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If I were running an internet service…
I would be looking for direct access to my customer’s wallets. The more direct the better:
- Gathering subscription or transaction revenues is better than…
- Selling product, which is better than…
- Being paid for referrals by the order, WIBT
- Being paid for referrals by the inquiry, WIBT
- Being paid for simple traffic, WIBT
- Not being paid at all
What I really like about direct revenues:
- They allows a viable model with a small customer base;
- And if the business scales, it has tremendous revenue and profit potential.
- They clarifies the value proposition for customers, because they ask “is this something important enough to pay for?”
- They discourage gaming (since such participation involves out-of-pocket for the the gamer)
I’m not an experienced magazine publisher (college experience doesn’t count). So I would look for what I can sell to generate top-line. Affiliate models like Amazon Associates (which I have discussed before) and that of iTunes allow that kind of thing to work, and when crossed with clever web services, allow so-called “mashups” to be interesting drivers of direct revenues. Personally I see this is potentially key for many web services that are going to survive beyond (or better yet, without!) funding.
July 5th, 2006 at 1:26 am
Can’t argue with you here: direct access or revenue is definitely better than second- or third-tier leftovers. I also agree with your assessment of Amazon Affiliates. That type of program where you can influence actual transactions is much better than many of the other ones I’ve seen.
July 9th, 2006 at 1:04 pm
Selling a service online with repeat revenue, even if it is of much lower sale value than say a perpertual license single sale of an online or offline product is much more appealing.
For one, you have more or less guaranteed revenue cashflow (instead of a single-sale customer) assuming that your service is one that your customers would begin to depend upon.
Support, upgrades and value adds are much more justified and easier to deploy on an online service as well.
Customer interaction is again one-on-one and an excellent way to gather feedback. Copy-protection / piracy issues are also eliminated from start.
July 10th, 2006 at 1:23 pm
Not to mention the fact that it opens up multitude of possibilities for expansion of future businesses. From a marketing perspective, the subscriber earned is a great asset. And not just a subscriber but a loyal subscriber, cause he’s going to come back again and again and you earn that much attention to create an impact on user’s mind.
To try and rationalize this argument, users who use to google on google, would be the ones who registered with gmail, orkut and then used adwords to promote or adsense to earn and again they would be the one to use gbuy or any other future product or service they would come up with. True that every user wont stick or there wont be any new registration, but when this loyal customer base would be queried and parsed on different age, sex, earning, preferences filters can actually help them to gauge the ROI on future areas of development.
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