TABLE 1 INTERNET BUSINESS MODELS SOURCES OF COMPETITIVE FEATURES AND CONTENT ADVANTAGE Commission-based Commissions charged for brokerage or intermediary Search services. Adds value by providing expertise and/or Evaluation access to a wide network of alternatives Problem-solving advertisi Web content paid for by advertisers. Adds value b Search providing free or low cost content-including Evaluation customer feedback, tise, and entertainment programming-to audiences that range from very broad (general content) to highly targeted (specialized content) Mark thro- g marked-up merchandise. Adds value Search through selection, distribution efficiencies, and by Transaction leveraging brand image and tion may use entertainment prog to enhance sales Selling manufactured goods and custom services. Search Adds value by increasing production efficienci Problem-solving capturing customer preferences, and improving Referral-based Fees charged for referring customers. Adds value by s product or service offering D tracking referrals electronically, and g demographic data. Expertise and customer feedback are often included with referral information ubscription-based Fees charged for unlimited use of service or content. Adds value by leveraging strong brand name, Problem-solving providing high quality information to specialized markets or access to essential services. May entirely of entertainment programming Fees charged for metered services. Adds value by providing service efficiencies, expertise, and Transaction practical outsourcing solutions. face new threats because of the adop field, referred to more broadly as customer tion of Internet technologies by our relationship management(CRM). But sales petitor force. com has taken a slightly different In addition to what we are now doing approach. Instead of installing software on with our Web site, how mi each user's pc. salesforce. com rents out its utilize other business models and / or service for $65 to $125 per user. Users ombine complementary activities to he software by going on-line; accounts are add greater value? managed and maintained on the Internet. Questions such as these can help man According to Marc Benioff, CEO of salesfor agers evaluate new avenues for adding value ce. com,Were a utility.. Were like elec- from using digital and Internet technologies tricity. You only pay us if you use us. Thus, Additionally, there are a number of illustra- salesforce. com has utilized a fee-for-service tive examples of firms that have used these business model to create a business system value-adding techniques in unique way that is seriously challenging Oracle and Sie- An interesting example is the fast-gro Ow. bel Systems, its close competitors. With other ing company salesforce. com, a provider of enterprise software, there is typically a large sales management services. Many companies upfront expense and additional training and have jumped into the sales management consulting is required to get it working. Thisface new threats because of the adop￾tion of Internet technologies by our competitors?
In addition to what we are now doing with our Web site, how might we utilize other business models and/or combine complementary activities to add greater value? Questions such as these can help man￾agers evaluate new avenues for adding value from using digital and Internet technologies. Additionally, there are a number of illustra￾tive examples of firms that have used these value-adding techniques in unique ways. An interesting example is the fast-grow￾ing company salesforce.com, a provider of sales management services. Many companies have jumped into the sales management field, referred to more broadly as customer relationship management (CRM). But sales￾force.com has taken a slightly different approach. Instead of installing software on each user’s PC, salesforce.com rents out its service for $65 to $125 per user. Users access the software by going on-line; accounts are managed and maintained on the Internet. According to Marc Benioff, CEO of salesfor￾ce.com, ‘‘We’re a utility ... We’re like elec￾tricity. You only pay us if you use us.’’ Thus, salesforce.com has utilized a fee-for-service business model to create a business system that is seriously challenging Oracle and Sie￾bel Systems, its close competitors. With other enterprise software, there is typically a large upfront expense and additional training and consulting is required to get it working. This TABLE 1 INTERNET BUSINESS MODELS TYPE FEATURES AND CONTENT SOURCES OF COMPETITIVE ADVANTAGE Commission-based Commissions charged for brokerage or intermediary services. Adds value by providing expertise and/or access to a wide network of alternatives. Search Evaluation Problem-solving Transaction Advertising-based Web content paid for by advertisers. Adds value by providing free or low cost content—including customer feedback, expertise, and entertainment programming—to audiences that range from very broad (general content) to highly targeted (specialized content). Search Evaluation Markup-based Reselling marked-up merchandise. Adds value through selection, distribution efficiencies, and by leveraging brand image and reputation. May use entertainment programming to enhance sales. Search Transaction Production-based Selling manufactured goods and custom services. Adds value by increasing production efficiencies, capturing customer preferences, and improving customer service. Search Problem-solving Referral-based Fees charged for referring customers. Adds value by enhancing a company’s product or service offering, tracking referrals electronically, and generating demographic data. Expertise and customer feedback are often included with referral information. Search Problem-solving Transaction Subscription-based Fees charged for unlimited use of service or content. Adds value by leveraging strong brand name, providing high quality information to specialized markets or access to essential services. May consist entirely of entertainment programming. Evaluation Problem-solving Fee-for-service-based Fees charged for metered services. Adds value by providing service efficiencies, expertise, and practical outsourcing solutions. Problem-solving Transaction 169