Choosing a Business Model

I’ve heard recently some bad news for internet radio stations. I guess it’ll end up either with closing internet radio stations or, most likely, having all of them moved to some kind of internet paradise which can’t be controlled from US.

I don’t get it. Instead of exploiting new, fast growing market they’re trying to kill it w before the birth. Don’t they see that people won’t start buying tons of audio CDs even if they were successful with destroying all internet radio stations (which won’t happen by the way)? It’s like saying “Hey, it worked 10 years ago, why it shouldn’t work now?” It’s like closing eyes and pretending the sun is shining on midnight. Hello guys, the world has changed.

Now with all this Web 2.0 buzz and constant migration from desktops to web applications, everyone, when starting a new project, should seriously consider this business model. The application no longer gives an advantage only for the sake of just having it. You need to give something different, easily accessible and, with more and more competitive market, you have to price it fairly. As mainstream record labels grouped in RIAA example shows it’s not impossible that you’ll have to redesign your business model even when you have a leading position now.

If I was about to start a new software business now, it would be definitely a web-based application. It gives you a bunch of options. You can sell your services for a monthly fee. You can earn your money with on-line ads. You can build the user-base in the long run and then sell it as the main asset of your service. You can build some unique technology, gain some activity to prove you’re better and then sell it to the bigger player on the market. You can mix all of those creating something new. There many possibilities with the Web and you’re not limited with standard old-fashioned business models.

Sure, if you’re a big player you have quite different perspective. That entire Web 2.0 buzz isn’t a good message for you, unless you’re Google of course. However, in this scenario you’re a desirable partner for many web start-ups. Just like Pandora, which needs to cooperate with record labels. Just like in my start-up – Overto – where we cooperate with internet auctions platforms: Polish branch of eBay and the biggest player in Poland – Allegro (Polish links only). Sure, you can say that you don’t want to see any “competitors” around and try to kill a bunch of them – that’s the way RIAA tries to do right now. On the other hand you can exploit chances young wolves offer you. Some additional income from internet radio stations if music is priced fairly. A lot of affiliated services add value and sometimes gives even better functionality than base service. E.g. we search through Allegro better than Allegro itself.

In every case the business model and cooperation policy, which I believe is a part of the business model, is very important for the future of organization. Even when you’re now fat and lazy it’s not give for a lifetime.