As a professor at North Carolina State Universityand the founding director of the Institute for Advanced Analytics, Rappa is bestknown to millions around the world as the creator of "Managing the DigitalEnterprise", an innovative and award-winning educational Web site devotedto the study of management in the digital world.
Here he describes what a businessmodel is:
Business models are highly discussed but leastunderstood. In the most basic sense, a business model is a method of doing businessby which a company can sustain itself - that is, generate revenue. The businessmodel spells-out how a company makes money by specifying its position in thevalue chain.
Some models are quite simple. A companyproduces a good or service and sells it to customers. If all goes well, revenues from sales exceed the cost of operation and the company realizes aprofit.
Other models can be more complex.Broadcasting is a good example. Radio and later television programming has beenbroadcasted over the airwaves free to anyone with a receiver for much of thepast century. The broadcaster is part of a complex network of distributors,content creators, advertisers (and their agencies), and listeners or viewers.Who makes money and how much is not always clear at the outset. The bottom linedepends on many competing factors.
Business models have been defined and categorizedin many different ways. This is one attempt to present a comprehensive andcogent taxonomy of business models observable on the web. The proposed taxonomyis not meant to be exhaustive or definitive. Internet business models continueto evolve. New and interesting variations can be expected in the future. Thebasic categories of business models discussed in detail in a table include: Brokerage, Advertising, Infomediary, Merchant, Manufacturer (Direct), Affiliate, Community, Subscription and Utility
(To read thearticle on http://digitalenterprise.org, please click here)
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