Entertainment & tourism, Non-profit & public

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Many free business models are based upon advertising while others are based on direct exchange of services. You do something for me and in return I’ll do something for you. Everybody happy! This new approach by Disney combines both methods. In order to get free publicity they are encouraging people to do volunteer work with the Handson Network. When someone gives a few hours of his precious time to such a good cause, Disney will give that volunteer a free visit at on of its theme parks. Visitors of Disney Land or Walt Disney World will admit that this is truly a unique experience. The return Disney receives is off course a better reputation and that without the need to spend big advertising budgets.While more and more charity based business concepts do pop-up, we see that only few of them use it in this fundamental new way. Most of the time a company only promises to donate a part of the profit to charity. By doing this they hope to convince people to buy more goods. All the ‘RED’ products use this method: Charity as a sticker. But in this Disney case there is no direct money involved and that is not a problem at all! Disney is a marketing company, one that sells brand reputation. So anything that can strengthen their reputation will be directly linked to higher profits elsewhere. If you’re a simple product seller you can’t rely directly on such a concept since you don’t have other revenue streams. Maybe in that case a ‘Buy one, give one’-concept will be a more sustainable way of using ‘charity’.

Other-industries

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The new start-up Irehab.com tries to take a different approach to health care. Patients can get free advice on how to treat specific complaints. By answering a few questions and looking at several 3D animations, these users should be able to diagnose themselves. To treat for instance ‘back pain’ they can follow step-by-step instruction videos made by physical therapists but personally selected by external doctors to fit the needs of that specific patient. The first 10 consults are free of charge, both for the patient and the doctor. On the platform itself, they will have a private area where they can keep track of the results. After the first 10 consults the doctors will have to pay $0.99 for each patient that they want to follow up in the future. For further advice the patient will have to pay a fixed nominal fee per month directly to the clinic or doctor. On average this fee will be around $9.99. The only money that Irehab.com” receives will be the $0.99 per month, so they will need a large database to make this Freemium concept profitable. Within a few years it will be common practice that people will diagnose and monitor themselves without the hassle of expensive expert consults. Many companies are looking for ways to monetize this evolution. Google Health and Microsoft HealthVault are only a few of the large group IT services that are around these days. But also beyond the normal web experience we see these experimental concepts. Recently Apple presented the Lifescan’s New Diabetes iPhone App that communicates with a seperate glucose monitoring device. The latter works similar as the VirtuaGym concept we presented earlier. There people could monitor their offline exercise habits to benchmark these with other peers online. This D.I.Y. health care market is nearly unexplored so you may expect a boom of new concepts and ideas in the coming year. Many of them will fail but some of them will change the way we look at health care forever.

Banking & professional services

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TruGenetics understands that the value of genetic profile analysis lies in the combined data of a large group of people. Therefore they decided not to charge their users for individual genome reports in contrast to several competitors. During the first phase of their business, the company will offer this service for free to at least 10.000 users. These people will be asked to send TruGenetics detailed profile information together with a salvia (spit) sample. In exchange for their support, users will receive a service in return in the form of a detailed personal genome report. For Truegenetics all this data will hopefully lead to new findings in phenotypes that could be used to patent new products. Such products can then be sold to biotech, pharma and medical companies. If nothing comes out of this expensive research, they could still sell the data, but this will not be the main goal of the company.

This is a good example of a free business concept that doesn’t rely on advertising or charging premium users. By means of crowdsourcing, they build up the true value of the company. The service for service transaction in their system is also remarkable. The service Trugenetics offers to its users is so personalised (what is more personalised then your own DNA?) that more then enough value is created to encourage people to participate. For many it will even be an unique experience to be part of this global research program that could be beneficial for society one day. Overall this concept shows us once again how consumers are evolving when it comes to privacy and how this creates potential to all sorts of health 2.0 businesses.

Banking & professional services

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As previously described on In-Game Selling, companies are moving from advertisement based revenue models to in-app commerce or in-product selling. Timebridge.com is an excellent example of the same principle. Timebridge offers a scheduling service enabling people to collaboratively determine when to meet, also on mobile. Their actual revenue model is the resale of online and phone meeting services. This is not a freemium model, as Timebridge does not sell a premium of its own product. It is not an advertising business model either, since Timebridge is not earning on selling its users’ attention to advertisers. Timebridge’s business model consists of offering its users a free service that serves as broker platform to resell 3th party (meeting) services with commission.

A lot of free products and services go with a freemium or advertising strategy, but advertising is not sustainable for a number of reasons. In-app commerce, or broader, in-product selling is there to challenge advertising. Micro-payments will be a crucial facilitator in getting consumers to actually paying for content again, in times where people are used to free and ad-supported. Like Timebridge, in-game selling, blogs with jobs/widgets/affiliate programs… can your product or service offer a channel to sell and buy things? Sales people earn more than advertisers, don’t they?

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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During the most recent edition of Pitch Arena, we presented our business model framework to the entrepreneurs and start-ups that were present. The concept of Pitch Arena is rather straight forward. Several start-ups present their new venture to an audience of innovators and technologists in order to get valuable feedback and meet interesting people. We didn’t pitch our platform but fueled to the Q/A session with our view on the business models of the 4 presenting start-ups. With the theme of this Pitch Arena being ‘Social Applications‘, we clearly distinguished four different models being used. Let’s have a look at two of them today.

Wantz.it : dowant!

Wantz.it offers a simple wish list service to their users. People can easily submit products and services they wish to receive to their list by tagging web pages via twitter, facebook or via their own wantz.it page. Then Wantz.it gives those users different means to actively spread/expose their wish list to their friends. When such a friend decides to buy a gift after clicking on an item in the wish list, a part of the money will be sent towards the wantz.it company as a form of commission.

Tweetag : Twitter clouds!

Tweetag’s social app gives users the possibility to create specific tagclouds. The first part of their service is a form of donationware. When used in a non-commercial context, Tweetag asks for a donation fee. The biggest revenue is planned to follow from a second revenue stream though, as commercial companies will be charged when adding a cloud on their web page. While there might be limited value in knowing what everybody is talking about, it could be very interesting to see what a specific group of people is saying. A newspaper for instance could wish to add a tweet cloud to give their readers insight in what a selection of politicians is tweeting all day. By doing this tweetag creates value.