This document summarizes key changes in business models and consumer behavior driven by digital technologies between 2000-2010. It discusses how digitization and the internet enabled universal access to services, content and people, shifting from scarcity to abundance. New business models emerged like freemium, advertising, cross-subsidies and zero marginal cost. Consumers transitioned to renting/streaming content instead of owning physical copies. Marketing also shifted from traditional methods to conversational approaches by participating in online discussions.

1. Lecture L20
NEW BUSINESS MODELS

5. UNIVERSAL
ACCESS TO"
SERVICES AND "
OTHER PEOPLE

6. 2000
MUSIC
PICTURES
COMMUNICATION
SMARTPHONES
TV
SHOWS
MOVIES
BÆKUR
THE DIGITAL DECADE
2010

7. iMac
iPhone
Mac OS 9.0.4
500 MHz PowerPC G3 CPU, 128MB Memory
Screen - 786K pixels
Storage - 30GB Hard Drive
iOS 4.0
1 Ghz ARM A4 CPU, 512MB Memory
Screen - 614K pixels
Storage - 32GB Flash Drive
Source:
Ars
Technical
Images:
Apple
17
2000 2010
THE SECOND HALF OF THE CHESSBOARD

8. Source:
http://www.flickr.com/photos/webrevenu/

9. HIERARCHAL NETWORK
20th Century 21th Century

10. FUNDAMENTAL
SHIFT
IN
PEOPLE’S
BEHAVIOUR

11. FUNDAMENTAL
CHANGE IN
CONSUMING
CONTENT
Picture
by
Flickr
user
Shaggyshoo

12. FUNDAMENTAL
CHANGE IN
PRODUCING
CONTENT
Picture
by
Flickr
user
Shaggyshoo

13. Copyright
©
2012
Ólafur
Andri
Ragnarsson
If your business has not been
disrupted by the Internet, it will
The digital online world
13

17. YouTube Monty Python
Videos Boost
DVD Sales 23,000%

18. USER
GENERATED
CONTENT

19. TRADITIONAL PRODUCTION OF CONTENT

20. TRADITIONAL PRODUCTION OF CONTENT
Benchmark:"
"
" Production budget: $900,000"
" Audience: ~ 50,000,000

21. USER GENERATED PRODUCTION OF CONTENT

22. USER GENERATED PRODUCTION OF CONTENT
Benchmark:"
"
" Production budget: $0"
" Audience: 680,216,740

30. Can this delivery
method compete?

31. “Every industry that becomes digital
becomes free”
- Chris Anderson, Editor WIRED
Freeconomics

32. The Economy of the Free
Source:
Free!
Why
$0.00
Is
the
Future
of
Business
Subsidising Products is well known
"
Cross-subsidy!
"
Now, a different sort of free has emerged
"
The new model is based on the fact that the cost
of products themselves is falling fast

34. ZERO

35. The Economy of the Free

36. A Taxonomy of Free
"Freemium"!
What's free: Web software and services, some content
Free to whom: users of the basic version
"
Subscription model of media
"
Varying tiers of content, from free to
expensive, or a premium "pro" version
"
The 1% Rule
"
F2P in the video games industry

37. A Taxonomy of Free
Advertising!
What's free: content, services, software, and more
Free to whom: everyone
"
Examples
Yahoo's pay-per-pageview banners
Google's pay-per-click text ads,
Amazon's pay-per-transaction "affiliate ads"
Paid inclusion in search results
Paid listing in information services
Lead generation

39. A Taxonomy of Free
Cross-subsidies!
What's free: any product that entices you to pay for something else
Free to whom: everyone willing to pay eventually, one way or another
"
Examples
Give the music, sell concerts

40. A Taxonomy of Free
Zero marginal cost!
What's free: things that can be distributed
without an appreciable cost to anyone
Free to whom: everyone
"
Examples
On-line music
Digital reproduction and peer-to-peer
distribution, the real cost of distributing
music has truly hit bottom

41. A Taxonomy of Free
Labor exchange!
What's free: Web sites and services
Free to whom: all users, since the act of using these sites and
services actually creates something of value
"
Examples
Free porn if you solve a few captchas
Rating stories on Digg, voting on Yahoo Answers,
or using Google's 411 service

42. A Taxonomy of Free
Gift economy!
What's free: the whole enchilada, be it open source software
or user-generated content
Free to whom: everyone
"
Examples
Wikipedia
Zero-cost distribution has turned
sharing into an industry

43. Economy of Abundance
Traditional products exist in the economy of scarcity
"
When the cost of copying and distributing becomes
close to nothing, the economy shifts
"
You can’t sell copies – their worthless
"
It’s not only about money - time and respect are also
important
"
So is you digital footprint

44. You can’t sell
copiesthey’re worthless

45. 25
Videostores, DVD,
late fees, clutter
Everything, anywhere,
anytime (almost)
BEFORE NOW
CHANGE IN CONSUMER BEHAVIOUR

46. Printed books, magazines
Digital, automatically
delivered, interactive
BEFORE NOW
CHANGE IN CONSUMER BEHAVIOUR

47. Own, store, clutter Rent, subscribe, stream
OWNERLESS LIFESTYLE
BEFOE NOW

52. Back in 2007, streaming music services accounted
for just 3% of total music industry revenues.
"
Today, streaming services contribute to 21% of total
revenues
Source: http://www.businessinsider.com/pandora-v-itunes-revenues-2014-3

54. What can you
sell?and make money?

55. Accessibility

56. Immediacy

57. Personalisation

58. Authenticity

59. Patronage

60. Interpretation

61. Embodiment

62. Findability

63. How can you
marketyour Products?

64. TRADITIONAL MARKETING

65. Use the medium people use
From marketing to conversation

67. BRANDING

68. EVERYTHING COMMUNICATES

69. EVERYTHING YOU SAY
EVERYTHING YOU DON’T SAY
EVERYTHING YOU DO
EVERYTHING YOU DON’T DO

70. MARKETING IS LIKE JAZZ

71. CONVERSATION

72. UNITED BREAKS GUITARS

73. $3,500 Taylor Guitar

75. The YouTube video was posted on July 6, 2009
"
It amassed 150,000 views within one day, prompting United to
contact Carroll saying it hoped to right the wrong
"
13.3 million by September 2013
http://en.wikipedia.org/wiki/United_Breaks_Guitars

76. Within 4 days of the video being posted online, United
Airlines' stock price fell 10%, costing stockholders about
$180 million in value

78. STARBUCKS KNOWS THE CONVERSATION

83. CONVERSATION

84. WELCOME TO THE CONVERSATION

85. WELCOME BACK TO THE CONVERSATION

88. LEARNING IS NOT
MANDATORY,
NEITHER IS
SURVIVAL

89. Lecture L21
GAMES
NEXT
NO LECTURE 28.03