Archive for July, 2007
- Posted by Tengku Zahasman on July 29th, 2007 filed in Entrepreneurship, Web2.0, Business Model
- 14 Comments »
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A lot of people will be wondering the same thing the first time they hear about building businesses around Web 2.0, “After creating a Web App.. what happens next? How do we generate money out of it?”
Its nothing complex, really. As long as you can build an interesting or useful app, there comes the quality traffic. Quality traffic always comes with quality users. And when there are quality users, guess what? There’s money… lots of `em too. Look at Friendster and Myspace. Their founders are now millionaires.. how do you think they pull money out of those apps?
You need to have some kind of business model before you build that app… or at least an idea of how to generate money out of it
We’re all in the business of making money here. Depending on what type of services your web application offer, there can be many different ways to monetize it. A lot of these have been practiced in the offline business world for ages, but the fact that we’re doing it “the web way” makes some new people in this industry a bit confused.
1. SUBSCRIPTION BASED MODEL
This is one of the widely used business model in the industry of Web 2.0, specifically for those web apps that provide “uniquely” useful services and don’t have so many scary competitors. Usually those that uses this approach will also provide FREE subscription plan but with limited functionalities. This strategy is implemented just so that the users will be able to try out their services before deciding later on whether they want to upgrade to a paid subscription if they need the extra functionalities. Some people upgrade because they want to remove ads and other types of annoyances in their account. According to Ryan Carson, in most cases 98% of the users will be on the FREE plan and only 1-2% will actually upgrade. However, if you have a REALLY huge user base, 1-2% may actually be worth it. Basecamp, Freshbooks, DropSend and Shoutmix (a Malaysian shoutbox provider) are some of the famous Web 2.0 startups that uses this approach.
2. ADVERTISING MODEL
Reserve some space on your web app for advertisers to put their advertisements on. This can be done in many creative ways depending on your application’s behavior and not necessarily just by putting banner ads on the webpage. Take for example Revver, an alternative online video sharing service like YouTube. They append short video advertisements at the end of each uploaded videos. Some widget-based web companies will put small ads on their widgets too. Feedburner allows putting ads in their user’s RSS feeds. This type of business model is mostly used by apps that has massive amount of target audience or users. Most of them usually provide absolutely FREE service/accounts to attract that number of traffic.
3. SELL STUFFS ONLINE..
Although selling stuffs sounds a bit traditional but it still is very practical and web2.0-ish if you do it the right way. Check out CafePress for instance… the company that actually allows you to design t-shirts online (and also caps, mugs, etc), and buy it without any minimum order. To make it better, they would even allow you to open up your own e-store with those designs you just created and get commissions out of it, shippings handled 100% by them. Isn’t that idea just plain brilliant? I think I should create an app like that someday…
4. REVENUE SHARING MODEL
This is also a type of “advertising model” with the exception that instead of taking all the advertisement revenues for yourself, you also share a few percentage of it with your users who help spread the ads across the web. Such examples are Google AdSense, PayPerPost, Text-Link-Ads, Advertlets and ImageFly. By giving some percentage to your users, you’ll instantly create the buzz and attract lots of participants very quickly. This will exponentially increase your advertising network and thus giving you the extra credibility to attract bigger advertisers. This is a business model with a marketing influence injected to it. The disadvantage about this approach however is that keeping up with your publisher’s payouts could be very troublesome and time consuming. You need to constantly make your publishers happy cuz one mistake might get you into lots of trouble in terms of reputation.
5. REVENUE THROUGH PPC PROGRAMS
PPC stands for Pay-Per-Click. This is one of the easiet way to generate money out of your web app because you only need to place some non-intrusive ads around your application and get paid for every valid clicks made on those ads. It can actually be implemented in almost any web app of any types and combined with other main business models. Google AdSense, Yahoo Publisher Network (YPN) and Bidvertiser are some of the PPC programs out there widely used by many apps to generate revenues. Example apps that uses this monetization method are Friendster and Flickr. Possibly worth it for high traffic apps.
6. SELL YOUR WEB APP
A lot of web startups out there dreams of getting acquired or bought off by the giant web companies out there like Yahoo and Google. While this is not really a business model, it does give you the monster-bucks (we’re talking [b][m]illions here ppl ) very quickly. Basically it is selling off your business so that you can stop managing your web app and just enjoy the money. Few months ago YouTube and Feedburner was sold off to Google for about 1.65 billion and a hundred million bucks respectively. Now their founders are living in heaven. You need to be very good in statistics to attract these buyers tho, because you need to prove to them giants that your app is really worth that much.
OTHER MODELS.. THINK.. THINK..
I can’t possibly list all business models here. What I have stated up there are some of the major business models used by many Web 2.0 companies. Companies like Paypal and E-Gold for example have their own business model on the base of electronic-currencies which I haven’t yet stated in the 6 points above. Ebay, Amazon and Alibaba also have their own unique business models. The point is that by being a little bit creative, you can turn money out of almost any ideas you can think of. The most important part now is to start building upon that idea!Tags: business model ideas internet business internet startups web 2.0 Web 2.0 entrepreneur
I am posting this information because I want other people who’s facing the same problem as I had to be able to find the solution when searching through Google. I know I didn’t. So for PHP users who are using XAMPP on Windows Vista, pay attention (other WAMPs could be affected too)…
Being a CakePHP baker, I had the tendency to try out the Bake script (a convenient command-line interface (CLI) tool in CakePHP which helps programmers to create all the necessary Model classes, Controller classes, and View template files based on the database schema - alongside with some optional basic CRUD methods). So after I set-up the console so that it can run PHP and the bake script, I typed in “cake” into the cmd box and pressed Enter. The Cake console appeared to be running successfully, but there is this annoying error box which kept on popping up everytime I run a command/script. This error box carried the message “CLI has stopped working”. Oddly, the CLI could still be used afterwards
At first I thought it was a CakePHP problem, but when I tried running the command “php -v” to check the PHP information, the same problem happened. So I knew this must be a PHP problem instead of CakePHP’s.
A short Googling around suggested me that most of the people having this problem are those who uses XAMPP on Vista. Initially I decided to just forget about the problem and move on since the scripts did run without problems. But to make matters worse, everytime I start up my Komodo Edit IDE, that error box pops up like 5 times in a row. Now that annoyed me to the bone so I decided to have this problem fixed.
“Fixed commandline handling for CLI and CGI. (Marcus, Johannes)”
Realising that the PHP version used in XAMPP is version 5.2.2, I immediately downloaded the PHP 5.2.3 binaries in hope that replacing the PHP in the XAMPP folder with the new version of PHP would fix this problem. To my amazement, it did. No more annoying pop-ups.. yay!
Update: The “Actual” Solution
Turns out that the actual culprit to this problem is the mysqli extension (mysqli_php.dll) distributed with XAMPP. So instead of replacing all of the latest PHP distribution, you only need to replace that particular extension with the one that came pre-installed with XAMPP. That is sufficient enough to get rid of the annoying alert box.
So there.. if you ever face the “CLI has stopped working” error on your Vista machine, don’t just give up and disable CLI straight away. Simply download the latest PHP binaries and replace it into where you installed PHP (eg: C:\xampp\php) overwriting everything. Practically, you may only need to replace the mysqli_php.dll extension. That should do the trick.Tags: cakephp experience
All work and no fun makes Web 2.0 a dull world. Let’s up for a bit of entertainment (or infotainment) shall we?
Getting a VC’s attention is not easy. So if you want to learn some tips on how you can manipulate a VC into signing that million-dollar-agreement with your Web 2.0 team, perhaps this 3-minutes video can help you out. The man speaks in Hebrew but it has an English subtitle. Quite an interesting “videopedia” with some ground-breaking tips. Watch it carefully, enjoy and learn!
But of course you’re not gonna take that guy seriously, do ya?
Thanks TechCrunch.Tags: capital humor