E Commerce Revenue Models Used On Websites Computer Science Essay
Twitter is a micro-blogging site is a social networking giant. It has revolutionized the social networking space. There are various modes, through which twitter makes money, though the CEO & co-founder of Twitter, Evan Williams, has officially maintained that his organization is in no hurry to make money. The investors of Twitter echo the same sentiments.
Still, Twitter makes money and planning to come out with various ways in which it would generate revenues. Following are the revenue drivers for Twitter –
Promoting the third party apps
Selling the ad space
Charging the companies for accessing Twitter
Concept of premium accounts by charging some fees for each account
You Tube is the video sharing site. Any user with the You Tube account can upload videos to the site and share it with the other users of this site. You Tube is currently a free site, where the site does not charge any amount from the users to share or watch a video. The revenue models for You Tube are –
Overlay ads in the bottom of the videos. Clicking on these ads launches them, while the video is paused for a while
In future, the site may also enter into the pay-per-view concept. This would mean the users paying for the videos they are watching or downloading.
In future, You Tube can also focus on charging users for visiting certain part of the sites or for watching more than certain number of videos.
Yahoo! Group started as an email service provider. Subsequently, it diversified into the web page, providing information into multitudes of subjects including, finance, news, business, groups, media, search engine etc. The revenue model for the Yahoo! Group is as follows –
The 88% of the revenue generated by Yahoo! Group in the financial year 2009 came from the marketing of services. The biggest chunk of it came from the search advertising, where advertisers pay Yahoo! Group, so that their ads are displayed on the search results.
Other forms of advertising like contextual and display ads.
Facebook is another social networking site with a difference. It was started in February 2004. It is privately owned and has more than 500 million active users as of July 2010. The revenue models for the Facebook are as follows –
The Facebook’s flyer application serves the advertisements to the users
Facebook credits, which is a virtual currency the users of Facebook use to buy the virtual goods in the applications and games in the Facebook platform. Ten Credits are awarded to Users for every dollar they spend on Facebook.
MySpace is one of the most popular Social networking websites of 2006. Facebook toppled MySpace from the top position in the year 2008. The revenue model for the MySpace is as given below –
Behavioral targeting of the users visiting MySpace
Revenues generated by the ads on the websites and the affiliated networks
MSN is an integrated web services provider. It includes various services like MSN Encarta, MSN Mail, Live messenger, MSN Music etc. The revenue model for the MSN is as given below –
Premium paid services
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Facebook is one of the strongest players amongst all the six players analyzed above. It is able to satisfy it is users in terms of the functionality and the experience of the web site. It is able
to attract new users with ease. The ability to adapt to the changing times has been highly visible in case of Facebook. However, at times it was seen that it acted as disadvantage as many users get uncomfortable, when the users interface changes frequently. The development of the mobile phone apps, when other players are still investigating the business model of it, is a living testimony to the vision of Facebook. The pro-active exploration by the Facebook of the new revenue generating mechanism makes it one of the most flexible social networking sites in the current time. Though Facebook has the disadvantage of having the spam and fraudulent emails to users from the advertisers, however, these are the disadvantages associated with almost all online businesses. Thus, this advantage of Facebook is true for any website. However, Facebook provides the various user defined safety mechanisms, it does not make the security control obsolete but effectively minimizes the entire impact.
SWOT analysis of Facebook
SWOT analysis of Facebook is performed to determine the company’s strength, weakness, opportunities and threats.
Appealing design of website for the users resulting in efficient human-computer interaction
Internationalization of the services provided on the web
Multimillion customer base as it is free of cost to join it
Application support for the mobile users
Third party Facebook security is poor
Frequent fraudulent/spam emails on Facebook advertisements
Part of the current trend
Third party applications can be charged as a brokerage. Advertisers can sell their products on the Facebook directly to the users while the Facebook can charge the brokering amount.
One of the first web services provider to have the mobile app and hence can explore number of opportunities in this space
User interface is changed constantly and hence affecting the growth of customer account
As Facebook surpassed MySpace and Orkut, the fresh new entrants can always overcome the Facebook.
Entry barrier is hardly there in this competitive arena
Future prospects (over 5 years) and Medium Term (5 years) prospects for Facebook
The above SWOT analysis of the Facebook clearly indicates that the both medium and long-term future prospects of the Facebook are positive. Facebook is using the smarter & new ways to advertise and reach to the target audiences. Various activities like those that branded virtual gifts are included as part of this strategy. As the count of active users on Facebook exceeds 500 million as of July 2010, there are many opportunities for Facebook to explore and generate revenues. The rate of swelling users count suggests that the Facebook users would not be decreasing in the time to come rather it would be increasing in next 5 years. Facebook was made available to users 6 years ago and the increase in the count of users has seen phenomenal growth. Hence, it is reasonable to assume that the growth of Facebook users is not going to decline in the near future. Facebook has low business risk, better opportunity, minimum weakness and strong strength in the business. Thus, it is suggested that Facebook should be the right option for investment by the wealth management firms.
Customer Centric Design
The purpose of this section is to illustrate the examples of good, moderate and bad adherence to the Website design guidelines.
Example of Good Adherence to the Website design Guidelines
The example site chosen is www.google.com. The Google website conforms to the customer centric design guidelines. The Google page loads quickly due to absence of heavy graphics. As the user is only interested in visiting Google page for searching the relevant keywords, the site only provides as much. There are no advertisers, no frills, and no stacking up of plethora of hyperlinks to any non-essential details. The site has a simple design. It has a bar to enter the relevant keyword and a search button to activate the search. The top left corner of the page provides the hyperlinks to the various categories of searches, just in case the user is interested in details. Google had been on the forefront of designing its pages as per the feedback from the users. No jargon, whether marketing or business, is present on the search page. Instead, succinct text suggestions are provided as soon as users enter the details in the search bar. Google has been quick to move over to the mobile internet. It developed and launched the mobile version of the Google search page in the similar format. Thus, keeping the user experience same, across the platforms. Such a customer centric design proves the success of Google search engine, in spite of heavy competition in this domain. Almost, every web services has a search engine of their own.
Example of Moderate Adherence to the Website design Guidelines
The example site chosen is www.ebay.com. This site is designed with the consideration for the users navigating it. The products in this site are groups in the expected way and it becomes quite intuitive for any user to access them. For example, all Computer items, like flash memory, computer parts, Laptops etc are categorized under the computers section. The search boxes and the navigation boxes are located conveniently. Hence, making it easier for the users to access it and navigating to the desired information quickly. The service description of the ebay items are easier to understand as no business or marketing language is used. Though the site maintains the discipline of using the appropriate language, the users of the site break this principle. The ebay site is not user friendly on multiple browsers. The navigation panel becomes disarray when the site is opened in the Firefox browser. The website becomes a maze of words when it is opened in the text only mode. The site has enough contrast to allow a color blind user to differentiate and view it comfortably but there is no control on the users. Thus, a user can post images which a color blind user may not be able to see clearly.
Example of Bad Adherence to the Website design Guidelines
The example site chosen is www.latistae.com. This site is designed for selling the women Garments. The site is highly cluttered with the pictures of model wearing the garments but the images are not necessarily connected with the products being sold. The process of purchasing any good is complex and the user is left hanging after certain keystrokes. The site has the un-related advertisements of the search engine optimization, which is hardly of interest to the users visiting this websites for purchasing the women clothing. The advertisements in the end of the homepage are too flashy and the color scheme is not pleasing enough. The content of the website is still readable enough but it is not relevant. Testing this website into the Firefox browser did not result in any image, hence this website is not portable across the browsers. In terms of the color-blind optimization, the color scheme on the website is not pleasing and highly flashy. The website claims to store various retail brands but does not make it clear about the brand being displayed by the models on the homepage. There were few links on the website, which were found to be broken. Thus, the analysis of this website on the customer centric web design principle highlights that it has bad adherence to it.
Are there still serious eCommerce website around that are making a lot of mistakes
The analysis of the various eCommerce websites, which are there to make good revenues, clearly revealed the adherence to the website design principles. There are no cases of drastic bad designed sites as the revenue figures are directly impacted for the badly designed ecommerce websites. Thus, there are hardly any serious eCommerce website making many mistakes in adhering to the website design principles.
Rupert Murdoch declared he was going to charge for all of his company's web content.
Analyze this issue and reinforce your conclusions using information learned in this subject (e.g. Revenue Models). Refer to for some background on this issue.
This situation is a case of organization’s desire to add more revenue drivers in its portfolio to keep up the cash generation. In this case, the Rupert Murdoch’s company was relying on the advertisement revenues. As the organization was not able to increase its revenues due to only advertisement, it declared its intent to charge the company’s web content. This revenue model is known as the subscription-advertising model. The question in everyone’s mind is whether this initiative is going to backfire or not?
Analysis of similar cases in past reveals that such developments have received mixed responses. For example, USA.net was one of the popular free email service providers but due to recession in year 2001, it had to change its free services to the subscription based. The changeover resulted in majority of users changing their email provider, as there were many which provided free emails. Another similar case is of Northern light. This was a free search engine service, which changed to subscription-based service. However, they had to change their revenue model, from search engine to research articles, to keep themselves afloat.
As the analysis reveals, the online business owners change their revenue models with the changing times. Hence, the changeover by Rupert Murdoch is not unexpected. The only glitch is that there are other free news service providers with almost equal quality; hence, the volume of users would be transferred from paid subscription of Web content to free subscription. Thus, a balanced decision could be to retain some part of the web content as free area, while some part of the web content e.g. analytical reports can be made available to premium user base.
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