Abstract
Internet has increased the companies’ propensity to offer products/services free of charge through web-based platforms. This choice challenges the logic of traditional business models aimed at increasing the value captured by the firm. In order to analyse the impact of the free of charge offering on the enterprises’ web-based business models, we developed a systematic theoretical framework able to identify the key actors and flows of value involved in these business models. We tested this framework on 125 web-based platforms, clustering them through a combination of Multiple Correspondence Analysis and Hierarchical Clustering on Principle Components. The analysis allowed us to identify five different configurations of free-driven business models. Differently from the previous literature, we identify three specific configurations based on user-innovators, who are customers interested in participating in value creation processes, if adequately incentivized. These configurations are characterized by different sources of revenues and by the provision of specific free flows of value to user innovators, who can contribute to the business model with their working knowledge and reputation. Our analysis not only contributes to the academic debate on online business models, but it can support web-based companies in the definition of business model characterized by an effective and sustainable equilibrium between value creation and value capture processes.
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Notes
In this paper, we refer to the definitions of “Web 1.0” and “Web 2.0” coined by Tim O’Reilly in late 2004 [81]. He classifies as Web 2.0 all the new generation of Internet applications, mainly developed after the dotcom bubble in 2000, which “harness network effects to get better the more people use them”. Basically, in his view, Web 2.0 favours many-to-many communications, collaboration among users and sharing of user-generated contents, while the previous Web 1.0 is mainly based on one-to-many communications to a relatively passive audience.
Long tail is a retailing strategy based on selling a large number of unique items in relatively small quantity (e.g. hard-to-find items), rather than on a limited number of unique items in large volume (e.g. popular items). The sustainability of this strategy has been favoured by the reduction of distribution and inventory costs due to Internet [4].
Clearly, there are models typical for the web but not based on free-concept [28], such as the premium business model and the network-effect business model [77]. These ways of gaining can be direct: charging a product license fee, billing person-days, a subscription based model, charging a service or success fee and demanding a posting fee [38].
Our analysis is limited to business models where the provision of free flows of value is always on the hand of the focal firm, even when the provision of free flows of value is enabled by the contribution of other stakeholders. The inclusion of more complex business models, where different firms provide free flows of value to different customers, requires a different framework, with more than one focal firm.
Intrinsic motivation is related to people’s needs to feel competent and self-determined and it inspires activities that individuals find interesting and would do, even in the absence of separable consequences. On the contrary, extrinsic motivations concern activities that could lead to a separable consequence, which is desirable for the individuals [35].
In the literature, there are also alternative business model representations. One of the most diffused in the literature is based on the development of an ontology that conceptualizes and formalizes the “building blocks” of a business model, specifying how they can be decomposed in more granular components and how they are inter-related among them [15, 70, 83].
A more detailed report on these analyses is provided in “Appendix II”.
“Appendix III” provides the list of EWs assigned to each cluster.
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Appendices
Appendix I: EWs analysed
ID EW | EW name | EW typology |
|---|---|---|
1 | Gumstix | Open CPU |
2 | Open SPARC | |
3 | Opencores | |
4 | Coreboot | |
5 | Arduino | Design that includes a CPU |
6 | SquidBee | |
7 | BalloonBoard | |
8 | Plaice | |
9 | ASoC | |
10 | Open Graphics Project | Graphics card |
11 | Project VGA | |
12 | Ethernut | Other electronics part and components |
13 | Etherrape | |
14 | ExpressPCB | |
15 | Free IO | |
16 | Manticore | |
17 | Octopus USB | |
18 | ECB ATmega32/644 | Open computers |
19 | OLPC XO-1 | |
20 | Open OEM | |
21 | Simputer | |
22 | Free Telephony Project | Open telephones |
23 | Maemo | |
24 | Open Handset Alliance | |
25 | Open Moko | |
26 | Open Router | Open wireless hardware |
27 | Sun SPOT | |
28 | AKVO | Agriculture, development, energy, environment and sustainability |
29 | Build-It-Solar | |
30 | OSCirrus | |
31 | Grid Beam Building System | Building and housing, furniture |
32 | Movisi Open Design Furniture | |
33 | Open Architecture Network | |
34 | Aibo Hack | Entertainment, fashion, leisure and learning |
35 | Niketalk | |
36 | PlaymoBeach | |
37 | Lego Factory | |
38 | Pleo | |
39 | Ravelry | |
40 | Zoybar | |
41 | CandyFab Project | Food |
42 | BioBricks | Health |
43 | Open Prosthetics Project | |
44 | DIY Drones | Mobility: vehicles |
45 | EDAG Open Source Light Car | |
46 | Microkopter | |
47 | Open Source Green Vehicle | |
48 | Sahkoautot | |
49 | Multimachine | Production |
50 | Innocentive | Open innovators—intermediary platforms |
51 | sourceforge | |
52 | 99design | |
53 | Inventnow.org | |
54 | Ideastorm | |
55 | Zooppa | |
56 | Fellowforce | |
57 | IdeaConnection | |
58 | Yet2.com | |
59 | IdeaMagnet | |
60 | Ninesigma | |
61 | Innovation Exchange | |
62 | Big Idea Group | Open innovators—innovation services |
63 | spigit Enterprise | |
64 | Idea Crossing | |
65 | Sense Worldwide | |
66 | Pharmalicensing | |
67 | Chaordix | Platforms for entrepreneurs |
68 | Ideawicket | |
69 | WhyNot | |
70 | odesk | Freelance platforms |
71 | elance | |
72 | Guru | |
73 | Ki Work | |
74 | Amazon Mechanical Turk | |
75 | Spreadshirt | Creative websites |
76 | Threadless | |
77 | cafepress | |
78 | Ponoko | |
79 | zazzle | |
80 | Sellaband | |
81 | Artistshare | |
82 | TopCoder | |
83 | IStockPhoto | |
84 | BrainReactions | P2P Crowdsourcing platforms |
85 | P&G connect & develop | Product ideas |
86 | hyve | |
87 | Spreadshirt Logo Design Contest | Branding |
88 | Peugeot | Product design |
89 | Nespresso | |
90 | Muji | |
91 | Mycustomer | |
92 | Fluevog | |
93 | CrowdSpirit | Peer production |
94 | Linux | |
95 | Wikipedia | |
96 | iBridge Network | Universities |
97 | Science Commons | |
98 | Eureke medical | Open innovators—miscellaneous |
99 | Picnic Green Challenge | |
100 | Metaforesight | Consortium |
101 | IBM Microelectronic | |
102 | Bluetooth Consortium | |
103 | Ideo Design Community | Elite circle |
104 | Alessi design community | |
105 | Brainstore | |
106 | Veel Design | |
107 | Anim8or | Open source software |
108 | Blender | |
109 | a-squared | |
110 | AntiVir | |
111 | Avast | |
112 | AVG | |
113 | HammerHead | |
114 | Foobar 2000 | |
115 | iTunes | |
116 | Audacity | |
117 | AudioShell | |
118 | BeSweet | |
119 | 7-zip | |
120 | bzip2 | |
121 | ExtractNow | |
122 | FilZip | |
123 | Free Download Manager | |
124 | Fresh Download | |
125 | LeechGet |
Appendix II: Methodological approach
Our clustering approach is based on the application of a Multiple Correspondence Analysis (MCA) followed by a Hierarchical Clustering on Principle Components (HCPC). Figure 3 depicts the steps of our procedure and the related input and output.
Steps of the methodological approach
MCA provides a simplified interpretation of our original data, by reducing the dimensionality of our dataset into fewer synthetic orthogonal variables, called principal components. Specifically, MCA computes these principal components, reducing the loss of variance explained by the original variables. In our study, we fix a number of principal components equal to 6, so accounting for more than 80% of the variance explained by our flows.
The relationship between these principal components and the flows of value is presented in Table 6, thanks to the computation of the squared cosine, which measures the importance of a component for each flow. In particular, the higher the value of square cosine, the higher is the importance of a component for a flow of value.
Moreover, MCA provides a projection of each observation (EW) on these principal components.
The projections of each observation (EW) on the principal components, as computed by MCA, are used as input by HCPC. HCPC is a hierarchical clustering method that computes a dendrogram, starting with as many clusters as observations (EWs) and builds up a tree by successively merging the closest clusters. The merging process is based on Ward’s criteria, which prescribes the minimization of the within-types variance and the maximization of the between-types one.
In our study, HCPC builds 5 clusters and assigns each EW to them. Each cluster is characterized by specific values of the principal components and, consequently, of our flows.
Appendix III: EWS’ assignment to clusters
ID EW | Cluster | ID EW | Cluster | ID EW | Cluster | ID EW | Cluster | ID EW | Cluster |
|---|---|---|---|---|---|---|---|---|---|
1 | 3 | 26 | 2 | 51 | 3 | 76 | 2 | 101 | 1 |
2 | 3 | 27 | 2 | 52 | 2 | 77 | 2 | 102 | 4 |
3 | 4 | 28 | 3 | 53 | 1 | 78 | 2 | 103 | 1 |
4 | 3 | 29 | 3 | 54 | 2 | 79 | 2 | 104 | 1 |
5 | 3 | 30 | 2 | 55 | 1 | 80 | 2 | 105 | 1 |
6 | 2 | 31 | 3 | 56 | 1 | 81 | 2 | 106 | 3 |
7 | 2 | 32 | 2 | 57 | 1 | 82 | 2 | 107 | 5 |
8 | 2 | 33 | 3 | 58 | 5 | 83 | 2 | 108 | 5 |
9 | 2 | 34 | 2 | 59 | 1 | 84 | 1 | 109 | 5 |
10 | 3 | 35 | 2 | 60 | 1 | 85 | 1 | 110 | 5 |
11 | 2 | 36 | 3 | 61 | 4 | 86 | 5 | 111 | 5 |
12 | 3 | 37 | 2 | 62 | 1 | 87 | 1 | 112 | 5 |
13 | 2 | 38 | 2 | 63 | 2 | 88 | 1 | 113 | 5 |
14 | 2 | 39 | 3 | 64 | 1 | 89 | 1 | 114 | 5 |
15 | 3 | 40 | 2 | 65 | 1 | 90 | 1 | 115 | 5 |
16 | 2 | 41 | 3 | 66 | 4 | 91 | 1 | 116 | 5 |
17 | 2 | 42 | 3 | 67 | 1 | 92 | 1 | 117 | 5 |
18 | 3 | 43 | 3 | 68 | 4 | 93 | 1 | 118 | 5 |
19 | 3 | 44 | 3 | 69 | 1 | 94 | 3 | 119 | 5 |
20 | 3 | 45 | 3 | 70 | 1 | 95 | 3 | 120 | 5 |
21 | 3 | 46 | 2 | 71 | 1 | 96 | 1 | 121 | 5 |
22 | 2 | 47 | 3 | 72 | 1 | 97 | 1 | 122 | 5 |
23 | 3 | 48 | 3 | 73 | 1 | 98 | 1 | 123 | 5 |
24 | 3 | 49 | 3 | 74 | 1 | 99 | 1 | 124 | 5 |
25 | 3 | 50 | 1 | 75 | 2 | 100 | 3 | 125 | 5 |
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Battistella, C., Murgia, G. & Nonino, F. Free-driven web-based business models. Electron Commer Res 21, 445–486 (2021). https://doi.org/10.1007/s10660-019-09374-3
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DOI: https://doi.org/10.1007/s10660-019-09374-3