (Altruism, Royalties, Cross-subsidies)
What's Profitable? What's Not?