In reality, they are all very similar to the business
models you see in the offline world.
You can sell goods and services, you can produce products
for wholesale distribution, you can sell information, you
can sell tools to help people in their own business model,
you can sell advertising, or you can provide consulting
services.
Do you see a common theme in all of these models?
That's right---to have a viable business, you have to
literally provide some kind of a good or service that adds
value to someone or something, either online or offline.
I think that when people think about going into business
offline, they look for a need in their community and try to
fill it.
Online, they tend to think, OK, what can I do to make a lot
of money?
There is a huge difference between the two.
Online, I think people really believe that if they put up a
web site and sell something, the money will just come in.
It is simply not an accurate thought, but I think that just
about everybody has thought it at one time or another.
So to create an income online, you must meet a need, just
like you would in the offline world.
You meet that need by producing, developing, distributing,
or brokering a product or service.
That is just about it. You will never earn long-term viable
income from schemes and scams, no more than a bank robber
will earn a long-term viable income robbing banks.
Here are some of the basic business models you can find on
the web:
1) Production model. This is a company that produces value
by transforming one good into another for online
consumption. An offline equivalent would be a shoemaker or
a gold mining firm. The online equivalent might be the
development of new software or search technology, or the
development of online technology that aids in the execution
of some of the other online business models.
2) Merchant model. This is a company that specializes in
the sales and organizes the delivery of goods and services
to an online market. This can be compared to the offline
equivalent of a merchant. Some examples online are
bookstores, food stores, catalog web sites and other goods
and services sales organizations.
3) Advertising model. This is a company that specializes in
providing the service of advertising or promotion to other
online firms, for example, those firms that operate using
the production or merchant model. This model charges these
companies a fee to advertise the goods and services
provided by the other online business models.
4) Affiliate model. This is a model that resembles the
advertising model, but is different in that it focuses on
recruiting many individual companies or individuals to do
the advertising in a systematic and piecemeal way. Whereas
in the advertising model, the advertiser is paid based on
the amount of advertising distributed, the affiliate model
pays the affiliate marketer when a sale or step in a sales
process is completed. This step may be an online visit, a
request for more information, or the actual sale itself.
5) Brokerage model. This model is one that compensates the
broker for bringing together buyer and seller, usually in
the form of a personal, one-on-one introduction. An example
of this might be an online auction or a processor of online
payments.
6) Information model. The information business model is one
in which the company provides information to a specific
field or niche market. This information would typically
instruct another company or individual on an easier or more
efficient method of performing a task, or actually teach
the task or the implementation of the task.
7) Subscription model. This is an overlay model, one which
is generally incorporated into one of the other models.
This model would provide a good or service over a
protracted period of time, and provide a guaranteed and
generally consistent level of that good or service for a
period of time, for example over the course of several
months. Two products that fit into this subscription model
might be that of online monthly video rentals or services
like food or medicines which are delivered on a regular
basis by commitment.
8) Utility model. This model operates in much the same way
as an offline utility might operate, offering a product
that has, through its use, become a necessity and is often
tightly controlled. An example of an online utility model
would be that of internet access or telephone service via
an online network.
models you see in the offline world.
You can sell goods and services, you can produce products
for wholesale distribution, you can sell information, you
can sell tools to help people in their own business model,
you can sell advertising, or you can provide consulting
services.
Do you see a common theme in all of these models?
That's right---to have a viable business, you have to
literally provide some kind of a good or service that adds
value to someone or something, either online or offline.
I think that when people think about going into business
offline, they look for a need in their community and try to
fill it.
Online, they tend to think, OK, what can I do to make a lot
of money?
There is a huge difference between the two.
Online, I think people really believe that if they put up a
web site and sell something, the money will just come in.
It is simply not an accurate thought, but I think that just
about everybody has thought it at one time or another.
So to create an income online, you must meet a need, just
like you would in the offline world.
You meet that need by producing, developing, distributing,
or brokering a product or service.
That is just about it. You will never earn long-term viable
income from schemes and scams, no more than a bank robber
will earn a long-term viable income robbing banks.
Here are some of the basic business models you can find on
the web:
1) Production model. This is a company that produces value
by transforming one good into another for online
consumption. An offline equivalent would be a shoemaker or
a gold mining firm. The online equivalent might be the
development of new software or search technology, or the
development of online technology that aids in the execution
of some of the other online business models.
2) Merchant model. This is a company that specializes in
the sales and organizes the delivery of goods and services
to an online market. This can be compared to the offline
equivalent of a merchant. Some examples online are
bookstores, food stores, catalog web sites and other goods
and services sales organizations.
3) Advertising model. This is a company that specializes in
providing the service of advertising or promotion to other
online firms, for example, those firms that operate using
the production or merchant model. This model charges these
companies a fee to advertise the goods and services
provided by the other online business models.
4) Affiliate model. This is a model that resembles the
advertising model, but is different in that it focuses on
recruiting many individual companies or individuals to do
the advertising in a systematic and piecemeal way. Whereas
in the advertising model, the advertiser is paid based on
the amount of advertising distributed, the affiliate model
pays the affiliate marketer when a sale or step in a sales
process is completed. This step may be an online visit, a
request for more information, or the actual sale itself.
5) Brokerage model. This model is one that compensates the
broker for bringing together buyer and seller, usually in
the form of a personal, one-on-one introduction. An example
of this might be an online auction or a processor of online
payments.
6) Information model. The information business model is one
in which the company provides information to a specific
field or niche market. This information would typically
instruct another company or individual on an easier or more
efficient method of performing a task, or actually teach
the task or the implementation of the task.
7) Subscription model. This is an overlay model, one which
is generally incorporated into one of the other models.
This model would provide a good or service over a
protracted period of time, and provide a guaranteed and
generally consistent level of that good or service for a
period of time, for example over the course of several
months. Two products that fit into this subscription model
might be that of online monthly video rentals or services
like food or medicines which are delivered on a regular
basis by commitment.
8) Utility model. This model operates in much the same way
as an offline utility might operate, offering a product
that has, through its use, become a necessity and is often
tightly controlled. An example of an online utility model
would be that of internet access or telephone service via
an online network.
9) Community model. This is a business
model that focuses on bringing together individuals or
companies of similar interest for the purpose of developing
relationships and sharing information. Two examples of the
community web phenomenon are the recently created Myspace
and the older online forum.
When deciding to go into business online, it is important
to determine which of these business models most interest
you. To which of these models are you best suited?
In which of these models are you most likely to be
considered an expert, or in which would you have the
willingness to become an expert?
Talk soon,
Jeff & Charles
model that focuses on bringing together individuals or
companies of similar interest for the purpose of developing
relationships and sharing information. Two examples of the
community web phenomenon are the recently created Myspace
and the older online forum.
When deciding to go into business online, it is important
to determine which of these business models most interest
you. To which of these models are you best suited?
In which of these models are you most likely to be
considered an expert, or in which would you have the
willingness to become an expert?
Talk soon,
Jeff & Charles
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