Business Models for Web 2.0


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Lecture Notes for BM60014 at VGSOM, IIT Kharagpur

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Business Models for Web 2.0

  1. 1. Getting into Web 2.0
  2. 2. What is Web 2.0 ?
  3. 3. This is Web 2.0 !
  4. 4. The War of the Encyclopedias <ul><li>Why has Wikipedia eclipsed </li></ul><ul><ul><li>Britannica – the best known brand </li></ul></ul><ul><ul><li>Encarta – the most well supported brand </li></ul></ul><ul><li>Two reasons </li></ul><ul><ul><li>The volume and diversity of user generated content </li></ul></ul><ul><ul><li>The trust that is created in groups – the social network </li></ul></ul>
  5. 5. What is Web 2.0 <ul><li>Network of Trust </li></ul><ul><ul><li>Network of individual </li></ul></ul><ul><ul><li>No heirarchy </li></ul></ul><ul><li>User Generated Content </li></ul><ul><ul><li>Never the creation of an individual. </li></ul></ul><ul><ul><li>Always built collaboratively </li></ul></ul><ul><li>Rich Media </li></ul><ul><ul><li>Images, movies, 3D realism </li></ul></ul><ul><li>Infinitely Extensible </li></ul><ul><ul><li>Never Complete </li></ul></ul><ul><ul><li>Extended through </li></ul></ul><ul><ul><ul><li>More technology </li></ul></ul></ul><ul><ul><ul><li>More computers </li></ul></ul></ul>
  6. 6. What do users generate ? <ul><li>The obvious stuff </li></ul><ul><ul><li>Blogs : text </li></ul></ul><ul><ul><li>FlickR : images </li></ul></ul><ul><ul><li>YouTube : videos </li></ul></ul><ul><li>A little more sophistication </li></ul><ul><ul><li>Wikipedia </li></ul></ul><ul><li>The not so obvious stuff </li></ul><ul><ul><li>Relationships among people </li></ul></ul><ul><ul><ul><li>Orkut, Facebook </li></ul></ul></ul><ul><ul><ul><li>LinkedIN </li></ul></ul></ul><ul><ul><ul><li>Communities </li></ul></ul></ul><ul><ul><li>Relationship among pieces of data </li></ul></ul><ul><ul><ul><li>Google Page Rank </li></ul></ul></ul><ul><ul><ul><li>Folksonomy </li></ul></ul></ul>
  7. 7. Innovation : Limited by Imagination <ul><li>Incremental improvement is not enough </li></ul><ul><ul><li>kaizen is out </li></ul></ul><ul><ul><li>business process reengineering is out </li></ul></ul><ul><ul><li>knowledge management is too slow </li></ul></ul><ul><li>The gap between what can be imagined and what can be accomplished has never been smaller </li></ul><ul><li>we can now walk backward from our imagination rather than walk forward from the existing past </li></ul>But those who can visualize a new reality are vastly outnumbered by those who cannot
  8. 8. Key Deliverable in this course <ul><li>Presentation / Whitepaper on Sector </li></ul><ul><ul><li>Nature of services </li></ul></ul><ul><ul><li>History of evolution </li></ul></ul><ul><ul><li>List of Players </li></ul></ul><ul><ul><ul><li>Principal Players </li></ul></ul></ul><ul><ul><ul><li>India Story </li></ul></ul></ul><ul><ul><li>Business Models </li></ul></ul><ul><ul><li>Profitability </li></ul></ul><ul><ul><li>Porters Analysis </li></ul></ul>
  9. 9. Analysis of Industry Sectors <ul><li>Porter's 5 forces </li></ul><ul><ul><li>is a framework for the industry analysis and business strategy development </li></ul></ul><ul><ul><li>It define 5 forces that determine the competitive intensity and therefore attractiveness of a market. </li></ul></ul><ul><ul><li>A change in any of the forces normally requires a company to re-assess the marketplace. </li></ul></ul><ul><li>Attractiveness </li></ul><ul><ul><li>refers to the overall industry profitability. </li></ul></ul><ul><ul><li>An &quot;unattractive&quot; industry is one where the combination of forces acts to drive down overall profitability. A very unattractive industry would be one approaching &quot;pure competition&quot;. </li></ul></ul><ul><ul><ul><li>A clear example of this being the airline industry. As an industry profitability is low (and since the dawn of flight the entire industry has failed to make a profit!) </li></ul></ul></ul>
  10. 10. Porter Model
  11. 11. The threat of substitute products <ul><li>The existence of close substitute products increases the propensity of customers to switch to alternatives in response to price increases (high elasticity of demand). </li></ul><ul><ul><li>buyer propensity to substitute </li></ul></ul><ul><ul><li>relative price performance of substitutes </li></ul></ul><ul><ul><li>buyer switching costs </li></ul></ul><ul><ul><li>perceived level of product differentiation </li></ul></ul>
  12. 12. The threat of the entry of new competitors <ul><li>Profitable markets that yield high returns will draw firms. The results is many new entrants, which will effectively decrease profitability. </li></ul><ul><ul><li>the existence of barriers to entry </li></ul></ul><ul><ul><ul><li>patents, rights, etc </li></ul></ul></ul><ul><ul><li>economies of product differences </li></ul></ul><ul><ul><li>brand equity </li></ul></ul><ul><ul><li>switching costs or sunk costs </li></ul></ul><ul><ul><li>capital requirements </li></ul></ul><ul><ul><li>access to distribution </li></ul></ul><ul><ul><li>absolute cost advantages </li></ul></ul><ul><ul><li>learning curve advantages </li></ul></ul><ul><ul><li>expected retaliation by incumbents </li></ul></ul>
  13. 13. The intensity of competitive rivalry <ul><li>Sometimes rivals compete aggressively and sometimes rivals compete in non-price dimensions such as innovation, marketing, etc. </li></ul><ul><ul><li>number of competitors </li></ul></ul><ul><ul><li>rate of industry growth </li></ul></ul><ul><ul><li>intermittent industry overcapacity </li></ul></ul><ul><ul><li>exit barriers </li></ul></ul><ul><ul><li>diversity of competitors </li></ul></ul><ul><ul><li>informational complexity and asymmetry </li></ul></ul><ul><ul><li>fixed cost allocation per value added </li></ul></ul><ul><ul><li>level of advertising expense </li></ul></ul><ul><ul><li>Economies of scale </li></ul></ul><ul><ul><li>Sustainable competitive advantage through improvisation </li></ul></ul>
  14. 14. The bargaining power of customers <ul><li>Market of outputs. The ability of customers to put the firm under pressure and it also affects the customer's sensitivity to price changes. </li></ul><ul><ul><li>buyer concentration to firm concentration ratio </li></ul></ul><ul><ul><li>bargaining leverage, particularly in industries with high fixed costs </li></ul></ul><ul><ul><li>buyer volume </li></ul></ul><ul><ul><li>buyer switching costs relative to firm switching costs </li></ul></ul><ul><ul><li>buyer information availability </li></ul></ul><ul><ul><li>ability to backward integrate </li></ul></ul><ul><ul><li>availability of existing substitute products </li></ul></ul><ul><ul><li>buyer price sensitivity </li></ul></ul><ul><ul><li>differential advantage (uniqueness) of industry products </li></ul></ul>
  15. 15. The bargaining power of suppliers <ul><li>Market of inputs. Suppliers of raw materials, components, and services (such as expertise) to the firm can be a source of power over the firm. Suppliers may refuse to work with the firm, or e.g. charge excessively high prices for unique resources. </li></ul><ul><ul><li>supplier switching costs relative to firm switching costs </li></ul></ul><ul><ul><li>degree of differentiation of inputs </li></ul></ul><ul><ul><li>presence of substitute inputs </li></ul></ul><ul><ul><li>supplier concentration to firm concentration ratio </li></ul></ul><ul><ul><li>threat of forward integration by suppliers relative to the threat of backward integration by firms </li></ul></ul><ul><ul><li>cost of inputs relative to selling price of the product </li></ul></ul>
  16. 16. Identifying Web 2.0 sites <ul><li>Which are the various Web 2.0 sites in the internet ? </li></ul><ul><li>We have heard of the common ones </li></ul><ul><ul><li>Shown at the the left </li></ul></ul><ul><li>Where are the others ? </li></ul>
  17. 17. The web 2.0 principles <ul><li>Web is a platform that </li></ul><ul><ul><li>Consists of hundreds of machines, not one server or computer </li></ul></ul><ul><ul><li>That hosts rich multimedia </li></ul></ul><ul><ul><li>Generated by end users – not the platform provider </li></ul></ul><ul><ul><li>Who form of network of trust </li></ul></ul><ul><ul><li>And is in perpetual beta ... never finished </li></ul></ul>
  18. 18. Web2.0 technologies <ul><li>RSS </li></ul><ul><li>Blog/Vlog/ Podcast </li></ul><ul><li>Ajax, Ruby on Rails </li></ul><ul><li>Mashups </li></ul><ul><li>Tag cloud </li></ul><ul><li>Rating/ Tagging </li></ul><ul><li>Social Networks </li></ul>
  19. 19.
  20. 20.
  21. 21. Categories Social Network Content Aggregation Multimedia Publishing Lifestyle Business Functions Fun and Games Education Employment Career Maps Geographic Information Niche Sectors
  22. 22. Social Networks <ul><li>Brings together like minded people in an informal forum </li></ul><ul><li>Three kinds of social networks </li></ul><ul><ul><li>The Big Guys </li></ul></ul><ul><ul><li>The Smaller Social Networks </li></ul></ul><ul><ul><li>The Niche Players </li></ul></ul>Content Aggregation Multimedia Publishing Lifestyle Business Functions Fun and Games Education Employment Career Maps Geographic Information Niche Sectors Social Network 1
  23. 23. Global Social Networks <ul><li>Twitter is a service for people to communicate and stay connected through the exchange of quick, frequent answers to one simple question: What are you doing? </li></ul><ul><li>Facebook is a social utility that connects you with the people around you. </li></ul><ul><li>Bebo is a social media network where friends share their lives and explore great entertainment. </li></ul>
  24. 24. Smaller Social Networks <ul><li>Sphinn is a social site for search and interactive marketers. </li></ul><ul><ul><li>to share and discover news stories, read and take part in discussions, discover events of interest and network with others. </li></ul></ul><ul><li>NowPublic lets people work together to cover news events around the world. </li></ul><ul><li>PlugIM is a user driven internet marketing community. </li></ul><ul><ul><li>Submit content, share articles, comment on projects and promote your favorites to the front page. </li></ul></ul>
  25. 25. Niche and Specialist Networks <ul><li>Network of young mothers </li></ul><ul><ul><li>Between chasing kids and chasing deadlines, there never seems to be enough time in the day to cook a healthful family dinner. Never fear .. </li></ul></ul><ul><li>A community of people who are touched by diabetes </li></ul><ul><li>imbee is a parent approved, teacher endorsed social networking site appropriate for kids and 'tweens. </li></ul>
  26. 26. Content Aggregation <ul><li>Start Pages </li></ul><ul><li>Classifieds and Directories </li></ul><ul><li>Guides and Reviews </li></ul><ul><li>Content Aggregation and Management </li></ul><ul><li>News and Blog Guides </li></ul><ul><li>Social News The Big Guys </li></ul><ul><li>Bookmarking </li></ul>Multimedia Publishing Lifestyle Business Functions Fun and Games Education Employment Career Maps Geographic Information Content Aggregation 1 2 Niche Sectors
  27. 27. Start Pages <ul><li>Portal that you 'assemble' with things that are of interest to you </li></ul>
  28. 28. Classified Ads and Directories <ul><li>Craigslist </li></ul><ul><ul><li>Classified ads based on cities of the US and also the world </li></ul></ul><ul><li>Oodle </li></ul><ul><ul><li>Classified ads based on categories of things on offer </li></ul></ul><ul><li>Linking Parking space buyers, sellers and renters </li></ul>
  29. 29. Guides and Reviews <ul><li>Yelp </li></ul><ul><ul><li>Reviews for restaurant, beauty parlours and any other kinds of services </li></ul></ul><ul><li>Google Local </li></ul><ul><ul><li>Local services in the neighbourhood </li></ul></ul><ul><li>Citysearch </li></ul><ul><ul><li>Looking for specific services (pizzas ?) at Calcutta ? </li></ul></ul>
  30. 30. Data Collection & Management <ul><li>WUFOO HTML form builder that helps create contact forms, web surveys, and invitations so you can collect the data, registrations and online payments. </li></ul><ul><li>Dabble DB helps you create online databases on the web. It’s easy to use yet extremely flexible and powerful. </li></ul><ul><li>EditGrid is an Online Spreadsheet. </li></ul><ul><ul><li>EditGrid also provides live data access, like stock prices, positioning itself as an on-demand platform of data and spreadsheets. </li></ul></ul>
  31. 31. News and Blog Guides <ul><li>Google : the big guy ! </li></ul><ul><li>Bloglines </li></ul><ul><ul><li>Publish Blogs </li></ul></ul><ul><ul><li>Search Blogs </li></ul></ul><ul><ul><li>Subscribe to Blogs </li></ul></ul><ul><ul><li>Share Blogs </li></ul></ul><ul><li>Technorati </li></ul><ul><ul><li>Making sense of your own blogs and that of others </li></ul></ul>
  32. 32. Social News / Whats Hot ? <ul><li>Collaborative and Cooperative way of choosing web pages that are of interest to a whole group of people </li></ul><ul><li>Members vote on individual web pages and the most popular pages are shown </li></ul>
  33. 33. BookMarking
  34. 34. Multimedia Publishing <ul><li>Books </li></ul><ul><li>Pictures, Images </li></ul><ul><li>Music </li></ul><ul><li>Video </li></ul><ul><li>Create, store, tag, display products </li></ul>Lifestyle Business Functions Fun and Games Education Employment Career Maps Geographic Information Multimedia Publishing 1 2 3 Niche Sectors
  35. 35. Books <ul><li>Lulu </li></ul><ul><ul><li>Platform to publish books on your own </li></ul></ul><ul><ul><li>Including print-on-demand and delivery </li></ul></ul><ul><li>Biblio </li></ul><ul><ul><li>Marketplace for books </li></ul></ul><ul><li>Vufind </li></ul><ul><ul><li>A community of libraries </li></ul></ul>
  36. 36. Photographs & Images <ul><li>Flickr is the most well known site for storage and display of your digital images </li></ul><ul><li>Picnik allows you to manipulate and digitally enhance images from any location </li></ul><ul><li>One of the first storage and display services. Also operates in offline mode </li></ul>
  37. 37. Music <ul><li>Last FM plays music from virtually any artist or combination of artists </li></ul><ul><li>Pandora is not accessible from outside the US </li></ul><ul><li>MOG is a music blog </li></ul>
  38. 38. Video
  39. 39. Lifestyle <ul><li>Sports </li></ul><ul><li>Travel </li></ul><ul><li>Food </li></ul><ul><li>Health </li></ul>Business Functions Fun and Games Education Employment Career Maps Geographic Information Lifestyle 1 2 3 4 Niche Sectors
  40. 40. Sports <ul><li>Istats helps you keep track of your personal workout – exercise schedules and performance and compares them to that of others </li></ul><ul><li>Team snap is a way to create a website for your sports team </li></ul><ul><ul><li>Schedules, availability </li></ul></ul><ul><ul><li>Vast range of sports </li></ul></ul><ul><li>Community for dedicated golfers </li></ul>
  41. 41. Travel <ul><li>Farecast : the smartest way to choose a ticket fare </li></ul><ul><li>Kayak – airticket booking site </li></ul><ul><li>Boo – a community of tourists and travellers that go beyond air fares </li></ul>
  42. 42. Food <ul><li>I am cooked </li></ul><ul><ul><li>A web community for video recipe sharing </li></ul></ul><ul><li>Urban Spoon </li></ul><ul><ul><li>Where do you want to eat? Pick a city to find restaurants and see menus, maps and reviews. </li></ul></ul><ul><li> </li></ul><ul><ul><li>Video recipes </li></ul></ul>
  43. 43. Health <ul><li> </li></ul><ul><ul><li>provides information, inspiration and tools to help you take control of your health and improve your life. </li></ul></ul><ul><li>PEERtrainer </li></ul><ul><ul><li>is a Powerful SystemFor Weight Loss and Fitness Support </li></ul></ul><ul><ul><li>Helps You Be Accountableto Yourself, and Supported By Others </li></ul></ul><ul><li>Imedix </li></ul><ul><ul><li>A New Way To Find And Share Health Information </li></ul></ul>
  44. 44. Fun and Games <ul><li>Fun Stuff </li></ul><ul><li>Games & Entertainment </li></ul>Business Functions Education Employment Career Maps Geographic Information Fun and Games 1 2 3 4 5 Niche Sectors
  45. 45. Fun Stuff <ul><li>Cocktail builder </li></ul><ul><ul><li>Helps you create exotic cocktails with ingredients that you have at home </li></ul></ul><ul><li>Hairmixer </li></ul><ul><ul><li>Refashion, design your hair by combining with celebrity images </li></ul></ul><ul><li>Comiqs </li></ul><ul><ul><li>Create comics with your own pictures </li></ul></ul>
  46. 46. Games & Entertainment <ul><li>Zango </li></ul><ul><ul><li>Collection of online games </li></ul></ul><ul><li>Galaxiki </li></ul><ul><ul><li>science fiction & fantasy galaxy that anyone can edit. </li></ul></ul><ul><ul><li>A fantastic place for science fiction and fantasy lovers. </li></ul></ul><ul><li>Doof </li></ul><ul><ul><li>Online games + social networking </li></ul></ul>
  47. 47. Education, Employment, Career <ul><li>Education </li></ul><ul><li>Job Search </li></ul><ul><li>Professional Networking </li></ul><ul><li>Ask Questions </li></ul>Business Functions Maps Geographic Information Education Employment Career 1 2 3 4 5 6 Niche Sectors
  48. 48. Education <ul><li>Docstoc </li></ul><ul><ul><li>User contributed collection of document templates for professional use </li></ul></ul><ul><li>Mango </li></ul><ul><ul><li>Place to go to learn foreign languages </li></ul></ul><ul><li>Spanish Pod </li></ul><ul><ul><li>Website to learn the spanish language </li></ul></ul>
  49. 49. Employment & Job Search <ul><li>StandoutJobs </li></ul><ul><ul><li>Free HR software for recruitment purposes </li></ul></ul><ul><li>Career Builder </li></ul><ul><ul><li>Job search, match maker </li></ul></ul><ul><li>Monster </li></ul><ul><ul><li>Job search, match maker </li></ul></ul>
  50. 50. Professional Networking <ul><li>LinkedIN </li></ul><ul><ul><li>Professional networking site </li></ul></ul><ul><li>Biznik </li></ul><ul><ul><li>Professional networking site </li></ul></ul><ul><li>ProfessionalontheWeb </li></ul><ul><ul><li>Site for website developers and to sell their services </li></ul></ul><ul><ul><li>How about other services ? </li></ul></ul>
  51. 51. Ask Questions <ul><li>Yahoo answers </li></ul><ul><ul><li>Collaborative way to get answers from volunteers </li></ul></ul><ul><li>Minti </li></ul><ul><ul><li>Advice from parents about parenting </li></ul></ul><ul><li>Fixya </li></ul><ul><ul><li>Technical support, user manuals for consumer devices </li></ul></ul>
  52. 52. Business Functions <ul><li>Collaborative Document Management </li></ul><ul><ul><li>Creation and Sharing </li></ul></ul><ul><li>Firmwide Business Support </li></ul>Maps Geographic Information Business Functions 1 2 3 4 5 6 7 Niche Sectors
  53. 53. Collaborative Document Management <ul><li>Google Docs </li></ul><ul><ul><li>Online Office Suite </li></ul></ul><ul><ul><li>Wordprocessor, spreadsheet, presentation tool </li></ul></ul><ul><li>Writeboard </li></ul><ul><ul><li>Creation of shareable web based documents </li></ul></ul><ul><li>Thinkfree </li></ul><ul><ul><li>Online Office Suite </li></ul></ul>
  54. 54. Firmwide Business Support <ul><li>Backpack </li></ul><ul><ul><li>Instant creation of a collaborative intranet for any company </li></ul></ul><ul><li>Zoho </li></ul><ul><ul><li>Online Office Suite / Mail </li></ul></ul><ul><ul><li>Application Development </li></ul></ul><ul><ul><li>CRM, Invoicing </li></ul></ul><ul><li>Wufoo </li></ul><ul><ul><li>Online forms for data collection </li></ul></ul>
  55. 55. Maps & Geographic Systems <ul><li>Maps </li></ul><ul><li>Mapping Applications </li></ul>Maps Geographic Information 1 2 3 4 5 6 7 8 Niche Sectors
  56. 56. Maps <ul><li>Google Maps </li></ul><ul><ul><li>Creation of customisable maps </li></ul></ul><ul><li>Live Search </li></ul><ul><ul><li>Microsoft version of Google Maps </li></ul></ul><ul><li>Google Earth </li></ul><ul><ul><li>lets you fly anywhere on Earth to view satellite imagery, maps, terrain, 3D buildings and even explore galaxies in the Sky. </li></ul></ul><ul><ul><li>You can explore rich geographical content, save your toured places and share with others. </li></ul></ul>
  57. 57. Mapping Applications <ul><li>Frappr </li></ul><ul><ul><li>Social networks based on maps </li></ul></ul><ul><li>Wayfaring </li></ul><ul><ul><li>Collaboratively created and used maps </li></ul></ul><ul><li>Community Walks </li></ul><ul><ul><li>Create maps with paths on it for collaboration and sharing </li></ul></ul>
  58. 58. Niche Sectors <ul><li>Retail </li></ul><ul><li>Real Estate </li></ul><ul><li>Data Visualisation </li></ul><ul><li>Genealogy </li></ul><ul><li>Philanthropy </li></ul>1 2 3 4 5 6 7 8 9 Niche Sectors
  59. 59. Retail Business <ul><li>Threadless </li></ul><ul><ul><li>Design, Sell, Buy T shirts </li></ul></ul><ul><li>Etsy </li></ul><ul><ul><li>Buy and sell handicrafts </li></ul></ul><ul><li>Stylehive </li></ul><ul><ul><li>High value lifestyle products </li></ul></ul>
  60. 60. Real Estate <ul><li>Zillow </li></ul><ul><ul><li>Searching for, Buying, selling, mortgage of homes </li></ul></ul><ul><li>Rentomatic </li></ul><ul><ul><li>Services the rental market </li></ul></ul><ul><li>Hotpads </li></ul><ul><ul><li>Buy, Sell </li></ul></ul><ul><ul><li>Rent, Lease </li></ul></ul>
  61. 61. Data Visualisation
  62. 62. Infrastructure <ul><li>Storage and Remote Access </li></ul><ul><li>Web Development </li></ul><ul><li>Widgets </li></ul><ul><li>Online Desktop </li></ul><ul><li>Mobile </li></ul><ul><li>Hosted Wiki </li></ul>1 2 3 4 5 6 7 8 9 Infrastructure
  63. 63. Are We Web 2.0 ? Kollaborative Klassroom Meet 12 out of 66 criteria !