Revenue Model Identification: Analysis of Digital Business Models

This assignment analyzes five key revenue models prevalent in digital businesses: advertising, subscription, transaction fee, sales, and affiliate. The assignment begins with an overview of each model, including how they function and the businesses that utilize them. The advertising model is exemplified by Twitter, detailing how the platform generates revenue through ad sales, including promoted tweets and account promotions. The subscription model, exemplified by Spotify, explores how recurring fees provide access to content and premium features. The transaction fee model, illustrated by Etrade and Hotwire, describes how revenue is generated through transaction processing. The sales revenue model, with Amazon as an example, examines how online platforms facilitate product sales. Finally, the affiliate revenue model, with Flipkart and Bestbuy as examples, explains how businesses earn commissions through partnerships and product promotion. The assignment offers detailed explanations and real-world examples to clarify each revenue model's practical application and impact on business profitability.

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Table of Contents
REVENUE Model Identification.................................................................................................................3
1.1 Advertising Revenue Model........................................................................................................3
1.2 Subscription revenue Model........................................................................................................3
1.3 Transaction Fee Revenue Model..................................................................................................4
1.4 Sales Revenue Model..................................................................................................................4
1.5 Affiliate Revenue Model.............................................................................................................5
References...................................................................................................................................................6

REVENUE Model Identification
1.1 Advertising Revenue Model
This model mainly focuses on the sale of advertisement as a source of revenue for the business.
Example of the digital business that uses this model is Twitter. It is a social networking site that
has more active users than any other online platform. The advertising is the mode through which
this organization is increasing its revenues. The company generates about 85% of its revenue
through advertising sales. The individual or company can advertise on twitter through promoting
the tweet, which will be available on the timeline of people and hence it boosts its awareness
among them. Moreover, the individual and business can post the ad by promoting from its
account (Zott & Amit, 2017). With the help of Twitter, there are business and individuals that
are gaining popularity all over the world.
Twitter provides the people and company to add photos and videos for their advertisement in
order to provide information regarding their content and business to the target audience. Twitter
charges the advertisers based on tweet generated. Around 65% of Twitter’s advertising revenue
comes from mobile devices. This digital business helps the companies and individuals to reach to
a large number of people in order to share their thoughts and make a connection for the future
(Laudon & Traver, 2016). The advertising revenue model is beneficial for twitter as it helped in
increasing profitability and attracts a more audience to promote their business. The Advertisers
are charged based on the number of communication tweets made also there are required to pay
on per click. This model offers the users with a platform to have free access to the content and
attract more revenue towards the business.
1.2 Subscription revenue Model
This model is used by those companies that charge their customer with the recurring fee for
using or accessing the content or any product or services. The firm charges its customer with
monthly or yearly fees in order to increase its revenue sources. For example, Spotify which
provide media services to its customers. It provides the customers with Freemium services
through which they charge its customers with a monthly or yearly membership for accessing the
music videos. The company provides customers with improved streaming quality that are

offered on the paid subscription. The Freemium service provided by Spotify assist in increasing
the acquisition and many customers are taking the subscription in order to use improved
streaming quality for the music audio and video (Linder & Williander, 2017). Moreover, Food
service providers such as Blue Apron, which uses the convenience-based subscription model as a
source of revenue to enhance the profitability level. This company adds value by providing
access to niche products such as the selection of different types of diets. It provides customers
with food ingredients and recopies in order to prepare meals at home.
1.3 Transaction Fee Revenue Model
This is the revenue model in which the customer is required to pay for the transaction which is
being made by them. It is a form of commission that is being paid by the customer for executing
the transaction. It is the fee that been paid by the customer to the operator of the platform. The
fee which is charged by the operator can be fixed or on the basis of percentage. One of the
companies that are using this model is Etrade, which offers the customers with electronic trading
platforms through which they are able to trade common stock and other financial assets. This
platform charges the customers to pay the fee in order to process the transaction.
The other firm that uses transaction fee revenue business model is Hotwire which is an online
booking website that provides the customers with low priced travel services. The customer can
be a buyer or seller that is paying the transaction fee. The site by providing the customer with the
platform for providing their products and services to its end users charge a fixed or percentage-
based fee in order to make the transaction successful (Sprenger, Mettler & Winter, 2017). The
transaction fee is the source of generating higher revenue. The firm is the market operator that
provides the customers with the platform in order to sell their goods and services. The customers
are required to register themselves in order to identify both the parties. The business implements
this model by charging the customers with fees for each transaction they are executing.
1.4 Sales Revenue Model
It is the online platform that is being used by the wholesalers and retailers of goods and services
in order to provide their products and services to the customers online. The prices that are
available on the online platform are more competitive because there are many companies which
are providing their products and services through online mode in order to communicate with a
large number of customer to increase their revenue. Amazon is the company that uses the online

platform in order to sell its products and services to customers in order to provide the customers
with more convenience, time-saving and easily accessible information regarding the different
products and services. Amazon implements this model by developing an online website and
adding the information regarding the product and services through which the customers have the
option to purchase online.
The sales revenue model helps the firm in attracting more revenue as the number of the customer
which are active on internet are increasing day by day which is beneficial for the companies that
are selling their products through online platforms. The products and services are sold through
online means and there is no physical presence of the buyer and seller (Kim & Min, 2015).
Amazon by implementing this model has increased their growth in their revenue as it attracts
more customers toward the bands which assist in increasing the profitability of the firm. The
company, which is using this model, have gained more growth and success and increase their
revenue which is beneficial for aching the goals and objectives in an effective and efficient
manner.
1.5 Affiliate Revenue Model
It is the program through which the merchants are able to sell their products and services on the
basis of commission to heir partner websites. These Merchants promote their products and
services through their affiliate partner websites. This program includes the code on the basis of
which it identifies the affiliate. The affiliate act as an intermediate between the seller and the
buyer by promoting the products and services of the merchants on their websites. The merchants
through their program are able to sell their products and the affiliate can earn commission s tier
source of revenue. The digital business which is using this model includes Flipkart which
provide promote the products and services of different merchants and get the commission on the
basis of sell.
This model is implanted when the visitor access to the website and become the paying partner on
the basis of which they are provided with access to the content or services. The affiliate, by
referring the customer about the product service of the merchant, assists in attracting the revenue
in the form of commission (Fleisch, Weinberger & Wortmann, 2015). Flipkart by acting as an
affiliate for different merchants is increasing their profitability and gaining more commission
from different merchants. The business which is implementing this model is Bestbuy which is

the business involved in electronics, computers, appliances, cell phones etc. It provides access to
the different merchants which are dealing in these products by promoting their products through
the website of Bestbuy.
References
Fleisch, E., Weinberger, M., & Wortmann, F. (2015). Business models and the internet of things.
In Interoperability and Open-Source Solutions for the Internet of Things (pp. 6-10). Springer.
Cham.
Kim, S. K., & Min, S. (2015). Business model innovation performance: when does adding a new
business model benefit an incumbent?. Strategic Entrepreneurship Journal, 9(1), 34-57.
Laudon, K. C., & Traver, C. G. (2016). E-commerce: business, technology, society.
Linder, M., & Williander, M. (2017). Circular business model innovation: inherent uncertainties.
Business strategy and the environment, 26(2), 182-196.
Sprenger, M., Mettler, T., & Winter, R. (2017). A viability theory for digital businesses:
Exploring the evolutionary changes of revenue mechanisms to support managerial
decisions. Information Systems Frontiers. 19(4). 899-922.
Zott, C., & Amit, R. (2017). Business model innovation: How to create value in a digital
world. GfK Marketing Intelligence Review. 9(1). 18-23.