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What Are Your Business Model, Start-Up?

February 10, 2011

In the wake of the digitalization of newspaper products, traditional media companies are looking for new business models. Lots and lots of start-ups within the media business have been praised for their innovative approaches. Examples are Skype, Huffington Post and True Slant – even MySpace was once a role model for social media.

However, many start-up don’t really have an economically viable business model. And that does not really show, before they are bought by a huge company and forced into excel spreadsheets.

Yes, Google managed to make YouTube profitable. Congratulations.

But what about Skype, based on the free-model, bought by Ebay, MySpace bought by New Corporation, and AOL bought by Time Warner?

After 7 years, Skype is still looking for revenues. MySpace is loosing pace. Shortly after AOL was bought by Time Warner in 2001, AOL’s growth started to slow. In 2009 Time Warner and AOL separated, and now AOL bought Huffington Post, whose business model is based on people blogging for free. Now, of course, these bloggers will demand pay. And will HuffPost then continue being that great new media venture?

Another praised start-up was True Slant, which business model was based on writers being paid by clicks. But most writers got their salary from traditional media companies, and now True Slant has been bought by Forbes who is trying to implement the low-low-wage-model to the corporation.

Corporate sclerosis
It is hard to foresee the future. But the trend is that those start-ups, who do make it, with a viable business model, sooner or later grow into a big corporation suffering fro corporate sclerosis. That is AOL, Ebay and Google. So, before spitting out millions of dollars on new ventures in the future, it is dead important to go after start-ups, who has actually proven an economically viable business model. No wonder that Groupon after two years was valued 6 mio us dollar.

 

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One Comment
  1. Lars Højholt permalink

    Techdirt and owni.fr (sxsw accellerator finalist) are both profitable although none of them really are making money on content. Interesting cases none the less. Check them out if you haven’t already.

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