Tuesday, January 13, 2009

In search of new business models

In the past few years the Advertising-based business model has been the approach of choice for many startups. Today TechCrunch carried the news that Jott, the "voice to action" web service is dropping it's free option. Jott's CEO, John Pollard was quoted saying "The terrible advertising market means every customer has to pay their own way."

Jott is a cool service that can be indispensable for some people. The ability to make a phone call and dictate a blog post or a tweet, or create an appointment or task is a great capability when typing on a phone keyboard is not an option.

Back in October, when Ping.fm went off the Internet for a brief period I raised the business model question. In this economy revenue is king. I see Jott's move as a confirmation of this trend away from Advertising support as the primary revenue model. Advertising will not go away. In fact I can see it getting more intrusive as a means to encourage serious users to upgrade to a fee-based advertising free service.

In that same Ping.fm post I also suggested that mobile application development could become an increasingly attractive option for developers since this provides an opportunity to generate revenue through sales with few distribution headaches.

We are heading in to an extremely interesting phase in the evolution of the Internet. Entrepreneurs are going to have to think much harder about their path to revenue. This should trigger some inventive business models but also consolidation around some of the giants in the business that have the audiences that generate substantial revenues from advertising. This won't necessarily reduce the pace of innovation but we may be entering a phase where the consumer's "free ride" is much less common place.

No comments:

Post a Comment