MIST 2090 1st Edition Lecture 6 Outline of Last Lecture I Business Modeling II The Canvas Outline of Current Lecture IIII Common Business Models IV Generic Business Model The Value Chain V The Digital Revolution Complicated Business Models VI Bait Hook VII Freemuim VIII Two Sided Market IX Three Trends in the digital age Current Lecture III Common Business Models Common business models include industrial manufacturing product development retail distribution services subscription ad revenue In old days there was 1 permanent model for each industry Manufactures all had same generic business model Retailers followed the same 2 models catalog retailers or store retailers Depending on which industry you were in only a few potential business models at your disposal IV Generic Business Model The Value Chain Tradition organizations thought about their business models in terms of the value chain of an industrial manufacturing company Even random non manufacturing businesses like credit unions attempted to adopt the traditional industrial value chain business model These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute V The Digital Revolution Complicated Business Models Digital rev disrupted traditional business models because digital technologies enable a variety of new opportunities that challenge and disrupt the traditional models and blue the lines b w traditional industries Ex amazon supplanting the retail industry like books and then providing the backbone for it Ex apple getting the music industry to sell songs for 1 and creating the iphone ipad applestore digital platform Ex quicken loans deciding to sell loans without a physical retail building VI Bait Hook Bait are hook are business ideas that gives to you that locks you in and the company gets revenue in return A classic example is a razor and razorblade or printer and toner Digital bait hooks are even more compelling because the incremental cost of the bait approaches zero when you reach scale VII Freemuim Freemium gives something free to most of the customers to get a subset of the customers using premium services Although there are some examples of freemium in the non digital world freemium is a particularly powerful business model in the digital age because the marginal cost of producing additional digital products are often zero VIII Two Sided Market 2 sided market requires network effects where neither group benefits unless both groups are involved IX Three Trends in the digital age 1 Digitizing more of your customer s experience 2 Digital natives increasing 3 Customer Voice to address these you need a specifically digital business model must distinguish b w space and place in non digital wold the place of physical objects matters content moves with the medium of content the digital world is about spaces where content is disaggregated from its medium and moves separately digital business models of 3 components 1 content what is consumed 2 experience what its like to be a customer 3 platform coherent set of digitized business processes data and infrastructure