Research on Influencing Factors of Internet Business Models Based on Web2.0

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1 2010 International Conference on Management of e-commerce and e-government Research on Influencing Factors of Internet Business Models Based on Web2.0 Lei Bing School of Management Henan University of Technology Zhengzhou, China Abstract The influencing factors of Internet business model based on Web 2.0 are the study object. And they are professional degree of website, service integration and the consistency of members. This paper adopts the research method of literature analysis, analyzes the relationship among the influencing factors from the qualitative point of view and analyzes their influence to the web 2.0 website s competitive capacity, profitability, ripening degree of business model and its probability of success. It proves that the change direction of the three indexes is the same to the change direction of Internet business model based on Web 2.0. This achievement is a guide to the innovation of business model. At last, the compositions of three influencing factors are analyzed specifically. Keywords- web 2.0; influencing factors; professional degree; integration; consistency I. INTRODUCTION With the development of internet, web 2.0 has become the main business model gradually. But from the current situation of Internet Business, the industry is not certain the key success factors of web 2.0 business model. And the business models designed can not reflect users requirement exactly. Most innovative business models based on web 2.0 don t make success. Jiang Ming-mei [1] points out that the users involvement in web 2.0 website is worse than expected. Hu Yan-ping [2] thinks that the development of web 2.0 is controversial in China so far, many new things have no conclusion in the process from disorder to order of the field and its technique and application are in the early stage of development. So, it is crucial to find out the key success factors of web 2.0 business model. On the basis of existing literatures and case study, this paper tries to found the theoretical model of influencing factors based on web 2.0 internet business model. II. LITERATURE REVIEW About the research to internet business model, Timmers [3] is one of the scholars who study it at the earliest. He points out business model includes three facets: (1) framework of products, service and information flow, including the description to the participants of all kinds of business activity and their roles. (2) the description to the potential benefits of participants.(3) the description to income resource. After that, Tapscott [4] studies the business model from the perspective of, business operation and value. And some scholars consider the financial factor in the definition. Ascertaining the elements of business model helps to describe business model exactly. Accordingly, Osterwalder [5] and other scholars list it separately to research. They study the formulation tool and form of business model, depict the elements of business model and their inter-relationship and propose the evaluation method of business model. At home, Fang Zi [6], Chen Yi [7] and other scholars research the internet business model from the angel of its classification and innovational method. Web 2.0 is an internet business model whose core is the application of social software such as Blog, BBS, SNS, RSS, Tag, Wiki and whose foundations of theory and technique are six degrees of separation, xml and ajax. The definition of web 2.0 is put forward by Tim O Reill [8] first. He mainly studies the web 2.0 design pattern and business model from a technical point of view. Schauer [9] summed up the key characters of web 2.0 and divided them into primary attributes and experience attributes. Primary attributes included The Long Tail, the value of user contributions and Internet communication effects. And experience attributes are decentralization, creative commons, remixability and emergent, etc. Anderson [10] analyzed the typical application, ideological foundation and supporting technology of web 2.0 in detail. And he also forecasted the future development of web 2.0. III. THEORETICAL MODEL OF INFLUENCING FACTORS BASED ON WEB 2.0 BUSINESS MODE According to the review of literatures, the researches on web 2.0 business model have involved its definition, characters, attributes and manifestation mode. However, there are few academic research literatures about the influencing factors of web 2.0 business mode while the industry has been very concerned about it. On the basis of sorting out relevant literatures, the paper tries to combine the follow-up survey study to several domestic Web2.0 websites and build the theoretical model of influencing factors based on Web 2.0 internet business model. This theoretical model extracts three aspects of influencing /10 $ IEEE DOI /ICMeCG

2 factors: professional degree of website, service integration and the consistency of members. Professional degree of website. It refers to its invested technology and emphasis on some function which web 2.0 website supplies to its members. An enough professional web 2.0 website may influence the loyalty and preference of its members and potential members directly. Consequently, the result influences the scale and maturity of its business model. On the other hand, sufficient professional degree of website may also help its business model to enhance core competencies and improve customer relations. Accordingly, the results are achieved to enhance core competencies and make profits. Professional degree of website is proportional to the maturity of business model, competitiveness and persistence of earnings. The higher the professional degree of website is, the more mature business model is. Corresponding, it is more likely to win in the competition and the profitability is more lasting. Service integration. It is an index to reflect if the source of web 2.0 websites core business and other applications is wide. And it is also an index to measure if web 2.0 websites can absorb users for a long time and if its model is sound to increase the number of users. From some point of view, if websites professional dimension is like a hand to absorb members to increase their consistency, service integration is another hand to achieve the same effect. It can further attract supporters and potential users of the site from other angle so that the site is more attractive to consumers. Consistency of members. It is an index to measure some of e-commerce sites, such as the number of registered members, occupation, gender, ages and social status. It is also an index to measure members behaviors, such as their loyalty to websites, preference of interest, durability and the wish to introduce new members. Consistency of members determines the size and maturity of its business model for a website. The index of members consistency is in direct proportion to the size and maturity of business models. It means that the higher members consistency of a web 2.0 website is, the more mature its business model is and the larger its size is. Service integration Professional degree of website Consistency of members competitiveness and persistence of earnings Size and maturity of business model Success probability of business model Figure 1. influencing factors of business model based on web 2.0 As shown in Figure1, the professional degree of website is the base of the maturity, competitiveness and persistence of earnings of business model. Combined with service integration, it can affect consistency of members to some extent. What s more, service integration and professional degree of website can promote each other. They can improve the competitiveness of the site and influence the business model. The higher the professional degree of website and service integration are, the more likely consumers tend to the site s business. And finally there are more consumers to become registered members and advanced members of the website. Consistency of members, professional degree of website and service integration all can influence websites competitiveness and the development of business model to different extend. There is interaction between websites competitiveness and maturity of business models. And they influence success probability of business model. The above model reflects the relation between the three indexes and the growth of business model, websites competitiveness and persistence of earnings. We can reveal the development of business models based on Web 2.0 fundamentally by further analyzing evaluation indexes which form its influencing factors. But the above three indexes are only latent. Referential value can be provided for the innovation of business models when explicit ( indexes) of these latent are found out. IV. ANALYSIS ON INFLUENCING FACTORS OF BUSINESS MODES BASED ON WEB 2.0 A. Analysis on components of professional degree of website As the carrier of Internet, Web 2.0 site itself is a technology. Jiang Ming-mei [1] summarized the experience and lack of Web 2.0 e-commerce websites. He thought the experience of Web 2.0 was effective use of consumer selfservice and algorithmic data management in order to reach out to the entire Internet, to the edges and not just to the center, to the long tail and not just to the head. Zhu Xiuliang [11] also thought technology was still the first when the rise of Web 2.0 was in a large scale. In his opinion, without the innovation of technology, there is no technology and innovation of business models inspired by the technology. So professional degree of website is rational to be a important factor which influences the business model of Web 2.0 e-commerce. Therefore this paper provides improved components of professional degree on the basis of previous experience. In the improved, the professional degree of websites has a positive role to websites competitiveness, persistence of earnings and size and maturity of business model. The research thinks the professional degree of websites can be reflected in three aspects. (1) the professional degree of Business Enterprise Zone. Enterprises are the main contributors to profits of Web 2.0 websites. The essence of Web 2.0 websites is to provide enterprises with professional 92 97

3 web marketing service for making profits. Enterprises must set clear area which is easy to be accepted by users. The area is Business Enterprise Zone. It is a platform on which enterprises and online consumers communicate directly. And it is a platform by which consumers get comprehensive and direct knowledge of goods. In current, netizens can not accept online advertising generally. So the establishment of Business Enterprise Zone is not only practical, but also easy to be accepted by the majority of Internet users. The professional degree of Business Enterprise Zone includes the following : the attraction of advertising, the function completeness of Business Enterprise Zone, the strength of commodity display function and the competence of value-added services. (2) Extended capabilities of UGM (User Generated Market). Fang Lei [12] thought those who provided the platform with the most powerful ability of UGM extension, would be able to maximize the use of the user's enthusiasm and creativity. It is thus clear that UGM will become a kind of operation type of Web 2.0 websites for a long time. Extended capabilities of UGM include the following : the degree to stimulate enthusiasm and creativity of users, scientificity of membership and scientificity of user rating. (3) Focus of site features, such as friends circle, video sharing and applications. The main reason for Facebook and Myspace, which are the world s leading social media sites, lies in their focus on the community and great control over their own page for users. The indexes of focus of site features are following: interpersonal adaptability and controllability over their own page for users. Explicit and indexes of professional degree of Web 2.0 websites are shown in table I. Professional degree of websites TABLE I. EXPLICIT AND MEASURABLE INDEXES OF PROFESSIONAL DEGREE OF WEB 2.0 WEBSITES Professional degree of business enterprise zone Extended capabilities of UGM Attraction of advertising Function completeness of business enterprise zone Strength of commodity display function Competence of value-added services Degree to stimulate enthusiasm and creativity of users Scientificity of membership Scientificity of user rating Fang Lei[12] Focus of site features Interpersonal adaptability Controllability over their own page for users B. Analysis on components of service integration Jiang Ming-mei [1] thought Web 2.0 made companies become more perfect to win the competition through re-use and integration of the services provided by others. Hai Zhong-fan [13] pointed out that blog sites and SNS sites will embark on the road to integrate their services. At present, service integration is the current development trend of Web 2.0 websites. So far, the research on service integration of Internet enterprises focuses on the following six areas: service integration, central business expansion, compatible applications of platform, improving payment, improving credit and interactive rich media entertainment. About the acceleration of service integration to business models, different scholars drew different conclusions from their own point of view. Wang Yuan [14] s opinion was that the business model of Web 2.0 was easy to integrate the content such as theme communities and interactive entertainment. She thought the business model was in favor of websites management for providing users with features such as self-expression platform. Dong Xiao-chang [15] put forward the method to divide service integration. So far the above are more ic study about service integration of Web 2.0 at home. And they provide an important reference for the paper. But there are two shortcomings. First, the division to various integration patterns is overlapping and its classification is not clear. Second, it is not conductive to ascertaining the direct cause of the generation of service integration. So, it s necessary to make a new classification from the angle of the generation of service integration. The standards of the research are integration examples, integration projects and integration platform, which are involved in the evaluation to service integration form Web 2.0 users. It divides service integration into four integration patterns. They are central business expansion, compatible applications of platform, the improvement of risk and interactive rich media entertainment. The meaning of central business expansion is to expand other major functions on the basis of major functions. The aim is to expand the site's audience reach, and enhance the site's authority. The of central business expansion are fusion degree among single-service websites, satisfactory level of community function, integration degree of online and offline behaviors and radiation level of central functions. Compatible application of platforms refers to take the current main functions as the basis and gather the wisdom of the public to design a large number of practical applications for websites. Its are if providing the function to make friends on heterogeneous platforms, if providing extended function to applications, and if providing the resource sharing. The 93 98

4 improvement of risk is to make the security features of websites better than other competitors by some technical means and make users more reliable to the sites. Its are the perfect degree of identity authentication, the perfect degree of online trading and the perfect degree of online payment. Interactive rich media entertainment refers to make the site more entertaining and add more leisure value for site s functions and its applications. It can also meet the needs of Internet users to the greatest extent. Its are if providing the interactive games and if providing the audio and video sharing. Explicit and indexes of service integration of Web 2.0 websites are shown in table II. TABLE II. Service integration EXPLICIT AND MEASURABLE INDEXES OF SERVICE INTEGRATION OF WEB 2.0 WEBSITES Central business expansion Compatible application of platforms The improvement of risk Interactive rich media entertainment Fusion degree among singleservice websites Satisfactory level of community function Integration degree of online and offline behaviors Radiation level of central functions function to make friends on heterogeneous platforms If providing extended function to applications resource sharing identity authentication online trading online payment interactive games audio and video sharing Fang Lei[12] Zhang Dan[16] C. Analysis on components of consistency of members As a new Internet business model, the emerge of Web 2.0 makes the traditional business model based on Web 1.0 reform. The creativity of users has been played unprecedentedly on this platform. It gives users unprecedented choice space and room for creativity. So, its success is closely related to the consistency of members for the business model of Web 2.0. Hai Zhong-fan [13] thought one of the profits of blog + SNS model is to charge after the website reached a certain size and had steady members. Internet follows the law of positive feedback. It means that the larger the scale of network is, the more obvious the network effect is. When the scale of network exceeds a certain value, the network effect will increase dramatically. The reach of the conclusion is indicative that the consistancy of members is very important to the success of Web 2.0 websites. The components of consistency of members are the environment for members to create contents, the satisfaction in virtual environment and the building on website popularity. The environment for members to create contents refers to the environment to inspire members to create original articles, videos and other contents. The quality of environment to create contents directly affects the production quantity and quality of original content. And the of environment to create contents for members are the friendliness of the article layout, the support to create videos, the friendliness of content publishing and the friendliness of members selfmanaging. The satisfaction in virtual environment refers to the satisfaction for members to viral life, communication and value realization in virtual environment provided by websites. For the netizens, Web 2.0 websites are the environment that they live in the virtual world. An important factor that the netizens are willing to live in the environment is the ability to meet their own value. So the satisfaction in virtual environment is one of the important factors of consistency of members. The of the satisfaction in virtual environment include the strength of interpersonal function, the richness of applications such as game, the ability to show self and the richness of lifestyle application tools. The building on website popularity refers to means and methods adopted for retaining and attracting members. And the of the building on website popularity are the availability of the core attraction, the ability to absorb a large number of professionals, the degree of viral marketing support and the friendliness of user experience. Explicit and indexes of consistency of members of Web 2.0 websites are shown in table III

5 TABLE III. Consistency of members EXPLICIT AND MEASURABLE INDEXES OF CONSISTENCY OF MEMBERS OF WEB 2.0 WEBSITES Environment for members to create contents Satisfaction in virtual environment Building on website popularity the article layout Support to create videos content publishing members selfmanaging Strength of interpersonal function Richness of applications such as game Ability to show self Richness of lifestyle application tools Availability of the core attraction Ability to absorb a large number of professionals Degree of viral marketing support user experience Zhang Dan[16] V. CONCLUSION AND PROSPECT The research founds the theoretical model of influencing factors based on web 2.0 Internet business model in theory. From the qualitative point of view, it analyzes how professional degree of website, service integration and the consistency of members influence the sites competitiveness, persistence of earnings, maturity and success probability of business model. And it constructs the explicit and indexes of influencing factors of business model. In general, service integration has a positive impact on the consistency of members. The professional degree of websites and service integration are the basis of healthy competition and sustained profitability to Web 2.0 websites. And at last they influence the success probability of business model. The research shows that the higher service integration and professional degree of websites are, the higher online transaction trends of sites members and the level of online participation are. And this is conductive to the maturity of business model. The aim of this research is to use specific measures to clear up the factors which restrict the development of Web 2.0 business model by the roots, and provide helpful experience to enhance the innovative capability and acceptable capacity of Web 2.0 business model. This study only conducts exploratory analysis theoretically on the factors which influence Web 2.0 business model. Some problems need further empirical research, for example, the strength of various factors affecting and the reasonableness of factors and the design on explicit indexes. REFERENCES [1] Jiang Ming-mei, The Present Situation of Global Web2.0, China Internet Week. Vol. 09, pp , [2] Hu Yan-ping, Report of Status and Trends of China's web2.0, Beijing: Internet Society of China, [3] Timmers P, Business Models for Electronic Markets, Journal on Electronic Markets. Vol. 02, pp. 3-8, [4] Tapscott D, Lowy A and Ticoll D, Digital Capital-Harnessing the Power of Business Webs, Boston: Harvard Business School Press, [5] Osterwalder A, The Business Model Ontology: a proposition in a design science approach, Lausanne: Universite de Lausanne, [6] Fang Zi, Wang Kan-liang, Analysis of Innovation Method of E- Commerce Business Models, Journal of Xi'an Jiaotong University(Social Sciences Edition), Vol. 02, pp , [7] Chen Yi, Sui Dan, The Typology and Comparison of e - Business Mode, Shanghai Management Science, Vol.03, pp , [8] Tim Oreilly, What is Web 2.0? Design patterns and business models for the next generation of software, Communications & Strategies, Vol. 09, pp , [9] Schauer Brandon, Experience Attributes: Crucial DNA of Web 2.0, Adaptive Path, Vol. 12, pp , [10] Anderson Paul, What is Web 2.0? Ideas, technologies and implications for education, JISC Technology and Standards Watch, Vol. 02, pp. 1-56, [11] Zhu Xiu-liang, A New Approach to Business Model Innovation, China Money, Vol 03, pp , [12] Fang Lei, Web2.0 Business Model, IT Time Weekly, Vol. 26, pp.33, [13] Hai Zhong-fan, The Business Model of Blog+SNS, Electronic Commerce World, Vol. 01, pp , [14] Wang Yuan, Business Model and Trend Study of Web 2.0, Journal of Beijing University of Posts and Telecommunications(Social Sciences Edition), Vol. 01, pp.1-5, [15] Dong Xiao-chang, Web2.0 Buzz Again, China Internet Week, Vol. 28, pp.27-30, [16] Zhang Dan, The Business Model of Web2.0: New Shoes to Walk on the Old Path, Computer Week, Vol. 11, pp.12, [17] Xie Zhong-liang, SNS2.0: Can Winning Standard, Electronic Commerce, Vol. 11, pp ,