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This is a fantastic list, and it is extremely helpful to have everything in one place. The next step, IMO, is for folks like us in the HN community to put a little more meat on the bone. Annotate or link to this list with specifics for each model. I might quibble, on a very minor level, with calling these "business models." More accurately, they are revenue sources. One could argue that this is a small distinction, but there is a real difference. A revenue source is necessary, but not sufficient, for the operation of a healthy business. Plenty of other things go into the mix, even leaving aside the obvious (product): COGS, logistics, competitive differentiators, etc. There is so much more to the success of Uber, for example, than just the "excess-capacity market" revenue model. All of what Uber does with its drivers on the back end, for instance, is quite sophisticated -- and equally responsible for the company's success as its top-line, nominal model. Further annotation -- and I'm happy to get my hands dirty and contribute -- will also help us flesh out the pros and cons of some of these models. "Pay-what-you-want," for instance, lists Radiohead as the example. That's fine. But what a lot of folks don't realize is that Radiohead made approximately 80% of its money from the "In Rainbows" album release by selling collector's edition box sets for $81 a pop. In that case, pay-what-you-want served as a loss leader and demand driver, and the collector's sets earned the real money. Either of these tactics, without the other, would not have worked as well. The combination of the two was a stroke of genius -- allowing the band's customers to segment themselves, and in effect, adding an ultra-premium tier to the top of the "pay what you want" curve. The operative lesson of Radiohead's experiment was that pay-what-you-want can be effective, but you need to structure the pay scale to account for your customer segments' different willingness to pay for different versions of the same product. Give them suggestions, at both the low end and the high end of the product/price spectrum. If you don't, you're anchoring everyone towards the low end. And that leaves a lot of money on the table. This lesson has carried over to sites like Kickstarter, to great effect. (I have no idea if Kickstarter took any inspiration from Radiohead's experiment; this is just a thematic observation.) |
Ben Thompson wrote an analysis of "Digital Whales", http://stratechery.com/2014/dependent-digital-whales/
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"So to recount, Facebook is going gangbusters because of ads for free-to-play games, developers are excited about the chance to cash in via Facebook ads, Google and Twitter are trying to mimic Facebook’s success, and Google and especially Apple are hanging their app store hats on the amount of revenue generated by in-app purchases.
In other words, billions of dollars in cold hard cash, and 20x that in valuations are ultimately dependent on a relatively small number of people who just can’t stop playing Candy Crush Saga.
... Answered my own question: Re/code reports that a new study from app-testing firm Swrve claims that half of all in-app purchases are made by just 0.15% of mobile gamers, which is pretty stunning considering how lucrative in-app purchases have become for mobile game developers."
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