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Business Models of Digital Markets
 

Business Models of Digital Markets

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This is the first part of my course for the Master of Digital Marketing of the International Univeristy of Monaco: ...

This is the first part of my course for the Master of Digital Marketing of the International Univeristy of Monaco:

Most of what is known in traditional economy has been widely questioned, or even completely destroyed, by internet.
The disintermediation of value chains, the acceleration of commercial exchanges, the importance of brand sociology, !ash sales methods, the transformation of products into services, the permeability of borders, the abundance and volatility of o"ers... All these phenomenas make digital markets hardly accessible to those who still use 20th century management tools.
In this course, we will explore #rst the main principles distinguishing digital from traditional economy. We will work then on the importance of two-sided or multi-sided markets, and in particular the economy of gratuity. We will then move forward with the extension of models of monetization enabled by the web today.
Finally, we will try to suggest a new approach on a digital company’s creation of value and added value for its clients, insisting on the notion of ecosystems and «closed gardens». For each key point we will use a recent case study, allowing the students to understand the underlying mechanisms and the practical impacts (for ex. why Diablo III is in competition with iTunes? Why la FNAC is not one of Amazon’s competitor?).

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    Business Models of Digital Markets Business Models of Digital Markets Presentation Transcript

    • BUSINESSMODELS OFDIGITALMARKETSMERKAPT / IU MONACOPhilippe MÉDA - 2013
    • Philippe Méda / Business Designer Copiloting blue chips companies and startups’ innovation projects. Business design: - Business Model Innovation - Marketing Strategy - Intrapreneurship Transition design: - Mentoring - Executive coaching - Talent Management In France... and abroad: - London, Berlin, Brussels, Singapore, SFO pmeda@merkapt.com
    • Your expectations?
    • Business Models of Digital MarketsMost of what is known in traditional economy has been widelyquestioned, or even completely destroyed, by internet.The disintermediation of value chains, the acceleration ofcommercial exchanges, the importance of brand sociology, !ashsales methods, the transformation of products into services, thepermeability of borders, the abundance and volatility of o"ers… Allthese phenomenas make digital markets hardly accessible to thosewho still use 20th century management tools.In this course, we will explore #rst the main principles distinguishingdigital from traditional economy. We will work then on theimportance of two-sided or multi-sided markets, and in particularthe economy of gratuity. We will then move forward with theextension of models of monetization enabled by the web today.Finally, we will try to suggest a new approach on a digital company’screation of value and added value for its clients, insisting on thenotion of ecosystems and «closed gardens». For each key point wewill use a recent case study, allowing the students to understand theunderlying mechanisms and the practical impacts (for ex. why DiabloIII is in competition with iTunes? Why la FNAC is not one of Amazon’scompetitor?).
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 1. EMBRACING DESTRUCTION
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Innovation as seen in MBAs
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world In real life...
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 1. Experts don’t see the future «There is little reason for an individual to have a computer in their home» Ken OLSEN, CEO Digital Equipment, 1977
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 1. Experts don’t see the future
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 1. Experts don’t see the future 2002
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 1. Experts don’t see the future Universal communicator
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 1. Experts don’t see the future Universal communicator
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 1. Experts don’t see the future Holograms Flying cars
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 1. Experts don’t see the future Holograms
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 1. Experts don’t see the future Artificial intelligence
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 1. Experts don’t see the future Artificial intelligence
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 1. Experts don’t see the future Flying cars
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 1. Experts don’t see the future Flying cars
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 1. Experts don’t see the future Experts are excited by... Market does...
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates 38 Years 13 Years 4 Years 3 Years 88 Days Time to reach 50 million adopters
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates Social life (Facebook), 2004 Shopping (Amazon), 1995 Music industry (Apple), 2007 Education (Wikipedia), 2000 TV (Netflix), 2013 Digital «Richter magnitude scale»
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates So what is digital?
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates A digital system is a data technology that uses discrete (discontinuous) values.
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates information + di"usion A digital system is a data technology that uses discrete (discontinuous) values.
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates Di"usion Speed of propagation, ease of interoperability, pervasion, reach, and scale. collective intelligence? 2015 III m-payment (enabler to next gen market) e-administration open data m-commerce 2007 II e-commerce social web cloud search mp3 2000 I MMORPG VOD e-books Information Variety and density of knowledge transfered. Digital Markets Generation
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates
    • ➊ Embracing destruction 2. Innovation accelerates➋ The product is not interesting➌ A brave new revenues world Digital means disintermediation
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates Je! Raikes, Stanford, 2004
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates Books
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates TV?
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates «Slow Hunch»
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 2. Innovation accelerates Payment
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 3. Alpha males and the status quo «With in a group of macaques, the last to adopt innovation are the alpha males.» Génétique Moléculaire Evolutive et Médicale, U571 INS ERM) François TADDEI (Laboratoire de
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 3. Alpha males and the status quo
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 3. Alpha males and the status quo Hic sunt dracones / Here be dragons
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 3. Alpha males and the status quo
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 3. Alpha males and the status quo Innoriskation
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 3. Alpha males and the status quo TECHNOLOGY Risk / Innovation Fundamental Research RUPTURE 0.001% Black Swans R&D / IP SIGNIFICATIVE 20% Forecastable ROI Startups Pipeline Versioning INCREMENTAL 80% OTS Multinationals MARKET Risk / Innovation Busines Model Known New Paradigm New Cycle New Segment New Ecosystem New Business Model BLACK HOLE
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 3. Alpha males and the status quo ? BLACK HOLE
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 3. Alpha males and the status quo
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 3. Alpha males and the status quo
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 3. Alpha males and the status quo Charles Leadbater, TED Talks, 2005
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 4. First-movers and pioneers Be identi#ed as the leading brand Federate the early adopters community Lead their transition in a core market community and secure your market share Leverage your advance to decrease the BOM (Bill of Materials) with economies of scale in production/purchasing Be the #rst again to cycle the market with a new o"er
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 4. First-movers and pioneers
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 4. First-movers and pioneers
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 4. First-movers and pioneers
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world 4. First-movers and pioneers
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world The destructive nature of digital markets
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world The destructive nature of digital markets Innovation is about changing the market. And creating a clear added value. Not inventing technologies. Typical companies have to balance status quo and risk. This is di!cult (but they can do ok for some time). Startups depend on taking risk. Find a crisis and solve it (this is disruption).
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Destruction is OK The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as U.S. Steel illustrate the same process of industrial mutation–if I may use that biological term–that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. Joseph A. Schumpeter «Capitalism, Socialism and Democracy» (New York: Harper, 1975) [orig. pub. 1942], pp. 82-8
    • 2. THE PRODUCT IS NOT➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world INTERESTING (IT NEVER WAS) I see... business models
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Business model / Business plan BUSINESS MODEL Your strategy to generate added value for your customers, and how to transform this into sustainable revenues streams. BUSINESS PLAN Your step-by-step operational forecast of how this logic will happen in real life, during the next 5 years.
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Business model?
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Business model? “Compeng*Through*Business*Models”*6*Harvard&Business&School,&2008
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Business model?
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Business model?
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Business model?
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Business Model Visualization ACTIVITY OFFER MARKET key resources strategic communication distribution customers added value products monetization and assets partnerships channels modes segments
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Business Model Visualization ACTIVITY OFFER MARKET key resources strategic communication distribution customers added value products monetization and assets partnerships channels modes segments 1 B2B X 2 B2C
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world ACTIVITY OFFER MARKET key resources strategic communication distribution customers added value products monetization and assets partnerships channels modes segments
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world ACTIVITY OFFER MARKET key resources strategic communication distribution customers added value products monetization and assets partnerships channels modes segments CPC Google Android You AdWords B2B Generate Microsoft Auctions Gmail Chrome customers Apple Google docs ... leads ... Google maps Your data ...
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world ACTIVITY OFFER MARKET key resources strategic communication distribution customers added value products monetization and assets partnerships channels modes segments Google FREE Google B2C Instantly find the Gmail most relevant Google docs information Google maps ... Google Android Microsoft Gmail Chrome Apple Google docs ... ... Google maps Your data ... Generate customers leads CPC You AdWords B2B Auctions Typical multi-sided model
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Business Model Visualization
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Added Value ACTIVITY OFFER MARKET key resources strategic communication distribution customers added value products monetization and assets partnerships channels modes segments What is the problem that we solve? Why are the customers coming to us, instead of the competition? Cost / Performance / Unicity / Uniqueness / Design / Well-being / Values / Accessibility
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Added Value “I sat in a room with Steve, and he put on the table Apple’s product line. And we had four products, two portables and two desktop computers. The iPod wasn’t created yet. And that was a challenge (with only four products). But it ended up being the ultimate opportunity, because we said, because we don’t have enough products to fill a store that size, let’s fill it with the ownership experience. So we quickly moved from a buying experience to an ownership experience–Genius Bars, theaters, and face-to-face help and friendly people. But we had a liberty that most retailers don’t have that are overstuffed with products. You know, you don’t have the space to innovate.” — Johnson at 2005 retail conference
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Added Value
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Added Value
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Added Value To organize the world’s information and make it universally accessible and useful.
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Added values in collision course...
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Added values in collision course... With $2 billion a year, Apple is finally making money on content 23 Billion items were sold sold through iTunes in 2012 (Christopher Mims, 2013)
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Added values in collision course...
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Added values in collision course...
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Added values in collision course...
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Added values in collision course...
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Added values in collision course...
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Key Resources and Assets ACTIVITY OFFER MARKET key resources strategic communication distribution customers added value products monetization and assets partnerships channels modes segments What is the What do we need to build problem that we solve? barriers of entry? Why are the customers What is our magic? coming to us, instead of the What are the core competition? competencies we need to Cost / invest in, to sustain our Performance / business? Unicity / Uniqueness / Know-hows / Soft skills / Design / Well- Processes / Structure / being / Values / Accessibility Culture / Networks / Tools / IP
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Key Resources and Assets
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Key Resources and Assets How Apple works: Inside the worlds biggest startup By Adam Lashinsky, Sr. Editor at Large August 25, 2011:
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Key Resources and Assets Intel working hard to keep Ultrabook pricing lower than $1,000 By Sean Portnoy | August 6, 2011 Despite Intel’s lofty claims that its new Ultrabook platform of super-slim laptops would account for 40 percent of the notebook market by the end of the next year, it’s been dogged by some issues as manufacturers work to get the first Ultrabooks out the door. The most notable one is the price tag, and the chip giant is stepping up efforts to show that the laptops don’t need to cost more than $1,000. That price point is important for a number of reasons, not least of which is that the cheapest MacBook Air costs $999. There have been rumored complaints by laptop manufacturers that given the cost of materials, Ultrabooks would cost more than $1,000 out of the gate. But according to DigiTimes, Intel has provided those vendors a bill of materials for two different Ultrabook flavors, showing that component costs can range from $475 to $650 for 21mm Ultrabooks and $493 to $710 for 18mm flavors. The company is also planning to meet with manufacturers to work on controlling costs to keep the price under a grand — though those same manufacturers have griped that Intel’s pricing of its own parts is a big reason for the high projected costs. Ultrabooks have hit one other snag, perhaps thanks to Apple itself. Vendors are facing a shortage of the magnesium-aluminum chassis that Intel wants used for Ultrabooks, which is leading them to consider using fiberglass chassis instead. Apple has most likely gobbled up all those chassis for itself,as the two major suppliers of the metal chassis are also suppliers to Apple. The one good thing about using fiberglass rather than metal: the Ultrabooks may cost about $20 cheaper. While major manufacturers like Asus and HP appear onboard with Ultrabook production, at least one other vendor is skeptical of the platform: Acer’s founder, Stan Shih, has dubbed the new laptops a “fad.” If Intel and its partners can keep them priced below the MacBook Air that might not be the case, but there’s plenty of skepticism floating around about whether Ultrabooks will be the future of notebooks or not.
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Key Resources and Assets A core competency is a well-performed internal capability that is central, to a company’s strategy, competitiveness, and profitability. Valuable + Costly to imitate + Rare / Hard to substitute
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Key Resources and Assets
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Strategic Partnerships ACTIVITY OFFER MARKET key resources strategic communication distribution customers added value products monetization and assets partnerships channels modes segments What is the What do we need Who are we working with problem that we to build barriers solve? of entry? to get access to rare Why are the What is our resources? customers magic? coming to us, Who is central to increase instead of the What are the core competition? competencies we our market reach? need to invest in, Cost / to sustain our Who can kickstart us? Performance / business? Unicity / Who can protect us from Know-hows / Uniqueness / Soft skills / competitors? Design / Well- Processes / Cost / TTM / Risk / IP / being / Values / Structure / Accessibility Culture / Scalability / Culture Networks / Tools / IP
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Strategic Partnerships
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Products ACTIVITY OFFER MARKET key resources strategic communication distribution customers added value products monetization and assets partnerships channels modes segments What is the What do we need Who are we What’s in our portfolio? problem that we to build barriers working with to solve? of entry? get access to rare resources? What do we show on the Why are the customers What is our website? magic? Who is central to coming to us, increase our instead of the What are the core market reach? What do we invoice? competition? competencies we Cost / need to invest in, Who can Specifications / to sustain our kickstart us? Performance / business? Who can protect Versions / Availability / Unicity / us from Know-hows / competitors? Roadmap / Key Uniqueness / Soft skills / Design / Well- Processes / Cost / TTM / features / Support being / Values / Structure / Risk / IP / Accessibility Culture / Scalability / Networks / Culture Tools / IP
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Products Product? Service ? Experience? Usage ? Solution ? Lifestyle? Statement ?
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Products Products
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Products Direct competition?
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Products Comes in di!e rent co 100% R lors e 0% Fat cyclable (Fructo Essent s ial vita e) Smart min packag s ing 10% Pr ice Trendy
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Products Minimum Don’t fall Viable in love Product with your ideas
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Monetization ACTIVITY OFFER MARKET key resources strategic communication distribution customers added value products monetization and assets partnerships channels modes segments What is the What do we need Who are we What’s in our How do we generate problem that we to build barriers working with to portfolio? solve? of entry? get access to cash? rare resources? What do we Why are the customers What is our show on the How is the revenue magic? Who is central to website? coming to us, increase our structure? instead of the What are the core market reach? What do we competition? competencies we invoice? What are the other forms need to invest in, Who can Cost / to sustain our kickstart us? Specifications / of revenue? Performance / business? Versions / Who can protect Cash / Reputation / Unicity / Know-hows / us from Availability / Uniqueness / competitors? Roadmap / Key Engagement / Soft skills / Design / Well- Processes / Cost / TTM / features / being / Values / Support Granularity / Cycle / Structure / Risk / IP / Accessibility Culture / Scalability / Direct or indirect mode / Networks / Culture Recurrence Tools / IP
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Monetization Transfers : Providers : Benefits : TURNOVER CASH FLOWS CUSTOMERS EBIDTA RECOMMENDATION TRUST & VISIBILITY MARKET BRAND VALUE SUSTAINABILITY EMPLOYEES & ENGAGEMENT PRODUCTIVITY PARTNERS PEFORMANCE KNOWLEDGE MATURITY MARKET TTM GRANULARITY
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Communication ACTIVITY OFFER MARKET key resources strategic communication distribution customers added value products monetization and assets partnerships channels modes segments What is the What do we need Who are we What’s in our How do we How do we broadcast our problem that we to build barriers working with to portfolio? generate cash? solve? of entry? get access to offer to the market? rare resources? What do we How is the Why are the customers What is our show on the revenue How does the market find magic? Who is central to website? structure? coming to us, increase our us? instead of the What are the core market reach? What do we What are the competition? competencies we invoice? other forms of What are the surfaces of need to invest in, Who can revenue? Cost / to sustain our kickstart us? Specifications / contact with customers? Performance / business? Versions / Cash / Who can protect Pre-sales / Post-sales / Unicity / Availability / Reputation / Know-hows / us from competitors? Engagement / Uniqueness / Soft skills / Roadmap / Key Periodicity / Image / Design / Well- features / Granularity / Processes / Cost / TTM / being / Values / Support Cycle / Direct or Focus / Coverage / Structure / Risk / IP / indirect mode / Accessibility Culture / Scalability / Interacivity / Recurrence Networks / Culture Attractiveness Tools / IP
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Communication
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Communication «By creating value for our customers, we create value for our shareholders. We use our expertise to create transport-related products and services of superior quality, safety and environmental care for demanding customers in selected segments. We work with energy, passion and respect for the individual.»
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Communication «We organize the world‘s information and make it universally accessible and useful.»
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world alue ded v yo ur adIDEAS+PEOPLE+STRATEGY
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world alue ded v yo ur ad
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Distribution ACTIVITY OFFER MARKET key resources strategic communication distribution customers added value products monetization and assets partnerships channels modes segments What is the What do we need Who are we What’s in our How do we How do we How is the offer delivered problem that we to build barriers working with to portfolio? generate cash? broadcast our solve? of entry? get access to offer to the to each customer rare resources? What do we How is the market? Why are the What is our show on the revenue segment? customers magic? Who is central to website? structure? How does the coming to us, increase our market find us? How do partners help us instead of the What are the core market reach? What do we What are the competition? competencies we invoice? other forms of What are the enhance our logistics? need to invest in, Who can revenue? surfaces of Cost / Specifications / contact with Direct / Indirect / to sustain our kickstart us? Performance / business? Versions / Cash / customers? Unicity / Who can protect Availability / Reputation / Network / Integration / Know-hows / us from Pre-sales / Post- Engagement / Uniqueness / Soft skills / competitors? Roadmap / Key sales / Parallelization / Design / Well- features / Granularity / Processes / Cost / TTM / Periodicity / being / Values / Cycle / Direct or Cascade / Rainfall Structure / Risk / IP / Support Image / Focus / Accessibility indirect mode / Culture / Scalability / Coverage / Recurrence Networks / Culture Interacivity / Tools / IP Attractiveness
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Distribution
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Distribution
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Distribution
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Distribution Structure Offre Marché compétences valeur partenaires produits et communication distribution clients clefs ajoutée stratégiques services © EUROMED MANAGEMENT / MERKAPT 2008-2010
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Customers Segments ACTIVITY OFFER MARKET key resources strategic communication distribution customers added value products monetization and assets partnerships channels modes segments What is the What do we need Who are we What’s in our How do we How do we How is thepaying us? Who istooffer problem that we to build barriers working with to portfolio? generate cash? broadcast our delivered each solve? of entry? get access to offer to the customer rare resources? What do we How is the market? How do we describe segment? the Why are the What is our show on the revenue customers How does the groups of customers magic? Who is central to website? structure? How do partners coming to us, increase our market find us? reacting to our offer in a help us enhance instead of the What are the core market reach? What do we What are the our logistics? way? competition? competencies we invoice? other forms of What are the the same need to invest in, Who can revenue? surfaces of Direct / Cost / to sustain our kickstart us? Specifications / contact with What are the different Indirect / Performance / business? Cash / customers? Who can protect Versions / customers’ roles? Network / Unicity / Availability / Reputation / Know-hows / us from Pre-sales / Post- Engagement / Integration Mass Niche / / market / Uniqueness / competitors? Roadmap / Key sales / Soft skills / Granularity / Parallelization / Design / Well- features / Processes / Cost / TTM / Periodicity / Ecosystem / Stake- Cascade / being / Values / Support Cycle / Direct or Structure / Risk / IP / Image / Focus / Accessibility Scalability / indirect mode / Coverage / holders / Promoters / Rainfall Culture / Recurrence Networks / Culture Interacivity / Gate keepers / Early Tools / IP Attractiveness adopters / Laggards / B2C / B2B / B2G / C2C
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Customers Segments
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Cost Structure ACTIVITY OFFER MARKET key resources strategic communication distribution customers added value products monetization and assets partnerships channels modes segments COST STRUCTURE Where are the main costs coming from? What are the sort term, long term and recurring costs? What are the key investments? Working capital requirement / Fixed or variable cost structure / Economies of scale / Compartimentalization
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Business Model Visualization ACTIVITY OFFER MARKET key resources strategic communication distribution customers added value products monetization and assets partnerships channels modes segments What is the What do we need Who are we What’s in our How do we How do we How is the offer Who is paying problem that we to build barriers working with to portfolio? generate cash? broadcast our delivered to each us? solve? of entry? get access to offer to the customer rare resources? What do we How is the market? segment? How do we Why are the What is our show on the revenue describe the customers magic? Who is central to website? structure? How does the How do partners groups of coming to us, increase our market find us? help us enhance customers instead of the What are the core market reach? What do we What are the our logistics? reacting to our competition? competencies we invoice? other forms of What are the offer in a the need to invest in, Who can revenue? surfaces of Direct / same way? Cost / Specifications / contact with to sustain our kickstart us? Cash / Indirect / Performance / business? Versions / customers? What are the Who can protect Network / different Unicity / Availability / Reputation / Know-hows / us from Pre-sales / Post- customers’ roles? Engagement / Integration / Uniqueness / competitors? Roadmap / Key sales / Soft skills / Granularity / Parallelization / Niche / Mass Design / Well- Processes / Cost / TTM / features / Periodicity / Cycle / Direct or Cascade / market / being / Values / Structure / Risk / IP / Support Image / Focus / indirect mode / Rainfall Ecosystem / Accessibility Culture / Scalability / Coverage / Recurrence Stake-holders / Networks / Culture Interacivity / Promoters / Tools / IP Attractiveness Gate keepers / Early adopters / COST STRUCTURE Laggards / B2C / B2B / Where are the main costs coming from? What are the sort term, long term and recurring costs? What are the key B2G / C2C investments? Working capital requirement / Fixed or variable cost structure / Economies of scale / Compartimentalization
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world What digital is destroying & recreating ACTIVITY OFFER MARKET key resources strategic communication distribution customers added value products monetization and assets partnerships channels modes segments Adds up collective Extreme outsourcing Transfer payment to Reach out directly to intelligence / crowd and scaling-up someone else, use every connected device interactions to create opportunities. before paying, pay per individually. new information. use.... Extremely low / no Ship before finalizing, Personalized, on the Global, local, glocal, barrier of entry. the media is the spot engagement. fractalize markets, reach product, the user is the for unsolvent product, needs only to customers, everyone’s a do one thing right.... market... COST STRUCTURE From an OPEX world to a CAPEX world.
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Do you see business models?
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Do you see business models?
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world
    • 3. A BRAVE NEW➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world REVENUES WORLD
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Free is the new black Transfers : Providers : Benefits : TURNOVER CASH FLOWS CUSTOMERS EBIDTA RECOMMENDATION TRUST & VISIBILITY MARKET BRAND VALUE SUSTAINABILITY EMPLOYEES & ENGAGEMENT PRODUCTIVITY PARTNERS PEFORMANCE KNOWLEDGE MATURITY MARKET TTM GRANULARITY
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world A flat pricing world
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world A flat pricing world
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Galaxies of opportunities... Microsoft, Xbox Live 20 million people log in daily $700 million revenue Premium accounts $49 /month Xbox Live is integrated in Windows Phone 7, and will be in Windows 8 as well. "Xbox Live will be the pervasive media service across devices, whether its us or Apple or anybody else, people want to be able to navigate through multiple devices in a The US virtual goods market has reached certain ecosystem very seamlessly". $2.1 billion in 2011 Steam Store Playstation Apple App Store 50 to 70% of the $4 b sales from Network and iTunes $1.4 downloaded PC games +100 million billion revenue More download PC games are registered 50 million bought in the US, than physical accounts registered games from retail stores. $500 million accounts, revenue +500,000 Apps "The overall decline of PC games when combining sales via both digital downloads and physical retail Premium accounts 15 billion Apps sales is impacted by the expansion of social- $49 /month downloaded (20% network gaming as well as the continued being games). expansion of free game options." NPD analyst Anita Frazier
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world But is there real money in it?
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world But is there real money in it?
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Sustaining the TTM race TURNOVER FREE $ RECOMMENDATION +++ A $ B TTM TT Market / Maturity
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Sustaining the TTM race
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Sustaining the TTM race
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Sustaining the TTM race
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Sustaining the TTM race Marginal cost of production / delivery vs. Opportunity cost
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Free is the new black Razor & Blades Sponsorship Freemium TRIALWARE BUNDLE
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Understanding the customer acquistion cost «If it’s free, you are the product»
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Collaboration economy vs. Free
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world The death of the Ad Economy?
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Death of the musical industry? Tag Price vs. Adjusted Price CD $15 Digital Album $9.99 Single $0.99
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Death of the musical industry? BAIN «Publishing in the Digital Age» Adjusted Data Non-Adjusted Revenues (in!ation) 64% Global drop (end of 1990 peak) RIAA Data (16 categories) CD peak ≃ Vinyl peak (+13%)
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Death of the musical industry?
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Death of the musical industry? Or do we get another perspective?
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Weak signals of destruction / recreation
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world What do we sell? FAIL! The device is not the product
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Still, there’s destruction... 400 300 200 100 0 2011 2012 Répartition des ventes de l’édition US ($ Mds) Adult Hardcover Adult Paperback Adult Mass Market Paper. Downloaded Audio eBooksAmerican Publishers Association
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Still, there’s destruction...
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Still, there’s destruction...
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Still, there’s destruction... FAIL
    • ➊ Embracing destruction➋ The product is not interesting➌ A brave new revenues world Thanks! Philippe MÉDA pmeda@merkapt.com @PMerkapt