Business Models for Monetizing Internet Applications and Web Sites: Experience, Theory, and Predictions

Almost all attempts to date to monetize Internet applications targeted at individuals have focused on natural extensions of traditional media or traditional retailing. Most are either some form of consumer-focused advertising or of consumer-focused e-commerce. And yet the Net is far more powerful than traditional media on one hand, and far more liberating and thus inappropriate as an alternative to traditional media on the other. There are numerous potential online business models that are not based on advertising. This paper explores several such areas and divides them into two basic categories, those that sell some product, experience, content, or service and earn revenues from the sale, and those that provide access to consumers and charge for access. It further divides each of these major categories into subcategories, and for each subcategory reviews current experience, places it in the context of the relevant literature in competitive strategy, and uses that theory to make predictions. The paper concludes with strategic recommendations for corporations as well as with suggestions for further research.

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