Six Pixels of Separation - The Blog
November 10, 2008 3:16 PM

New Business Models

There are lots of little ways to tweak your business and how you market it using the many online channels. The problem gets increasingly more complex when the channel changes the way your business operates. For many traditional businesses, they think it's about how they market online and not about how their business model works in this new channel. That's when the tragedy usually strikes.

We keep seeing the same thing over and over again. The big mobile carriers were worried about voice and not data. When other companies came in and focused on data (like RIM with the BlackBerry), the carriers started fighting for what they felt like they were entitled to. The music industry did not want to stop selling CDs and they really didn't want to go back to the single song format, then iTunes came out with songs for $0.99 by download and changed everything. Or maybe people didn't want to download the song at all, but simply wanted to use it as a ringtone.

Don Tapscott (author of Wikinomics and Grown Up Digital) says this about the music industry: "how sad that the same industry that gave us The Beatles is now suing their consumers because they can't figure out a new business model." Just this past week, Seth Godin was interviewed over on the HarperStudio Blog, The 26th Story, in this post: Tribes Author Seth Godin Discusses Free Content and the Publishing Industry:

"First, the market and the internet don't care if you make money. That's important to say. You have no right to make money from every development in media, and the humility that comes from approaching the market that way matters. It's not 'how can the market make me money' it's 'how can I do things for this market.' Because generally, when you do something for an audience, they repay you. The Grateful Dead made plenty of money. Tom Peters makes many millions of dollars a year giving speeches, while books are a tiny fraction of that. Barack Obama used ideas to get elected, book royalties are just a nice side effect. There are doctors and consultants who profit from spreading ideas. Novelists and musicians can make money with bespoke work and appearances and interactions. And you know what? It's entirely likely that many people in the chain WON'T make any money. That's okay. That's the way change works."

Does Threadless sell t-shirts or do they sell design and celebrating the creative spirit of the individual (with a passionate community)? Lulu does not publish one book to ten million people, Lulu sells ten million books to ten million people.

New business models...

Look weird.

Act weird.

Are weird.

... because they are new. New business models cause disruption (especially when it involves technology and communication).

The reason most companies are stuck is because they keep thinking: "that's the way it has always been." What would happen if you sat down with your business and thought about how it all got started? Odds are, you'll quickly realize that the founder of your business (which might be you) saw a new way of doing things. It could have been better, cheaper, more efficient, cooler, whatever... it was a new business model.

We live in the time of very unique and new business models. They come along quick and change everything we thought we knew about an industry. What if all classified ads were free (except for the one related to employment, real estate and "adult services")? Maybe it will change your current newspaper advertising model or, just maybe, it's the next Craigslist.

It also doesn't have to be complex. Look at what Google did to advertising. AdWords has nothing to do with images, video or audio. It has nothing to do with high-end directors and special effects. It has to do with a fistful of words and the right targeting at the right time. Oh, it also has to do with charging on a performance basis instead of perceived value or estimated audience size. 

How do you feel about new business models? Business killers, inventors or disrupters?

By Mitch Joel