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B2B Business Models
Business Information Systems > B2B Business Models Abstract
Information technology is not only revolutionizing the way that enterprises do business with consumers, but also the way that they do business with each other. In addition, many experts predict that business-to-business transactions will exceed those of business-to-consumer e-commerce. However, just as there are different business models for non-electronic businesses, there are also more than one model for business-to-business e-commerce. Two revolutionary new business models that have come out of this movement are the business-to-business e-commerce models of Dell and Cisco. However, these models are not appropriate for every organization. In addition to these new paradigms for individual firms, other changes in business-to-business e-commerce are occurring that are revolutionizing the traditional paradigms.


Traditionally, when one thinks of business paradigms, one of the first things that springs to mind is the concept of companies selling to consumers. The department chain store or the big box store down the street are prime examples of this business model. Historically, this meant that the business had a brick-and-mortar location where it employed its own personnel. Even with the advent of the Information Age, this model changed only slightly, with information technology being used to support the way that business was done by making standard operations more efficient. For example, manual cash registers have been replaced in most modern businesses by high tech models that keep track of various aspects of transactions including tender type (i.e., whether the transaction was cash, check, charge, etc.) and amount paid as well as inventory control information or other administrative data. Such automated information collection makes closing the store at night and balancing the books a much easier task and can also help store and chain managers to make decisions about the type of inventory to carry, new services that could be offered to customers, and demographics that can be used in marketing efforts. However, information technology not only allows organizations to perform various business processes more efficiently, in many cases it also allows them to reengineer organizational processes by improving the effectiveness and efficiency of the various processes within an organization. With advances in information systems, however, this model can now be taken a step further. Electronic business-to-consumer paradigms allow a business to market and sell directly to consumers. Examples of this business model include, (the online purveyor of books and a wide variety of other items) and Travelocity (the online travel agency) businesses that sell electronically directly to consumers. However, not all businesses sell directly to consumers, nor should they. Automobile parts manufacturers frequently sell to the automotive industry rather than to the car owner. Precious stones’ miners sell to the gem industry where the stones are cut and sold, in turn, to jewelers and suppliers who, in turn, sell to suppliers. Pharmaceutical companies sell to directly or indirectly to pharmacies and hospitals who sell the products to customers. As with business to consumer paradigms, the model of business-to-business (B2B) commerce has been revolutionized by advances in information technology and systems.

Table of Contents Abstract Keywords Overview Applications Conclusion Terms & Concepts Bibliography Suggested Reading

B2B Business Models EBSCO Research Starters® • Copyright © 2008 EBSCO Publishing Inc. • All Rights Reserved

Essay by Ruth A. Wienclaw, Ph.D. Page 2

Despite the increasing popularity of business-to-consumer e-commerce with its ease of ordering and comparing items online, many experts predict that business-to-business transactions will exceed those of business-to-consumer e-commerce. This makes sense. For example, although a consumer may order a book over the Internet, the business from whom the book is purchased not only has to interact with the purchaser but also with the publisher who printed the book. The publisher, in turn, needs to interact with the paper and ink suppliers, the maintenance firm that keeps the printing presses running, the authors who submit their manuscripts online, and so forth. Business Models for Conducting B2B E-Commerce Just as there are different business models for non-electronic businesses, there is also more than one model for business-to-business e-commerce. In general, a business model is an organization’s approach to doing business. Although there are many different business models available, most business models have several core concepts in common. At the level of the most basic business model, an organiza• tion must have something of value to offer to the marketplace, whether it be goods, products, or services. A bookstore, for example, may offer books and magazines as well as various services such as special ordering. To be successful, the thing which the organization offers its customers needs to be of value – something that the customer either wants or needs (or both). Another part of the business model is the customer – the • target market to whom the organization is trying to sell its offering. The business model needs to articulate how the business will gain, maintain, and foster relationship with customers. In order to get the product into the hands of the customer, • the organization also needs an infrastructure in place. The infrastructure includes such things as having the right mix of people and skills necessary to produce the product as well as to run the business. This may include not only the people working directly for the organization, but partners as well who provide skills or services that that business does not provide for itself but that are necessary to get the product into the hands of the customer. This may include companies that provide complementary skills necessary to make the product (e.g., suppliers) as well as supply chain partners that provide raw materials, supplies, or components or that distribute, warehouse or sell finished products. The business model also needs to include consideration • of the company’s income and cash flow as well as its cost structure. Electronic Data Interchange & E-Commerce Models One of the outgrowths of information technology that has enabled the development of new business-to-business ecommerce models is electronic data interchange, a standard format used in exchanging business data such as price or product identification number. Electronic data interchange is a standard format that is used to exchange business data including price or product identification number. Electronic data interchange technology is particularly important for in international commerce where paperwork required for international trade creates costs that can be up to seven percent of the value of the items being traded. With electronic data interchange technology, on the other hand, shippers, carriers, customs agents, and customers all can send and receive documents electronically, thereby saving both time and money for international transactions. Advantages of E-Commerce for B2B Businesses As shown in Figure 1, the traditional business model for business-to-business operations involves a procurement staff that negotiates with various suppliers. For example, a bookstore may procure books from several distributors and office supplies from one or more other suppliers. In the e-commerce business model, a procurement staff (typically smaller than the staff necessary in the traditional business-to-business model) shops online for supplies and other items necessary to the business. Just as it does for the consumer in the business-to-consumer business model, the Internet allows businesses to comparison shop online in order to find the most appropriate product at the best price. This reduces many of the front-end costs for finding goods and products that are incurred in the traditional model.

Keywords Business Model Business Process Business-to-Business (B2B) E-Business Business-to-Consumer (B2C) E-Business E-Commerce Electronic Exchanges Enterprise Hub

D. EBSCO Research Starters® • Copyright © 2008 EBSCO Publishing Inc.Information System Information Technology Just-in-Time Manufacturing (JIT) Portal Target Market B2B Business Models Essay by Ruth A. • All Rights Reserved Page 3 . Ph. Wienclaw.

p. Figure 2: Electronic Exchange Structures (Adapted from Senn.415) Consortia-backed Exchange The second general type of electronic exchange is the consortia-backed exchange. Independent exchanges may be vertical (i. There are several advantages to private exchanges over other types of electronic exchanges.. As a result. As shown in Figure 3. This means that the owners have the ability to exclude competitors and their suppliers from the exchange so that the exchange only benefits its members. The owners of a private exchange can also offer pricing incentives or alternatives so that they can streamline business processes and benefit participants. Applications For many years. Certainly. improved marketplace liquidity. Public Exchange In a public exchange (also known as an independent exchange). orders for computers are placed with Dell by telephone or through the Internet. In addition. Private Exchange Another type of electronic exchange structure is the private exchanges. This approach also enables Dell to forego having brick and mortar store fronts with inventory that must be kept on the books or that might become obsolete. Ph. and more efficient and flexible transaction methods.D. most private exchanges can be tailored to serve specific products. thereby significantly reducing overhead. prepaid) order.e. Far from being inflexB2B Business Models Essay by Ruth A.e. the owners of these exchanges can regulate access to both buyers and sellers. items that are not built by Dell are shipped directly to the customer by the manufacturer. simultaneously serving businesses in different industries). Through a process called just-in-time (or lean) manufacturing.. Assembly lines are set up to produce masses of products that are all the same. displays information. the assembly line allowed products to be made more quickly and cheaply than ever before. This reduces both lead times and set up times for building a computer. • All Rights Reserved Page 4 . p. as opposed to public exchanges. electronic interchanges typically have one of three structures. Even though the assembly line process improved over the years. serving members of a specific industry) or horizontal (i. but it did so at a price. The use of the Internet to facilitate business-to-business transactions promises reduced costs. These hubs are sites on the Internet where buyers and sellers can come together to exchange information and buy and sell products and services. These features help Dell to reduce the costs of production and sales. 52) Electronic Exchanges Another way that this can be done is through the use of electronic exchanges (also known as electronic markets or B2B hubs). Dell only orders the parts for a computer when it has a firm (and in the case of non-corporate orders. One of the primary purposes of consortia-backed exchanges is to drive down costs for all participants. Public exchanges are independently owned by the third party that displays the content and provides electronic tools for conducting business. The Dell Business Model One of the business models for business-to-business operations that has been enabled by information technology is the Dell business model. These are e-markets created by consortia of traditional firms within an industry who band together to create a common forum for business-tobusiness transactions of goods and services. In addition. better access to buyers and sellers. Under the just-in-time philosophy. and provides the tools necessary to conduct e-business. the traditional mass manufacturing (or Fordist) model followed the principles of assembly line manufacture that revolutionized production when first implemented by Henry Ford. custom options were – at least in the beginning – difficult to acquire. a third party market operates the electronic market. EBSCO Research Starters® • Copyright © 2008 EBSCO Publishing Inc. in this model.Figure 1: Business-to-Business Business Models (From Lucas. As shown in Figure 2. First. waste is reduced and productivity improved by only having the required inventory on hand when it is actually needed for manufacturing. Wienclaw. These exchanges are structured around the needs of a specific sponsoring business and its trading partners and can be joined by invitation only. it was not until the flexibility and power brought about by information technology that a true revolution of the manufacturing process occurred. Dell operates with little in-process and no finished goods inventory: Products are shipped as soon as they are manufactured.

53) The Cisco Business Model Another lean business-to-business model that has been enabled by information technology is the Cisco model (Figure 4). other changes in business-to-business e-commerce are occurring that change the traditional paradigms. Cattle Offerings Worldwide for the beef and dairy market. standardizing systems. Not only are the majority of Cisco’s orders received over the web. these models are not appropriate for every organization. EBSCO Research Starters® • Copyright © 2008 EBSCO Publishing Inc. • All Rights Reserved Page 5 . Business-to-business hubs offer more choices to buyers and give sellers more access to buyers. The sellers would have to determine who the potential buyers were through advertising or a direct sales force. but 70 to 80 percent of their customer service requests are also dealt with online. and inefficiency in the existing supply chain. The hub finds the potential sellers and buyers.D. and evaluations to be transferred more easily. Examples of functional hubs include iMark which focuses on buying and selling used capital B2B Business Models Essay by Ruth A. this process also allows Dell to custom design systems for its customer within certain parameters as well as to offer a range of items rather than a single system. Electronic hubs (also known as vertical portals) are business-tobusiness web sites that bring together buyers and sellers in a particular industry such as information technology or retail. This would involve 25 separate searches and 25 separate contacts each time a seller wanted to sell. With the hub system. Vertical hubs that are successful tend to have a high degree of domain knowledge and industry relationships. PlasticsNet. Examples of vertical hubs include Band-X for the telecommunications industry. The sellers would then have to make a contact with each potential buyer. and improving matches for both buyers and for the plastics industry. This successful network communications manufacturer receives approximately 90 percent of its orders over the Internet. p. They provide domain-specific content and relationships that are of value to their participants. Vertical Hubs Vertical hubs are set up to specialize within an industry or other vertical market. if five buyers and five sellers were potentially interested in doing business with each other. Wienclaw. reducing the total number of postings to ten: Five postings on the hub by the sellers and five views by the buyers. create master catalogs and allow advanced search options. business-to-business hubs are two-way networks that mediate between buyers and sellers and create value for all parties. The orders are routed to contract electronics manufacturers who build the products to Cisco’s specifications. E-Hubs In addition to these new paradigms for individual firms. Figure 4: The Cisco Business Model (From Lucas. are horizontal hubs that provide the same functions across different industries rather than more functions within a single industry. they would first have to locate each other. These hubs facilitate business transactions within an industry and may charge a transaction fee for purchases. product descriptions. Figure 3: The Dell Business Model (From Lucas.ible. Vertical hubs are particularly advantageous when there is much fragmentation among the buyers and sellers. this number is drastically reduced. however. Business-to-business hubs create value in a number of ways including reducing search costs. Hub systems also allow information such as credit checks. For example. however. As opposed to business-to-consumer hubs that are one-way networks that primarily create value for sellers. Ph. Functional Hubs Functional hubs. Functional hubs are successful in situations where there is a greater degree of process standardization and sufficient knowledge about the processes and the ability to customize the business process to respond to differences in various industries. on the other hand. p. The value of hubs is that they reduce transaction costs by aggregating buyers and sellers in an electronic marketplace. and Ultraprise for secondary mortgage exchange. 54) Other Business Model Innovations Although the business models used by Dell and Cisco have revolutionized the way that these and similar organizations do business over the Internet.

Business-to-Business (B2B) E-Business: E-business in which a business markets and sells to other businesses. transac• tion fees will most likely decrease or even disappear. manufacturing. Business models include consideration of what the business offers of value to the marketplace. repair. and knowledge in the creation. Enterprise: An organization that uses computers. and dispersal of data and information. New business-to-business models will continue to appear as technology continues to evolve and enterprises seek creative solutions. this means that providers will need to shift from dealing in transactions to offering more comprehensive solutions to business needs. the e-speculator model that has a high degree of product standardization and moderate to high price volatility. First. (accounting. human resources). To facilitate this need. building and maintaining customer relationships. and supporting processes. Two revolutionary new business models that have come out of this movement are the business-to-business ecommerce models of Dell and Cisco. Information System: A system that facilitates the flow of information and data between people or departments. the specialist originator that deals with complex and relatively expensive products. and the sell-side asset exchange with high fixed costs and a relatively fragmented supplier and customer base. to make business-to-business e-commerce worthwhile.g. Business Process: Any of a number of linked activities that transforms an input into the organization into an output that is delivered to the customer.. The primary characteristics of JIT include having the required inventory only when it is needed for manufacturing and reducing lead times and set up times. storage. Web hubs may charge a transaction fee for purchases. Also known as a vertical portal.. an infrastructure that allows the organization to produce its offering.”B2B Business Models Essay by Ruth A.D. which support lean manufacturing and improve transaction efficiency. EBSCO Research Starters® • Copyright © 2008 EBSCO Publishing Inc. products can be bundled with related information and services in an effort to forge customer loyalty and long-lasting relationships. In addition. new models for business-to-business e-commerce continue to evolve as enterprises find new and creative ways to do business with each other. marketing). • systems need to evolve to handle not only simple transactions but complex ones as well.e. Conclusion E-commerce and the information technology that enables it allow organizations to conduct business together in new ways. the solution provider in which product costs are only a small portion of the overall costs. as markets become more competitive. Among other implications. Business-to-Consumer (B2C) E-Business: E-business in which a business markets and sells directly to for maintenance. cash flow. and the income. E-commerce is typically conducted over the Internet. In addition. • All Rights Reserved Page 6 . and Youtilities for energy management. Ph. purchasing. Systems for Improving B2B E-Commerce Business-to-business e-commerce is still in a state of flux as enterprises learn how to leverage information technology in general and the Internet in particular into systems that help them more efficiently and effectively do business. Hub: A business-to-business web site that brings together buyers and sellers in a particular industry. Although this term is often applied to large organizations. and cost structure of the organization. Terms & Concepts Business Model: The paradigm under which an organization operates and does business in order to accomplish its goals. E-Commerce: E-commerce (i. MRO. and distribution of information. Information Technology: The use of computers. operational processes (e. Business processes include management processes. Information technology comprises a wide range of items and abilities for use in the across industries. Observers are looking at several. Also called “lean manufacturing. communications networks. and operating procurement. the term can be applied to both small and large organizations. Electronic Exchanges: Sites on the Internet where buyers and sellers can come together to exchange information and buy and sell products and services. Among new business-to-business e-commerce models that are beginning to emerge are the mega exchange that maximizes liquidity and sets common transaction standards. electronic commerce) is the process of buying and selling goods or services – including information products and information retrieval services – electronically rather than through conventional means. Employease for employee benefits administration. Just-in-Time Manufacturing (JIT): A manufacturing philosophy that strives to eliminate waste and continually improve productivity. standards will need to be developed and put into place. storage. For example. Wienclaw.

Andrew. H. L. In the traditional procurement process. chat.aspx?direct=true&db=bth&AN=3712730&site=bsi-live Suggested Reading Huang. then the website is a marketplace and collects revenues from some aspect of the transaction (see revenue sources section below). If the transaction is consummated offline. Brand Strategy. The Napsterization of B2B.ebscohost. the acquisition of new suppliers . She is the owner of a small business that works with organizations in both the public and private sectors. R. 2000). 5257. Information technology: Strategic decision making for managers. and human/systems integration. Retrieved September 25. opportunities (3rd ed. 72(19). “Stickiness” is again an issue for this transaction model (Lessons from the Past. 2007. from EBSCO Online Database Business Source Complete. then the website is a bulletin board or community portal (Trepp. International Journal of Management. Ph.ebscohost.aspx?direct=true&db=bth&AN=3646644&site=bsi-live Williams. 2007. 209.aspx? direct=true&db=bth&AN=3712522&site=bsi-live Teschler. practices. 1999). Portal sites typically offer a search engine or catalog of web sites as well as other features. http://search.aspx? direct=true&db=bth&AN=24283270&site=bsi-live Essay by Ruth A. Retrieved September 25. 78(6). B2B E-Commerce 12 basis of the posted price. After suppliers submit competing offers.). 24(1). from EBSCO Online Database Business Source Complete. Retrieved September 25. Bibliography Lucas. Ruth A. Imagine Media Inc. 2007.Portal: A web site that acts as a point of access to the World Wide Web. D. Machine Design. (2007). However. 2000). from http://www. Retrieved September 25. (2000).D. the buyer selects the winning offer ( from EBSCO Online Database Business Source Complete. training. Target Market: The people or businesses to whom the entrepreneur wishes to sell goods or services.htm Senn. Many of these buyer-supplier relationships are long established. Jr. Upper Saddle River. 82-91. 18-19. Wienclaw holds a Doctorate in industrial/organizational psychology with a specialization in organization development from the University of Memphis. If the transaction is online. Going from push to pull. 2007.ebscohost. (2007). consulting on matters of strategic planning. These RFQs have detailed specifications and instructions regarding the type and quantity of the products requested. NJ: Pearson/Prentice Hall. Harvard Business Review. Sawhney. a buyer sends out a Request for Quotes (RFQ) or Request for Proposals (RFP) to potential suppliers. from EBSCO Online Database Business Source Complete. or up to the minute industry news. Wise. E. D. Harvard Business Review. (2000).com/login. http://search. C. http://search. New York: John Wiley and Sons. & Morrison. M. S. Beyond the exchange: The future of B2B.ebscohost. A.ebscohost. (1998). (2005). 36-37. in the case of new procurement contracts. J. 2007. http://search. Buyers identify suppliers from the website database and then consummate the transaction on or offline. as well as other terms of sale. Dr. Retrieved September 25.aspx?direct=true&db=bth&AN=25139349&site=bsilive McAfee. Entry to the e-commerce markets of China and Taiwan: An application of content analysis. Information technology: Principles. “Sticky” features that could be introduced include members-only content. 2007. (2004). but not always) based on the lowest price and sends a purchase order to the winning vendor (Trepp. (2000).com/login. Catalog aggregation sites often feature “sticky” content or other features that attempt to retain the purchaser at the website (Trepp. Wienclaw. 2000). Let’s get vertical. Retrieved September 24. from EBSCO Online Database Business Source Complete. Request for Quotes & Kaplan. 86-96.gwu. 78(6).edu/~ibus266j/Global%20B2B/Copy%20of%20models-b2b. New role for b-to-b exchanges: Helping developers collaborate.

offline and online about B2B being the new focus of e-business and how this area would grow very's still a lot of money In the following space. In an Internet enabled RFQ process. the Internet RFQ bidding process allows for reverse auction competitive bidding. buyers can achieve a much wider link is broken cause the company no longer is extant) . In addition. Why? WTGR .is an expensive and time-consuming process. This page used in the following courses taught by INTRODUCTION Beginning in November through December 1999 and into January and February 2000 there were a lot of newspaper and magazine reports. We can find many newspaper articles about B2B issues and many of them include projections as to how big the market will grow .shtml in which she noted several of these B2B projections and also commented on how important it would be in the business commuity in general. Competitive price discovery by suppliers during the RFQ bidding process could also potentially enhance this benefit to buyers. thus lowering procurement costs for buyers. 2000 "Forecasters Fuel Feeding Frenzy on B2B Projections" Mary Hillebrand wrote an article in E-Commerce Times in January 2000 Using an Internet enabled RFQ platform. Richardson .which may not be meaningful since since whether it is $5 trillion or $7 trillion .csustan. "The Stamford.pdf B2B Business-to-Business marketing and ecommerce updated 2005 Dec 19th (Nabeela noted that the fastparts. achieve more efficiency and lower the cost of supplier acquisition (Trepp. 2000). the sourcing procedure is greatly enhanced. you will find separate articles on B2B at three separate times from E-commerce Times.ecommercetimes. MGT D06 CCT 322 . Each story has a different perspective on B2B. By Mary Hillebrand E-Commerce Times January 27. Connecticut-based GartnerGroup sees the online B2B market reaching seven . http://www.

noting "when a leading Web incubator announced earlier this week [11Apr2000] that it would stop investing in business-to-business (B2B) is based on a report by a U.ecommercetimes." . is a story in February 2000 which says "Study: U. As the list of new portals continues to lengthen.shtml Brady writes "companies in nearly every industry are launching slick new Internet portals -. By Mick Brady E-Commerce Times March 16. Jasinowski added "our survey shows that most manufacturing companies are still at a rather basic level when it comes to integrating the Web into their corporate business activities.S.. Customers are not flocking to the portals as quickly as expected and even those who make the trip are often unwilling or unable to make transactions...." ." said NAM president Jerry Jasinowski.this story http://www. the vast majority offer only an information storefront. following on the heels of Hillebrand's story in January..percent of a predicted $105 trillion in total global sales transactions.but many have failed thus far to rise above the functionality of plain old Web sites . retailers lack a cohesive e-commerce strategy. The study echoed a recent report from Deloitte and Touche showing that 70 percent of U. 2000 Interestingly. trade association called National Association of Manufacturers WTGR "A nationwide poll of U. .S.will be a key driving force for B2B e-commerce. While 80 percent claim they have a Web site. 2000 "More Glitter Than Gold in B2B Portals" The study reports that companies who develop B2B marketplaces "e-market makers" -. yet relatively few manufacturers are participating in it." .. it reinforced concern that the dot-com shakeout in the business-to-consumer arena may . it is nevertheless becoming increasingly clear that a portal launch does not necessarily augur immediate B2B success.. 2000 "B2B Ventures Losing Their Allure" http://www.S. industrial firms shows that most are not engaging in extensive business-tobusiness (B2B) e-commerce.ecommercetimes. according to the National Association of Manufacturers (NAM).S.ecommercetimes. By Staff Writers E-Commerce Times February 23. By Chet Dembeck E-Commerce Times Columnist April 11. Manufacturers Not B2B E-Commerce Ready" ." "No one questions the importance of B2B Dembeck writes in a more "sober" way about the B2B hype.

." Geoffrey Bock. and Goldman." "In the B2B community.ecommercetimes. as quoted by Dembeck to communicate with third-party manufacturers and. Cox writes. in some "Smart companies are using the Internet to shorten the time it takes to get materials from suppliers. In general..ecommercetimes.. valuation and the projected size of the B2B market have gotten so big they have become hard to fathom. 2001 "Market for B2B Apps Still Soft" www. however.or perhaps because of -. continue to be soft.internetnews. research director for GartnerGroup.the large amounts of cash exchanged." "What seems like a sudden about face was actually expected by some industry analysts. with many B2B payments: Oftentimes. By Erika Morphy September 24. ". By Beth Cox August 17.. a buyer has to tie up its line of credit before the goods are even shipped just to provide the seller with the assurance that the bill will be paid.the proliferation of B2B marketplaces is being fueled by the desire to improve business processes. Massachusetts-based Patricia Seybold Group told the E-Commerce spreading to the realm of B2B. payment is still largely paper-based despite -. the applications needed to establish online marketplaces.html#story-start ". By Keith Regan October 01. "Sales of B2B software..and still. bolster supply chains and allow for collaboration among companies. such as credit insurance or letters of credit... Cautiously" www. Other payment mechanisms. Sachs analysts are lowering estimates for some of the prime players in the field. can be very costly -. an analyst with Boston. 2001 "Easy Payments Crucial for B2B Success" www.html An indication of how B2B is progressing is information on the computer software applications that are used by companies in B2B circumstances." "An easy payment process is the foundation of any customer-friendly operation." . it is also being driven by hype" George Reilly.. to turn business culture on its ." . a buyer's credit line is usually hamstrung for the duration of the transaction. 2001 "B2B E-Commerce Takes a Global View.

. These automated online marketplaces have moved past early stumbles and now can help companies reach new levels of accuracy. best thing to do when an issue surfaces. with Europe accounting for 14 %.ranging from handling purchase orders and credit references to billing and shipping -.but they are still slow in implementing it. or B2B . as they do in the business-to-consumer (B2C) e-commerce realm. U. the way these exchanges are designed and run is anything but standardized. However.. The B2B market is effected by many of the environmental forces challenging business in general . While the front-end trading portion of such marketplaces has been refined over time.B2B exchanges are not entirely problem-free.html Hensell explains "When it comes to buying and selling products. the motivation to overcome those hurdles is greater than the obstacles posed. but that ".. companies generated 67 % of global B2B e-commerce revenue.ecommercetimes. payment and fulfillment online or not at all. KEY POINTS So. Analysts have predicted that the fastest growing markets in coming years will be the overseas markets. although conducting B2B transactions online has become standard operating procedure. companies seem to have turned away from each other -. Deloitte & Touche e-commerce consultant Aran Nathanson told the E-Commerce Times. .com/story/32000. Hensell suggests B2B exchanges have grown and improved since the early 2000's. many large corporations have begun requiring their trading partners to conduct sales ordering. For example." .S. In fact." ." "But for many businesses. By Lesley Hensell October 2003 "The True Path of B2B E-Commerce" www.have not lived up to their potential. companies thus far still dominate the online B2B landscape.S.and the bigger the companies are. in many cases the back-end processes -." Where is B2B "Even though the overseas markets are expected to boom.." Hensell further explains that there is a wide variety of platforms and software within which companies conduct B2B and therefore there is little standardization. efficiency and profitability. is wait three or four months to see if it has "sustaining" power before jumping on the bandwagon The reality among medium sized businesses is that they may believe B2B is great . what we can conclude from these 2000-2001 B2B articles ? • • • • WTGR B2B seems to be getting a lot of hype and the expectation among IT oriented people is that it should grow rapidly as a business forum In this fast paced e-world. Gartner has estimated that B2B sales in the Asia-Pacific region will rise from US$9 billion in 1999 to $992 billion by 2004. exchanges. An Andersen survey of the B2B landscape last year [2000] found that U.. the less they want to talk.head. This decline in personal interaction during the sales process may be due partly to the rise of business-to-business.

8 billion to 2003 $108 billion $1 trillion *** Business 2005 . Annual B-to-B ecommerce is projected to soar from $43 billion in 1998 to $1 trillion by 2003. ***. This article appeared in Business 2.During our discussions of B2B aspects we refer to an article written by Mohanbir Sawhney and Steven Kaplanw. Business-to-Business Electronic Commerce Types of Transactions • Spot Buying ○ ○ • ○ ○ . The intermediary can be • • • a person or an organization or an electronic system .2nd ed.$ 4 trillion . Business-to-Business Electronic Commerce How is B2B conducted? B2B commerce can be conducted directly between a buyer and seller or via an online intermediary.from page 217 in Turban Text . ** . Sawhney and Kaplanw explain that "The great untold story of online commerce is that business-to-business sales have already eclipsed the higher-profile business-to-consumer market by a long shot." business-to-consumer business-to-business B2B $43 billion Business 1998 $7. we need to know what are some of the successful characteristics business models so that we can "conduct E-commerce successfully" in a B2B situation.Turban Text . if the B2B market is growing so fast.1 .0 in 1999.8 billion to $108 billion in the same period. $10 trillion ** So. while the consumer market swells from $7. titled " Let's Get Vertical . says B2B will grow to the range of $ 1. according to Forrester Research. .2nd ed. buying goods and services at market prices often facilitated by a third party exchange Strategic Sourcing long-term contracts that are usually negotiated to get a good cost advantage often this is done by streamlining your supply chain .

costs Business-to-Business Electronic Commerce B2B Models • Company Centric Models ○ which would include    • ○ Supplier Oriented Marketplace Buyer Oriented Marketplace Intermediary Oriented Marketplace Many-to-many Marketplaces also known as   Trading Communities or Trading Exchanges or Exchanges .. times.including ERP . seller and intermediary • • • • • product details customer profile supplier conditions product process . Business-to-Business Electronic Commerce The Information Processed in B2B .Business-to-Business Electronic Commerce The key entities in B2B EC.Enterprise Resource Planning . • • • • • • • Selling Company Buying Company Electronic Intermediary Deliverer Network Platform Protocols and communication Back-end information system .capacities transportation.meaning what you have to expect will be sent back and forth between the buyer. Supplier Oriented Marketplace common examples are manufacturers of electronic products example companies are • Cisco .

and wide variety of products. so they open up a web site to inform companies what they require. Intermediary Oriented Marketplace Boeing's PART case demonstrates the intermediary oriented B2B marketplace. One of the new terms used in this consideration is "Procurement Management" . and invite businesses to submit bids on what they wish to supply. sellers offer products for sale.• • IBM Intel which all have a majority of their product sold to other businesses. even though they may have some %age sold direct to consumers Cisco Connection Online         Customer Service Software downloads defect tracking technical advice Online Ordering Cisco builds most of its products for custom orders Custom orders can be facilitated more precisely through online menus Finding Order Status empowers the customer to know when order is arriving and specific details Buyer Oriented Marketplace Buy-Side: One-From-Many This is usually for large companies that buy a large volume. including transactions.boeing. Boeing plays the role of intermediary in supplying maintenance parts to airlines (most of which own Boeing planes) Currently the Boeing PART Page and myboeingfleet. www. In this and accept bids against the product.which is a fancy way of "figuring out best how to buy stuff" example companies are • • • General Electric Federal government agencies Automotive assemblers and Tier 1 parts companies GE Trading Process Network (TPN) GE TPN Post is an Internet-based trading network that enables buyers and sellers to do business-tobusiness electronic commerce. Access to the PART Page requires a separate account and login password.htm . A lot of this is being done in the form of an are administered separately.

fastparts." formerly from http://www. They offered exchange brokerage between buyers and is a leading business-to-business e-commerce net marketplace for the Electronics manufacturing industry.) FastParts. We facilitate the global trading of electronic inventory over the Internet with our ComponentConnectTM and EquipmentConnectTM trading exchanges. The genesis of B2B EC was technologies such as Electronic Data Interchange (EDI) and Electronic Fund Transfer. small and medium size companies are now also able to start participating in B2B and distributors can trade components quickly and cost effectively at was founded in 1991 to bring buyers and sellers of semiconductors and other electronic components together directly and anonymously to negotiate 'trade' transactions. part makers. dynamic business models Enhance cost structure and profit margins Create a virtual networked enterprise that transcends the time and geographic boundaries imposed by the globe Build highly coordinated communities with business partners and customers" Just how diverse can the B2B market be? It does not have to be limited to conventional manufacturing and service industries. SOLD! AuctionTM and Century Catalog services. and an auction which were typically the exclusive domain of larger organizations. . contract appeared to be inactive and all the other links do not work.html "It was founded in 1991 as an electronic bulletin board-based trading] include: • • • • • • Strengthen and globalize your corporate brand Increase customer satisfaction and loyalty Create flexible. such as the "business of" sports and entertainment. OEMs."Boeing views the Internet as an opportunity to encourage more of its customers to order parts electronically" CASE STUDY of a B2B e-commerce business model: FastParts. They also sell memory and some equipment of an authorized distributor/reseller of certain manufacturers. with the advent of the Internet and its open network. In FastParts words www.html "Key benefits of B2B EC [according to FastParts. The company brought its trading expertise onto the Internet upon receiving venture capital funding in 1996. Many other aspects of business can be involved. Membership assures participants they are dealing with pre-qualified trading "FastParts. FastParts." from formerly www. A Google search reveals little. their founding President left the company in 2001." "became an e-commerce pioneer in 1996 launched the first B2B Internet marketplace for buyers and sellers of electronic inventory" "Business-to-business (B2B) EC is the engine behind the EC (In Dec 2005 student Nabeela noted that the domain name for fastparts. In 2005 their URL was no longer active. to serve the needs of procurement professionals who faced the dual challenges of excess inventories on cancelled jobs and inventory shortages for unforecasted orders.

or downloads." said Patrick McDonnell. For .plesman.however. On this page there are several quotes from ecommercetimes.htm Prof. and this is going to bring them all together. Tim G. A check on the NHL site did not reveal any B2B activity .html "NHL looks at online B2B" Zyska noted that accounting firm PricewaterhouseCoopers has been hired by the NHL to do a study on "the feasibility of implementing a B2B initiative for the National Hockey League". before access . it should be noted thatthe NHL was closed down in 2004/2005 due to the strike by the Players ! . articles. MISTAKES ITEXTS USED I IMAGES I RANK IDISCLAIMER I STUDENT CONTRIBUTORS I FORMER STUDENTS http://www. chief financial officer of the NHL was quoted by Zyska as saying that "We have a lot of vendor relationships. CONTACT witiger. The resulting lead is then passed back to the advertiser for sales follow Associate Publisher of the ECommerce Times. 2004 or 2005 so it appears as if the NHL dropped this. a lot of suppliers at the team levels. I MAIN PAGE I NEWS GALLERY I E-BIZ SHORTCUTS I INT'L BIZ SHORTCUTS I MKTG&BUSINESS SHORTCUTS I TE I . Permission was given by Richard Kern.witiger.WTGR journalist Patricia Zyska at Plesman wrote a story in the August 2000 issue of the eBusiness Journal http://www. as well as league level. .witiger. Richardson www. a popular Web site may advertise an interesting report. Richardson 2004 Dec or as formidable as an industry exhibit. definition - © A lead generator is any marketing-related activity intended to publicize the availability of a vendor's product or service. that run anything from pencils and paper clips to Jumbotrons and zambonis. Craig Harnett. Lead generators may be as simple as printed advertising in a newspaper or trade journal. but require the visitor to register with their contact information before accessing the promised content." "Many of the individual teams buy their own products and services on an individual basis rather than in any aggregated form. Internet technology is also broadly employed to acquire leads from Web site visitors that seek to access helpful information. in an email to Prof. NOTE: a Google search in May 2005 could not find any hits for NHL and B2B that were dated in management consulting services partner with PricewaterhouseCoopers. a hard copy of the email is kep on file in Richardson's permissions binder.


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That much is certain. Other models can be more intricately woven. Ross Michael R. Vitale Peter Weill In the most basic sense. Things to read: Important Note Learning Objectives __/ 09-30-2005 \__ What Is Web 2. __/ 01-27-2007 \__ The Impact of Web 2. Radio and later television programming has been broadcasted over the airwaves free to anyone with a receiver for much of the past century.0 __/ 09-20-2006 \__ Yahoo: Terry Semel __/ 04-13-2006 \__ Google: Eric Schmidt __/ 12-27-2005 \__ Netflix: Reed Hastings __/ 03-01-2005 \__ Yahoo: Jerry Yang __/ 07-26-2001 \__ Google: Sergey Brin and Larry Page __/ 03-07-2001 \__ eBay: Meg Whitman __/ 09-02-1999 \__ Dell: Michael Dell __/ 11-05-1998 \__ AOL: Steve Case __/ 10-30-1996 \__ Apple: Steve Jobs Business models are perhaps the most discussed and least understood aspect of the web. This is one attempt to present a comprehensive and cogent taxonomy of business models observable on the web. content creators. The Web has popularized the auction model and broadened its applicability to a wide array of goods and services. The bottom line depends on many competing factors. and listeners or viewers. and unique items like fine art and antiquities. If all goes well. The business model spells-out how a company makes money by specifying where it is positioned in the value chain. Internet commerce will give rise to new kinds of business models. Who makes money and how much is not always clear at the outset.0 and Emerging Social Network Models World Economic Forum . financial instruments. Broadcasting is a good example. Rosenbloom __/ 11-00-2001 \__ Migrating to Profitable Electronic Commerce Business Models Jeanne W. the revenues from sales exceed the cost of operation and the company realizes a profit.that is. generate revenue. There is so much talk about how the web changes traditional business models. auctions have been widely used throughout the world to set prices for such items as agricultural commodities. A company produces a good or service and sells it to customers. The proposed taxonomy is not meant to be exhaustive or definitive. New and interesting variations can be expected in the future. advertisers (and their agencies). Internet business models continue to evolve. But the web is also likely to reinvent tried-and-true models.Social Networks: NEW! Join the Digital Enterprise social networks and meet other learners on Linkedin and Facebook Hear the podcast: Audio | Transcript Things to watch: Charlie Rose series of executive interviews: __/ 11-19-2007 \__ Amazon: Jeff Bezos __/ 07-19-2007 \__ Craigslist: Craig Newmark __/ 05-22-2007 \__ Wikipedia: Jimmy Wales __/ 12-29-2006 \__ A panel discussion on the future of the Internet and Web 3. Some models are quite simple. But there is little clear-cut evidence of exactly what this means. One of the oldest forms of brokering. a business model is the method of doing business by which a company can sustain itself -. The broadcaster is part of a complex network of distributors. Auctions are a perfect example.0: Design Patterns and Business Models for the Next Generation of Software Tim O'Reilly __/ 05-06-2005 \__ Do Some Business Models Perform Better than Others? A Study of the 1000 Largest US Firms Peter Weill __/ 01-14-2004 \__ The Utility Business Model and the Future of Computing Services Michael Rappa __/ 07-04-2005 \__ The Abundance of Simple Business Models on the World Wide Web Michael Featherstone Allan Ellis __/ 05-27-2002 \__ The Role of the Business Model in Capturing Value from Innovation Henry Chesbrough Richard S. Business models have been defined and categorized in many different ways.

com America Online ChemConnect Classmates Coolsavings Counterpane Craigslist Dell Computer DoubleClick eBay Flickr Google iTunes Lands' End Listen. Business models have taken on greater importance recently as a form of intellectual property that can be protected with a patent. business-to-consumer (B2C). Broker charges the seller a listing fee and commission scaled with the value of the transaction. "business methods") have fallen increasingly within the realm of patent law.conducts auctions for sellers (individuals or merchants). Moreover. [eBay] Transaction Broker -.takes customer orders to buy or sell a product or service. Brokerage models include: Marketplace Exchange patented "name-your-price" model pioneered by] Auction Broker -. Auctions vary widely in terms of the offering and bidding rules. Respond. or consumer-toconsumer (C2C) markets. [] Demand Collection System -. The formula for fees can vary. Brokers play a frequent role in businessto-business (B2B). But what is new and novel as a business model is not always clear.provides a third-party payment mechanism Case studies: Amazon. Type of Model: Brokerage Model Description: Brokers are market-makers: they bring buyers and sellers together and facilitate transactions. business models (or more broadly speaking. including terms like price and delivery. [ Jeff Bezos __/ 05-17-2006 \__ Users. Exchanges operate independently or are backed by an industry Netflix New York Times Orbitz Overture PayPal Priceline Red Hat Slashdot Truste Wikipedia Yahoo! Data sources: Online Classifieds Data Pew Internet Usage Metrics Nielsen // NetRatings Top 500 Sites Alexa Web Search Hungry minds: The Long Tail Chris Anderson iTunes: How Copyright. Indeed. as described below with examples. Prospective buyer makes a final (binding) bid for a specified good or service. Usually a broker charges a fee or commission for each transaction it enables. ChemConnect] Buy/Sell Fulfillment -. a firm may combine several different models as part of its overall Internet business LiveWire Monster. and Technology Shape Next topic: . from market assessment to negotiation and fulfillment. Not Money: the Google Business Model Marissa Mayer __/ 01-27-2006 \__ Digital 2.__/ 09-27-2006 \__ Web-scale Computing Services at Amazon. it is not uncommon for content driven businesses to blend advertising with a subscription model.offers a full range of services covering the transaction process. For example. and the broker arranges fulfillment. Some of the more noteworthy patents may be challenged in the courts. Contract.0: Powering a Creative Economy World Economic Forum __/ 06-05-2004 \__ Strategy for High Tech Companies Michael Cusumano __/ 09-26-2002 \__ A Conversation with Michael Dell __/ 05-01-2002 \__ How Does Google Actually Make Money? Larry Page The basic categories of business models discussed in the table below include:          Brokerage Advertising Infomediary Merchant Manufacturer (Direct) Affiliate Community Subscription Utility On the airwaves: __/ 12-22-2007 \__ Google Captures the 'Zeitgeist' of 2007 __/ 11-20-2007 \__ Ed Burns Makes First Straight-to-iTunes Movie __/ 11-19-2007 \__ Netflix's Million-Dollar Quest for Good Movie Tips Scott Horsley __/ 11-19-2007 \__ Amazon Rolls Out New Wireless Reading Device __/ 09-25-2007 \__ Amazon to Enter Music Download Business Laura Sydell __/ 08-22-2007 \__ Internet Threatens Local Newspapers Geoffrey Bennett __/ 07-19-2007 \__ Drop in eBay Items Concerns Investors Wendy Kaufman __/ 03-27-2007 \__ Blockbuster Targets Netflix with 'Total Access' Greg Allen __/ 02-07-2007 \__ Steve Jobs Wades into Digital Music Debate __/ 02-01-2007 \__ Michael Dell's Return Alex Chadwick __/ 01-02-2007 \__ Wikinomics: How Mass Collaboration Changes Everything Don Tapscott The models are implemented in a variety of ways. [Orbitz. A number of business method patents relevant to e-commerce have been granted.

also delivers advertising links or pop-ups as the user surfs the web. A niche portal cultivates a well-defined user demographic.freeware developers who bundle adware with their product. IM. Overture] Contextual Advertising / Behavioral Marketing -. provides content (usually. An e-Business Model Ontology for Modeling e-Business Alexander Osterwalder Yves Pigneur The Truth about Internet Business Models Jeffrey F. a browser extension that automates authentication and form fill-ins. a hosting service for online merchants that charges setup. A personalized portal allows customization of the interface and content to the user. The banner ads may be the major or sole source of revenue for the broadcaster. monthly listing. [Google] Intromercials -. [NYTimes] Query-based Paid Placement -. Google identifies the meaning of a web page and then automatically delivers relevant ads when a user visits that page. Broker facilitates business transactions between franchised distributors and their trading partners. For example.or virtual mall. blogs) mixed with advertising messages in the form of banner ads. [Salon in cooperation with MercedesBenz] return to top .is a catalog operation that connects a large number of product manufacturers with volume and retail buyers.sells favorable link positioning (i.a software agent or "robot" used to search-out the price and availability for a good or service specified by the buyer.interactive online ads that require the user to respond intermittently in order to wade through the message before reaching the intended content.animated full-screen ads placed at the entry of a site before a user reaches the intended content. The broadcaster. sponsored links) or advertising keyed to particular search terms in a user query. in this case. such as Overture's trademark "pay-for-performance" model. [CBS MarketWatch] Ultramercials -. May also provide automated transaction and relationship marketing services. The advertising model works best when the volume of viewer traffic is large or highly specialized. Craigslist] User Registration -.list items for sale or wanted for purchase. Registration allows inter-session tracking of user surfing habits and thereby generates data of potential value in targeted advertising campaigns.content-based sites that are free to access but require users to register and provide demographic data. [Yahoo!] Digital Markets Previous topic: Web Analytics Classifieds -. A high volume of user traffic makes advertising profitable and permits further diversification of site services. a web site. Contextual advertisers can sell targeted advertising based on an individual user's surfing activity. Escrow. [Google.e.usually a search engine that may include varied content or services. or to locate hard to find information. Rayport B2B E-Commerce Hubs Steven Kaplan Mohanbir Sawhney Business Models for Electronic Markets Paul Timmers A Taxonomy of Internet Commerce Paul Bambury Advertising Model for buyers and sellers to settle a transaction.. The broadcaster may be a content creator or a distributor of content created elsewhere. [Monster. but there also may be a membership fee. it extends the precision of search advertising to the rest of the web. Portal -. Listing fees are] Distributor -.the Business of Digital Media William W. for free) and services (like email. Virtual Marketplace -. Search Agent -. Content-Targeted Advertising by Google. and/or transaction fees.] return to top The web advertising model is an extension of the traditional media broadcast model. [zShops and Merchant Services at Amazon. [PayPal. but not necessarily. et al.

the sale of a product in which the right of ownership is transferred to the buyer.mail-order business with a web-based catalog. Some firms function as infomediaries (information intermediaries) assisting buyers and/or sellers understand a given market. [Apple iTunes Music Store] return to top Manufacturer (Direct) Model The manufacturer or "direct model". The manufacturer model can be based on] Catalog Merchant -. [Barnes & Noble] Bit Vendor -. The product is returned to the seller upon expiration or default of the lease agreement. thereby enabling advertisers to deploy large marketing campaigns. Virtual Merchant --or e-tailer. Sales may be made based on list prices or through auction. improved customer service. brand-integrated content is created by the manufacturer itself for the sole basis of product placement. One type of agreement may include a right of purchase upon expiration of the lease. [Amazon.g.. it is predicated on the power of the web to allow a manufacturer (i.traditional brick-and-mortar retail establishment with web storefront. Independently collected data about producers and their products are useful to consumers when considering a purchase.the sale of a product that involves only the transfer of usage rights to the buyer.customer loyalty program that provides incentives to customers such as redeemable points or coupons for making purchases from associated retailers. is a retail merchant that operates solely over the web. without being involved in the actual exchange of goods or services between the exchange for a rental fee. Combines mail. [Dell Computer] Purchase -. Brand Integrated Content -. in accordance with a “terms of use” agreement. [Lands' End] Click and Mortar -.. Data collected about users is sold for targeted advertising. with software licensing). conducts both sales and distribution over the web.e.Infomediary Model Data about consumers and their consumption habits are valuable. [Edmunds] return to top Merchant Model Wholesalers and retailers of goods and services.a merchant that deals strictly in digital products and services and. [Nielsen//Netratings] Incentive Marketing -. [Coolsavings] Metamediary audience market research contrast to the sponsored-content approach (i. Ad networks collect data about web users that can be used to analyze marketing effectiveness.facilitates transactions between buyer and sellers by providing comprehensive information and ancillary services. Lease -. the buyer receives the right to use the product under a “terms of use” agreement. the advertising model). a company that creates a product or service) to reach buyers directly and thereby compress the distribution channel. Advertising Networks -. Ownership rights remain with the manufacturer (e. in its purest form. License -. telephone and online ordering.feed banner ads to a network of member sites. [DoubleClick] Audience Measurement Services -. . and a better understanding of customer preferences. especially when that information is carefully analyzed and used to target marketing campaigns.

provide text. open source relies on revenue generated from related services like systems integration. it represents no cost to the merchant. Content Services -. banner exchange. Orkut] return to top Subscription Model Users are charged a periodic -.if an affiliate does not generate sales. Pay-per-click -. [Red Hat] Open Content -.. Open Source -. A community of users support the site through voluntary donations. romance). as seen in rise of social networking. Subscription and advertising models are frequently combined. Revenue can be based on the sale of ancillary products and services or voluntary contributions. return to top Community Model The viability of the community model is based on user loyalty. and revenue sharing developed collaboratively by a global community of programmers who share code openly. The affiliates provide purchase-point clickthrough to the merchant.openly accessible content developed collaboratively by a global community of contributors who work voluntarily. It is not uncommon for sites to combine free content with "premium" ( that pays affiliates for a user click-through. which explains its popularity. Users have a high investment in both time and emotion.e. subscriber.daily. or revenue may be tied to contextual advertising and subscriptions for premium services. or video content to users who subscribe for a fee to gain access to the service. provides purchase opportunities wherever people may be] Banner Exchange -.return to top Affiliate Model In contrast to the generalized portal. [Flickr.or member-only) content. The affiliate model is inherently well-suited to the web. The Internet is inherently suited to community business models and today this is one of the more fertile areas of development. [Barnes & Noble. which seeks to drive a high volume of traffic to one site. Friendster. tutorials and user documentation. monthly or annual -. Revenue Sharing -. It is a pay-for-performance model -. Social networking services can provide opportunities for contextual advertising and subscriptions for premium services. the affiliate Variations include. [Wikipedia] Public Broadcasting -. Instead of licensing code for a fee.trades banner placement among a network of affiliated sites. pay-per-click. [The Classical Station (WCPE. Subscription fees are incurred irrespective of actual usage rates. [Listen. It does this by offering financial incentives (in the form of a percentage of revenue) to affiliated partner] Social Networking Services -. Amazon.offers a percent-of-sale commission based on a user click-through in which the user subsequently purchases a product.fee to subscribe to a service. hobby. product support. audio. Netflix] .user-supported model used by not-for-profit radio and television broadcasting extended to the web.sites that provide individuals with the ability to connect to other individuals along a defined common interest (professional.

Traditionally. Unlike subscriber services.come in the form of membership associations that abide by an explicit code of conduct.g. Metered Subscriptions -. electricity water. [Truste] Internet Services Providers -.offer network connectivity and related services on a monthly subscription. [America Online] return to top Utility Model The utility or "on-demand" model is based on metering usage. as opposed to the subscriber model common in the U. [Classmates] Trust Services -. and in which members pay a subscription fee.S.g. Internet service providers (ISPs) in some parts of the world operate as utilities.Person-to-Person Networking Services -. such as individuals searching for former schoolmates. Metered Usage -. metering has been used for essential services (e. © 2010 Michael Rappa About | Forum | Terms of Use | Contact .allows subscribers to purchase access to content in metered portions (e.are conduits for the distribution of user-submitted information.measures and bills users based on actual usage of a service. charging customers for connection minutes.. metered services are based on actual usage rates. [Slashdot] return to top About the author: Michael Rappa is director of the Institute for Advanced Analytics at North Carolina State University. long-distance telephone services). numbers of pages viewed). or a "pay as you go" approach..