They have changed the way we do business. They are powered with digital technologies. Innovation in the way one structures its business model can be critical for the company's everlasting success. This is because new business models have emerged and have disrupted the market. The new business models are digital technology-enabled. They are adding value to customers where no traditional model has focused before. In this blog, we will cover many creative business models that have emerged and have set a new normal for our businesses.
Freemium Business Model
I start with this one because in my mid-career this is my favorite. You must have seen the "try now free" slogan used, but it is further than that many companies are now providing free versions of their tools, free learning, free educational versions, etc. All this to gain market share in the market. The freemium costs come out of their growth and marketing budgets. In many cases, they target and bet on your growth as an end-user and your need to reach their paid platform in the near or far future. This creates dependency, or lock-in, and attachment to these products. For example, Gmail and related services from Google, Zoom for online conferences, LinkedIn for professional networking, Hootsuite for social media management, Mailchimp email marketing campaigns, etc.
Subscription Business Model
This is where digitally enable subscriptions to take place which is bundled with routine data recording, reviews, and ratings to provide the customer with the best value-added propositions. This includes Netflix for shows, Amazon Prime for all media types, some retailers such as Frank and Oak use subscription models, and related client data to send by mail free to try items to capture sale leads. The subscription model can win clients with their data-driven offerings in the form of advanced recommendation systems. The "as you go" movement for services, such as Microsoft Office, Spotify, AWS, and many more falls under this category. For AWS the benefit here is economies of scales, and related flexibility they can offer their clients.
Multi-sided Platform Model
Also known as MSP, are where we break the chain of product/service offering to product/service listing. An MSP is a channel where sellers and buyer
s meet. An example of this is amazon for retailers, Airbnb, match.com, and the list is very long. This applies to many services and products. MSPs are a chicken/egg proposition, a fine balance between the multi-sides has to be done in order to reach higher traffic, data, and so better performance. A common question is how will the MSP gain money from just being a link. One can force money transactions through the platform or they can charge the side that will benefit the most or is less price sensitive.
Hidden Revenue Platform Model
This is becoming very popular and is a characteristic of popular "influencers" and "platforms". Generated traffic from being popular leads to a huge exposure that benefits marketers and advertisers. In brief, the money comes neither from consumer or producer but from a third benefiting party such as advertisers. YouTube is classic for this, Google also benefits from this model, and if we think deeply then any platform that reuses our data for a third-party falls under this category. This is an increasing ethical issue nowadays.
Crowd Sourcing Business Model
This is close to the traditional donation, non-profit organization model, amplified with internet connectivity. Mass funding becomes possible for any good willed initiative, also any ill-willed initiative on-demand initiatives. This also raises the ethical questions of who is funding these initiatives. But wait, this is not just about making money crowdsourcing work as an idea generation gone on steroids. Many companies such as McDonald's, Lego, PepsiCo, Unilever all generate ideas for their business through crowdsourcing ideas. This helps them get a competitive edge by launching products that are known statistically which will have a big impact.
See also: https://www.linkedin.com/pulse/digitally-transformed-business-models-ali-abdelmoniem-ahmed/?published=t
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