Strategic Development of Business Models

Implications of the Web 2.0 for creating Value on Internet

M.Sc. Irma Bejarano-González18.06.2012

Agenda• What is web 2.0?

• What is a business model?

• The 4C Internet business model typology

• Which are the key factors and sub factors of the Web 2.0 phenomenon?

• Which are the most important factors and sub-factors?

• Business Case: Wikipedia

• Which activities can the existing Internet businesses implement to embrace the Web 2.0?

• Which is the degree of importance of the different factor for each of the different business models “4C”?

• Conclusion

What is the Web 2.0?• The bursting of the dot-com bubble (Web 1.0) in the fall of 2001

• People thought “the web was overhyped”

• Web 2.0 concept born in 2005 by Dale Dougherty of O’Reilly Media

• 2nd generation of the Word Wide Web (Web 2.0): Evolution of the static HTML Web pages dynamic Web.

• improving the ability for people to collaborate and share information online.

• Changed the business models of the internet based companies and the way they create value.

What is a Business Model ?

• “the story that explains how an enterprise works,” Management writer Joan Magretta

• "The answer to the questions: 1) Who is your customer?, 2) What does the customer value?, 3) How do you deliver value at an appropriate cost?” , Peter Drucker

The 4C Internet business model typology

1)

2)

3)

4)

CONTENT

COMMERCE

CONTEXT

CONNECTION

Which are the key factors and sub factors of the Web 2.0 phenomenon?

1. Social Networking: • Structures of human on-line interactions• Built in a certain topic aiming to connect friends, or

assessments of products and services

1.1 Social IdentityUsers seeking for a sense of

belonging

1.2 Social TrustProduct reviews and

customer opinion platforms

1.3 Virtual word of mouth

Informal information transfer between different parties

1.4 Increasing Consumer PowerIncrease of Firms’

awareness of user opinions

3. Customization and Personalization • Firm’s ability to gives customers what they want,

identify users implicit interest and learn what they like

2.1 Customer CentricityPuts customers central

stage and views them as focal point of the business

2. Interaction Orientation: • Firm’s ability to manage effectively the rising customer

demand for a more intense and authentic dialogue between firm and customer

3.1 Personal Customization

Reconfiguring websites according to their needs

3. User-Added Value:Firms' ability to recognize that there is not only costumers

value added, the value comes also from the internet users

3.3 Group Customization

Whole groups to build and enforce new configurations

2.3 Interaction Configuration

Information is exchange, and with whom and for

what reason

3.2 Social CustomizationInternet business offering

specifically customized products to distinct social

layers

2.2 Customer ResponseFirms’ ability to manage the

dialog with tis customers and develop capabilities to

react

2.3 Cooperative value generation

Company integrates customers into business transactions as equals

3.2 User-generated creativity

let customers bring creative ideas in the

development of products

3.3 User-generated Innovation

Huge amount of innovation generated in the “open

software space"

3.4 Sources of revenue Enable companies to

optimize and broaden their products range and attract

new users.

Web 2.0

3.4 User-generated content

Creation of profiles, whole websites and media such as

video and audio files

My Space

Company Description It is one the most frequently visited online communities online.

First business mode intended to offer free Internet data storage.

Then it was modified to meet users need of personal web sites and social networking.

Factors Involved in the Success of Web 2.0

Interaction Orientation It is focused on user-to-user interaction

Customization/Personalization

Members can design their web presence according to their personal preferences.

Social Networking Users are invited to connect with friends,

relatives, etc.

User-added Value

Every additional individual profile contribute through indirect revenue

User-generated creativity, new music, video and content.

Conclusion

It utilizes all aspects of the Web 2.0. It is very successful Web 2.0 player. It is developing constantly its business model

with respect customers needs.

BUSINESS CASE: MySpace

Wikipedia

Company Description It is the largest and most popular general reference work on the Internet.

Factors Involved in the Success of Web 2.0

Interaction Orientation

Voluntary, cooperative value generation. Users edit and generate content. Specific core of long-standing members control

and reedit crated content if it is necessary.Customization/Personalization

Register members can modify and change their account settings.

Social Networking• Huge amount of social trust given to the

information by the web users.

User-added Value User –generated content is the starting point for the activities of Wikipedia.

Conclusion

It utilizes all aspects of the Web 2.0. Place users at their heart of their activities. User-generated content is the most critical

resource.

BUSINESS CASE: Wikipedia

4 Customization/Personalization

1 Social Networking

2 Interaction Orientation

3 User-added value

1st Virtual word of mouth

2nd Social identity

3rd Social trust

4th Customer Power

1st Customer centricity

2nd Customer response

3rd Interactionconfiguration

4th Cooperative value generation

1st User-generated creativity

2nd User-generated revenue/contact

3rd User-generated content

4th User-generated innovation

1st Personal customization

2nd Group customization

3rd Social customization

1st

2nd

3rd

4th

Which are the most important factors and sub-factors?

Which activities can the existing Internet businesses implement to embrace the Web 2.0?

Which is the degree of importance of the different factor for each of the different business models “4C”?

Conclusion