Business models
From Digipedia
OVERVIEW
A business model is, in short, the method (or methods) of managing a service which ensures its continued availability. Different approaches to securing the necessary resources (human, technical and financial) should be considered at the business planning stage of a project or programme as the foundation of its sustainability plan. Every project will have its own set of circumstances and so each solution will be bespoke and will depend whether a purely commercial, purely public good or mix of both models is desired.
For example, the Minerva Technical Guidelines emphasise an approach which looks at the inherent, rather than immediately commercial, value of the material made available and the role of Web 2.0 participative features making a significant contribution to the business model as follows:
"Web 2.0-3.0 approaches are reshaping some of the traditional business models which underpin the delivery of services to the public. A primary characteristic of these approaches is the principle that use has value. Traditional transactional models tend to depend on a direct relation between service and payment (whether this payment is by the user or front-loaded in the form of investment or subsidy).
The new approaches tend to favour the downstream revenue model. In this case, the cost of developing and delivering a service is recouped not from the user, but usually from a 3rd party whose business depends on highly focused or targeted access to particular user groups.
A popular alternative is also to consider the longer-term reputational value which arises from the delivery of the service. In many cases, the initial cost of development can be offset against the equivalent value of establishing an ongoing relationship with a target user group (and hence can be regarded as an investment in marketing and brand awareness). These models hold a parti cular appeal in a public service environment, which tends to require free-at-point-of-use access to content and services. It also offers a potential route to enhancing the sustainability of a given service by creating a new form of value which can be transacted with 3rd parties (reducing the dependence on ongoing grant income).
Finally, the participative nature of Web 2.0-3.0 approaches offers a potential route to reducing the medium-term costs of service development. If the capacity to deliver and maintain a service is localized within an organization, then the organization must resource 100% of the overhead involved. If, however, the user is given the opportunity to participate in the development of services, this decentralizes the resourcing of the service, and hence reduces the overhead cost to the organization itself. Models such as crowdsourcing (opening up development to a distributed user community) can provide the organization with significantly increased capacity which would otherwise be beyond its means."
Sources of advice and guidance
Ithaka Sustainability and Revenue Models for Online Academic Resources, 2008. This report was commissioned by JISC for the Strategic Content Alliance as the first step in a three-stage process aimed at gaining a more systematic understanding of the mechanisms for pursuing sustainability in not-for-profit projects. Although its focus is on online academic resources (OARs), which are projects whose primary aim is to make content and scholarly discourse availableon the web for research, collaboration, and teaching, the overall approach to financial models can be applied to a wide range of public sector initiatives.