A long list of Web business models

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Chris Anderson, Fred Wilson and Dave McClure have created a great list of Web business models. The list includes:

  • E-commerce
  • CPM ads
  • CPC ads
  • CPT ads
  • Lead generation
  • Subscription revenues
  • Affiliate revenues (think: Amazon Associates)
  • Rental of subscriber lists
  • Sale of information (selling data about users-aggregate/statistical or individual)
  • Licensing of brand (people pay to use a media brand as implied endorsement)
  • Licensing of content (syndication)
  • Getting the users to create something of value for free and applying any of the above to monetize it. (Like Digg)
  • Upgraded service/content
  • Alternate output (print/print-on-demand, t-shirts, etc)
  • Custom services (installation, support services)
  • Live events
  • Souvenirs/”Merchandise”
  • Co-branded spinoff
  • Cost Per Install (popular with top Facebook apps)
  • Sponsorships
  • Listings
  • Paid Inclusion
  • Multimedia ads (video ads)
  • API Fees (charging third parties to access your API, like Alexa)
  • FeedSense
  • FeedSearch
  • FanPageApps

To this, I have a few more to add:

(i) Donations. Several sites that I visit frequently, do not charge for the services/software they provide, but rely on donations from the user base. Many of the torrent sites follow this model as well.

(ii) Domain name value appreciation. This is a modern version of Sears, where the operation of the company lost money but the real estate owned by company appreciated significantly. Example - spark.com; the site lay dormant for a long time but the domain name appreciated in value. Spark Networks, a collection of dating site, purchased it in 2004; I know because I negotiated the deal for the purchase of spark.com and worked with Spark Networks on the IP side of their re-branding strategy.

(iii) Ad exchange credits. I haven’t seen this used recently, but this method involves showing ads from an ad-exchange and accumulating reciprocal ad credits, which can be sold to third party.

(iv) Sale of traffic. Example - BlogOhBlog.com gave away free wordpress themes for about 6 months with very limited monetization. At the end of the 6 month period, it had 100k visitors/month and the domain name BlogOhBlog.com was sold for $10k.

I am sure there are others. Please leave a comment here or at Fred’s blog if you would like to add it to the growing list.



Visual effects company Digital Domain Files for IPO

digital_domain_logoDigital Domain, a 14-year-old, Venice, California based visual effects and animation company, filed to raise up to $100 million in an initial public offering.

It has been a long time coming from Digital Domain - they were planning an IPO in 1999 but the IPO market dried up. It is always nice to see IPO opportunities bubble up again.

In 2006 the company was acquired by private investment firm Wyndcrest Holdings, a group led by movie director Michael Bay (Pearl Harbor) and investor John Textor.

The award-winning company has produced computed generated special effects for films and other media. They also maintain a strong position in media convergence with online branding and an impressive list of clients. Digital Domain received the Best Visual Effects Academy Award in 1997 and 1998 (for its work on Titanic and What Dreams May Come, respectively).

For the nine months ended Sept. 30, the company reported a loss of $15M on revenue of $56.6M.

The company plans to use proceeds from the IPO to prepay in full its existing secured notes. Remaining proceeds will be used to expand its technology development and licensing program and to branch into the production of animated and visual effects-driven feature films and the development and production of video games.

Digital Domain Co-chairman Michael Bay is a famed producer who recently directed “Transformers” and “Armageddon.” Mark Miller, the company’s president and CEO, is a former executive of Lucasfilm and Industrial Light and Magic.

Founders include Hollywood hotshots James Cameron, Stan Winston, and Scott Ross.



Measuring Facebook penetration: every 5th Canadian is on Facebook!

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This is amazing! I just came across a post at Robwebb2k where he used Facebook’s Flyer Pro advertising platform (now Facebook Ads) to find some interesting statistics about Facebook’s reach.

He ran some numbers to see which countries were most saturated with Facebook’s +48M users. The winners:

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The penetration in Canada has reached an absolutely unbelievable 22%. Every 5th Canadian is on Facebook and every 10th person in UK is a Facebook user.

The European numbers look very healthy too, Norway with 19%, UK with 11% and Sweden with 10%.

If you further modify the figures by noting that the computer penetration in Canada is about 70%, then the Facebook penetration numbers are even more staggering. It means that in Canada, every third person who has a computer is a member of Facebook. Similarly, for India the above table shows a dismal 0.02%, but if you modify it by noting that the internet-connected computer penetration in India is about 9M subscribers, then the participation rate is about 3%, which is very respectable for such a large country. (In fact, I would go even further and argue that the applications like Facebook are Broadband applications and one should really compare the numbers with the broadband penetration.)

OK, see you on Facebook.

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Whyville, edutainment and Tween marketing

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Whyville is an educational virtual world for tweens and teens, ages 10-16. This world’s motto is “learning by doing.” Whyville actively engages its visitors and encourages them to participate in fun, educational events that give kids “hands-on” experience with virtual science projects

It has been around since 1999, so technically it is not a startup. Last week, it received additional funding from Pat Sajak of Wheel of Fortune fame. The amount was not disclosed but till last December, Whyville’s parent company had raised about $1.5M from 12 angles. Whyville has about 2.2M players with the demographics that the advertisers love.

getty_whyvilleAs an educator with special interest in high school education, I am ambivalent about the Whyville’s marketing strategy of “active brain advertising,” which according to Jay Goss, Whyville’s COO, “the company isn’t just focused on garnering impressions or eyeballs for brands. We care about eyeballs connected to brains.”

For 10-13 year old, I’d prefer a clear sponsored but separate advertising method, but this is not a social blog, it is a business blog, we will save that discussion for some other time. As far as business model is concerned, Whyville does deliver edutainment to tweens in a way that is conducive to building a long term brand loyalty, and Whyville are appropriately leveraging it.

The most interesting demographic statistics that I found was that the Whyville has 68% female participants. It might be related to the lack of first person shooter games on the site. The site has an eclectic and multifarious mix of features. Here are some of them:

  • NASA, the Getty Museum, CDC and University of Texas systems are using the platform to deliver educational content.
  • Toyota is a major sponsor, it allows the user to buy a customized Scion, and if they don’t have enough online virtual cash, they can go to Toyota office and get a loan.
  • The participants maintain a credit score which is dependent on the participants virtual job and spending habits, mimicking the real life example.
  • A nutritional program sponsored by school Nutrition Board.
  • Geodig is a geology game that takes members around the world in search of rocks, fossils and gems or The Art Treasure Hunt which transports members on worldwide art tour.
  • Penguin Books, after publishing a book version of Al Gore’s movie, tapped them for educational programs to teach climate change.
  • Whyville recently received $440,000 in grants from the Texas Workforce Commission to build Whyville Biotech and a virtual manufacturing center.

After the phenomenal success of High School musical 2, there is no doubt that the tweens have their own ecosystem and generate their own economic waves. Whyville is a great place to ride that wave.



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