Literature Review: Business models on the Internet

Despite the popularity of the term 'business models', especially in relation to Web business, there has not been a lot of attempts to define it in explicit terms.

The most widely cited definition of business model comes from Timmers (1998) who defined business models as:

- an architecture for the product, service and information flows, including a
description of the various business actors and their roles;

- a description of the potential benefits for the various business actors; and

- a description of the sources of revenues.

Timmers (1998) also offered a classification of ten types of business models:

- eShop
- eProcurement
- eAuction
- eMall
- Third Party Marketplace
- Virtual Communities
- Value Chain Service Providers
- Value Chain Integrator
- Collaborative Platforms
- Information Brokers

Rappa (2000) added to this definition by stating that a business model is "...the method of doing business by which a company can sustain itself -- that is, generate revenue. The business model spells-out how a company makes money by specifying where it is positioned in the value chain."

Rappa gave a similar categorization of business models, as listed below:

- Brokage
- Infomediary
- Advertising
- Merchant
- Manufacturer
- Affiliate
- Community
- Subscription
- Utility


Many of the business models are described in terms of what they should accomplish.  For instance, Chesbrough and Rosenbloom (2002) outlined six functions of a business model:

1. to articulate the value proposition
2. to identify a market segment
3. to define the structure of the firm’s value chain
4. to specific the revenue generation mechanisms
5. to describe the position of the firm within the value network
6. to formulate the competitive strategy.

References

Rappa, M. (2000). "Business models on the Web." Managing the digital enterprise. North Carolina State University, USA. Available at: digitalenterprise.org/models/models.html

Timmers, P. (1998). "Business models for electronic commerce." Electronic Markets, 1998, vol.8, no.2, pages 3-8. Available at: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.22.2665&rep=rep1&type=pdf.

Chesbrough, H. and Rosenbloom, RS. (2002) "The role of the business model in capturing value from innovation: evidence from Xerox Corporation's technology spin-off companies." Industrial and Corporate Change, vol.11, no.3, pp.529-555.

Lambert, S. C. (2006). "Do we need a ‘real’ taxonomy of e-business models?" School of commerce research paper series, 06-06. Available at http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.94.7222&rep=rep1&type=pdf.

Osterwalder, A. and Pigneur, Y. (2002). "An e-Business Model Ontology for Modeling e-Business." 15th Bled Electronic Commerce Conference, E-Reality: Constructing the e-Economy, Bled, Slovenia, June 17-19, 2002. Available at: http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.16.633&rep=rep1&type=pdf.

[Osterwalder & Pigneur have different versions dealing with e-Business models, including:]

Osterwalder, A., Pigneur, Y. & Tucci C.L . (2005). "Clarifying Business Models: Origins, Present, and Future of the Concept".  Communications of the CAIS, vol 15, Article. Available at:

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.83.7452&rep=rep1&type=pdf.

Gordijn, J., Osterwalder, A. and Pigneur,Y. (2005). "Comparing two Business Model Ontologies for Designing e-Business Models and Value Constallations." 18th Bled eConference, eIntegration in Action, Bled Slovenia. Available at http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.77.5601&rep=rep1&type=pdf.

Troutman, M. & Timpson, S. (2008). "Effective Optimization of Web Sites for Mobile Access: The Transition from eCommerce to mCommerce." Journal of Interactive Advertising; Fall2008, Vol. 9 Issue 1, p1-12.