"A business model is a framework for creating economic, social, and/or other forms of value. The term business model is thus used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies." (http://en.wikipedia.org/wiki/Business_model)

Wikipedia: Business model design template: Nine building blocks and their relationships, Osterwalder 2004^[2]

 The following business models as listed on Wikipedia:

• Auction business model
• Bricks and clicks business model
• Collective business models
• Cutting out the middleman model
• Direct sales model
• Distribution business models, various
• Franchise
• Freemium business model
• Industrialization of services business model
• Low-cost carrier business model
• Loyalty business models
• Monopolistic business model
• Multi-level marketing business model
• Network effects business model
• Online auction business model
• Online content business model
• Premium business model
• Professional open-source model
• Pyramid scheme business model
• Razor and blades business model (bait and hook)
• Servitization of products business model
• Subscription business model
• Value Added Reseller model

Freemium

http://en.wikipedia.org/wiki/Freemium

Freemium^[1][2] is a business model that works by offering basic services for free, while charging a premium for advanced or special features. The word freemium is a neologism created by combining the two aspects of the business model: free and premium. The business model has gained popularity with Web 2.0 companies.^[3]

Origin

The freemium business model was articulated by venture capitalist Fred Wilson on 23 March 2006.^[4]

"Give your service away for free, possibly ad supported but maybe not, acquire a lot of customers very efficiently through word of mouth, referral networks, organic search marketing, etc., then offer premium priced value added services or an enhanced version of your service to your customer base."

After describing the business model, Wilson asked for suggestions as to what to call it. Within a matter of hours, more than 30 name suggestions were given by his blog readers. One such suggestion came from Jarid Lukin of Alacra, one of Wilson's portfolio companies. Lukin coined the term "freemium," and Wilson and his audience adopted it for the business model.^[5] The term has since appeared in Wired Magazine and Business 2.0, and has been used by prominent bloggers such as Chris Anderson and Tom Evslin. In 2009, Anderson published the book Free which examines the increasing popularity of this business model.

A freemium rate is the ratio of free to fee services provided.

Examples

An early example of the freemium model working on the internet was Musicmatch Jukebox, an all-in-one music management tool that was first marketed with a freemium model in 1999. Most users could use the Basic/Free version, but a $19.99 upgrade provided extra features such as supertagging and faster ripping and burning. ^[6]

According to the New York Times, freemium is becoming the "most popular business model among Web start-ups."^[7] Some of the most popular sites, such as Pandora^[8], Flickr, LinkedIn, and Skype, use the freemium model, and Facebook is considering adopting the freemium model according to Yuri Milner, the CEO of DST, a Facebook investor.^[9]

Other Online / Web Business Models

Advertising Model

The web advertising model is an extension of the traditional media broadcast model. The broadcaster, in this case, a web site, provides content (usually, but not necessarily, for free) and services (like email, IM, blogs) mixed with advertising messages in the form of banner ads. The banner ads may be the major or sole source of revenue for the broadcaster. The broadcaster may be a content creator or a distributor of content created elsewhere. The advertising model works best when the volume of viewer traffic is large or highly specialized.

Portal -- usually a search engine that may include varied content or services. A high volume of user traffic makes advertising profitable and permits further diversification of site services. A personalized portal allows customization of the interface and content to the user. A niche portal cultivates a well-defined user demographic. [Yahoo!]

Classifieds -- list items for sale or wanted for purchase. Listing fees are common, but there also may be a membership fee. [Monster.com, Craigslist, Match.com]

User Registration -- content-based sites that are free to access but require users to register and provide demographic data. Registration allows inter-session tracking of user surfing habits and thereby generates data of potential value in targeted advertising campaigns. [NY Times Digital]

Query-based Paid Placement -- sells favorable link positioning (i.e., sponsored links) or advertising keyed to particular search terms in a user query, such as Overture's trademark "pay-for-performance" model. [Google, Overture]

Contextual Advertising / Behavioral Marketing --freeware developers who bundle adware with their product. For example, a browser extension that automates authentication and form fill-ins, also delivers advertising links or pop-ups as the user surfs the web. Contextual advertisers can sell targeted advertising based on an individual user's surfing activity. [Claria]

Content-Targeted Advertising -- pioneered by Google, it extends the precision of search advertising to the rest of the web. Google identifies the meaning of a web page and then automatically delivers relevant ads when a user visits that page. [Google]

Intromercials -- animated full-screen ads placed at the entry of a site before a user reaches the intended content. [CBS Market Watch]

Ultramercials -- interactive online ads that require the user to respond intermittently in order to wade throughthe message before reaching the intended content.[Salon in cooperation with Mercedes-Benz]

Infomediary Model 

Data about consumers and their consumption habits are valuable, especially when that information is carefully analyzed and used to target marketing campaigns. Independently collected data about producers and their products are useful to consumers when considering a purchase. Some firms function as infomediaries (information intermediaries) assisting buyers and/or sellers understand a given market.

Advertising Networks -- feed banner ads to a network of member sites, thereby enabling advertisers to deploy large marketing campaigns. Ad networks collect data about web users that can be used to analyze marketing effectiveness. [DoubleClick]

Audience Measurement Services -- online audience market research agencies. [Nielsen//Netratings]

Incentive Marketing -- customer loyalty program that provides incentives to customers such as redeemable points or coupons for making purchases from associated retailers. Data collected about users is sold for targeted advertising. [Coolsavings]

Metamediary -- facilitates transactions between buyer and sellers by providing comprehensive information and ancillary services, without being involved in the actualexchange of goods or services between the parties.[Edmunds]

Manufacturer(Direct) Model 

 Wholesalers and retailers of goods and services. Sales may be made based on list prices or through auction.

Virtual Merchant --or e-tailer, is a retail merchant that operates solely over the web. [Amazon.com]

Catalog Merchant -- mail-order business with a web-based catalog. Combines mail, telephone and online ordering. [Lands' End]

Click and Mortar -- traditional brick-and-mortar retail establishment with web storefront. [Barnes & Noble]

Bit Vendor -- a merchant that deals strictly in digital products and services and, in its purest form, conducts both sales and distribution over the web. [Apple iTunes Music Store]

Affiliate Model 

In contrast to the generalized portal, which seeks to drive a high volume of traffic to one site, the affiliate model, provides purchase opportunities wherever people may be surfing. It does this by offering financial incentives (in the form of a percentage of revenue) to affiliated partner sites. The affiliates provide purchase-point click-through to the merchant. It is a pay-for-performance model -- if an affiliate does not generate sales, it represents no cost to the merchant. The affiliate model is inherently well-suited to the web, which explains its popularity. Variations include, banner exchange, pay-per-click, and revenue sharing programs. [Barnes & Noble, Amazon.com]

Banner Exchange -- trades banner placement among a network of affiliated sites.

Pay-per-click -- site that pays affiliates for a user click-through.

Revenue Sharing -- offers a percent-of-sale commission based on a user click-through in which the user subsequently purchases a product.