The first two decades of this century are characterized by digital entrepreneurs upending traditional business models in search of new ways of creating revenue and serving customers.
This has been made possible by the emergence of several new waves of technology – from desktop computers to the internet, mobile devices, and the cloud. Going forward, these waves of disruption seem certain to continue as new breakthroughs such as artificial intelligence (AI) continue to redefine the way we shop, work, play, and live our lives.
Often these business models are used in combination – for example, a software provider might make a “freemium” version available, supported by advertising revenue, while also offering a premium, ad-free service to those that are willing to pay. Or e-tailers like Amazon may make revenue from e-commerce while also acting as a marketplace where other sellers can offer their goods in exchange for a cut of the profits.
Anyone wanting to do business today – or understand how money is going to be made tomorrow – needs to understand the fundamental models underpinning the digital economy. So here’s my overview of some of the most successful and important and an explanation of how technology has made each of them possible.
The ad-supported business model is among the most successful of the digital era. It is behind the rise of companies like Google and Facebook, which match users to products and services using AI and analytics. This has become possible due to the sheer amount of user data that can be captured from online users. The success of these businesses is due to the concept that “if you’re not paying, you’re the product.” In the days of newspaper, radio, and television advertising, the data that could be collected was limited to information gleaned from audience and market research surveys. Today, every click, follow, like, and share – as well as the information we directly give to sites and services – can be used to learn about us. This data is collected from audiences and users and sold to advertisers who use it to predict what products and services we might want to buy.
As it’s simplest, this simply refers to companies that offer products and services online directly to the customer. This can describe the giants such as Amazon and Alibaba