9 Online business models

One of the most popular questions for startups online (and even major ones like Twitter and Facebook) is ‘what is your business model’. Sometimes the question is sincere but often it is voiced more like an accusation: what are you exactly trying to acomplish?

The interesting thing about business models is that there is not much magic involved. Business models are pretty much set and all you have to do really is apply one of them to your business. The hard part is choosing the right one for you. You can choose one or the combination of couple of them.

So here comes the list:

Brokerage
Brokers are market-makers: they bring buyers and sellers together and facilitate transactions.

Advertising
The web advertising model is an extension of the traditional media broadcast model. The broadcaster, in this case, a web site, provides content (usually, but not necessarily, for free) and services (like email, IM, blogs) mixed with advertising messages in the form of banner ads.

Infomediary
Independently collected data about producers and their products are useful to consumers when considering a purchase. Some firms function as infomediaries (information intermediaries) assisting buyers and/or sellers understand a given market.

Merchant
Wholesalers and retailers of goods and services. Sales may be made based on list prices or through auction.

Manufacturer (Direct)
The manufacturer or “direct model”, it is predicated on the power of the web to allow a manufacturer (i.e., a company that creates a product or service) to reach buyers directly and thereby compress the distribution channel.

Affiliate
In contrast to the generalized portal, which seeks to drive a high volume of traffic to one site, the affiliate model, provides purchase opportunities wherever people may be surfing. It does this by offering financial incentives (in the form of a percentage of revenue) to affiliated partner sites.

Community
The viability of the community model is based on user loyalty. Users have a high investment in both time and emotion. Revenue can be based on the sale of ancillary products and services or voluntary contributions; or revenue may be tied to contextual advertising and subscriptions for premium services.

Subscription
Users are charged a periodic – daily, monthly or annual – fee to subscribe to a service.

Utility
The utility or “on-demand” model is based on metering usage, or a “pay as you go” approach.

You can combine any of these models and vary slightly to make new models. But this is a nice list to get started with.