The topic of how businesses can make money online is one that I have been thinking about pretty much continuously for about ten years now.
Obviously there are large numbers of online businesses that do all kinds of interesting things.
What I’m interested in though is classifying their business models, so that I can understand them better.
There are only a very small number of business models that I have found so far. I could be missing a few.
If so, please let me know!
- Sell a product or a service – this is the most obvious business model, because it closely resembles the most common way that “brick and mortar” businesses make money. I class websites that sell memberships under this category as well.
- Sell advertising space – this is how most blogs (like this one!) make money.
- Act as a middleman – a good example is eBay, which makes money by allowing others to buy and sell from their platform.
- Beg – this is a common business model in the Open Source community. I’ve never been able to determine whether it works though.
There are lots of combinations of the above, which can blur the issue. I’m still trying to figure out how to classify companies that live off of venture capital without any income, and other companies that live off of government handouts. I think they are probably best classified as #4 in the list above. I can’t think of any other models for making money online though.
An example of one of the above business models can be found in the odd looking box below this line.
IF somebody happened to click on the box, I would possibly wind up a few cents richer than I currently am. Note that I can’t actually ask you to click on it, a) because that would be a violation of Google’s terms of service, and b) because I would then have to reclassify my business model from a combination of #1 and #2 in the above list to #4. And my pride won’t let me.
In any case, if you happen to think of business models that I’m missing, I would love to know.