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Friday, July 3, 2009

What Are The Key Features Of The "Future" Internet Based Business Model?

For years the Internet has offered new business opportunities. The Internet has opened up for efficient, flexible and scalable business models. What are the key features of future Internet based business model - and why will companies with these features earn money?

The question is the same question that the top U.S. media and even social networking sites are asking. With free music, movies, and shows available for free online companies like NBC, Universal, etc. have found it difficult to monetize their operations effectively online. However, there are a few examples that might provide some insight to your question.

Hulu, is one such company that was able to implement an effective business model that captured some of the audience lost to websites that had pirated products. They created a unique, easy to navigate platform that allowed users to find the new movies/shows that they wanted to see. By negotiating with top media organizations like NBC, FOX, etc. they helped them recapture some of the audience lost to other free websites (tv-links.com).

The site still has a lot to grow, but the key factors are this. It's incredibly user friendly (which helped beat out the previous competitors that focused on content and not usability), and it has successfully become profitable through its advertisement structure.

Another example of this is Apple and the music industry. Since file sharing programs exploded after Napster, CD sales have plummeted. Many record companies are still loosing a lot of money, but Apple was able to do one thing. It created a solid product (iPod) which it then tied directly to a software (iTunes), and thus created an incentive for the user to pay the 99 cents per song that it charges.

Again, the structure of the product allowed the music industry to recapture some of the sales lost to the free file sharing hosts available online.

The key in the future then will be to figure out ways to effectively recapture consumers lost to free tools online by creating more efficient, user-friendly, all encompassing products for those same consumers.

I recommend reading the book "Biznets: The Webopoly Future of Business" which discusses this subject exactly. In short, every business must be an e-business, it must be networking just as is the Internet, and it must be digitally competitive. There are case examples in the book of what a "biznet" company is like and how it operates.

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