The Long Tail Of Business Models

Chris Anderson of "Long Tail" fame has a blog post up where he quotes me (thanks Chris) and then submits a list of various web media business models and asks for other ideas. Here’s his list so far:

  • CPM ads ("cost per thousand views"; banner ads online and regular ads in print, TV and radio)
  • CPC ads ("cost per click"; think Google ads)
  • CPT ads ("cost per transaction"; you pay only if the customer brought to you from a media sites becomes a paying customer. Here’s an example.)
  • Lead generation (you pay for qualified names of potential customers)
  • Subscription revenues
  • Affiliate revenues (think: Amazon Associates)
  • Rental of subscriber lists
  • Sale of information (selling data about users–aggregate/statistical or individual–to third parties)
  • Licensing of brand (people pay to use a media brand as implied endorsement)
  • Licensing of content (syndication)
  • Getting the users to create something of value for free and applying any of the above to monetize it. (Like Digg or our own Reddit
  • Upgraded service/content (ed: aka "freemium")
  • Alternate output (pdf; print/print-on-demand; customized Shared Book style; etc.)
  • Custom services/feeds
  • Live events
  • "Souvenirs"/"Merchandise"
  • Co-branded spinoff

To that list, I’d add:

  • Cost Per Install (popular with top Facebook apps who can help others get installs)
  • E-commerce (selling stuff directly on your website)
  • Sponsorships (ads of some sort that are sold based on time, not on the number of impressions)
  • Listings (paying a time based amount to list something like a job or real estate on your website)
  • Paid Inclusion (a form of CPC advertising where an advertiser pays to be included in a search result)
  • Streaming Audio Advertising (like radio advertising delivered in the audio stream after a certain amount of audio content has been delivered)
  • Streaming Video Advertising (like streaming audio but in video)
  • API Fees (charging third parties to access your API)

I am certain there are at least dozens more, but I am off to the gym. I’d like to see us all compile as exhaustive a list as possible. So please leave your additional business model comments on either Chris’ post or this post, or write your own post and tag it in delicious with the world "webbusinessmodel". Thanks.

#VC & Technology

Comments (Archived):

  1. Guest

    – Market Maker in an Ad Exchange (too obtuse, Chris or Fred?)Similar to ADSDAQ, RightMedia or DoubleClick’s AdX Exchange. Revenue is generated between Bid (what the advertiser is willing to pay) and Ask (what the publisher is wiling to sell at).

    1. fredwilson

      That’s a good oneSomeone should add that to the wiki

  2. Andrew Parker

    Collaborating on this post would be best done by wiki, so I’ve set up the USV wiki to edit this post. See here:

  3. Avi Flombaum

    I wonder if it’s wise to implement more then one of these or to focus on just one. Great list though.

  4. Bruce Warila

    Preemptive PublishingIt seems to me that some of the of newer communication tools / platforms are about satisfying people’s desire to be the first to tell the world that they divined, discovered, and announced something – to scoop the news before everyone else. There has to be a business model in enabling people to preemptively publish, or at least to know what position they held in the stack of people that all seem to be having and sharing the same thoughts/ideas at the same time. Answer the question: who was first? Yeah, everyone can broadcast at will, but paying $6.00 a month to know that your stream of messages/posts are being sifted, sorted, ordered, and charted will let you know (and everyone else know) who preempted who…

  5. drBaher

    I’ve create a wiki for Media Business Modelshttp://www.mediabusinessmod…I’ve already added your Chris’ original list and your additions as well, and I hope more people will contribute to it in the future.Here’s my blog post about it

  6. Amit Shafrir

    great list – how about “in video product placements” – would that fall under streaming video advertising or is it a category on its own ?

    1. fredwilson

      It’s a category all of its ownAdd it to the wiki!

  7. cgardnerma

    Download Video Advertising ( where downloaded videos are accompanied by a refreshable ad “cache”. See NBC Direct.)

  8. Sam Huleatt

    “Brand-claimed Accounts” not sure if anyone does this, but it’s a model I’d like to see implemented:http://www.leveragingideas….

  9. Rolly Rouse

    Hi Fred -Excellent list.You might consider adding iCPC.iCPC is like CPC, but different. The paid clicks are for internal – not external – links. That is, the clicks are part of a process of engaging with content, not of navigating away to other Web sites (in hopes of finding useful content).Web advertising is gradually moving from less targeted to more targeted, from less measurable to more measurable, and from intrusive (push) to user-driven, consensual, and welcomed (pull). By monetizing content that’s systematically organized in one place, iCPC is part of a natural (and we hope inexorable) migration toward better-integrated user experiences.iCPC also helps make possible new forms of syndication in which valuable user content and advertising are one and the same. Highly customized content and advertising can be integrated into any Web site or blog, and iCPC revenues can be shared.We use iCPC as the revenue engine for our collaborative search network for home design products & services. It seems applicable to lots of other markets, as well.All the best -RollyRolly RouseCo-founder & CEOHomePortfolio

    1. fredwilson

      Great additionThanks

  10. Doug Kersten

    Arbitrage – The practice of taking advantage of a price differential between two or more markets. (e.g., think 712 phone numbers, products from China, etc.)

    1. fredwilson

      Always a good way to make money but not always sustainableFred

  11. güzel sözler

    thanks all

  12. David Wang

    CPA which is pretty close to lead generation, but I would consider it seperate

    1. fredwilson

      I agree

  13. kenberger

    Cute reference to Chris’ seminal phrase.But is this list really the long tail? Seems more like the head, shoulders, and waist as well.

    1. fredwilson

      AgreedHeadlines are important though

  14. vruz

    I think this is very important. The Long Tail of Business Models allows for the maximum possible flexibility.Actually *all* startup companies should nurture this approach, if the cost of essaying different models is getting cheaper and cheaper.10 Find an audience : see which model sticks: profit : GO TO 10

  15. Avinash

    This is an extremely useful list from Michael Rappa (North Carolina State Univerity) http://digitalenterprise.or…. In fact I’ve found the entire educational resource toManaging the Digital Enterprise very very informativeAvinash

  16. Louis

    I see that a couple of people have created wikis that list the business models discussed here and possibly more. What would be good to see however is a wiki that shows the business models being used by different startups. Could probably be a feature of a site like KillerStartups or StartupSearch.

  17. Joseph

    thanks for thisvery useful synthesisI would add the following: gamesone to one qualified contactsauctions (market places)

  18. Krish Murali Eswar

    Thanks for the model information. Is there a comprehensive ‘list of business models’ for brick and mortar and e-businesses? I am interested in this for our research on a social innovation project.

  19. Santiago Siri

    Great list.

  20. gregorylent

    …micropayments! .. it is why some video and social networks and instant messaging service is asia are .. get ready .. profitable! …. that, and the availability of virtual goods, decorations for your avatar at a very cheap price ..the obstacle in the west? cost per transaction of credit-card purchases … visa and mastercard are standing in the way of progress …in asia it is done via cellphones and smart cards …(learned this at the openwebasia’08 conference in seoul)

  21. victor

    Can some one please-please let me know where to locate a “business model” for a small company that only manufactures custom furniture & lighting for up scale restaurants & hotels. sold through architects, interior designers & furniture specifies.Kindly, send info to [email protected] thank you for your help. Victor.