Internet Marketing – Different Online Business Models
There are many different methods of earning income online. 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 manufacture products for wholesale distribution, you can sell information, you can sell tools to help people with their own business model, you can sell advertising, or you can provide consulting services.
Do you see a common theme in all of these patterns? That’s right — to have a viable business, you literally have to provide some kind of good or service that adds value to someone or something, online or offline.
I think when people think about starting an offline business, they look for a need in their community and try to fill it. Online, they tend to think, well, what can I do to make a lot of money? There is a huge difference between the two. I think online people really believe that if they build a website and sell something, the money will just come. It’s just not an accurate thought, but I think almost everyone has thought it at one point or another.
So to create an income online, you need to fill a need, just like you would in the offline world. You meet this need by producing, developing, distributing or brokering a product or service. That is all. You will never earn a long-term viable income from schemes and scams any more than a bank robber will earn a long-term viable income robbing banks.
Here are some of the main business models you can find on the web:
1) Production model. It is a company that produces value by transforming one commodity into another for online consumption. An offline equivalent would be a shoemaker or a gold mining company. The online equivalent may be the development of new software or search technology, or the development of online technology that supports some of the other online business models.
2) Merchant model. This is a company that specializes in sales and organizes the delivery of goods and services on the online market. This can be compared to the offline equivalent of a merchant. Some examples online are bookstores, grocery stores, catalog websites, and other organizations that sell goods and services.
3) Advertising model. This is a company that specializes in providing advertising or promotion services to other online businesses, for example those businesses that operate using the manufacturer 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 carry out the advertising in a systematic and fragmented manner. While the advertising model pays the advertiser based on the amount of advertising served, the affiliate model pays the affiliate marketer when a sale or step in the sales process is completed. This step can be an online visit, a request for more information, or the sale itself.
5) Broker model. This model is one that compensates the broker for bringing a buyer and seller together, usually in the form of a one-on-one personal introduction. An example of this could be an online auction or an online payment processor.
6) Information model. An information business model is one where a company provides information to a specific area or market niche. 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 task performance.
7) Subscription model. This is an overlay pattern that is usually included in one of the other patterns. This model will provide a good or service over an extended period of time and provide a guaranteed and generally constant level of that good or service over a period of time, for example over several months. Two products that fit into this subscription model might be online monthly video rentals or services such as food or medicine that are delivered regularly on a commitment basis.
8) Useful model. This model works much the same way an offline program might, offering a product that through its use has become a necessity and is often tightly controlled. An example of an online utility model would be that of accessing the Internet or telephone service through an online network.
9) Community model. It is a business model that focuses on bringing together like-minded individuals or companies to develop relationships and share information. Two examples of the community network phenomenon are the recently created Myspace and the older online forum.
When deciding to start a business online, it is important to determine which of these business models interests you the most. Which of these models suits you best? In which of these models are you most likely to be considered an expert or would you like to become an expert?
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