Business Models

Last week, and be sure to ignore the date on this post, I took a deep dive in business models. More specifically, how I could make money if I were to start an internet company. Though I recognize that a business model would need to be in place before getting any kind of venture capital, one business model in particular irks me. That is the virtual goods market. Now it's not the virtual creations in Second Life or World of Warcraft that are particularly loathsome -- these are items that have a clear use, like cheating at a game. It is the virtual gifts, like those tossed around in Facebook, that really bug me. Take the virtual martini, for example. Even though the margin may be 90% for such an item (let me pause for a moment to reflect upon the wondrous creation that is this 16-bit GIF), I have a hard time understanding who would pay $2 for this. I'm cool with Freemium, Affiliate, Subscription, and Advertising. These all make sense (though some of the upgrades, partners, and ads may leave a bit to be desired). This just might be the engineer in me wanting to see a product, but I think it has more to do with the lack of value in sending what is effectively an icon in place of actually saying what you mean. But, hey, I also think 50 text messages aren't as efficient as a 2 minute phone call, so maybe I'm just getting old.