In this very informative video, YC Continuity Partner Anu Hariharan exemplifies nine business models and important metrics for each of them - including mistakes to avoid.
Business Models:
Enterprise - 1:07
SAAS - 3:29
Subscription - 8:03
Transactional - 10:55
Marketplace - 14:04
E-Commerce - 18:24
Advertising - 20:35
Hardware - 22:33
The session includes a good Q&A session, starting at 25:00.
Although China’s internet penetration is just over 50%, it is home to 772 million internet users, 753 million mobile internet users and 527 mobile payment users…
As many people where too poor to afford computers decades ago, they skipped the PC and credit card era and jumped directly to smart phones. With mobile first, giants such as Baidu, Alibaba and Tencent, but also other companies in China, have developed interesting online business models that are less focused on advertising.
In this well delivered and very interesting presentation, venture capital firm a16z General Partner, Connie Chan, provides several examples how books, podcasts, video and music, are consumed and monetized.
Business Models for Digital Books
In the examples of digital books, Connie compares Chinese services to Amazon, showing how users are given more information before they make a purchase in China. In addition to traditional reviews, users can see how much friends have been reading, search and sort by which books that were read from front to back. Users can buy books by every 1000 characters, by every chapter, read first half for free and pay for second half or only pay for the last chapter. Users can also tip authors and instead of one-off payments, there are often elements of social, gamification and micro-transactions.
One interesting example mentioned is a book with more than 10,000 chapters that is still being written. Based on real time feedback, authors can change the story plot to keep their readers engaged and earn revenues continuously instead of in one-time transactions.
Business Models for Podcasts
Connie compares the US and China podcast market showing the US podcast market to be worth $314M in 2017 in comparison to $3-5B in China. While revenue from US blogs are primarily based on advertising, the Chinese market uses multiple revenue models. Again, combining elements of social, gamification, microtransactions, tipping creators and paid for bundles of podcasts.
In one example, two professors, with 250K listeners and 175K listeners, are shown to generate millions of dollars each...
Business Models for Video
For video the pattern is similar to previous areas providing users with more information before buying and more options to spend their money. Instead of relying on movie trailers, users can watch a portion of a movie for free to then pay to unlock the rest. Users can pay to upgrade resolution or sound and pay for premium content associated to the movie. While watching, users can interact with their friends watching, get coupons, buy skins to their phone/app, join VIP memberships, purchase merchandise or other related products, gain points and register for events.
Business Models for Music
In the music category, Connie shares parts of Tencent Music business model. Instead of buying a song or record once, there is a leader board showing how many times someone has purchased a music album and how many times they have gifted it. When a user has purchased an album multiple times, different VIP features, merchandise and events become available separating the average listeners to the true fans. Also here users can buy skins for the app, purchase merchandise and other products, share material with friends, buy tickets and see streamed live content.
The platform also allows users to make money by creating their own online radio stations, where other users can give tip or gifts.
An interesting interview with Paul Polman, CEO of Unilever, on a business model that is better to society and the environment, and still profitable. The company has set out an ambitious target to double its sales while reducing its environmental impact by 50%.
"Business models that responds to the needs of society are going to be successful... We have looked at all of our products, and did an impact assessment, across the total value chain, from sustainable sourcing, to our own factories and offices, to the consumer... ...we have built it into our R&D programs, into our brand programs..." "The future will only tell. I think you can only judge the CEO, not by the results they are getting when they are there, but really what happens to the company after they leave."
