Revenue models analysis and customer adoption trends is essential in order to plan a portal venture successfully. The five basic portal revenue models are access revenues, advertising revenues, subscription revenues, transaction revenues, and micro-transaction revenues.
In the face of slowing subscriber growth, mobile operators are concentrating on data services. Revenue for network operators will increasingly be derived from data access. The major operators such as NTT DoCoMo are attempting to maintain their control over the data services customers will access. The network operators developing their own versions of these services with other firms to acquire them. Thus, the operators are positioning themselves as gatekeepers, charging customers an access fee to connect with their service and content providers.
In the face of slowing subscriber growth, mobile operators are concentrating on data services. Revenue for network operators will increasingly be derived from data access. The major operators such as NTT DoCoMo are attempting to maintain their control over the data services customers will access. The network operators developing their own versions of these services with other firms to acquire them. Thus, the operators are positioning themselves as gatekeepers, charging customers an access fee to connect with their service and content providers.
Advertising revenues are derived from companies paying a fee to advertise their products on a portal site. In the web portal space, Google, Amazon and eBay are advertising or direct marketing funded. On the surface, the content appears to come at a bargain price, but deeper analysis reveals that the price is sustained by advertising. Internet advertising is more than the selling of visual-impact ads; it is also the sale of direct links from highly used portals to transactional sites.
Subscription Revenues models are designed to obtain up-front payments from customers for access to specific services or content. Subscription fees are usually billed monthly. Delinquent accounts can be canceled immediately. However, a customer who wants to cancel an online subscription often finds that the process takes considerable effort. Many subscription services consider the monthly payment more important than a simplified cancellation process, since cancellations mean churn. Adding new subscribers is more expensive and time-consuming than retaining current ones. The subscription model attracts customers with services that enable them to maintain continuous contact with the company.
Transaction revenue models included a match-maker and distribution. In the match-maker model, the supplier, not the intermediary, owns the product. The portal revenues are based on the net revenue or the commission it receives from the product's sale. In some cases, the fee is levied to both supplier and the buyer, and is typically .05-3.0 percent. Commercial transaction-based sites range from eBay to priceline.com. In the distributor model, the intermediary takes ownership of the product, it realizes the total revenues it gets off the product's sale. For example, a supplier purchases a product for $1.00 and resells it for $2.00. The $1.00 is the supplier's margin before costs. Once cost is factored in, however, the gross margin can be substantially less. Amazon.com is a typical example of this model. Micro-transaction revenues are based on a simple pay-as-you-go service and are essentially one-time pay-per-use transactions ranging from a few cents to several dollars. The Finland-based company Sonera is the leader in experimenting with many micro-transaction scenarios. The micro-transaction's cost is added to the customer's phone bill. A flexible billing system is essential to making micro-transaction point-of-sale services feasible. However, some web survivors are finally realizing profits, e.g., Autobytel, MarketWatch.com, and Amazon.com, to name a few.
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