Internet & media

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The new German start-up Niiu will soon launch their interpretation of a modern newspaper. Niiu readers have the possibility to select the content section of their choice. They prefer for instance the front page of The New York Times, the politics section of Tagesspiegel combined with the economic section of Handelsblatt business and select no sports at all. By using print-on-demand technology Niiu will create a unique paper version and deliver that to your doorstep. Thereby they try hold on to the romantic feeling of paper, an experience that remains important for many readers. Users pay via a flexible credit system which results in a prices between € 1,20 and € 1,80 per newspaper. Next to this revenue stream, advertisers will pay a higher price per ad due to the fact that they can be better targeted towards the reader’s interests. A part of the income will be redirected to the different news content providers that partner with Niiu. The traditional news sector is focused at value creation for the publishers: a one-size-fits-all newspaper at a fixed price that can be easily printed and distributed. In contrast the internet news business is aimed towards the user. Readers aren’t bounded to long-term subscription models with one content-provider but often hop from one news source to the other. Tools like RSS-readers help people to aggregate the content from the brands they like. Raising Pay-walls and blocking access to search engines doesn’t seem to be the right answer for classic news providers. We will have to see if Niiu manages to find a new niche within the news sector. But this unique businesses model that combines customized news with the classic paper experience looks already very promising.

Entertainment & tourism

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Following our previous post on wantz.it and tweetag, two other social applications that presented during Pitch Arena were Taatu and Virtua Gym. For these two ventures we also briefly described their business model. We didn’t go in depth, but mapping out the four social applications gaves us the possibility to quickly compare them with each other. Taatu is already active for several years and relies on a more complex business model than Virtua Gym.

Taatu

Taatu relies on two big revenue loops in their business system. First of all they offer a 3D chat experience to their user base, an active crowd of youngsters. The attention of this group is sold to advertisers who can create branded content and events inside the 3D world of Taatu. Another stream of revenue comes from many small micro-payments inside their virtual world. Users can buy virtual items that will extend their community experience. Also, the users of taatu can create goods that others can buy, which leads to a virtual economy. Different to other virtual economies, the virtual currency can’t be exchanged to dollars. Money can therefore only be transferred from the users to Taatu company.

Virtua Gym

During their 8 minute pitch shown below, the two brothers behind Virtua Gym describe the different business models that they are using. Since they are still in a very early stage, it difficult to determine which part of their business concept will become their most important revenue stream. Once they have built up their service towards gym users, they will have an interesting user base to sell to niche advertisers.

This leads to a typical free advertising based business model where the basic service is offered for free in exchange for advertising. Many online services try to rely on this business concept but only a few of them manage to become sustainable. A large user base, even in a niche topic is vital to attract large advertisers. Therefor Virtua Gym is working to add an experience on top of their service where users can have an off-line but real-time sport competition against other people.

Internet & media

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Hollrr.com is a very interesting business concept and that for many reasons. First of all, Hollrr gives regular consumers more tools and power in the business ecosystem. Secondly, it sets a perfect example how businesses are evolving when embracing new currency transactions as descibed in our 10 building blocks model. The most important transaction in their system is ‘reputation for exposure’. Below you see a visual mapping of Hollrr’s 4-player business model. Like always we show only the most relevant transactions and players. This allows us to better compare and transfer business concepts.

How does Hollrr.com work?

This is how hollrr.com tries to give more power to the consumer: Early-adopters try to spot new products and they will actively spread the word about their ‘discovery’. By using trackable widgets, tweets and blogpost they will notify their tribe. A consumer becomes thereby an influencer. This the exposure aspect we talked about.

When later on the product becomes a success, the tribe around that person will recognize that person as the one that was able to spot the product early stage. When someone becomes an expert in discovering potential successful products, they will earn the respect of their tribe. This is the reputation part of the transaction.

But Hollr.com goes one step further. Once the spotted product has become a success, they will reward the whole tribe that spotted and supported the product. The earlier a person talked about the product, the more money they will receive.

But how do they make money?

But who’s bringing in the money to pay those early-adopters and influencers. Hollrr.com gives one solution on their website. Product owners (companies) can add their products to the database of hollrr and pre-pay for clicks, or somehow they can join an affiliate program. But no further details are given so that leaves me with the following problem.

A small starting company that developed a new product, often doesn’t have the resources to pay services like hollrr for pre-paid clicks. However it will be that kind of products that will be the most interesting to the user base of hollr.com. Everybody there wants to be one of the first to support a new interesting product, but when no money can be earned with that hollrr will need another revenue stream.

So my question to Hollrr: How are you going to make money?

Banking & professional services

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Blyk.com is a free mobile network for youngsters. Blyk.com sends you messages from your favourite brands – targeted on your profile – in return for free minutes and text messages. The target age group of 16-24 year is rather hard to reach, which makes it an attractive offer for advertisers. The start-up launched about one and a half years ago in the UK, and has a base of 200,000 users now. Building on that success and backed by €70 million of investments, the start-up is currently expanding its business concept into the Netherlands. Unlike in the UK where they build up a complete telecom operator, they will partner with existing telecom providers to roll-out faster in Europe. In the Netherlands Blyk is partnering with Vodafone, and has already lined up advertisers from the travel, music, sports and film industry.

Blyk’s free business model is based on an advertisement revenue model generically similar to free newspapers, Google, and free online games. Where traditionally customers pay with ‘money’ for a mobile service, they can now pay with ‘attention’ to an advertising company, which in its turn pays the mobile service provider. Although FREE has been quoted as the most misleading business concept in the world by some, the speed and magnitude of new FREE initiatives should focus our attention on the following questions: which free start-ups are entering my industry? What if I made my current primary transaction free, on what other offerings could I earn money (services, ads, premium offer…)? Even if free is not sustainable at this moment in your business, it is an excellent brainstorming method to generate ideas about new value propositions and revenue streams in your industry. Just remember… the best way to avoid a war is to be prepared!

Entertainment & tourism

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While In-Game Advertising is growing to $2 billion in 2012, In-Game Selling has all the ingredients to become the next big business model innovation in the gaming industry. Our analysis of the business model behind in-game advertising discussed how game publishers sell the ‘attention’ of their audience to advertisers. The next step now is to go from ‘attention’ to ‘buying’, or from in-game advertising to in-game selling:

• In-Game Advertising: gamers will see in-game references to a Pizza fast food chain, but still need to pick up the phone or surf to the website in order to order pizza delivery.
• In-Game Selling: there is a Pizza delivery icon, shortcut or location in the game environment, where you can order a pizza just by a click of the button. Example: While playing EverQuest II just type /pizza and a web browser will launch the online ordering section of pizzahut.com. Fill in your info and just kick back until fresh pizza is delivered straight to your door. Domino’s Pizza announced similar ambitions.

In-Game Selling business model

Where previously the game was just a standard product or experience, it is upgraded with a sales channel for other products and services (f.e. pizza delivery). The game actually offers a platform to bring together buyer and sellers, and brings benefits to both, which we know as a brokerage service. Similar to other brokers, game publishers can charge a listing fee to the seller, and/or a commission per transaction. The generic principle here is very valuable: could your existing product or service offer a channel to facilitate specific buy/sell transactions? Which goods or services are your users interested in? Which sellers are interested in your users?

In-Game Selling is a specific example. Any suggestions for a good generic name for this new business model? In-Product Selling, Free+Reseller = Freeseller, In-App Commerce…?

Entertainment & tourism

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Traditionally game publishers like Electronic Arts, Nintendo, and Ubisoft, sell their games for a fixed price including profit. This is known as the basic Product Sales business model or Experience Sales business model. From this basic transaction, a lot of companies look for new value propositions and revenue streams to add. In-Game Advertising is a very strong example of a revenue stream that has been (increasingly) added over the last years. Think of virtual billboards, branded drinks or stores, or a branded Soccer League name – all within the gaming environment.

How to apply the in-game advertising business model?

From the initial transaction on the top (experience for money), a new flow is added with attention going from the gamers to the advertiser, compensated by a cash flow from advertiser to game publisher. Attention is the new currency! This is a straightforward example of an advertising model in which you sell the attention of your audience to an advertiser. Important to note is that the advertising is integrated into the user’s gaming experience, which makes it less offensive and more effective compared to TV commercials for example.

For the game publishers, in-game advertising offers an important new revenue stream that covers for part of the game development cost (which is expected to grow to $20M per title for a 7th generation console game). Pricing can vary from up-front flat fees, conditioned to sales volumes, to cost per unit settings. Industry reports suggest that in-game advertisement can increase profits by an extra $1 to $2 per game unit sold, which is an important increase over the current $5 to $6 profit per unit. The total income from in-game advertising is expected to top $2 billion in 2012. In-game advertising can also completely replace the purchase price to an extent where the game becomes free for the user (more on that later).

Which audience do YOU reach at this moment? Who would be interested in their attention? Could you sell the audience’s attention to them (integrated in the current experience)?