Lecture L20
NEW BUSINESS MODELS
UNIVERSAL

ACCESS TO"
SERVICES AND "
OTHER PEOPLE
2000
MUSIC
PICTURES
COMMUNICATION
SMARTPHONES
TV	
  SHOWS
MOVIES
BÆKUR
THE DIGITAL DECADE
2010
iMac
iPhone
Mac OS 9.0.4

500 MHz PowerPC G3 CPU, 128MB Memory

Screen - 786K pixels

Storage - 30GB Hard Drive
iOS 4.0

1...
Source:	
  http://www.flickr.com/photos/webrevenu/
HIERARCHAL NETWORK
20th Century 21th Century
FUNDAMENTAL

SHIFT
IN

PEOPLE’S

BEHAVIOUR
FUNDAMENTAL
CHANGE IN

CONSUMING
CONTENT
Picture	
  by	
  Flickr	
  user	
  Shaggyshoo	
  
FUNDAMENTAL
CHANGE IN

PRODUCING
CONTENT
Picture	
  by	
  Flickr	
  user	
  Shaggyshoo	
  
Copyright	
  ©	
  2012	
  Ólafur	
  Andri	
  Ragnarsson
If your business has not been
disrupted by the Internet, it will
T...
YouTube Monty Python 

Videos Boost 

DVD Sales 23,000%
USER
GENERATED
CONTENT
TRADITIONAL PRODUCTION OF CONTENT
TRADITIONAL PRODUCTION OF CONTENT
Benchmark:"
"
" Production budget: $900,000"
" Audience: ~ 50,000,000
USER GENERATED PRODUCTION OF CONTENT
USER GENERATED PRODUCTION OF CONTENT
Benchmark:"
"
" Production budget: $0"
" Audience: 680,216,740
Can this delivery
method compete?
“Every industry that becomes digital 

becomes free”
- Chris Anderson, Editor WIRED
Freeconomics
The Economy of the Free
Source:	
  Free!	
  Why	
  $0.00	
  Is	
  the	
  Future	
  of	
  Business	
  
Subsidising Products...
ZERO
The Economy of the Free
A Taxonomy of Free
"Freemium"!
What's free: Web software and services, some content
Free to whom: users of the basic versi...
A Taxonomy of Free
Advertising!
What's free: content, services, software, and more
Free to whom: everyone
"
Examples
Yahoo...
A Taxonomy of Free
Cross-subsidies!
What's free: any product that entices you to pay for something else
Free to whom: ever...
A Taxonomy of Free
Zero marginal cost!
What's free: things that can be distributed
without an appreciable cost to anyone
F...
A Taxonomy of Free
Labor exchange!
What's free: Web sites and services
Free to whom: all users, since the act of using the...
A Taxonomy of Free
Gift economy!
What's free: the whole enchilada, be it open source software
or user-generated content
Fr...
Economy of Abundance
Traditional products exist in the economy of scarcity
"
When the cost of copying and distributing bec...
You can’t sell
copiesthey’re worthless
25
Videostores, DVD,
late fees, clutter
Everything, anywhere,
anytime (almost)
BEFORE NOW
CHANGE IN CONSUMER BEHAVIOUR
Printed books, magazines
Digital, automatically
delivered, interactive
BEFORE NOW
CHANGE IN CONSUMER BEHAVIOUR
Own, store, clutter Rent, subscribe, stream
OWNERLESS LIFESTYLE
BEFOE NOW
Back in 2007, streaming music services accounted
for just 3% of total music industry revenues.
"
Today, streaming services...
What can you
sell?and make money?
Accessibility
Immediacy
Personalisation
Authenticity
Patronage
Interpretation
Embodiment
Findability
How can you
marketyour Products?
TRADITIONAL MARKETING
Use the medium people use
From marketing to conversation
BRANDING
EVERYTHING COMMUNICATES
EVERYTHING YOU SAY
EVERYTHING YOU DON’T SAY
EVERYTHING YOU DO
EVERYTHING YOU DON’T DO
MARKETING IS LIKE JAZZ
CONVERSATION
UNITED BREAKS GUITARS
$3,500 Taylor Guitar
The YouTube video was posted on July 6, 2009
"
It amassed 150,000 views within one day, prompting United to
contact Carrol...
Within 4 days of the video being posted online, United
Airlines' stock price fell 10%, costing stockholders about
$180 mil...
STARBUCKS KNOWS THE CONVERSATION
CONVERSATION
WELCOME TO THE CONVERSATION
WELCOME BACK TO THE CONVERSATION
LEARNING IS NOT
MANDATORY,
NEITHER IS
SURVIVAL
Lecture L21
GAMES
NEXT
NO LECTURE 28.03
L20 New Business Models
L20 New Business Models
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L20 New Business Models

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With the Internet and social networks, some new business models have emergied. Consider Flickr. Anybody can sign up and use the service for free. Only a fraction of the users get pro account and pay. How can Flickr make money on that? It turns out that services like this can.

Many businesses make money by giving things away. How can that possibly work? The music business has suffered severly with digital distribution of content. Should musicians put all there songs on YouTube? What is the future business model for music?

In this lecture we look at new busines models, include the business of free.

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L20 New Business Models

  1. 1. Lecture L20 NEW BUSINESS MODELS
  2. 2. UNIVERSAL
 ACCESS TO" SERVICES AND " OTHER PEOPLE
  3. 3. 2000 MUSIC PICTURES COMMUNICATION SMARTPHONES TV  SHOWS MOVIES BÆKUR THE DIGITAL DECADE 2010
  4. 4. iMac iPhone Mac OS 9.0.4
 500 MHz PowerPC G3 CPU, 128MB Memory
 Screen - 786K pixels
 Storage - 30GB Hard Drive iOS 4.0
 1 Ghz ARM A4 CPU, 512MB Memory
 Screen - 614K pixels
 Storage - 32GB Flash Drive Source:  Ars  Technical  Images:  Apple 17 2000 2010 THE SECOND HALF OF THE CHESSBOARD
  5. 5. Source:  http://www.flickr.com/photos/webrevenu/
  6. 6. HIERARCHAL NETWORK 20th Century 21th Century
  7. 7. FUNDAMENTAL
 SHIFT IN
 PEOPLE’S
 BEHAVIOUR
  8. 8. FUNDAMENTAL CHANGE IN
 CONSUMING CONTENT Picture  by  Flickr  user  Shaggyshoo  
  9. 9. FUNDAMENTAL CHANGE IN
 PRODUCING CONTENT Picture  by  Flickr  user  Shaggyshoo  
  10. 10. Copyright  ©  2012  Ólafur  Andri  Ragnarsson If your business has not been disrupted by the Internet, it will The digital online world 13
  11. 11. YouTube Monty Python 
 Videos Boost 
 DVD Sales 23,000%
  12. 12. USER GENERATED CONTENT
  13. 13. TRADITIONAL PRODUCTION OF CONTENT
  14. 14. TRADITIONAL PRODUCTION OF CONTENT Benchmark:" " " Production budget: $900,000" " Audience: ~ 50,000,000
  15. 15. USER GENERATED PRODUCTION OF CONTENT
  16. 16. USER GENERATED PRODUCTION OF CONTENT Benchmark:" " " Production budget: $0" " Audience: 680,216,740
  17. 17. Can this delivery method compete?
  18. 18. “Every industry that becomes digital 
 becomes free” - Chris Anderson, Editor WIRED Freeconomics
  19. 19. The Economy of the Free Source:  Free!  Why  $0.00  Is  the  Future  of  Business   Subsidising Products is well known " Cross-subsidy! " Now, a different sort of free has emerged " The new model is based on the fact that the cost of products themselves is falling fast
  20. 20. ZERO
  21. 21. The Economy of the Free
  22. 22. A Taxonomy of Free "Freemium"! What's free: Web software and services, some content Free to whom: users of the basic version " Subscription model of media " Varying tiers of content, from free to 
 expensive, or a premium "pro" version " The 1% Rule " F2P in the video games industry
  23. 23. A Taxonomy of Free Advertising! What's free: content, services, software, and more Free to whom: everyone " Examples Yahoo's pay-per-pageview banners Google's pay-per-click text ads, Amazon's pay-per-transaction "affiliate ads" Paid inclusion in search results Paid listing in information services Lead generation
  24. 24. A Taxonomy of Free Cross-subsidies! What's free: any product that entices you to pay for something else Free to whom: everyone willing to pay eventually, one way or another " Examples Give the music, sell concerts
  25. 25. A Taxonomy of Free Zero marginal cost! What's free: things that can be distributed without an appreciable cost to anyone Free to whom: everyone " Examples On-line music Digital reproduction and peer-to-peer distribution, the real cost of distributing 
 music has truly hit bottom
  26. 26. A Taxonomy of Free Labor exchange! What's free: Web sites and services Free to whom: all users, since the act of using these sites and 
 services actually creates something of value " Examples Free porn if you solve a few captchas Rating stories on Digg, voting on Yahoo Answers, or using Google's 411 service
  27. 27. A Taxonomy of Free Gift economy! What's free: the whole enchilada, be it open source software or user-generated content Free to whom: everyone " Examples Wikipedia Zero-cost distribution has turned 
 sharing into an industry
  28. 28. Economy of Abundance Traditional products exist in the economy of scarcity " When the cost of copying and distributing becomes close to nothing, the economy shifts " You can’t sell copies – their worthless " It’s not only about money - time and respect are also important " So is you digital footprint
  29. 29. You can’t sell copiesthey’re worthless
  30. 30. 25 Videostores, DVD, late fees, clutter Everything, anywhere, anytime (almost) BEFORE NOW CHANGE IN CONSUMER BEHAVIOUR
  31. 31. Printed books, magazines Digital, automatically delivered, interactive BEFORE NOW CHANGE IN CONSUMER BEHAVIOUR
  32. 32. Own, store, clutter Rent, subscribe, stream OWNERLESS LIFESTYLE BEFOE NOW
  33. 33. Back in 2007, streaming music services accounted for just 3% of total music industry revenues. " Today, streaming services contribute to 21% of total revenues Source: http://www.businessinsider.com/pandora-v-itunes-revenues-2014-3
  34. 34. What can you sell?and make money?
  35. 35. Accessibility
  36. 36. Immediacy
  37. 37. Personalisation
  38. 38. Authenticity
  39. 39. Patronage
  40. 40. Interpretation
  41. 41. Embodiment
  42. 42. Findability
  43. 43. How can you marketyour Products?
  44. 44. TRADITIONAL MARKETING
  45. 45. Use the medium people use From marketing to conversation
  46. 46. BRANDING
  47. 47. EVERYTHING COMMUNICATES
  48. 48. EVERYTHING YOU SAY EVERYTHING YOU DON’T SAY EVERYTHING YOU DO EVERYTHING YOU DON’T DO
  49. 49. MARKETING IS LIKE JAZZ
  50. 50. CONVERSATION
  51. 51. UNITED BREAKS GUITARS
  52. 52. $3,500 Taylor Guitar
  53. 53. The YouTube video was posted on July 6, 2009 " It amassed 150,000 views within one day, prompting United to contact Carroll saying it hoped to right the wrong " 13.3 million by September 2013 http://en.wikipedia.org/wiki/United_Breaks_Guitars
  54. 54. Within 4 days of the video being posted online, United Airlines' stock price fell 10%, costing stockholders about $180 million in value
  55. 55. STARBUCKS KNOWS THE CONVERSATION
  56. 56. CONVERSATION
  57. 57. WELCOME TO THE CONVERSATION
  58. 58. WELCOME BACK TO THE CONVERSATION
  59. 59. LEARNING IS NOT MANDATORY, NEITHER IS SURVIVAL
  60. 60. Lecture L21 GAMES NEXT NO LECTURE 28.03
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