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414 Part Three Key System Applications for the Digital Age

TABLE 10.5 INTERNET BUSINESS MODELS

CATEGORY DESCRIPTION EXAMPLES
E-tailer Sells physical products directly to consumers or to Amazon
individual businesses. RedEnvelope.com
Transaction broker Saves users money and time by processing online ETrade.com
sales transactions and generating a fee each time Expedia
a transaction occurs.
Market creator Provides a digital environment where buyers and eBay
sellers can meet, search for products, display Priceline.com
products, and establish prices for those products.
Can serve consumers or B2B e-commerce,
generating revenue from transaction fees.
Content provider Creates revenue by providing digital content, such WSJ.com
as news, music, photos, or video, over the Web. GettyImages.com
The customer may pay to access the content, or iTunes.com
revenue may be generated by selling advertising Games.com
space.
Community Provides an online meeting place where people Facebook
provider with similar interests can communicate and find Google+
useful information. iVillage, Twitter
Portal Provides initial point of entry to the Web Yahoo
along with specialized content and other Bing
services. Google
Service provider Provides Web 2.0 applications such as photo Google Apps
sharing, video sharing, and user-generated Photobucket.com
content as services. Provides other services Dropbox
such as online data storage and backup.

the Internet. Today, however, the portal business model provides a destination
site where users start their Web searching and linger to read news, find enter-
tainment, meet other people, and be exposed to advertising. Portals generate
revenue primarily by attracting very large audiences, charging advertisers for
ad placement, collecting referral fees for steering customers to other sites, and
charging for premium services. In 2012, portals (not including Google or Bing)
generated an estimated $8.5 billion in revenues. Although there are hundreds
of portal/search engine sites, the top four portals (Yahoo, Facebook, MSN, and
AOL) gather more than 95 percent of the Internet portal traffic because of their
superior brand recognition (eMarketer, 2012).

E-tailer
Online retail stores, often called e-tailers, come in all sizes, from giant Amazon
with 2011 revenues of more than $48 billion, to tiny local stores that have Web
sites. An e-tailer is similar to the typical bricks-and-mortar storefront, except
that customers only need to connect to the Internet to check their inventory
and place an order. Altogether, online retail will generate about $224 billion
in revenues for 2012. The value proposition of e-tailers is to provide conve-
nient, low-cost shopping 24/7, offering large selections and consumer choice.
Some e-tailers, such as Walmart.com or Staples.com, referred to as “bricks-
and-clicks,” are subsidiaries or divisions of existing physical stores and carry
the same products. Others, however, operate only in the virtual world, without

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