Another type of sale is an actual asset sale,
direct sale. This is sale of ownership of the
to a physical product. And in a physical channel
right some best examples are, you know, buying
cars. Ford or General Motors or Nissan or
going into a Walmart buying products in their
massive stores, or going to your local hardware
store and buying some thermometers.
Or as we said earlier there could be a usage fee
strategy and the fee is proportional to how much
of the service you used. What’s an example of
companies that do usage fees? Well every time
you use your cell phone, either for voice or data
you are paying a fee proportional to the services
or if you are a web developer, Amazon’s web
service has been the kind of the reason why the
web has exploded, because you no longer need to
buy hardware, but you are paying per computing,
or per database size or anything else . Or FedEx.
You are now paying for every envelope or
package you ship. Or what’s really interesting is
electric power. It always used to be metered and
proportional to the service. But now new solar
companies have decided that instead of selling
solar panels, their business mode. It’s we’ll
install the panel for free but we’ll also become a
utility. These are usage fee revenue strategies.
Subscription fee, instead of paying per use,
why don’t we pay kind of a flat fee every month
for continuous access to a service. What’s an
example of that? Well, Salesforce.com. We pay
literally for a continued use of the product or
maybe a better example is Netflix with all you
could eat downloads for videos. You want to
watch infinite number of movies; you pay just a
flat subscription fee.
There are other revenue models, like renting.
We rent houses but the best example for me is
Chegg in the book business. Now, all of a
sudden I could temporarily rent books.
Or BorrowLenses which says; listen instead of
buying expensive camera gear which you might
just use intermittently for photo shoots,
like expensive Hasselblads or expensive lenses,
why don’t you just go in and rent them for a
temporary amount of time.
And of course in the U.S. and overseas,
car rentals are the example for transportation.
Instead of buying a car in every city,
when you get off a plane, it’s very easy and we
just kind of take for granted that you could have
temporary access to automobiles, drive them for
hours or days and return them. Another type of
revenue model is licensing. It’s a fee for use for
intellectual property, IP.
What’s an example of using somebody’s IP,
I cant think of one. Well if you’ve ever used any
software from any computer manufacturer,
congratulations if you ever read the fine print
from Microsoft or Electronic Arts or even
Apple, you don’t own your software. You are
actually using it under a license. Surprise, that
means you can’t duplicate it and make a million
copies and give it away to your fiends.
You have agreed with Microsoft or Electronic
Arts that you are just licensing it for use on one
computer or if they are feeling generous this
year, maybe your laptop and your phone and
one desktop machine, but you do not have
infinite rights to their intellectual property.
Another type of revenue strategy could be an
intermediation fee. Now sometimes we find this
in marketplaces and it’s a fee for bringing two
parties together involved in a transaction.
What’s an example, well the most popular one
right now is, Airbnb, they don’t own all those
places they are renting, but what they do is
essentially a dating service between you and
somebody who wants to make money in renting
their apartment for a night or a couple of nights.
So you are the traveler who will need a place to
stay, but don’t want to stay in an expensive
hotel, use their site an intermediary.
Or Etsy, or even better CafePress or E*TRADE,
all these are kind of brokers. And by the way in
the physical world the classic is real estate
brokers. And they don’t own the house and they
don’t own you, but they’re a match making
service between you and the property you want
to buys. Another strategy for revenue stream
could be adverting.
So, again if you remember our conversation
about Google, Google’s strategy in Facebook
and Spice and Mint, it’s all about creating
massive numbers of user. So I could monetize
fancy name for make from all those users not
from making them pay, because the last time I
looked at Google, searched it, it didn’t cost me
anything directly. But Google is actually using
me to sell to advertisers. They’re saying, hey,
you want to get in front of people like Steve,
all you have to do is pay us for access to these
groups of individual and in fact if we’re very
sophisticated, we could segment them by
specific words or interest.