These slides summarize a method of value capture for business models as part of a course on business models for hi-tech products

1. Methods of Value Capture
4th Session in MT5016
Biz Models for Hi-Tech Products
A/Prof Jeffrey Funk
Division of Engineering and Technology Management
National University of Singapore

2. Business Model
 Value proposition: what to offer and how to
differentiate
 Customer selection: whom to serve and not serve
 Value capture: dominant sources of revenue
 Scope of activities: what activities to carry out and
what relationships to have
 Strategic control: how to sustain profitability (e.g.,
how to control architecture and standards)

3. What
percent of
total value
will a firm
try to
collect?
What
should be
their goal?
and its
collaborators?
Value Creation and Value Capture

4. Facebook
 Do you think they
capture large amounts
of the value they
create?
 With such large usage
of FB, lots of value
are apparently being
created

5. Old Manufacturing Uber
Microsoft’s OS YouTube
Google Facebook
Nest (IoT?)
IBM Linux Code Linux Kernel
Android Wikipedia
Blogs
In-house Community-Driven
Value Creation
ValueCapture
Eco-systemCompany
One reason they accept a low percent of the value:
users create the value!!
Source: Chesbrough
and Appleyard, 2007

6. Value Creation and Value Capture
How value is created
impacts on how much
value we need to capture
and how we capture it
Will an increasing number
of products depend on value
creation by communities?
For example, what happens
as the IoT diffuses?

7. Outline
 Overview of Value Capture
 Examples
◦ Computers
◦ Rolls Royce Jet Engines
◦ Infrastructure: Alstom Transport
◦ Internet of Things
◦ Media
 past, present, future
 can this tell us something about IoT?
 Conclusions

8. Methods of Value Capture
Revenue Model Basic Idea
Commission Fees levied on transactions where fees are
based on level of transaction
Advertising End users subsidized by advertising
Markup Value added in sales (e.g., retail)
Production Value added in production
Referral Fees for referring customers to a business
Subscription Fees for unlimited use
Fee for Service Fee for metered service
Licensing License technology for use
Source: Afuah and Tucci, Internet Business Models and Strategies

9. Methods of Value Capture (more detailed ones)
Dominant
revenue model
Basic idea Variants
Commission Fees levied on transactions
based on the size of the
transaction
Buy / Sell Fulfillment, Market Exchang e,
Business TradingCo mmunity, Buyer
Aggregator, Distribution Broker, Virtual Mall,
Metmediary, Auction Broker, Reverse Auction,
Classifieds, Search Agen t, Bounty Broker,
Matchmaker, Peer-to-peer Content Provider
Advertising End-users subsidized by
advertising
Generalized Portal, Personalized Portal,
Specialized Portal, Attention / Incentive
Marketing, Free Model, Infomediary
Registration Model, Recommender System,
Bargain Discounter, Community Provider
Markup Value added in sales Virtual Merchant, Catalogue Merchant, Click
and Mortar, Bit Vendo r
Production Value added in production Manufacturer Direct, Content Producer, E-
Procurement, Networked Utility Provider, Brand
Integrated Content
Referral Fees fo r referring customers to
a business
Lead Generator
Subscription Fees fo r unlimited use ISPs/OSPs, Last Mile Operators, Content
Creators
Fee-for-service Fees fo r metered service Service Provider, B2B Service Provider, Value
Chain Service Provider, Value Chain Integrator,
Audience Broker, Collaboration Platform
Provider, Application Service Provider
Source: Afuah and Tucci, Internet Business Models and Strategies
Licensing Fee for use of technology Flat fee or per unit fee

10. Methods of Value Capture for Music Industry
Revenue Model Example
Commission Singers receive fees when their songs are
played on Spotify
Advertising Spotify provides music and ads
Markup Records, tapes, DVDs produced and sold
Production Records, tapes, DVDs produced and sold
Referral Some radio stations received money for playing
songs
Subscription Spotify and Apple provide music subscription
Fee for Service Individual songs can be downloaded for fee
Licensing Singers license their songs to music companies

11. At What Price?
 After choosing one of the categories on
the previous slides, an additional issue is:
◦ how much to charge for each element of the
product or service?
 Supply and demand curves help us think
about pricing and value capture
 So does cost structure

12. Quantity (Q)
Price (P)
q
p
Remember Supply and Demand Curves
From Session 2
Demand
Supply

14. How do firms
use pricing to
increase
captured value?
Multiple
channels?
Personalized
pricing?
Discount
coupons?

15. Price is Also Related to Cost Structure
 What is your cost structure?
◦ Cost of delivered product or service
 Internal costs
 Materials and outside services
◦ R&D
◦ Sales
◦ Maintenance (if free to user)
 Fixed costs vs. variable costs
◦ High fixed costs make volumes very important
◦ But can also provide barrier to entry
 Higher margins are needed when cost of
sales, R&D, and maintenance are high

16. Gross margins
for different
types of disk
drives and
computers
What did this cause
mainframe and
mini-computer
suppliers to do?
computers
Source: The
Innovators
Dilemma,
Clayton
Christensen, 1997

17. Most Firms Emphasize
Existing Customers
 Easier to make money from existing customers
than to find new customers
 Suppliers of large disk drives, computers did this
◦ slow to find new customers who wanted smaller disk
drives and computers
 Many other firms are doing this now: focusing on
extracting additional value from existing
customers
◦ Cable TV, mobile phones, Google, Amazon
◦ As an aside, lots of jobs for MBAs in these companies
 What is one reason cable TV and mobile phone
companies can focus on extracting value?

18. May Lead to Disruption
 An emphasis on existing customers and
extracting more value from existing
customers may lead to disruption
 What technologies might disrupt
◦ Cable TV?
◦ Mobile phones?
◦ Google?
◦ Amazon?

19. Another Aspect of Pricing and Cost
Structure
 Cross Subsidization is Common in Many Industries
 More income from complements than original product
◦ blades than razors
◦ printer cartridges than printer machines
◦ copier toner than copier machine
◦ i-pods (MP3 players) than music (iTunes)
◦ peripherals than computers (IBM mainframe in 1970s)

20. Another Aspect of Pricing and Cost
Structure
 More income from after-sale service than from
product, particularly when switching costs are high
◦ Software, elevators, escalators, nuclear fuel, power
generation equipment
 More income from one customer than another
customer

21. Cross Subsidization Between Customers is Common
Industry Product Dual Customers Discount for
Real Estate Property sales Buyer, seller Buyer
Rentals Renter, owner Renter
Media Newspapers,
Magazines
Reader, advertiser Reader
Network television Viewer, Advertiser Viewer
Portals and Web
Publications
Web surfer,
advertiser
Web surfer
Shopping Malls Merchant, shopper Shopper
Payment
System
Charge/debit card Cardholder,
merchant
cardholder

22. What if Another Firm Begins Offering
Complements for Your Product?
 Another firm begins offering inexpensive
◦ blades for your razors
◦ printer cartridges for your printers
◦ toner for your copiers
◦ MP3 players for your iTunes music site
 Another firm begins offering inexpensive services for
your hardware
◦ Software, elevators, escalators, nuclear fuel, power generation
equipment
 You might lose your key revenue stream and thus your
profitability

23. Outline
 Overview of Value Capture
 Other Examples
◦ Computers
◦ Rolls Royce Jet Engines
◦ Infrastructure: Alstom Transport
◦ Internet of Things
◦ Media
 past, present, future
 can this tell us something about IoT?
 Conclusions

24. Computers (1)
 Most of us buy computers at retail outlets
and retail outlets pay the computer
suppliers
 But there has been a long evolution in
methods of value capture
◦ firms have modified methods of value capture
(and other aspects of biz model) many times
both to survive and find the most profits
 Each “discontinuity” has involved a new
method of value capture
◦ Also differences between firms for the same
discontinuity

25. Computers (2)
 Mainframe suppliers such as IBM used to
lease computers and software for a
monthly fee
◦ this low monthly fee and IBM’s large software
library created a barrier to entry for other
suppliers
 Mini-computer suppliers found a niche in
mid-1960s by selling computers and
providing documentation for engineers
and scientists who developed their own
software

26. Computers (3)
 PC suppliers in mid-1970s took mini-computer
method of value capture one step further
◦ More documentation in the form of more “open
system,” which enabled greater choice of software for
users
◦ Purchased microprocessors, other ICs, software from
other firms, sold computers through retail outlets
◦ Low development costs, no sales people, and higher
volumes enabled them to have lower margins
(remember previous slide)
 Software suppliers tried various methods of
value capture
◦ Microsoft received licensing fee for each PC sold

27. Software
 PC software
◦ IBM offered Microsoft a lump sum payment
for OS
◦ Microsoft wanted a licensing fee per PC
◦ What are the advantages and disadvantages
of each approach?
 Now, service revenues are now greater
than licensing fees for packaged
software and software as service
 Everything is moving to the cloud!
 Even manufactured products are
changing with the Internet of Things

28. Implications for Electronic Products
 Methods of value capture rapidly change
◦ Using the right method is critical
◦ Charging those with ability to pay is important
 Current trend is for electronic products to generate
content revenues
◦ Apple iPod, iPhone, iPhone
◦ Amazon Kindle, Android Phones
◦ Revenues come from a variety of players in an eco-system
 What about GoPro?
◦ Wearable camera for extreme sports enthusiast
◦ Lots of content is generated by users
◦ Can they promote their product with content?
◦ Can they collect revenues from content?

29. GoPro’s User Generated Content
 User-generated
content is self-
evangelizing (saves
on marketing)
 Deeper connection
with audience
 Technology
empowers users to
create captivating
content

30. Outline
 Overview of Value Capture
 Examples
◦ Computers
◦ Rolls Royce Jet Engines
◦ Infrastructure: Alstom Transport
◦ Internet of Things
◦ Media
 past, present, future
 can this tell us something about IoT?
 Conclusions

31. Rolls Royce Jet Engines
 A leader in providing jet engines for
aircraft manufacturers
 Where do its revenues come from, i.e.,
what is its method of value capture?
 Most of its revenues used to come from
sale of engines
 But over time, things have changed………

32. Rolls Royce Jet Engines
 Where are revenues?
◦ Selling engines or spare parts?
◦ Servicing the engines?
 Investment analysts estimate that some
engine suppliers
◦ get seven times more revenue from servicing
and selling spare parts as from selling engines
◦ More than 50% for Rolls Royce as of 2014
◦ Do they sell engines at a loss?
◦ The problem is that large margins attract
independent servicing firms (and engine-makers
after each other’s business)
Source: Economist, January 8, 2009. Britain's lonely high-flier http://productserviceinnovation.com/home/blog/ (August 20, 2014)

33. Rolls Royce’s New Method of
Value Capture
 Instead of selling first engines and then parts
and service to airlines, Rolls-Royce
◦ receives a fee for every hour that an engine runs
◦ promises to maintain it and replace it if it breaks
down
 “They aren’t selling engines, they are selling
hot air out the back of an engine,” says an
investment analyst (i.e., new value
proposition) More than half of its engines in
service are covered by such contracts, as are
about 80% of those it is now selling

34. This New Method of Value Capture
Requires New Capabilities
 Rolls Royce continuously monitors performance of
its 3,500 jet engines around the world,
 This data enables it to predict when engines are
more likely to fail, enabling more effective engine
changes
◦ fewer emergency repairs and fewer unhappy passengers
 The data are equally valuable to Rolls-Royce
◦ Spotting problems early helps it to design and build more
reliable engines or to modify existing ones
◦ Aided improvements in fuel efficiency and extended the
operating life of engines tenfold (to about ten years
between major rebuilds)

35. Rivals – Barriers to Entry
 How easy is it for rivals to service Rolls Royce
Engines?
 How does Roll Royce do something that makes it
harder for rivals to service their engines

36. Can this method be applied to
other products?
 Can we apply this idea to other products?
how about stand-up comedians or comedy
movies?
 http://www.bbc.com/news/technology-
29551380

37. Outline
 Overview of Value Capture
 Examples
◦ Computers
◦ Rolls Royce Jet Engines
◦ Infrastructure: Alstom Transport
◦ Internet of Things
◦ Media
 past, present, future
 can this tell us something about IoT?
 Conclusions

38. From the comments section
of Yahoo following a 90
delay on North-South line
on January 20, 2014 during
morning rush
What do you think of Joshua
Gunawan?

39. Alstom Transport (1)
 Alstom is a leading provider of transport
equipment and (e.g., rail) solutions in the world
 Problems with train downtime caused rail
companies to demand and pay for lower
downtimes
 London Underground specified in a contract that
96 trains be available for service each day
 This required Alstom to gradually take over
customer’s operational activities and to redesign
the system for lower downtime
 Should Alstom charge for time and distance that
trains travel?

40. Alstom Transport (2)
 Another change Alstom made to support
lower downtime of its transport division was
to create two customer-facing divisions:
◦ Alstom Systems provides turnkey solutions for
trains, signaling systems and maintenance services
◦ Alstom Services offers operational services, such as
train maintenance, technical support, product
upgrades and renovation
 This change represents a form of
organizational capability. For example,
feedback from Alstom Services enables
Alstom’s Systems design better turnkey
systems

41. Similar Examples (1)
 Many providers of
◦ mobile phone infrastructure providers (e.g.,
Ericsson)
◦ Elevators and escalators
◦ Electrical generating equipment
◦ Nuclear fuel
◦ Manufacturing equipment
 are selling services (value proposition)
and getting paid more money (method of
value capture) for doing services than for
manufactured product

42. Similar Examples (2)
 These providers of equipment and service
know the equipment and service better than
the customer – thus they do the service
 One reason they know the equipment and
service is because they spend a lot on R&D
 They spend a lot on R&D because they sell
systems to many customers
 Related to method of strategic control
◦ Economies of scale in R&D
◦ Mentioned in session 2

43. Remember
 Changes in business models often cause
the shares of firms to change……..
 Change creates opportunities

44. Outline
 Overview of Value Capture
 Examples
◦ Computers
◦ Rolls Royce Jet Engines
◦ Infrastructure: Alstom Transport
◦ Internet of Things
◦ Media
 past, present, future
 can this tell us something about IoT?
 Conclusions

45. Let’s Connect
the World

46. Internet of Things
 Enables new value propositions and enables new
sources of revenues from these value propositions
 These value propositions and revenues go beyond
those offered by Rolls Royce
 Value propositions for IoT were discussed in Session
3; for equipment and products, IoT enables
◦ Monitor
◦ Control
◦ Automation
 How can revenues be obtained from this additional
value?

47. Method of Value Capture for IoT
 Use data to better understand customer needs
◦ Amazon uses data from Kindle to make better
recommendations
◦ Retailers use data on customers in store (through iBeacon)
to make recommendations
 Reduce costs
◦ Farms use data to reduce costs
◦ Owners of equipment can reduce costs by monitoring
equipment location (and recovering stolen or misplaced
items)
◦ Insurance companies can reduce costs by better
understanding and reducing risk

48. Example of Insurance
 Auto insurance rates are function of
driving
◦ Fewer braking and less night-time driving
reduces rates
 Medical insurance rates are function of
exercise amount
◦ More exercise, lower rates
◦ Is food monitoring next?
 Both examples can help insurance
companies better understand risk, thus
reducing rates and increasing their
profits
 Insurance industry manages more than
$30 trillion and had profits of $338
billion
http://www.economist.com/news/finance-and-economics/21646260-data-and-
technology-are-starting-up-end-insurance-business-risk-and-reward

49. Method of Value Capture for IoT (2)
 Provide more value to customers
◦ Transport companies can provide better services if they
have better data on starting and ending points
◦ Equipment sellers can provide more uptime,
troubleshooting, and preventative maintenance for users
◦ This requires close cooperation between sellers and buyers
 Selling data
◦ Who provides Nest (thermostat) with most revenues?
◦ Will similar things emerge with other mechanical
products?
◦ Will third parties (complex value chains) collect and sell
this data?

50. Data acquisition:
sensors, ICs
Data transport:
cellular, satellite,
Wi-Fi, Bluetooth,
Zigbee,
Data analysis
and
interpretation:
Big Data
Will Complex Value Chains Emerge?
(scope of activities, topic of Session 6)
Example of Usage-Based Insurance for Automobile
Decision
Making by User
Firms
Data acquisition:
Speeds,
acceleration,
location and thus
type of road
Data transport:
cellular
Data analysis
and
interpretation:
Characterize
Driving
Behavior
Decision
Making by User
Firms:
Determine rates
Will they capture most of the value?

51. How Should Third Parties be Paid?
 Data transport providers are probably paid on a per
bit basis. But perhaps not?
 How about data acquirers or data analysis providers?
◦ Fee for installing or operating system?
◦ Fee for how well system works?
◦ Fee for increases in performance or reductions in cost?
◦ Think of jet engines or transportation, medical, electricity
generation, manufacturing and other equipment
 What if the data analysis firms the data analysis
people?
 Will these complex value chains increase power of IT
firms and reduce power of equipment suppliers?

52. What does this tell us About
Internet of Things?
 There will be change
 As data becomes more important part of business
◦ Managing this data will become more important
 Who will manage the data?
 Will it be manufacturers of products, users of products, or
new entrants; new entrants include providers of
◦ Data acquisition, transport, analysis
 Internet companies such as Google, FB, Apple (and
new entrants) have advantages
◦ Experience with managing data
◦ Power on Internet

53. What does this tell us About
Internet of Things? (2)
 Winners will provide good value propositions and
methods of value capture
 There will be many experiments to find the best value
propositions and methods of value capture
 Market power is also important
 Internet companies such as Google, FB, Apple (and
new entrants) have advantages
◦ Experience with managing data
◦ Power on Internet
 Product manufacturers need to be innovative in their
value propositions, methods of value propositions
(and scopes of activities)

54. Outline
 Overview of Value Capture
 Examples
◦ Computers
◦ Rolls Royce Jet Engines
◦ Infrastructure: Alstom Transport
◦ Internet of Things
◦ Media
 past, present, future
 can this tell us something about IoT?
 Conclusions

55. Evolution of Media Sector
 It has become a data intensive industry
 Technological change in how the data is managed
has caused large changes in the major players and in
the value chains
 The music industry was mentioned at the beginning
of these slides
 What about movies and videos?
 Can the evolution of this industry tell us something
about the evolution of Internet of Things?

56. Income from Videos/Movies
 Theater tickets from about 1900
 Broadcast television ad revenues from late 1940s
 Cable (from 50s) & satellite (from 90s) subscription
fees
 Rental and sales income from VHS from late 1970s,
from DVDs in 1990s
◦ Rental stores pay movie companies fixed fee or percentage
of rental/sales income
◦ Netflix extended this model to mail delivery service and
Redbox extended it to rental kiosks in 2000s
 Internet services
◦ Big changes occurring now

57. Internet Services
 Growth in Internet has soared in 20th century with
desktops, laptops, smart phones, tablet computers
 Many users are quitting cable and satellite (and
mobile phone) services, only relying on Internet
 Will Internet become main method of delivery?
◦ Users watching streamed videos from Netflix
◦ Viewing YouTube or other videos for free
◦ Purchasing videos from Apple or Amazon
 Let’s look at most successful firms in more detail
◦ Netflix, Google/YouTube
◦ Facebook, new services, and video ads
◦ Apple
◦ Twitter and Periscope

58. Netflix
 Began renting DVD movies by mail in 1997 and
streaming services in 2007
 Both services caused Blockbuster bankruptcy
 Netflix’s service >1/3 of all U.S. Internet traffic
 Most Internet service providers want Netflix to pay for
this traffic (net neutrality issue)
 Some Internet service providers (e.g., in Australia)
cooperate with Netflix to acquire subscribers
◦ Internet service providers put Netflix app on set-top box
◦ Operators collect small payments (10-15%) from Netflix for
each subscriber Netflix gains through broadband provider’s
set-top box
◦ Will Netflix eliminate cable companies?

59. Netflix is more valuable than CBS
(NBC and ABC are owned by cable companies)

60. Google
 Began with search engine
◦ Makes money through advertising
 Now a major supplier of videos
◦ Through YouTube
 Will it became a more important supplier of
entertainment, e.g., movies?
 Will it become a dominant firms in IoT?
◦ Acquired Nest a few years ago

61. Google Links Search Users and Advertisers
1
3
5
2 4
2

62. Google Links Visitors, Content Providers and
Advertisers
1
3
3
2
4
4

63. YouTube is Big Growth Engine
 15-second TV-style
spots
◦ Included in user
videos like YouTube
◦ (And placed in FB’s
News Feed)
 Digital video ads
are expected to
reach $7.8 billion in
2015
 Will YouTube
replace cable
companies?
http://www.thestreet.com/story/13011347/1/how-facebook-is-challenging-google-for-your-video-viewing-attention.html

64. YouTube Created New Eco-System
 YouTube has enabled new singers, comedians, and
other performers to succeed
◦ http://monetizepros.com/features/25-celebrities-who-got-
rich-famous-on-youtube/
◦ Many kids videos
 They receive a portion of the ad revenues
◦ YouTube takes 45%
◦ Some sell downloads of videos, songs, or subscriptions
 Some promote the new performers
◦ Performers endorse products, make public appearances
 Promoting products with infomercials is also a big
business
◦ As is managing these infomercials

65. What About Facebook:
Its Stock Price has Risen since IPO

66. Facebook
 Has experienced rapid growth in number
of users
 One of most popular websites
◦ https://en.wikipedia.org/wiki/List_of_most_po
pular_websites
 Question for FB has always been, how
can it make money from these users
 FB uses data on users to help companies
target users with display ads
◦ gender, age, location, marital status,
languages, education, workplaces, and
interests

67. Mobile Ads Drive Recent Increase
in Revenues and Share Price

68. Digital Video Ads (on mobile phone)
Also Driving Share Price
 95 million Americans
watched videos on FB
from desktop computers
in November 2014
 NFL provides game
videos and splits ad
revenues with FB
 Can FB challenge
YouTube?
 FB is growing stronger
with other media (see
next slide)
http://www.thestreet.com/story/13011347/1/how-facebook-is-challenging-
google-for-your-video-viewing-attention.html

69. Big Source of Future Revenues?
 FB hosts news articles from newspapers
◦ NY Times, National Geographic
◦ FB shares ad revenue with news sites
 Hosting improves user experience
◦ Faster access to news, particularly important on
mobile devices
 Reduces power of news sites
◦ Less time spent on news sites
 Increases power of FB in media

70. Big Source of Future Revenues? (2)
 Will FB host more types of content
including more video services in future?
 Will these video services include full-
length movies, short comedy routines,
or new performers (like YouTube)?
 Will this enable FB to challenge
YouTube, cable companies, and movie
companies?
 Can FB or Google become a movie
producer?
◦ just like Amazon has become a publisher

71. Apple
 Highest market capitalization in world
 Most valuable brand name
 Leading supplier of hardware for
accessing the Internet
◦ iPhone, iPad, iPod, MacBook
 Its users are lead users for video and
other services
◦ Large purchasers of music, video, other
content
 Gives Apple much power in any content
negotiations

72. Apple (2)
 Recently introduced $10 a month music
streaming service (same price as
Spotify)
 Video streaming services are emerging
◦ With HBO (14.99 a month, more expensive
than Netflix’s $7.99 a month service)
◦ With Showtime, expected soon
◦ Probably more will be announced
 These services will continue to weaken
cable companies
 Will Apple (or Google) extend its
domination to television hardware?

73. Twitter and Periscope
 Another media giant? ($20B market cap)
 Users send 140-character messages
called tweets
 Registered users can read, post tweets
 Unregistered users can only read them
 Users access twitter through website,
SMS, or mobile app
 Twitter makes money through ads, but
future is still unclear
 Twitter recently acquired Periscope

74. Twitter and Periscope (2)
 Recently introduced Periscope, personal
broadcasting
 Users broadcast from phone by staring at
phone’s camera
 Periscope app notifies others that you are
streaming live video of yourself
 Lots of celebrities want to reveal more about
themselves
 Text responses come almost immediately as the
streaming is started
 How much advertising might this generate?
 How might this change video industry?

75. Summary of Movie/Video Industry
 Movie companies are still there (Universal, Disney,
Warner Brothers, Paramount) with some changes in
ownership
 But broadcasting companies (CBS, NBC, ABC) are
much weaker and
◦ cable companies (both channels and delivery platforms)
may face same problems as Internet continues to grow in
importance
 Will Netflix, Google, FB, and Apple become
stronger and dominant media industries?

76. Summary of Movie/Video Industry (2)
 New value propositions, methods of value capture
(and scopes of activities) continue to emerge
◦ From Netflix, Google, FB, and Apple
◦ But also from other incumbents (e.g., Twitter) and
probably from new entrants
 Power also matters
◦ Google, FB, and Apple use their power to enter new
markets
 Will Google, FB, and Apple (and Amazon) become
leaders in media and in Internet of Things?

77. Conclusions (1)
 New technologies, new markets, and new levels of
value (dis)integration often require new methods of
value capture
 But there are no simple answers to the best methods of
value capture
 Of course you want to maximize revenue, but without
losing customers and collaborators
 One firm’s method of value capture depends on
◦ method of value capture by competition, collaborators
◦ customer needs

78. Conclusions (2)
 Contrasting industries and analyzing whether
methods of value capture can be borrowed from
other industries is a good place to start
 Also look for consistency among different
elements (customer selection, method of value
capture, value proposition, scope of activities) of
business model

79. For Your Presentations
 Do not just tell me the sources of revenue for your firm
◦ Identifying these revenue streams is just one step in your
analysis
 Analyze alternative methods of value capture. As stated
on previous slide
◦ Contrasting industries and analyzing whether methods of value
capture can be borrowed from other industries is a good place
to start
◦ Also look for consistency among different elements (customer
selection, method of value capture, value proposition, scope of
activities) of business model