Digital Business Models: Core Concepts

Digital Money Makers: Core Business Models

How do you turn pixels into profit? Here are the main types of digital business models.

1. Subscription Model

• How it works: Customers pay a recurring fee for access.
• Example: Netflix, Adobe Creative Cloud.
• Key: Predictable recurring revenue.

2. Freemium Model

• How it works: Basic version free, pay for premium features or ad-free.
• Example: Spotify Free/Premium, LinkedIn Basic/Premium.
• Key: Low barrier to entry, convert free users to paid.

3. Platform Model (Multi-Sided)

• How it works: Connects two or more user groups.
• Example: Uber (riders/drivers), Airbnb (hosts/guests).
• Key: Network effects.

4. Advertising Model

• How it works: Content/service is free, revenue from ads.
• Example: Google Search, YouTube, free news sites.
• Key: Large user base to attract advertisers.

5. E-commerce Model

• How it works: Sells goods/services directly online.
• Example: Amazon, ASOS.
• Key: Convenience, wide selection, efficient logistics.

Your Action:

• What is the primary digital business model of your company?
• How could you incorporate elements of another model to enhance value?

Golden Rule: The best digital models leverage technology to solve problems at scale and deliver unique value.