written by Nadine Gauernack, Lisa Hartmann
The Rising of the Business
With the development from Web 1.0 to Web 2.0 also the classic business models developed. But the ways how you can earn money are the same. The opportunities you have are advertising, infomediary, merchant, community, utility, subscribtion etc. Now these business models are combined with the new opportunities. For example there are: Peer Pioneers, Ideagoras, Prosumer, The New Alexandrians, Global Plantfloors, Wiki Workplaces and platforms for Participation.
Peer Pioneers belong to the idea that the users are integrated in designing websites. The power of mass collaboration should be improved by this revolutionary style of value creation. One important thing in this model is the groupthink. One successful website which created a community that designed the website on their own is MySpace. Of course there are also some critical points. People write every article by themselves. Also people who have actually no knowledge about a theme. Nobody controls whether it is right or wrong. The result is: information falsify. A website as Wikipedia or MySpace needs a datamanagement to organize all information. Too much data can also confuse users. All in all Peer Pioneers is a development of the existing model community. A few years ago not everybody had the chance to go into the Internet because they have not the right software. The old communities were only for few people approachable. They were not able to load pictures or videos. Today all these things are possible for every user.
Business models can also be successful if you integrate the idea of a prosumer. A Prosumer is a portmanteau of the words “producer” and “consumer”. This means that people are at the same time producers of information and also users of these information. To reach a high degree of customization, consumers have to take part in the production process especially in specifying design requirements. In a sense, this is merely an extension or broadening of the kind of relationship that many affluent clients have had with professionals like architects for many decades. This concept has an impact on the world. Here is a problem, too. Today some internet users are already prosumers, but the most human of the population do not utilize it.
The last paragraph will show you how the Business Models and the new ideas will be implement.
This is the way how you can earn money!
It is possible. There are many companies which earn money with their Web 2.0 business models – some of them earn much money. But how do they do it? What is their strategy or is there a strategy? And how much money do they really earn?
Google is a well known search engine – it is the market leader in this business. Google was founded in 1998. So that was before the term “Web 2.0” was brought into being. You don’t really have to know that there is a “Web 2.0” you only need an idea, like Google.
Google started as a native web application. It was and is also today only a service. There is no software which is sold by the company and there is also no licensing. Only the use through the customers is important no selling of products. This is also the difference to the “old” business models. Google has to be an expert in database management so that it can provide its special service.
But how does Google earn money? The answer is advertising. Nearly all the revenues from Google are form ads. Always when a customers googles something there are listed links form companies paying Google money for listing them. In the graph “Staggering Growth” you can see that the revenues form Google raised form above $ 0.2 billion in 2003 to nearly 1.6 billion in 2006. That is really a staggering growth!
With this business model you can definitely earn money!
Also Amazon was founded before the establishment of the term “Web 2.0” – in 1994. The business idea of Amazon is simple; selling products – for example books, CDs, DVDs, electronic and photo articles, software – over the internet. This is a typically Web 1.0 business model. But Amazon had and has something new. The customers are involved into the creation of the page. Amazon is a marketplace. People and companies can sell their products over the page of Amazon.Customers are able to assess products. That is an aid for other customers and a reason for buying from Amazon.
2002. There are affiliate programs. Partners can make a link to the website of Amazon. When a person clicks on that link, visits Amazon and buys there something, the partner will get a fee.
2007. It is possible for website operators to have their own Amazon shop at their homepage.
This is not all. The development of Amazon goes on. And also does their usage of the Web 2.0 as a business model.
And what is with the turnover? It rises steadily. In 2006 the turnover increased by 26 % to $ 10.7 billion. In 2007 it already was $ 14.8 billion. That was a growth of 39 % compared with the year before. And this development will go on.
eBay is the biggest internet auction house all over the world. Its foundation was in 1995 – for the creation of “Web 2.0”. But also eBay is clearly a business model of the Web 2.0. Not eBay sells but other people and companies. eBay is only the middleman of the agreement for sale between the seller and the buyer. It provides services. It creates the perfect surroundings for internet sales. Its subsidiary makes possible the payment over Paypal.
And how does eBay earn money? Always when there is bought something the seller has to pay a fee to eBay. Of course it also earns money with its services. For example eBay gets money from the mail-order firms.And how you can see in the table “Global Financial Figures eBay” also this business model is worth it. From 2001 to 2006 the turnover rises by nearly 700 %. For the profit there was a growth from 2001 to 2006 by 866 %.This is an enormous growth which shows how you can make much money with a good business idea and the Web 2.0.
All in all, one thing is clear. It is not so important how you name the realization of your business model; whether it is Web 1.0 or Web 2.0. You simply need a good idea.
The Peer Pioneers (version form 12.02.2008)
Second Life and IBM (version form 12.02.2008)
What is Web 2.0 Tim O’Reilly, (version form 12.02.2008)
About eBay (version form 12.02.2008)
Google soon at 6 bn$ turnover and the cathedral of knowledge?, Marcel Reichart (version form 12.02.2008)
Web 2.0 (version form 12.02.2008)
Peer Pioneers (version form 12.02.2008)
Alles über Google (version form 12.02.2008)
Über uns, Amazon (version form 12.02.2008)
BUSINESS MODELS ON THE WEB, Michael Rappa (version form 12.02.2008)