Building or launched a web site/application? Check out the choices below on how to generate money from your hard work. Note that these are not mutually exclusive: consider mixed hybrid models too.
Anything missing? Let us know in the comments.
See also our more recent post on Web App Business Models: User Needs and What People Pay For.
Business Models
|
| Model | Variation | Notes |
|---|---|---|---|
| I | Immediate Revenue | Models for generating regular income, cash-flow (‘Self-Sufficient’ models) | |
| I.S | Subscription | Charge the end-user a regular, recurring fee. Consider:
|
|
| I.S.F | Fixed | A single, fixed subscription cost (e.g. to access an online magazine or a specific service). | |
| I.S.V | Variable | A number of fixed-price subscriptions are available to the end-user; fee dictates feature/usage limitations, etc. This includes the ‘Freemium’ model; a (usually limited) ‘free’ option alongside one or more paid options. | |
| I.T | Third-Party Supported | The end-user receives the service for free; a third-party pays the fee for a returned service. | |
| I.T.A | Advertising | One or more third-parties place clearly defined adverts within the website/application. Variations of adverts include graphical banners, text, inline, pop-over, interstitial, etc. Normally charged by cost per click, cost per action, or cost per thousand impressions. | |
| I.T.S | Sponsorship | One or more third parties become the ‘official’ sponsor(s) of the website. This could include fixed (non-rotating, typically prominent) adverts, integration of third-party branding (colours, slogans) and/or licensing agreements. | |
| I.T.C | Paid Content | Advertorials: third-parties pay to include marketing-led content on the website.
|
|
| I.T.P | Paid Placement | Third-parties pay to be included in lists or in the application (e.g. comparisons, reviews, entertainment listings). | |
| I.T.R | Referrer | End-users are directed to third-party sites, which pay a fee to the website owner for any referred transactions (e.g. comparison sites). | |
| I.T.L | License Content | Third-Parties are given access to re-use the content from the web-site for their own purposes. | |
| I.P | Payments | The end-user makes individual, ad-hoc transactional purchases. | |
| I.P.U | Pay-per-use | Micropayments: the end-user is charged a fee to use an online service (one-off, or for a limited time). This includes the 'brokerage' model, where user(s) are charged a fixed-price or percentage per transaction (e.g. ebay). This also includes the purchase of ‘credits’ e.g. 10 uses of the service for a fixed cost. Discounts can be offered for bulk purchases. | |
| I.P.P | Physical Products | The typical e-commerce model; includes books, CDs, holidays, tickets, etc. Typically each ‘physical product’ has a non-arbitrary cost associated with its production. | |
| I.P.V | Virtual Products | The end-user purchases a ‘digital’ product that typically has a negligible cost of replication. This includes virtual gifts (e.g. Facebook), in-game items (e.g. World of Warcraft), and other virtual assets (e.g. land in Second Life). | |
| I.P.R | Related Products | The end-user has free access to the main product/service. An additional, optional charge is made for related ‘added value’ products/services, e.g. documentation, support, commercial versions, related iPhone or Android application, etc. | |
| I.P.D | Donations | The website relies on voluntary end-user donations (e.g. a ‘Tip Jar’). | |
| L | Long-Term Revenue | Strategic, ‘Invest and Reward’ models where costs are incurred initially for a longer-term ‘pay off’. | |
| L.E | Establish and Exploit | Attract a substantial audience before monetizing. | |
| L.E.R | Re-use/Re-sell | Re-sell/re-use the data/content, usually from User Generated Content websites e.g. create books, posters or other purchasable products from data/content created on site. | |
| L.E.P | Platform | Establish a platform, then charge for third parties to participate once an audience has been established e.g. iPhone. See also Facebook. | |
| L.E.B | Branding | Build a ‘personal brand’ for yourself/your company. Once awareness is raised, go on Conference/Workshop/‘Expert’ circuit, or release a book, etc. | |
| L.S | Sell/Exit | Create a popular application/website, then make it someone else’s problem to monetize e.g. YouTube | |
Meta-Models
The following business models can be applied in addition to most of the basic revenue models described above.
|
| Model | Variation | Notes |
|---|---|---|---|
| M.R | Revenue Share | End-users are offered a cash incentive to make the website/application generate revenue, by sharing a percentage of revenue with them (usually based on their personal referrals or popularity of their content). | |
| M.R | Re-Seller | The end-user can re-sell the online service. | |
| M.R.A | Affiliate | The end-user is paid to direct customers to the website, typically by listing/selling the products/services elsewhere. | |
| M.R.W | White Label | The end-user can brand/tailor the online service and re-sell it as their own (typically taking a percentage of the generated revenue, or paying a fixed subscription cost to the original service). |
Popular Business Models
We spent a few hours going through the Webware 100 Top Web Apps for 2008, analysing the business model(s) used by each. The chart below shows the results of this survey: 34% use Advertising, 12% a Variable Subscription model, and 8% each for Virtual Products (typically digital downloads), Related Products (typically a large software company offering a free product to attract you to their platform) and Pay-Per-Use.
Further Reading
- Free! Why $0.00 Is the Future of Business
- The benefits of a monthly recurring revenue model in tough economic times
- Struggling to Monetize Web 2.0
- How to Price your Web App
Post Comment
About The Author
Dan Zambonini is the Technical Director of Box UK. He is the original architect of the Amaxus Content Management System, conceived clickdensity, has participated in industry-shaping think tanks, and has had articles featured in international websites and magazines. He is passionate about making use of the latest technologies in everyday life, and believes people and communities are key to innovation. For more, you can visit him on his personal website at www.danzambonini.com. 
-
Web App Development
From API mash-ups and iPhone applications, to enterprise Web 2.0 sites, Box UK can create your web application.
Box UK Twitter Feed
- Thanks for the feedback! RT @13twelve: @boxuk the UX session was properly good, cheers @jamesdownes & @zambonini. Hope to see you again soon Posted on 1st Feb by Box UK
Dan Zambonini’s Twitter Feed
- Excellent point: RT @jowyang: Remember that mobile isn't a strategy, but aligns with your ever-increasingly complex 'Context Strategy'. Posted at 11:20 am by Dan Zambonini
Comments
120 comments
David Bearman said... 24th Feb 2009, 14:57
Nice list Dan. I'd 'add' or elaborate, one. For a number of years we developed fairly complex models around licensing, which might deserve more examination here than in your one (ITL) reference. For examle, the Art Museum Image Consortium licensed content to third-party distributors, who were in turn authorized to develop competing applications and re-license content to higher education institutions who allowed third-parties (students and teachers) tomake end-uses of it. (see:"The Economics of Publishing Cultural Heritage Content Online: The AMICO Experience", in Proceedings of ICHIM03, Paris, 2003. See http://www.archimuse.com/publishing/ichim_03.html) The general model of licensing content so others can develop applications that return income is under-utilized I think.
seo wales said... 26th Feb 2009, 09:58
I want an ITP fridge and a successful LS job - people pay me to put food in my fridge and give me money for whatever I happen to do ... not seen a thorough working like this before, thanks.
Juan Chaparro said... 3rd Mar 2009, 01:58
Love this Article...It's perfect as I do web 2.0 consulting to businesses. Thanks for sharing
Andy Wright said... 12th Mar 2009, 18:18
Thanks for a great article! This is just what I was looking for.
digvijay singh said... 19th Mar 2009, 18:46
Awesome..Awesome...Awesome. You just helped me define my market in a better manner. Thanks a Ton
warikoo said... 26th Mar 2009, 05:16
Great article... Quick question though - Where would lead gen fall? My experience is that advertising, while considered most basic, is rarely the bread earner for a site, unless it gets a huge volume up and running. Lead gen works very well then...especially if one goes down the simple route of keeping acquisition costs low (organic traffic or better ad optimization) and pricing the leads appropriately..!
Arjun said... 26th Mar 2009, 11:07
@warikoo I think lead gen would fall under the M.R./Revenue Share model which is basically saying you pay the referrer based on quality of lead.
Herbert said... 27th Mar 2009, 10:06
This list is also an excellent starting point for small e-business entrepreneurs to develop a monetization strategy. These business models help you to develop your own monetization mix. Well done!
Owen Brunette said... 27th Mar 2009, 16:00
The other dimension is to know which of these sites are generating profit either by having some published indication or maybe just from knowing the failure rate for the different models. For example if these sites had also been in the Webware 100 or even 500 six or twelve months ealier it might indicate a sustainable business model and allow better assessment of which models are generating money instead of burning their investor's money. Using the webware list which is prioritised by 'coolness' rather than profitability or traffic is also an issue and it would be interesting to contrast with the models of the Alexa top 100 or other sources.
Subbaraman Iyer said... 31st Mar 2009, 10:36
Well, nice to hear about the free business models! how does it make a business model, if ultimately this can't be sustained. A case in point is Facebook with 200 million users and still has no business model. I wrote about the challenges it faced in my blog at : http://subbaiyer.wordpress.com/2009/03/31/facebooks-positive-and-unique-problem/
Robin Good said... 10th Apr 2009, 23:02
Wonderful work Dan, really useful.
I was wondering whether it would be appropriate to include also Fund Raising as a specific model. I have seen in the past some sites resort systematically to it with excellent results.
Joe Stepniewski said... 14th Apr 2009, 15:06
awesome. I just created a wordle based on your lovely collation of the webware top 100 business models
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penny stocks said... 27th May 2009, 11:39
This is a fantastic and nice business model. Thanks
Paddy said... 27th Jun 2009, 03:45
Great analysis, really thorough, but theres a burning question left unanswered for me...
While its great to know who uses what business model, what I REALLY want (need) to know is which ones are more successful?
If the 34% majority using ITA are only turning over $1,000 a month, then Im kinda interested in their model. But if the 8% using IPU are doing $10,000 a month, then Im really interested in their model.
Any ideas on which of the models seems to give the best returns?
Natalie said... 2nd Jul 2009, 20:12
This is the most detailed article I've read on the subject - and believe, I've been looking for that kind of info as I'm working on a new web app!
Thanks for doing all the research and presenting it in such an easy to read form.
Serge said... 4th Jul 2009, 14:08
Very valuable info. Thank you very much
Avery said... 10th Jul 2009, 08:27
Very useful article, thanks for sharing! Bookmarked :)
Jonas said... 22nd Jul 2009, 22:50
Oh, I was just sketching up a similar list. Great work anyway.
home improvement said... 1st Aug 2009, 18:47
I think this is covered so much. This is so well explained and detailed.
Michael Pillsbury said... 7th Aug 2009, 21:57
All my websites are currently I.T.B - Third-parties pay to be included in lists or in the application (e.g. comparisons, reviews, entertainment listings). This way I add content to the website while earning money from commision
birnkmann gas grill said... 9th Aug 2009, 13:56
Excerllent post,this is the best articles I have even seen,I will download it and keep studying it all the time.
Business Tips said... 9th Aug 2009, 20:10
Subscription are such a big key. This is so well explained with great detail. thanks for the great information.
Austin Estate Planning said... 10th Aug 2009, 03:14
You really broke this one down for us. I personally think subscriptions are they way to go if possible because this is a continuous income stream. Nice explanations.
Dave said... 10th Aug 2009, 17:55
There are so many startups looking to develop a web application that attracts thousands or occasionally millions of users but they donât think about how the money is going to be generated. If you come up with an idea for a service which is going to attract millions of users, yet you donât know who those users are, youâve already got a bad start.
Viral Marketing said... 10th Aug 2009, 23:09
How many web applications are funded by tip jars? If you give nothing extra to people who pay, are there people actually willing to give up their money?
Melen said... 10th Aug 2009, 23:12
I see that Advertising model is most used but I wonder what the breakdown is with actual $ revenue is calculated.
Cheap car insurance said... 11th Aug 2009, 03:53
Really cool. Your business model doesn't seem like the traditional model we use to predict income and business feasibility. I notice that the model has more insight to the business and is easier to customize. Thank you for the reference.
Laura Nina said... 12th Aug 2009, 03:01
The business model is really understandable. Good for learning material in the Entrepreneurship course. I had one in the Business Feasibility Study, but doesn't look like this one. Thank you.
cheap car insurance said... 13th Aug 2009, 04:05
The model makes us very easy to understand the fact about business. It was my pleasure to see this model. I will instruct my manager to create similar model of my company too.
Online games said... 13th Aug 2009, 11:39
For me the list is also an excellent starting point for small e-business entrepreneurs to develop a monetization strategy. These business models help you to develop your own monetization mix. Well done!
sealer said... 13th Aug 2009, 16:36
Just too complete to be ignored. Once you use this as a standard to evaluate and value, you need not worry about missing a single thing anymore.
No Prescription Color Contact Lenses said... 14th Aug 2009, 03:54
This list is also an excellent starting point for small e-business entrepreneurs to develop a monetization strategy. These business models help you to develop your own monetization mix. Well done!
Online Bathroom & Tile retailer said... 14th Aug 2009, 18:29
There are also many overlaps in the business models. TileSupply is based on Physical Products. However, I have seen many business models that both sell physical goods and sell advertising.
tminarik.co.uk PLR said... 15th Aug 2009, 02:04
I offer a lifetime membership but I would consider it to be Physical Goods because the customers are getting something tangible from it.
UK website traffic said... 15th Aug 2009, 16:39
I sell UK website traffic, would you consider that a virtual good?
Wedding said... 17th Aug 2009, 01:34
Great tools to evaluate your blog. It is never too late to do, even if your blog is already established, you can still something better to improve. Thank you.
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web hosting directory said... 17th Aug 2009, 19:15
I run a web hosting directory and get commission from each web hosting package I sell.
Dell Chargers said... 17th Aug 2009, 19:21
I think that the best business model is to sell physical goods as you usually get the biggest profit margins.
Number 1 Web Host Review said... 17th Aug 2009, 19:25
I went with a commission-based business model. The greatest appeal was the low cost to startup since you do not have to develop a brand image - it is already done for you.
Internet Marketing Consultant said... 18th Aug 2009, 05:57
Great to see a good post on monetization if often gets overlooked.
mario games said... 20th Aug 2009, 13:49
Super helpful. A business model is often disregard today, and I think it's the first building block of every business.
bridal shower favors said... 22nd Aug 2009, 09:13
Very comprehensive article, thank you for sharing it with us.
Fights said... 23rd Aug 2009, 17:16
Great thanks!
Cerrajeros said... 24th Aug 2009, 17:59
What business model would you consider good for my income? Cerrajero
Download Torrent said... 26th Aug 2009, 06:22
This is the most detailed article I've read on the subject - and believe, I've been looking for that kind of info .
Thank you
God bless you
Garden Edging Ideas said... 26th Aug 2009, 09:31
Need time to work through these ideas but what a great list. Thank you.
CD Covers said... 26th Aug 2009, 16:04
Thanks for a great article! This is just what I was looking for.The business model you develop is really innovative and detailed. I love them. Thank you, I think it will be good material for the future.
CD Cover said... 26th Aug 2009, 16:09
The business model you develop is really innovative and detailed. I love them. Thank you, I think it will be good material forthe future reference. and once again Thanks for the information
Texas Holdem said... 26th Aug 2009, 18:53
Great tools to evaluate your blog. It is never too late to do, even if your blog is already established, you can still something better to improve. Thank you.
TightPlace said... 27th Aug 2009, 05:33
I run a social network, Tight Place, The Next Level. It is smiler to MySpace and FaceBook, but it has a lot of unique features built in. Come meet some new people!
John said... 27th Aug 2009, 06:12
I think you could have included the link selling in the table. Most of the blog owners are earning now a days through selling their link spots to other webmasters. This facilitates in consistent earning.
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Why is my computer so slow said... 28th Aug 2009, 01:40
Very interesting, you really covered absolutely everything! I never realised there were so many different ways to monetize as site.
Cleveland Business Broker-SK Consulting Associates said... 28th Aug 2009, 01:48
I wonder if a free web subscription service that only charges "Pay to remove adverts" would really work... are people actually willing to pay extra money just to remove banners or popups? I guess it depends on the niche and demographics...
Caravan Porch Awnings said... 28th Aug 2009, 05:03
Those are pretty solid portfolio on how to monetize one's website. I'm yearning to learn more on web design in order to create sites which look very professional; thus, making them more appealing to advertisers. Thanks. Adam
UKtraffic said... 28th Aug 2009, 05:27
That is important to start with good preparation. After that you would need to build good traffic.
MedievalDays said... 28th Aug 2009, 06:36
My advice is to keep updating the website.
electronics store usa said... 28th Aug 2009, 07:10
Excellent, excellent guide showing all the possible income sources for an online business. Anyone new into the field should find a gold mine here.
home tutor said... 28th Aug 2009, 09:26
For me, the subscription model has worked just fine. Overall this is a great portfolio of all possible monetizing options for a web business.
Spiral Online Shop said... 28th Aug 2009, 12:23
Great information which is especially relevant in this recession. It never has been harder to monetize websites successfully.
Spiral Online Shop said... 28th Aug 2009, 12:55
Great information which is especially relevant in this recession. It never has been harder to monetize websites successfully.
Lukisan Abstrak said... 28th Aug 2009, 18:09
Thanks for Information Great tools to evaluate your blog. This business model tips really innovative and detailed, Make me better to improve my web. Thank you.
Black Hair Styles said... 28th Aug 2009, 21:37
Well, this is a comprehensive list. Probably most of the known models are mentioned here. If anyone is wondering about the whole internet business thing works, this is the perfect table to clarify the basics. I tried a few minutes thinking about models you have excluded, but could not come up with any. Have you thought about incentivized lead generation (like paying members to pay a free offer - which in turn pays the webmaster). Anyway great list.
Anis Maharjan said... 29th Aug 2009, 08:26
Great piece of information, it helps alot in managing business. Anyway thanks for sharing.
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VietNam vacations said... 29th Aug 2009, 09:40
Nice tips, I like it very much, now I can monetizing my web app very easy.
Thank you very much.
Seo Blog said... 29th Aug 2009, 09:48
this was really good stuff. This will help us to manage the web business in better way. Looking forward for updated information.
Lukisan said... 29th Aug 2009, 12:04
Very comprehensive article, thank you for sharing it with us.
Sale iPhone said... 29th Aug 2009, 18:41
Just too complete to be ignored. Once you use this as a standard to evaluate and value, you need not worry about missing a single thing anymore.
Motorcycle Parts Review said... 29th Aug 2009, 23:24
that is very cool. you have plenty of talent.
Dead Sea Bath Salt said... 30th Aug 2009, 02:51
Those business models sound really awesome. I'll try to implement some of them on to some my projects.
web said... 31st Aug 2009, 01:05
this is a huge list of comments!
ConcreteSealer said... 31st Aug 2009, 08:25
That can be much more important than just selling a product and marketing effort. We need to beb different to come out on the surface.
order said... 31st Aug 2009, 12:59
Well Done. Thanks for sharing.
UKproperty said... 1st Sep 2009, 10:20
E-business also needs careful consideration and planning upon the running. Thank you for your source. It's great.
Bankruptcy said... 2nd Sep 2009, 02:35
Thank you. It is great to find this post. I am looking for business model or business planning for e-business.
Australian Flags said... 2nd Sep 2009, 05:39
Very useful article, thanks for sharing! Bookmarked :] You can use some flags and flag poles for your site.
Republic Flags said... 2nd Sep 2009, 05:49
I really like the flags for the site and hope you book mark these sites.
Baba said... 2nd Sep 2009, 10:36
Those stuff are really useful for me... Thanks!
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Obama said... 2nd Sep 2009, 20:30
Excellent road map of the various methods available to the webmaster. Thank you, it is nice to have all the possibilities summarized in one place.
Peter08 said... 3rd Sep 2009, 13:18
Hello dude,
Wholesome article. Comprehensive list. This covers atmost all the business models. None is left. Kudos!
Ryan said... 3rd Sep 2009, 17:14
Are there really so many ways to generate money from our web pages? Great!
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Stevenson said... 5th Sep 2009, 17:25
Nice one. Good to have all the major income generating contributors on the list.
Livescores said... 6th Sep 2009, 12:25
Great website.
Apparel wholesale supplier said... 6th Sep 2009, 12:27
Good to have all the major income generating contributors on the list.
Eulogy Sample said... 6th Sep 2009, 19:54
A single, fixed subscription cost (e.g. to access an online magazine or a specific service).
internet marketing Melbourne said... 7th Sep 2009, 02:31
great post.
could fund raising or a similar activity be part of the specific business model?
Wedding Photographer said... 7th Sep 2009, 15:58
the main problem about CPA world is the fraud going on both ways. Neither affiliates nor networks are honest and innocent.
ciggarest said... 7th Sep 2009, 17:26
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Robinson said... 7th Sep 2009, 19:32
CPA is growing fast. But at the same time, scammers are also growing fast with CPA. CPA is no more reliable.
Coffee Makers said... 8th Sep 2009, 06:14
The products and services a business offers. Quoting Osterwalder (2004), a value proposition "is an overall view of .. products and services that together represent value for a specific customer segment. It describes the way a firm differentiates itself from its competitors and is the reason why customers buy from a certain firm and not from another."
Coffee Makers
SyntheticGrass said... 9th Sep 2009, 04:49
The business model can be profitable. You can convert it to e-book or sell it to management consultant. I like the business model too, they are really detailed and well-planned.
Logo Design said... 9th Sep 2009, 06:58
Pretty informative blog!
Thanks for sharing all your infos!
SEO Consultant said... 10th Sep 2009, 21:42
Hi,
thank for sharing informative article, I do like the way you structured the articles.
cheers,
New York said... 11th Sep 2009, 03:14
This is a great list and a great start for any small business. The strategy you have came up with is amazing and I will have to develop this for myself a little bit later on this week.
zhuzhiyan said... 11th Sep 2009, 09:04
Subscription based apps would be the best way to monetize, because it also leads to passive income that you will collect each month.
Games said... 17th Sep 2009, 15:37
I was wondering whether it would be appropriate to include also Fund Raising as a specific model.
Replica Watches said... 18th Sep 2009, 12:41
Thanks that article is superb, it too helped me to raise my business..
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Gigi Spaima said... 18th Sep 2009, 14:12
Monetizing your business is not so easy like you may think...
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Andrew said... 20th Sep 2009, 15:58
Great info! Thanks for sharing.
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agnesnathania said... 21st Sep 2009, 00:21
if these sites had also been in the Webware 100 or even 500 six or twelve months ealier it might indicate a sustainable business model and allow better assessment
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Seo Company said... 23rd Sep 2009, 13:38
Very Nice information , Thanks a lots.
Regards,
Jenn
Jane Mitchael said... 23rd Sep 2009, 13:39
Excellent Post, Keep it up.
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Johnny Blaze said... 25th Sep 2009, 13:46
Wow, Ive been looking for something like this for quite sometime. I developed a shopping cart web app and have been trying to figure out the best way to market it. This will do just fine. Thanks for offering this for free.
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nyc towing said... 25th Sep 2009, 23:15
Thanks for doing all the research and presenting it in such an easy to read form.
band said... 28th Sep 2009, 22:02
Quick question though - Where would lead gen fall? My experience is that advertising, while considered most basic, is rarely the bread earner for a site, unless it gets a huge volume up and running. Lead gen works very well then...especially if one goes down the simple route of keeping acquisition costs low (organic traffic or better ad optimization) and pricing the leads appropriately..!
Thanks and Regards
Chika said... 28th Sep 2009, 22:40
Hi,
thank for sharing great article, very informative and useful for Chika
Chika said... 28th Sep 2009, 22:41
great article
Dog Training said... 4th Oct 2009, 03:22
Great article. I do like boxuk
Kenali dan Kunjungi Objek Wisata di Pandeglang said... 8th Oct 2009, 20:33
THis business model is a good article. thank for sharing
Bali said... 4th Nov 2009, 12:20
thank for sharing monetizing web app business.
jeims said... 15th Nov 2009, 20:11
Microsoft would be working on solutions that really amazes people, as Apple does,
or OS's that really works, as Linux and BSC do. The history shows that all empires come to an end....
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Trabajo said... 4th Dec 2009, 23:42
What is the best business model for a web 2.0 app like facebook app?
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