Umair Haque on the music industry

Economist Umair Haque considers the current crisis of the music industry in the light of microeconomic information and contract theory. Interesting thoughts!




More videos on the music industry:
Interview with Trent Reznor on business models in the music industry
Making $1.6 Million in a week for music given away for free

Alan Bell on the business of motion pictures

An interesting presentation by Alan Bell, EVP & CTO, Paramount Pictures, on what the business of creation and distribution of motion pictures has been and where it's going. "Studios have always been in the business of selling intellectual property. We've always been managing rights. When you bought a DVD you bought the right to view it as many times as you want, you did not buy the rights to copy it."

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Videos on Business Models

Below is a list of videos relating to business models. If you know any good videos on business models that are missing, please let me know.

• Alan Bell on the business of motion pictures
• Alexander Osterwalder on Business Models
• Alexander Osterwalder on The Net's Next Business Models
• Amazon's platform business model
• BMDesigner - An interesting software tool based on the business model canvas
• Chris Anderson on Freemium: The First Business Model of the 21st Century
• Chris Anderson & Guy Kawasaki debate The Freemium Business Model
• David Heinemeier Hansson on Charging for Online Services
• David Rowe on Open Hardware business models
• Eric Schmidt on news, newspapers and real time content
• Fred Wilson on disruption talks@google
• IMVU, Tripit, Photobucket, Commission Junction, and ShoeMoney Media in a very interesting panel about online Revenue Models
• Interview with Craig Beers, project manager for Ether Saga Online
• Interview with Eric Schmidt on Charlie Rose
• Interview with Evan Williams, CEO Twitter
• Interview with Marc Andreessen on Internet business models
• Interview with Marissa Mayer on The future of Google, on Charlie Rose
• Interview with Steve Rubel on business models for newspapers and online communities
• Interview with Trent Reznor on business models in the music industry
• Is the Advertising Model Dead?
• Journalism and business models discussed by panel at the International Center for Journalists' annual Board Dinner
• Mad Avenue Blues - The year the media died
• Making $1.6 Million in a week for music given away for free
• Martin Geddes on telco Business Models
• Music 2.0 Business Models from Future of Music Coalition
• Nick Bilton on new technology that will enable interesting business models for news
• Ning, Pandora, YouSendit, Pinger & Ngcomo in an extensive panel discussion about different Business Models
• Reshma Sohoni, CEO Seedcamp, on finding Business Models
• Rory Sutherland on revenues from mobile advertising and accidental business model innovation
• Shai Agassi on the business model of Better Place
• Simon Torrance on Two-Sided Business Models
• The Future of Content & Telecoms: Flat Rate Content Bundles and Social Media (Gerd Leonhard @ eComm 2009)
• Tim O'Reilly on Open Publishing
• TimesOpen: Tim O'Reilly Keynote Video
• Umair Haque on the music industry
• USC Marshall Webinars on Business Models
• Videos from New Business Models For News Summit 2008
• Zong, Super Rewards, PayPal and GMG Entertainment in an interesting panel on Monetization Infrastructure for Social Games

Alexander Osterwalder on Business Models

A business model talk for La Trobe and DOTARS by Alexander Osterwalder from 2007.



Further reading:
The Business Model Canvas - A Powerful Tool

The Business Model Canvas - A Powerful Tool

Alex Osterwalder, an author, speaker and consultant on business model innovation has developed a powerful tool to describe business models in a structured, simplified and understandable way. This was, together with an overview and synthesis of existing literature about business models, perhaps the main contribution with his dissertation on business models in 2004. It is also the basis for the beautiful book he is currently finalizing on the subject.

Creating a common understanding

A very valid point Osterwalder makes, that also Linder and Cantrall made in 2000, when discussing the confusion related to the concept of business models, is that many people speak about business models when they only mean parts of a business model. By having a common understanding, and a visual representation, the users of the canvas can easily separate what parts are being discussed and relate it to the overall picture.

9 elements mentioned by at least two other authors

There are many different opinions among business practitioners and academics on how to define the term business model and what elements to include. Osterwalder's business model canvas is a very good attempt to compile the different existing models and he describes the different elements that he believes should be included in detail in his dissertation. He constructed his nine elements of the business model from the different business model building blocks that had been mentioned by at least two other authors prior to his work. The result is a business model canvas with 9 different business model elements.

Business model design template: Nine building blocks and their relationships, Osterwalder 2004

Visual thinking

What makes the business model canvas a really powerful tool is that it gives a simplified overview and helps people visualize and communicate their ideas. In his workshops Osterwalder often puts the canvas on the wall and have his participants draw their own business model.

Slide from this presentation

My take on the business model canvas

I sometimes get the question how I relate to Osterwalders's business model canvas and what I think of it. And the answer to that is that I find the canvas very helpful and a powerful tool to discuss most business models. I often use it, explicitly or implicitly, to get a quick and structured picture of a business model.

However, businesses, due to the development in ICT, increasingly work in partnerships, offer joint value propositions, use standardization, offer platforms for others to build applications on, build multi-channel and multi-owned distribution networks, profit from diversified and shared revenue streams etc. This increased complexity, with value chains replaced by complex value networks, has made me believe that value propositions can not only be directed towards customers but to partners, suppliers, communities, etc. Why should they collaborate with you? What are their needs? What do you bring to the table? Read more about value propositions here

Also, with my background as a management consultant in IA/IP strategies, I often see and design business models where the control mechanisms for sustainability are crucial to understand the business model. A simplified version is the razor-and-blade model: without patents someone else would provide the blade for much lower price destroying the business model. A complex version is the positioning of technology and IP portfolios in collaborative R&D and standardization activities. And the use of control mechanisms is not only towards customers, but towards suppliers, partners, competitors etc. Read more about control mechanisms here

Also, as with the element “customer relationships” I would perhaps include a “partner relationships” as it can vary from loose supplier relationships to strategic alliances, joint ventures etc.

Finally I often find it useful to turn the model around starting with the customer or stakeholder far to the left and ask "who could we potentially provide value for?, what are their needs?" then look at what internal and external assets and capabilities that could be used, combined or developed into value propositions.

It’s a great tool and for those of you interested to know more check out the book chunk project.

Aravind uses Freemium Business Model to enable FREE eye surgery for the poor

There are an estimated 12 million blind people in India with most cases arising from treatable or preventable causes such as cataracts. In a developing country with limited resources government alone cannot meet health needs of all the poor and the challenges are to make the service accessible, affordable and with high quality.

Aravind is the world’s biggest eye-hospital chain, based in India founded in 1976. Its core principle is that the hospital must provide services to the rich and poor alike, yet be financially self-supporting. It treats over 1.7 million patients each year, two-thirds of them for free.

Aravind's Freemium Business Model:

• Fee for service: 35% of patient care
• Free or subsidized service: 65% of patient care

There are separate facilities for paying and non-paying patients and it is up to the patient to choose where to get the care. The fee based service can include fancy meals or air-conditioned rooms and the paying customers pay well above costs to cover the costs for subsidized and free services. The free or subsidized services are made very cost efficient by proving only the basic facilities that enact a process of social self-selection and create a hurdle for those who can afford to pay to demand free treatment.

To maintain the quality of the care, the same doctors rotate to deal with both paying and non-paying patients.

High volumes

Aravind uses community partners and eye camps to access the poor, something that creates a huge demand for its services. Aravind’s business model is based on the high volumes generated and a surgeon in Aravind performs more than 2000 cataract surgeries a year which is 5 times the number performed by an average Indian ophthalmologist. The large number of performed surgeries creates an expertise and reputation which has lead to Aravind becoming a training center for ophthalmic professionals and trainees.

Aravind is not only a eye-hospital but also

• a social organization committed to the goal of elimination of needless blindness

• an international training centre for ophthalmic professionals and trainees

• an institute for research that contributes to the development of eye care

• an institute to train health-related and managerial personnel in the development and implementation of efficient and sustainable eye care programs

• a manufacturer of ophthalmic products available at low costs

"Aravind’s model does not just depend on pricing, scale, technology or process, but on a clever combination of all of them" The Economist, April 16th 2009

Further reading:

The Freemium Business Model

Free webinar by Henry Chesbrough on Business Model Innovation May 5th

UTEK corporation announced today that it will hold a webinar on Business Model Innovation May 5th. Presenting will be professor Henry Chesbrough who will share practical guidelines for executives and managers who seek to transform their business model through innovation. Joining Professor Chesbrough will be Peter Skarzynski, the author of Innovation to the Core.

The webinar will take place Tuesday May 5th at 2PM EDT.
Link to free registration