Revenue model in transition

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1. Revenue Models
In Transition
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2. Learning Objectives
In this chapter, you will learn about:
• Revenue models
– Revenue models in transition
– Advertising-supported
– Advertising-subscription mixed
– Fee-based
– Advertising-supported to
Subscription Model
– Multiple Transitions

3. Revenue Models
In Transition
Many companies undertake a series of changes in their revenue models as they
learn how to do business on the Web. Some of these changes take several years
before the company becomes profitable. For example, CNN and ESPN took over
10 years to become what they are now. They also created a business in
television, a widely used medium at the time.
Five different companies had to endure a revenue model transition to gain
experience in the online world. As we continue in the second wave of electronics,
these companies may have to do adjustments to their revenue models.

4. Learning Objectives
In this chapter, you will learn about:
• Revenue models
– Revenue models in transition
– Advertising-supported
– Advertising-subscription mixed
– Fee-based
– Multiple Transitions

5. Subscription to Advertising-
Supported Model:
• Subscribers pay fee and accept advertising
• Slate magazine by Microsoft is a current events and news
publication.
• It has very experience writer and editors on staff.
Everybody, including Microsoft, thought online magazines
had a great potential.
• Most magazines were using advertising-supported
network, Slate began charging annual subscription fees and
a limited introductory period.

6. Subscription to Advertising-
Supported Model:
• Even thought Slate had excellent content and good ratings, its 27,000
subscribers only generate $500,000, not enough to pay and maintain
the Web site and its content.
• Nowadays, Slate is again an advertising-supported site. Since is a part
of Microsoft Slate does not earn a profit. It is maintain by Microsoft in
the MSN portal to increase its stickiness.

7. Three strategies for an advertising-supported revenue model

8. Learning Objectives
In this chapter, you will learn about:
• Revenue models
– Revenue models in transition
– Advertising-supported
– Advertising-subscription mixed
– Fee-based
– Multiple Transitions

9. Advertising-Supported to Advertising-
Subscription Mixed Model:
Salon.com, another online magazine has also a great
reputation for its original content, change their
revenue model the opposite way from Slate’s.
Salon.com offers an optional subscription version of
the site, where the subscriber pays only $30 a year
and they can view Salon.com without ads, and can
also download online materials for later offline use.
Premium subscribers can also download music, e-
books, and audio books.

10. Revenue models used by online editions of newspapers and
magazines

11. Learning Objectives
In this chapter, you will learn about:
• Revenue models
– Revenue models in transition
– Advertising-supported
– Advertising-subscription mixed
– Fee-based
– Multiple Transitions

12. Advertising-Supported to Fee-for-Service
Model:
Xdrive Technologies a started as an advertising supported Web site in
1999. They would offer a free disk storage space for online use. Users had
ads on every page, and they would customize them to target e-mail
advertising on them. After a couple of years of offering free disk storage
space, Xdrive wasn't’t able to pay the cost of providing the services. So
they switch to the subscription-supported models and began selling
services to individuals and businesses alike, the amount of monthly
subscription is based on the amount disk space assign to the user.

14. Learning Objectives
In this chapter, you will learn about:
• Revenue models
– Revenue models in transition
– Advertising-supported
– Advertising-subscription mixed
– Fee-based
– Advertising-supported to
Subscription Model
– Multiple Transitions

15. Advertising-supported to Subscription
Model:
•Northern Light is a search engine with an integrated
database of journal articles and other publications to which it
had acquired reproduction rights.
•When the users do their search the search engine would
retrieve links to free websites and information for sale from
the search engine.
•In January 2002 they decided to switch to subscription
model because the funds created by the ads were not
sufficient to pay for the site.

16. Advertising-supported to
Subscription Model:
• The company still offers the individual account option, however
if the person is interested on the database files, he must play
with his credit card and he would be billed every month. In 2003
new owners took over Northern Light and they are trying to
reopen a new Web search engine site.

17. Learning Objectives
In this chapter, you will learn about:
• Revenue models
– Revenue models in transition
– Advertising-supported
– Advertising-subscription mixed
– Fee-based
– Advertising-supported to
Subscription Model
– Multiple Transitions

18. Multiple Transactions:
• Encyclopædia Britannica is a company that has transferred its
existing reputation for high quality to the World Wide Web.
Encyclopædia Britannica started in 1768 and it developed its
respected brand over its years of publishing. It started as a type
of precomputer-age frequently asked questions (FAQ) list, a list
from notes taken by a group of academics.
• Those notes were then published into several articles.
Encyclopædia Britannica began its online business with two Web
sites. The Britannica Internet Guide, a free Web navigation aid
that classified and rated information laden sites, and
Encyclopædia Britannica Online, available for a subscription fee.
• Britannica used the free site to attract people to the
subscription site. In 1999 Britannica switch to advertiser-
supported sites because of low subscriptions sales. The day of
the new free site’s opening over 15 million people log in, and
forced to close for two weeks to upgrade their system.

19. Multiple Transactions:
• Britannica.com besides all its content they offer
Merriam-Webster’ Collegiate Dictionary and the
Britannica Book of the year. And after two years of
using advertising-supported model Britannica faced a
decline advertising revenue so they switch to the
mixed model where they would charge $5.00 a month
or $50.00 a year.

20. Learning Objectives
In this chapter, you will learn about:
• Revenue models
– Revenue models in transition
– Advertising-supported
– Advertising-subscription mixed
– Fee-based
– Advertising-supported to
Subscription Model
– Multiple Transitions

21. – Revenue models in transition
– Advertising-supported
– Advertising-subscription mixed
– Fee-based
– Advertising-supported to
Subscription Model
– Multiple Transitions

22. Thank
You……