ifacethoughts

Efficient Markets

Mike of Techdirt says that efficient markets are not about big and small businesses and I agree with him. With whatever experience I have had from a business perspective, I feel that there are people who create value and there are people who can make money out of it by coming up with business models. I think instead of big and small businesses it is those who can and those who cannot make money out of the value.

I have mused earlier that value and revenue models need not always go hand in hand by themselves. Someone has to marry them. Of course, for a longterm revenue model value is necessary, but value might not always mean a good revenue model. I have also come to believe that coming up with a revenue model is a skill and requires out of box thinking. The value creator has to know the market needs, but the business model creator has to know degree of that need. Will the customer be ready to pay for that? If not who are the other candidates? What was a revelation to me was when my friend, Manoj, explained to me how the media works. The media publishes content, but earns through advertising, which is not the first hand information the user is looking for. It is complementary content that pays for consumption of the main content. Of course contextual advertising can enhance it, but inherently the news and editorials in the newspaper are not the same as its classifieds.

Having said that I do not think that revenue models can work without offering value for long. There are a lot of cases where customers are bullied into paying, and it does work if there is a monopoly. But efficient markets will always drive to break this monopoly and come up with alternatives that will balance it out. This will encourage rethinking and innovation in business models, those who cannot will not be able to survive. If the customers are happy with the value they get for what they pay then small and big businesses do not matter.

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Abhijit Nadgouda
iface Consulting
India
+91 9819820312
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This is the weblog of Abhijit Nadgouda where he writes down his thoughts on software development and related topics. You are invited to subscribe to the feed to stay updated or check out more subscription options. Or you can choose to browse by one of the topics.