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Business Modelsand Business Reality

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Alsop on Content Content is queen, not king.

Technology is king. The one thing that VC

depend on for evaluating new companies isintellectual property.

Virtual magazines, or content businesses on thethe Internet, use technology as a platform. Ifthey close in on something proprietary, they come

nearer to justifying a vcs investment of riskcapital.

StewartAlsop, An Old Fogy Doesnt Get WebContent, Fortune, Nov. 6, 2000.

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Business ModelDistinguish from:

Revenue model Funding model

Organizational model

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Indirect Revenue Models Advertising

Niche vs General

Business vs. Consumer Local vs. National

E-commerce Take percentage of sales for delivering qualified

customers. Support

Provide more cost-effective means of deliveringtraditional business service.

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Direct Models Direct Pay/Service

Subscription

Per piece

E-commerce

User buys directly from you.

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Non-commercial Models

Public Radio/TV

Will communities support onlinepublications or services that serve them?

Will government funding or communityfunding support services that cannot or

should not be commercialized? Non-profit organizations

Grants

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Funding Models Self-funded

Use cash from business to fund growth.

Advantages: retain control; gradual, adaptivegrowth.

Disadvantages: under-capitalized means fewerresources; might miss window of opportunity.

Sell all or part of company and give up equity. Companys future depends on successful IPO or

acquisition (exit strategy).

Advantage: more resources, rapid growth, upside.

Disadvantages: loss of control; grow too fast;

short-term.

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What Do You Want? Build a Lasting Business

Get Rich and Get Out See Your Idea Realized

(e) All of the Above

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Organizational Model What size and structure is appropriate

for the idea?

Startups vs. traditional businesses.

Focus & Commitment

Expertise

Resources

Environment

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Internet Public LibraryThe Quest for a

Sustainable Model

Internet Public Library:http://www.ipl.org/

Analysis: The InternetPublic Library by LorrieLeJeune in Journal ofElectronic Publishing

IPL Mission Statement

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IPL Timeline: StartJanuary 5, 1995

Project started at University ofMichigan School of Information andLibrary Studies as part of a graduateseminar.

Started by Joseph Janes, AssociateProfessor and 35 students in his class.

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IPL Launch: March 1995 IPL Site opened (about 70 days from

project start to launch)

University provides server (Sparc 20)and an Internet connection

Good traffic and publicity.

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IPL Summer 1995 Receives $150K Grant: "We are pleased now

to be supported by grants from the School of

Information via its grant from the W. K.Kellogg Foundation, and the gifts of theFriends of the Library"

Friends Sponsorship program

Individual -- $25-$100 to fund a review or apage.

Corporate -- Sponsor development of an area

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IPL: 1996 In January, determines that School of

Information will not continue to support it.

Develops business plan to pursue additionalfunding. Establishes position to do outreach.

In June, IPL awarded $200K from Andrew W.Mellon Foundation -- Press Release. This

grant will "Fund the development of severalprojects aimed at ensuring the long-termviability of the Library by giving it a steadyand sustainable revenue stream."

Launchses "WebINK: Internet Newsletter forKids and POTUS U.S. Presidents

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IPL: 1997Summer, 1997

Funds are beginning to run out. Staffmembers leave, anticipating that theproject will be scaled back.

August 1997

Supplemental funding supports 2administrative staff with fundingthrough April 1998.

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1998: Third Anniversary IPL has served more than 5-7 million

people in 2-3 years with a staff of sixand a budget of less than $450,000.

"Where we are now is extraordinary,for a class project with no money, not

even a server when we started," saidIPL Director Joseph Janes.

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Joe Janes: People think the public library is free, because they don't

have to hand over any money whenever they use its

services. But it didn't used to be that way; public librarieswere actually subscription libraries. People paid a set feefor each service and that went on for several hundredyears. In the late 1800s Andrew Carnegie stepped in,donated a lot of money for buildings, and got the

government to support these new public libraries with taxrevenues. And this system has been in place -- virtuallyunchanged -- since the 1920s. So now what happens is youhave all these librarians saying that everything is free.

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Views of IPL Lejeune: The IPL made a tactical error in embracing

the public-library model.

Schelle Simcox, hired to do business developmentleft in July 1997: "If you want to be an informationprovider you need to have someone on your teamwith the ability to bring in a steady source ofincome. That person should be a marketer who cansell your ideas to an audience that isn't quite readyfor them; someone with the ability to pull peopletogether, get them excited about ideas that areunproven, and convince them to offer financialsupport."

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GNN: 1993-1995

First Commercial Web Publishing

VentureFirst Portal

First Site to Sell Advertising

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Developing GNN In Feb. 1993, formed four-person

"skunkworks" team and began planningfor new product based on the demo.

Internally, we had to advocate for theproject and establish a separate identity

and eventually a separate team andbudget for development.

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GNN: 1993

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GNN: Launch of a Portal Launched at InterOp in August.

Announced that it would be supportedby advertising.

Consisted of a directory of links: TheWhole Internet Catalog.

Plus special-interest magazine-likesections.

Difficult to sell advertising.

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Internet in a Box Product developed by Spry and co-

produced with OReilly

Included Web browser that pointed toGNN.

Announced at first Internet World,

December 1993.

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GNN: 1994 Obtain a license to publish NCSA's

What's New page, the most heavily

trafficked site on the Net.

We establish a publishing process formaintaining the resource.

Advertisers begin knocking on our door.

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GNN Staffing: 1994Team of Twelve

Project Manager

Sales and Marketing

Graphic Designer

Editorial and Production Technical Director

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GNN: 1995 GNN is perceived to be a "native" Internet

brand.

In spring, AOL offers to buyGNN. We believeit's necessary to scale up GNN. Staff is up to23.

Sale for $14 million in stock occurs insummer.

First sale of an Internet intellectual property.

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AOL and GNN AOL repositions GNN as an Internet

service provider.

Ignores content and directory services.

December 1996

AOL closes down GNN.

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Three GNN Designs

Click here

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Web Review1995 to Present

Launched in August

as general Webmagazine.

Sample article.

Additional cover.

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Web Review We were stretching the magazine metaphor as

far as we could go. In our first half-year, we

had the resources to build fairly complexstory layouts.

Covers

Digital Academy, October 13, 1995

Mozilla, Dec. 8, 1995 Webula, October 27, 1995

Web95, December 22, 1995

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Web Review Business Advertising model

Was to have been linked up to AOL andGNN and they were to sell advertising.

We had difficulty as a general magazineand began to target Web developers.

After about a year, we announced adecision to close the magazine.

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New Partnership Struck a deal with Miller Freeman, a SF-

based, diversified publisher to jointly

produce Web Review.

Wed produce the editorial product andtheyd handle the sales and marketing.

WR complemented a Web conferenceand a Web magazine.

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Web Review Re-launched Resume publishing in Fall of 1996

focusing on Web designers and

developers.

New target audience plus maturity ofWeb products and advertising make the

publication reasonably successful.

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Web Review 1999 About 450,000 pages views a week.

About $100K/month advertising.

About 25k email subscribers.

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MFI Acquires Web Review MFI (now CMP) buys Web Review for

$3 million.

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Ferndale Ferndale

An Interactive entertainment producedbyTom Arriola

Sample

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Likeminds Collaborative filtering applied to movies

Patented technology applied first onkiosks in video stores.

Songline prototyped Web demo

Spun out Likeminds in 1997

Acquired by Andromedia;

Andromedia acquired by Macromedia.