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63-589: NetEase Cloud Music operates under a freemium business model in which basic services are free whilst some enhanced features are available on a subscription basis. NetEase Cloud Music's primary income has two components: music streaming services and social entertainment services. Similar to QQ Music , artists and labels can choose to restrict content to paying subscribers or have their albums purchasable on their website. Artists that allow album purchases of this type include Taylor Swift and Ariana Grande . Users who purchase albums can listen to their purchased songs without

126-448: A stub . You can help Misplaced Pages by expanding it . Freemium Freemium , a portmanteau of the words "free" and "premium", is a pricing strategy by which a basic product or service is provided free of charge , but money (a premium) is charged for additional features, services, or virtual (online) or physical (offline) goods that expand the functionality of the free version of the software. This business model has been used in

189-535: A business model has been incorporated into certain accounting standards. For example, the International Accounting Standards Board (IASB) utilizes an "entity's business model for managing the financial assets" as a criterion for determining whether such assets should be measured at amortized cost or at fair value in its International Financial Reporting Standard, IFRS 9 . In their 2013 proposal for accounting for financial instruments,

252-514: A business model when none is in place and business model reconfiguration for the process of changing an existing business model, also highlighting that the two processes are not mutually exclusive, meaning reconfiguration may involve steps which parallel those of designing a business model. Al-Debei and Avison (2010) consider value finance as one of the main dimensions of business modelling which depicts information related to costing, pricing methods, and revenue structure. Stewart and Zhao (2000) defined

315-735: A business model. A systematic review and analysis of manager responses to a survey defines business models as the design of organizational structures to enact a commercial opportunity. Further extensions to this design logic emphasize the use of narrative or coherence in business model descriptions as mechanisms by which entrepreneurs create extraordinarily successful growth firms . Business models are used to describe and classify businesses, especially in an entrepreneurial setting, but they are also used by managers inside companies to explore possibilities for future development. Well-known business models can operate as "recipes" for creative managers. Business models are also referred to in some instances within

378-705: A change from traditional business models. One is the subscription model , in which platforms charge users a small monthly fee in exchange for services. She notes that the model was ill-suited for those "accustomed to free content and services", leading to a variant, the freemium model. A second method is via advertising. Arguing that traditional advertising is no longer appealing to people used to "user-generated content and social networking", she states that companies now turn to strategies of customization and personalization in targeted advertising . Eric K. Clemons (2009) asserts that consumers no longer trust most commercial messages; Van Dijck argues platforms are able to circumvent

441-499: A company selects its customers defines and differentiates its offerings, defines the tasks it will perform itself and those it will outsource, configures its resource, goes to market, creates utility for customers, and captures profits". A business framework involves internal factors ( market analysis ; products/services promotion; development of trust; social influence and knowledge sharing) and external factors (competitors and technological aspects). The process of business model design

504-426: A company's business model. In a paper published in 2017, Johnson demonstrated how matrix methods may usefully be deployed to characterise the architecture of resources, costs, and revenues that a business uses to create and deliver value to customers which defines its business model. Systematisation of this technique (Johnson settles on a business genomic code of seven matrix elements of a business model) would support

567-437: A competitive advantage. Although business model innovation promises financial returns, periods of radical business model innovation can reduce the person-organization fit and thus lead to a greater fluctuation in the workforce. As a specific instance of Business Model Dynamics, a research strand derived from the evolving changes in business models, BMA identifies an update of the current business model to changes derived from

630-442: A given value. As a result of digital transformation , it is the predominant business model of the 21st century. In an op-ed on MarketWatch, Choudary, Van Alstyne and Parker further explain how business models are moving from pipes to platforms, leading to disruption of entire industries. There are three elements to a successful platform business model. The toolbox creates connection by making it easy for others to plug into

693-404: A lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer premium-priced value-added services or an enhanced version of your service to your customer base. Jarid Lukin of Alacra , one of Wilson's portfolio companies, then suggested the term "freemium" for this model. In 2009, Chris Anderson published the book Free , which examines

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756-539: A membership. As of September 2022, NetEase Cloud Music currently offers three subscription types. Subscriptions are only purchasable by a mobile device, with iPhone payments processed via Apple's App Store . NetEase Cloud Music's social entertainment services include such features as live streaming, virtual items, and online karaoke. These services help increase the platform's overall profit by encouraging users to become live streaming-related memberships or give virtual gifts to anchors. In NetEase Cloud Music's revenue for

819-413: A new business model, the process is called business model innovation. There is a range of reviews on the topic, The concept facilitates the analysis and planning of transformations from one business model to another. Frequent and successful business model innovation can increase an organisation's resilience to changes in its environment and if an organisation has the capability to do this, it can become

882-488: A new meme dubbed “NetEmo(网抑云)”, which took off after some users poked fun at depressed people. “It's midnight, NetEmo mode activated,” read one meme featuring a clock and tears streaming down a face. On November 8, 2020, “NetEmo” was selected as one of the "China's Top 10 Trending Words in 2020" by Youth Digest, a Chinese magazine. NetEase makes use of H5 advertisements, that is, interactive web page advertisements which can be disseminated among social media platforms. Based on

945-660: A sourcing business model known as Vested Outsourcing, a hybrid sourcing business model in which buyers and suppliers in an outsourcing or business relationship focus on shared values and goals to create an arrangement that is highly collaborative and mutually beneficial to each. From about 2012, some research and experimentation has theorized about a so-called "liquid business model". Sangeet Paul Choudary distinguishes between two broad families of business models in an article in Wired magazine . Choudary contrasts pipes (linear business models) with platforms (networked business models). In

1008-619: A study of collaborative research and external sourcing of technology, Hummel et al. (2010) similarly found that in deciding on business partners, it is important to make sure that both parties' business models are complementary. For example, they found that it was important to identify the value drivers of potential partners by analyzing their business models, and that it is beneficial to find partner firms that understand key aspects of one's own firm's business model. The University of Tennessee conducted research into highly collaborative business relationships. Researchers codified their research into

1071-418: A taxonomical approach to empirical studies of business models in the same way that Linnaeus’ taxonomy revolutionised biology. Daas et al. (2012) developed a decision support system (DSS) for business model design. In their study a decision support system (DSS) is developed to help SaaS in this process, based on a design approach consisting of a design process that is guided by various design methods. In

1134-430: A variation of the model known as " open core ", in which the unsupported, feature-limited free version is also open-source software, but versions with additional features and official support are commercial software. In June 2011, PC World reported that traditional anti-virus software had started to lose market share to freemium anti-virus products. By September 2012, all but two of the 50 highest-grossing apps in

1197-408: Is a consequence of the business model and has a symbiotic relationship with it, because the business model determines the brand promise, and the brand equity becomes a feature of the model. Managing this is a task of integrated marketing . The standard terminology and examples of business models do not apply to most nonprofit organizations , since their sources of income are generally not the same as

1260-575: Is also called business model innovation and forms a part of business strategy . In theory and practice, the term business model is used for a broad range of informal and formal descriptions to represent core aspects of an organization or business , including purpose , business process , target customers , offerings, strategies, infrastructure , organizational structures , profit structures, sourcing, trading practices, and operational processes and policies including culture . The literature has provided very diverse interpretations and definitions of

1323-590: Is available in Apple App store . However, its English version is currently not published. NetEase Cloud Music, China's leading music streaming service with over 800 million users, is home to "NetEase Depression Cloud", which refers to sentimental stories posted for likes in the comments section of songs. On 3 August 2020, NetEase Cloud Music officially launched a campaign to “cure comments” of feigned depression and provide emotional support to users who are genuinely struggling with mental health issues. The phenomenon sparked

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1386-408: Is closely related to tiered services . Notable examples include LinkedIn , Badoo , Discord , and in the form of a "soft" paywall , such as those employed by The New York Times and La Presse+. This is often in a time-limited or feature-limited version to promote a paid-for full version. The model is particularly suited to software as the cost of distribution is negligible. A freemium model

1449-613: Is part of business strategy . Business model design and innovation refer to the way a firm (or a network of firms) defines its business logic at the strategic level. In contrast, firms implement their business model at the operational level, through their business operations . This refers to their process-level activities, capabilities, functions and infrastructure (for example, their business processes and business process modeling), their organizational structures (e.g. organograms, workflows , human resources) and systems (e.g. information technology architecture , production lines). The brand

1512-526: Is sometimes used to build a consumer base when the marginal cost of producing extra units is low. Thus little is lost by giving away free software licenses as long as significant cannibalization is avoided. Other examples include free-to-play games – video games that can be downloaded without paying. Video game publishers of free-to-play games rely on other means to generate revenue – such as optional in-game virtual items that can be purchased by players to enhance gameplay or aesthetics. Ways in which

1575-486: The Financial Accounting Standards Board also proposed a similar use of business model for classifying financial instruments. The concept of business model has also been introduced into the accounting of deferred taxes under International Financial Reporting Standards with 2010 amendments to IAS 12 addressing deferred taxes related to investment property. Both IASB and FASB have proposed using

1638-483: The "tied products business model") was introduced in the early 20th century. This involves offering a basic product at a very low cost, often at a loss (the "bait"), then charging compensatory recurring amounts for refills or associated products or services (the "hook"). Examples include: razor (bait) and blades (hook); cell phones (bait) and air time (hook); computer printers (bait) and ink cartridge refills (hook); and cameras (bait) and prints (hook). A variant of this model

1701-614: The 1990s from Southwest Airlines , Netflix , eBay , Amazon.com , and Starbucks . Today, the type of business models might depend on how technology is used. For example, entrepreneurs on the internet have also created new models that depend entirely on existing or emergent technology. Using technology, businesses can reach a large number of customers with minimal costs. In addition, the rise of outsourcing and globalization has meant that business models must also account for strategic sourcing, complex supply chains and moves to collaborative, relational contracting structures. Design logic views

1764-518: The Games section of Apple's iTunes App Store supported in-app purchases , leading Wired to conclude that game developers were now required to choose between including such purchases or foregoing a very substantial revenue stream. Beginning in 2013, the digital distribution platform Steam began to add numerous free-to-play and early-access games to its library, many of which utilized freemium marketing for their in-game economies. Due to criticism that

1827-457: The Tencent Music's claim, and ruled that NetEase Cloud violated the copyrights of Jay Chou's songs. In June 2018, China's "Fight Pornography and Illegality" office interviewed the heads of NetEase Cloud Music, and asked it to vigorously clean up ASMR content involving pornography and vulgarity, and strengthen the supervision and review of related content. This Chinese music article is

1890-408: The activity of designing a company's business model. It is part of the business development and business strategy process and involves design methods . Massa and Tucci (2014) highlighted the difference between crafting a new business model when none is in place, as it is often the case with academic spinoffs and high technology entrepreneurship, and changing an existing business model, such as when

1953-413: The alignment of the organization's strategy with the organization's structure, operations, and the environmental factors in achieving competitive advantage in varying combination of cost, quality, time, flexibility, innovation and affective. Business model design includes the modeling and description of a company's: A business model design template can facilitate the process of designing and describing

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2016-411: The beneficiaries. The term 'funding model' is generally used instead. The model is defined by the organization's vision, mission, and values, as well as sets of boundaries for the organization—what products or services it will deliver, what customers or markets it will target, and what supply and delivery channels it will use. Mission and vision together make part of the overall business purpose . While

2079-613: The business model as "a statement of how a firm will make money and sustain its profit stream over time." Osterwalder et al. (2005) consider the Business Model as the blueprint of how a company does business. Slywotzky (1996) regards the business model as "the totality of how a company selects its customers, defines and differentiates it offerings, defines the tasks it will perform itself and those it will outsource, configures its resources, goes to market, creates utility for customers and captures profits." Mayo and Brown (1999) considered

2142-477: The business model as "the design of key interdependent systems that create and sustain a competitive business." Casadesus-Masanell and Ricart (2011) explain a business model as a set of "choices (policy, assets and governance)" and "consequences (flexible and rigid)" and underline the importance of considering "how it interacts with models of other players in the industry" instead of thinking of it in isolation. Zott and Amit (2009) consider business model design from

2205-478: The business model as an outcome of creating new organizational structures or changing existing structures to pursue a new opportunity. Gerry George and Adam Bock (2011) conducted a comprehensive literature review and surveyed managers to understand how they perceived the components of a business model. In that analysis these authors show that there is a design logic behind how entrepreneurs and managers perceive and explain their business model. In further extensions to

2268-507: The business model for encouraging predatory game design tactics based on an improper business model. In 2015, Nintendo released two of their own freemium games in the Pokémon series based on other standalone purchasable titles. With the title Pokémon Rumble World , Nintendo took a different approach by making it possible to complete the entire game without buying premium credits, but retaining them as an option so players can proceed through

2331-451: The business model has to take into account the capabilities of Web 2.0 , such as collective intelligence , network effects, user-generated content , and the possibility of self-improving systems. He suggested that the service industry such as the airline, traffic, transportation, hotel, restaurant, information and communications technology and online gaming industries will be able to benefit in adopting business models that take into account

2394-427: The business model includes high-level strategies and tactical direction for how the organization will implement the model, it also includes the annual goals that set the specific steps the organization intends to undertake in the next year and the measures for their expected accomplishment. Each of these is likely to be part of internal documentation that is available to the internal auditor. When an organisation creates

2457-526: The case of pipes, firms create goods and services, push them out and sell them to customers. Value is produced upstream and consumed downstream. There is a linear flow, much like water flowing through a pipe. Unlike pipes, platforms do not just create and push stuff out. They allow users to create and consume value. Alex Moazed, founder and CEO of Applico , defines a platform as a business model that creates value by facilitating exchanges between two or more interdependent groups, usually consumers and producers, of

2520-487: The characteristics of Web 2.0. He also emphasized that Business Model 2.0 has to take into account not just the technology effect of Web 2.0 but also the networking effect. He gave the example of the success story of Amazon in making huge revenues each year by developing an open platform that supports a community of companies that re-use Amazon's on-demand commerce services. Jose van Dijck (2013) identifies three main ways that media platforms choose to monetize, which mark

2583-600: The concept of business model in the context of reporting a lessor's lease income and lease expense within their joint project on accounting for leases. In its 2016 lease accounting model, IFRS 16 , the IASB chose not to include a criterion of "stand alone utility" in its lease definition because "entities might reach different conclusions for contracts that contain the same rights of use, depending on differences between customers' resources or suppliers' business models." The concept has also been proposed as an approach for determining

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2646-492: The context of accounting for purposes of public reporting. According to the Oxford English Dictionary, the term "business model", a compound of business and model , was first used in 1832 in the sense of "a plan for the operation of a business". Over the years, business models have become much more sophisticated. The bait and hook business model (also referred to as the " razor and blades business model " or

2709-499: The context. BMA can be innovative or not, depending on the degree of novelty of the changes implemented. As a consequence of the new context, several business model elements are promoted to answer those challenges, pivoting the business model towards new models. Companies adapt their business model when someone or something such as COVID-19 has disrupted the market. BMA could fit any organization, but incumbents are more motivated to adapt their current BM than to change it radically or create

2772-475: The design logic, George and Bock (2012) use case studies and the IBM survey data on business models in large companies, to describe how CEOs and entrepreneurs create narratives or stories in a coherent manner to move the business from one opportunity to another. They also show that when the narrative is incoherent or the components of the story are misaligned, that these businesses tend to fail. They recommend ways in which

2835-491: The early history of business models it was very typical to define business model types such as bricks-and-mortar or e-broker. However, these types usually describe only one aspect of the business (most often the revenue model). Therefore, more recent literature on business models concentrate on describing a business model as a whole, instead of only the most visible aspects. The following examples provide an overview for various business model types that have been in discussion since

2898-427: The entrepreneur or CEO can create strong narratives for change. Berglund and Sandström (2013) argued that business models should be understood from an open systems perspective as opposed to being a firm-internal concern. Since innovating firms do not have executive control over their surrounding network, business model innovation tends to require soft power tactics with the goal of aligning heterogeneous interests. In

2961-524: The first half of 2022, the social entertainment service and other revenue increased 57% to $ 2.48 billion. NetEase Cloud Music currently only operates in China. The official Android app of NetEase music is virtually unknown to listeners outside of China, for two reasons. First, the app is in Chinese and most of the tracks are playable in China only; and second, the app is not available on Google Play Store . NetEase app

3024-410: The game at a pace that suits them. Business model A business model describes how a business organization creates, delivers, and captures value , in economic, social, cultural or other contexts. The model describes the specific way in which the business conducts itself, spends, and earns money in a way that generates profit . The process of business model construction and modification

3087-458: The invention of term business model : Other examples of business models are: Technology centric communities have defined "frameworks" for business modeling. These frameworks attempt to define a rigorous approach to defining business value streams. It is not clear, however, to what extent such frameworks are actually important for business planning. Business model frameworks represent the core aspect of any company; they involve "the totality of how

3150-405: The issue through personal recommendations from friends or influencers on social media platforms, which can serve as a more subtle form of advertisement. Finally, a third common business model is monetization of data and metadata generated from the use of platforms. Malone et al. found that some business models, as defined by them, indeed performed better than others in a dataset consisting of

3213-475: The largest U.S. firms, in the period 1998 through 2002, while they did not prove whether the existence of a business model mattered. In the healthcare space, and in particular in companies that leverage the power of Artificial Intelligence, the design of business models is particularly challenging as there are a multitude of value creation mechanisms and a multitude of possible stakeholders. An emerging categorization has identified seven archetypes. The concept of

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3276-683: The measurement and classification when accounting for insurance contracts . As a result of the increasing prominence the concept of business model has received in the context of financial reporting, the European Financial Reporting Advisory Group (EFRAG), which advises the European Union on endorsement of financial reporting standards, commenced a project on the "Role of the Business Model in Financial Reporting" in 2011. Business model design generally refers to

3339-498: The multiplayer games falling under this category were pay-to-win in nature or were low-quality and never finished development, Valve has since added stricter rules to its early-access and free-to-play policies. Freemium games have come under criticism from players and critics. Many are labelled with the derogatory term 'pay-to-win', which criticizes freemium games for giving an advantage to players who pay more money, as opposed to those who have more skill. Criticisms also extend to

3402-504: The perspectives of design themes and design content. Design themes refer to the system's dominant value creation drivers and design content examines in greater detail the activities to be performed, the linking and sequencing of the activities and who will perform the activities. Developing a framework for business model development with an emphasis on design themes, Lim (2010) proposed the environment-strategy-structure-operations (ESSO) business model development which takes into consideration

3465-476: The platform. This infrastructure enables interactions between participants. The magnet creates pull that attracts participants to the platform. For transaction platforms, both producers and consumers must be present to achieve critical mass. The matchmaker fosters the flow of value by making connections between producers and consumers . Data is at the heart of successful matchmaking, and distinguishes platforms from other business models. Chen (2009) stated that

3528-404: The popularity of this business model. As well as for traditional proprietary software and services, it is now also often used by Web 2.0 and open source companies. In 2014, Eric Seufert published the book Freemium Economics , which attempts to deconstruct the economic principles of the freemium model and prescribe a framework for implementing them into software products. The freemium model

3591-421: The product or service may be limited or restricted in the free version include: Some software and services make all of the features available for free for a trial period, and then at the end of that period revert to operating as a feature-limited free version (e.g. Online Armor Personal Firewall ). The user can unlock the premium features on payment of a license fee, as per the freemium model. Some businesses use

3654-443: The software industry since the 1980s. A subset of this model used by the video game industry is called free-to-play . The business model has been in use for software since the 1980s. The term freemium to describe this model appears to have been created much later, in response to a 2006 blog post by venture capitalist Fred Wilson summarizing the model: Give your service away for free, possibly ad supported but maybe not, acquire

3717-519: The sub-license lapsed, NetEase released a "Jay Chou Hot Song Collection" at a price of 400 yuan. Subsequently, Tencent Music sued NetEase Cloud Music for violating Audio and Video Producers' Rights and claimed 4.99 million yuan. According to the Music Licensing Cooperation Agreement signed by the two companies, NetEase Cloud Music should immediately removed licensed tracks and delete them from the servers. The court supported part of

3780-465: The summary of users' behaviors on the platform, NetEase Cloud Music has created many trending H5 advertisements, such as "Annual Listening Reports", "Test Your Philosophical Temperament", "Jung personality test", and "Your Instruction Manual". These advertisements target a wide range of audiences. Jay Chou is one of the biggest pop stars in China. From 2015 to 2017, NetEase paid Tencent each year to sub-license Jay Chou's 808 songs. On April 1, 2018, after

3843-415: The tooling company Hilti shifted from selling its tools to a leasing model. They suggested that the differences are so profound (for example, lack of resource in the former case and inertia and conflicts with existing configurations and organisational structures in the latter) that it could be worthwhile to adopt different terms for the two. They suggest business model design to refer to the process of crafting

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3906-461: The way that the business model can often appear unregulated, to the point of encouraging prolific spending. Freemium games are often designed in a manner where players who are not actively using premium features are actively frustrated, delayed or require much larger investments in time required to acquire currency or upgrades. In November 2014, the animated TV series South Park aired an episode entitled " Freemium Isn't Free ". The episode satirized

3969-444: Was employed by Adobe , a software developer that gave away its document reader free of charge but charged several hundred dollars for its document writer. In the 1950s, new business models came from McDonald's Restaurants and Toyota . In the 1960s, the innovators were Wal-Mart and Hypermarkets . The 1970s saw new business models from FedEx and Toys R Us ; the 1980s from Blockbuster , Home Depot , Intel , and Dell Computer ;

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