So many services we are using off the net are free. This blog-editor I am using to make my posts, this hosting service I am using to host my blog, the search engine I used to look up some details before making this post, the e-mail account on which I receive all the comment written on the posts – all of them are free. And exactly how? What is the revenue model for these? The most common one is the advertisements. So, advertisers pay for something I use. And why on earth do advertisers pay for that? Because they expect to earn their revenues from me because of that advertisement. Now, this ad-supported model is not without its flaws. Not always does clicking on ads translate into the revenues of the advertisers. Fine they can find a way to trace the actual purchases made and accordingly pay to the service provider who has placed those ads. But in a country like India, the effectiveness of that would be further limited. How many of the people have credit cards and how many of them are very comfortable shopping online? So, advertiser does not get enough revenues. But imagine being able to place physical goods instead of ads, being able to pick up physical goods off the screen and pay for them in cash (the way you imagine Jaya :O). Forget it – point is not that the goods can be picked up off the screen, but that the advertiser should be able to make money, right? If the advertiser is able to make money, he would be willing to sponsor it.
Now, leave the online world. That isn’t exactly the concern here. I was thinking over the infrastructure development in India. There is lots of talk about private-public partnership, private sector involvement etc. Many of them are working. But still we need more and more innovation in terms of identifying the revenue model, so that the private investment could be attracted in more and more areas. Here are my two cents to the process of innovative business models 😀
Consider the roads in small town and rural areas. A road connecting some villages to the town. A road that will help flourish several economic activities in the village. And we have these consumer goods companies who want to reach the rural market. So, let’s have the outlets on the roads (size, right location, exact model etc. are implementation details, which will be important of course. But right now I am only giving an idea). Let companies invest in the road and get rights to use these outlets. Let’s also give them advertisement spaces. Let these outlets sell and bring in money for the company. The period over which the companies exercise the rights should be long enough to give them attractive return on the investment. And the implementation details have to worked out in a way so as to keep operating costs low. Because you have to price the products so that people actually stop there to buy things. Technology will have a role to play in here. So, there we will have that. Ads and Distribution supported infrastructure/roads.