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List of Web Business Models

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Re: List of Web Business Models

#61

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, b…

F2P games took market segmentation and price elasticity testing to somewhat questionable places, with large financial returns, http://www.gamasutra.com/blogs/RaminShokrizade/20130626/1949...

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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Re: List of Web Business Models

#62

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, b…

F2P games took market segmentation and price elasticity testing to somewhat questionable places, with large financial returns, http://www.gamasutra.com/blogs/RaminShokrizade/20130626/1949... Ben Thompson wrote an analysis of "Digital Whales", http://stratechery.com/2014/dependent-digital-whales/ --- "So to recount, Facebook is going gangbusters because of ads for free-to-play games, developers are excited about the c…

All of which is to be expected, to a certain extent. Certain categories of goods -- especially games and entertainment -- have always had broad userbases or fanbases with very small, but fanatical "hardcore" segments. Only in recent years have companies have been able to address the segments so effectively. In the old days, you had low-tech segmentation strategies, like Collector's Edition DVDs, or value-added merchandise, or mailing lists, or fan clubs. These days, you can offer in-app purchases, expansions, or slightly different price points based on different release windows and platforms. On the surface, these tactics seem exploitative. In practice, not all of it has to be. Certain value-added stuff is not for everybody. Clearly. It's for the tiny percentage (anywhere from a fractional percentage to roughly 8%, in most cases) who is willing to pay for a lot more. The thing is, there's an ethical way and a less-ethical way to a) figure out who those people are, and b) offer them more. The ethical way involves giving people the choice to be hardcore or not to be. It involves offering a hardcore value-add that in no way detracts from the experience the casual fans enjoy. That's what Radiohead did. It's what some mobile gaming companies do, and what other mobile gaming companies do not.

IAP in gaming has been a fraught subject, and rightfully so. That's largely because certain gaming companies have realized the potential for IAP vis-a-vis the natural segments of hardcore gamers, and have attempted to IAP-gate the basic gameplay. Rather than offer a standard product to everyone, and a hardcore product to the hardcore, they try to hook everyone into playing at a "hardcore" level -- and sell IAP accordingly. This stinks, frankly. A lot of companies have picked a lot of low-hanging fruit with this model, but the model is already creating backlash. Unfortunately, it's not going away anytime soon. It's so damned lucrative.

I would almost call that strategy a pay-ladder, rather than a true segmentation. You get everyone onto the ladder, and you make people pay to climb it. It's exploitative. It's also very effective. (For now.)

We should distinguish this strategy from a less exploitative segmentation, like what Radiohead did with "In Rainbows," and what a lot of artists and performers are attempting to do with their own albums, books, or shows. Radiohead didn't force anyone onto a pay-ladder. Radiohead gave people legitimate choice, and the $81 box set was a choice that people who really wanted it could opt into. Both strategies arrive at a segmentation of the userbase; Radiohead's strategy arrives at that segmentation through a more positive and consumer-friendly method.

Segmentation, in and of itself, is not evil. It's just smart business strategy. How you set up the segmentation, and how you enforce it, delineate the boundaries between ethical and unethical.

Re: List of Web Business Models

#63
post #27

I was hoping for more fleshed-out examples of why the business models were good, but the list was interesting nonetheless. My two personal-favorite business models are (in no particular order): Tesla and Miley Cyrus. Tesla: evident if you're familiar with it ( http://www.teslamotors.com/blog/secret-tesla-motors-master-p... ) My interest in the Miley Cyrus model might need a little more explanation. Back a few months…

Soulja Boy also used the 'Miley Cyrus' model, except he would release a short, easy to do, dance video for everyone to dance when his song came on!

Re: List of Web Business Models

#64

Earlier quoted context omitted.

F2P games took market segmentation and price elasticity testing to somewhat questionable places, with large financial returns, http://www.gamasutra.com/blogs/RaminShokrizade/20130626/1949... Ben Thompson wrote an analysis of "Digital Whales", http://stratechery.com/2014/dependent-digital-whales/ --- "So to recount, Facebook is going gangbusters because of ads for free-to-play games, developers are excited about the c…

All of which is to be expected, to a certain extent. Certain categories of goods -- especially games and entertainment -- have always had broad userbases or fanbases with very small, but fanatical "hardcore" segments. Only in recent years have companies have been able to address the segments so effectively. In the old days, you had low-tech segmentation strategies, like Collector's Edition DVDs, or value-added mercha…

Thanks for the detailed response, just noticed you are co-host on the Stratechery Podcast :)

There is so much to explore in this topic. A recent article on Pinterest said that Buzzfeed made a change on their social sharing buttons to increase the size of Pin button, only for traffic which originated on Pinterest. It resulted in a large increase in re-pins of the article.

Star Citizen seems to have done a reasonable job of providing people with a choice of in-game enhancements. Apparently, some have willingly spent thousands.

Could pay-what-you-like museums and/or libraries make use of these techniques?

Another topic is non-DRM online content which have "Donate" buttons. Are there techniques like the Buzzfeed/Pinterest one, where the Donation Pitch is customized based on data about the traffic origin of previous donations?

Re: List of Web Business Models

#65
post #63
post #27

I was hoping for more fleshed-out examples of why the business models were good, but the list was interesting nonetheless. My two personal-favorite business models are (in no particular order): Tesla and Miley Cyrus. Tesla: evident if you're familiar with it ( http://www.teslamotors.com/blog/secret-tesla-motors-master-p... ) My interest in the Miley Cyrus model might need a little more explanation. Back a few months…

Soulja Boy also used the 'Miley Cyrus' model, except he would release a short, easy to do, dance video for everyone to dance when his song came on!

Paris Hilton did it as well - leak a sex tape, do all sorts of outrageous shit, and make sure that the media covers it all and people talk about it. Ironically, she's the first Hilton in a while to be a self-made millionaire; her actions got her cut off from the bulk of her trust fund, but she's making about $10M/year in endorsements and public appearances.

Re: List of Web Business Models

#66
post #27

I was hoping for more fleshed-out examples of why the business models were good, but the list was interesting nonetheless. My two personal-favorite business models are (in no particular order): Tesla and Miley Cyrus. Tesla: evident if you're familiar with it ( http://www.teslamotors.com/blog/secret-tesla-motors-master-p... ) My interest in the Miley Cyrus model might need a little more explanation. Back a few months…

Why is Miley Cyrus famous, despite an apparent lack of talent? She was probably famous before she was born.

Re: List of Web Business Models

#67

One thing worth mentioning for games is what Valve is doing with Dota 2. The game is truly free to play, and giving them all the money in the world will not give the player any in-game advantage. On the surface, the game sells various hero skins and other cosmetic items that are little more than vanity items. Looking closer, it seems that Valve is making (or at least trying to make) money by developing a scene of pro…

Totally viable. Riot Games is pulling it off with League of Legends. Exact same case: money is just for skins etc. All the money in the world won't give you any unfair advantage. Oh and yes, HUGE competitive scene.

Re: List of Web Business Models

#69
post #27

I was hoping for more fleshed-out examples of why the business models were good, but the list was interesting nonetheless. My two personal-favorite business models are (in no particular order): Tesla and Miley Cyrus. Tesla: evident if you're familiar with it ( http://www.teslamotors.com/blog/secret-tesla-motors-master-p... ) My interest in the Miley Cyrus model might need a little more explanation. Back a few months…

It's worth pointing out that Miley Cyrus didn't exactly invent this model. The old saying is "there's no such thing as bad publicity". The first example that came to my mind is Madonna who always seems to do something "stupid" and "crazy" every couple years that reminds people she exists and keeps her in the public eye.

Re: List of Web Business Models

#70
post #27

I was hoping for more fleshed-out examples of why the business models were good, but the list was interesting nonetheless. My two personal-favorite business models are (in no particular order): Tesla and Miley Cyrus. Tesla: evident if you're familiar with it ( http://www.teslamotors.com/blog/secret-tesla-motors-master-p... ) My interest in the Miley Cyrus model might need a little more explanation. Back a few months…

Every time I see something about her, even overwhelmingly negative, I shake my head and think "another person tricked into feeding her success".

What does it say about you, though, that you are reading that person's commentary? Whoever it was was probably just using her notoriety to make a point they wanted to make anyway. Media feeding frenzies go both ways. The media uses Miley as much as she uses them. The system isn't as simple as one person tricking another person into free publicity.

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