(2019-02-22) Turns Out Revenue Model Design Is Important And Its A Product Matter First

Turns out revenue model design is important. And it’s a product matter first. With the three examples presented here I also want to explore the idea that success in digital is not driven by the adoption of a specific business model, but by the ability to monetise a product or ecosystem in different ways — or, in other words, to implement a multimodal business model. (see 2018-12-07-ChanOutgrowingAdvertisingMultimodalBusinessModelsAsAProductStrategy)

1. All Facebook scandals ultimately stem from its business model

Data misuse is not our friend, it’s our business model

2. Apple no longer reporting device unit sales signals a more radical business transformation

As Horace Dediu pointed out, the decision to stop reporting unit sales signals a more profound business model transformation for the company. Apple is no longer seeing its business as “selling devices” but as creating and keeping customers.

Apple Services is an umbrella term that comprises a growing set of services, including Music, iCloud, and App Store revenues. The service business reached $10 billion of revenues per quarter in 2018 and is now as big as Facebook.

Meanwhile, in the last years a new breed of relatively cheaper smart devices has come to the market, that build their success on a multi-faceted business model where hardware is seen as an enabler and “lock-in mechanism”, while integrated services drive revenues.

Not so long ago, it seemed that most tech manufacturers were tied to the idea that they had to replicate the success formula of the iPhone

3. Uber launched its subscription programme, Blue Apron moved away from it

I believe that there isn’t a dominant business model in tech today, and that the key is implementing multiple ways to organically monetise your ecosystem

Conclusions: what to do when one business model is not enough anymore

The first takeaway is that business design is not something just for the financial or sales departments and it’s not about finding ways to get revenues without “harming the user experience”. In this product age, business design is a product matter first, a lens to organically drive product and growth thinking.

The second takeaway is about multimodal business models

With the tech market getting more and more mature and growth opportunities becoming scarcer, companies are looking to adopt multiple revenue models as early as possible in their evolution to survive in difficult times.