background image
V I I I . 2
O n l i n e b u s i n e s s m o d e l s
Starting an online business just after the " wipe out"?
"What's the business model?"This is a question very few venture capitalists are likely
these days to ask aspiring newcomers to the online market place.Yet, cultural heritage
institutions that today are seeking a place in this market, clearly must ask where is their
"niche" market and which models could work for them to gain some revenues through
online services or e-commerce solutions.
Generally, the business model outlines how and from where an organisation generates
its revenues by specifying where it is positioned in the value chain or "value web".The
Internet has led many people with entrepreneurial minds to figure out all sorts of online
business models that range from very clear cut to extremely fanciful approaches. After some
years of experience, observers in the development of online business models are prepared to
tell quite a realistic story of e-commerce. Even before the " wipe-out", Jeffrey F.
Rayport (Head of The Marketspace Center, Monitor Company, Cambridge) wrote:
"What awaits us is the perhaps deflating realisation that, Internet company valuations
aside, e-commerce is just, when all is said and done, another kind of business. As with busi-
nesses that have come before it, there are countless ,right' answers, endless combinations of
business models and infinite permutations of key themes and approaches.There will be no
magic bullet. (...) So the truth is that there are no simple answers. Every e-commerce
business is either viable or not viable.They hardly qualify for the paint-by-number
prescriptions that business people seem to expect." (Rayport, 1999)
After the " wipe-out", there seems to be, as Tim Jackson (columnist and venture
capital advisor to the Carlyle Group) has observed, a re-focusing on "tried-and-true busi-
ness models", i.e. ventures that did come off the ground, prove to work, and are more or less
stable. Overall, of course, the e-commerce hype has gone and the investment climate has
become more risk-averse. (cf. Jackson, 2001)
It might seem to be a kind of paradox for cultural heritage institutions to start thinking
of investments in online commercial ventures after so many dot.coms have crashed. But, in
many ways these crashes have cleared some ground and show what does and what does not
work, and what the tried-and-true models might be also for these institutions.
Models in the box
Drawing on the opportunities offered by information and communication technologies
(ICTs), companies and organisations have developed a broad range of online business
models.To take into account all the different basic models and sub-forms one actually needs
to develop and apply a taxonomy. For example, according to the taxonomy developed by
Michael Rappa there are nine generic models including: Brokerage, advertising,
infomediary, merchant, manufacturer, affiliate, community, subscription, and utility. For these
generic models, Rappa distinguishes a total of 26 subforms. (cf. Rappa, 2000)
Rappa also provides concrete examples, and it might not be insignificant that the only
example he gives that is somewhat related to cultural institutions is in the generic model
group "community", subform "Voluntary Contributor Model", and the example being:
National Public Radio.The Voluntary Contributor Model is "predicated on the creation of
a community of users who support the site through voluntary donations. Not-for-profit
organizations may also seek funding from charitable foundations and corporate sponsors
that support the organizations' missions."