این فصل را با ذکر تمام تیترهایش (تاکید میکنم تمام تیترهایش) به انگلیسی ساده و روان خلاصه کن Business Models and Value Creation in the Internet Market










The Internet is increasingly important in the media sector. In the context of Internet management and social media, the following section will therefore focus in particu- lar on the management of companies whose business activities focus on the creation or sale of digital media content via the Internet.1


12.1	Range of Services

A number of different products and services are offered in the Internet sector. These offers can be categorized based on the participating actors—the private consumers (consumer),rms (business), and public institutions (administration). This is shown in Fig. 12.1. Economically relevant are the areas of business-to-business (B2B) and
business-to-consumer (B2C), because high revenues are generated.
In the business-to-business sector, companies focus their Internet offers on other companies. The goal is to optimize the business processes and to reduce the transaction costs as well as to increase potential sales. One example of this is the procurement of marketplaces in which companies can be brought together indepen- dent of their size and respective sector. The objective of the participating companies is an enhancement of procurement productivity, a global procurement and sales marketing and a reduction in distribution costs. The buyers receive the possibility to procure a fair comparison of a large number of suppliers and products. Business-to- business transactions are highly relevant to the Internet media sector in the context of content syndication.
If a company’s Internet offering is aimed at consumers, this is referred to as business-to-consumer offerings. During a service exchange sequence, it is quite
possible that the constellation of providers and recipients alternates. When users,

for example, download a piece of music from an online music portal, they are initially the recipients and the company, on the other hand, the provider in a business-to-consumer relationship. Should the users subsequently place their sub- jective assessment of the music piece at the disposal of the company in the form of user-generated content, the roles are switched. The company is now the recipient, while the users take on the role of the provider.
A relevant feature for the Internet media industry manifests itself in the otherwise characteristically relatively weak consumer-to-consumer sector in the form of peer- to-peer computing (P2P). For example, the P2P network BitTorrent offers private users the possibility to share datales like music or videos with each other. It is assumed that 13% of all PCs have programs installed which enable the access to the
BitTorrent network (Torrent Freak 2007). Even if they are not attributed to the commercial sector, consumer-to-consumer offers (such as BitTorrent) nevertheless have to be regarded as a competitor to commercial music portals.
The consumer-to-business sector at the moment is still classied as rather insig- nicant. Two very signicant offers hereby are, on the one hand, the databases with job applications, in which private people offer their labor to companies and, on the
other hand, the databases with private offers for car sales. Such offers have had a strong impact on the market for job ads as well as on ads for private car sales in the newspapers.
 
12.3   Value Creation Structures	187
	Interactions of Market Participants

The ubiquity of the Internet leads to the interaction of the most diverse actors with each other, in which complex interaction patterns in part prevail. The subsequent discussion will focus on the relevant actors in the media industry and will therefore in particular closely address the content providers and their interaction patterns.
The Internet service providers as well as the associated infrastructure provider are market participants that are of central importance. The Internet service provider (ISP) is the interface between the user and the Internet. A stationary or mobile Internet access is hereby made available to the customer and is billed either on a time or use basis. The Internet service providers for their part work closely with the infrastructure providers to ensure that the various ISPs are connected across continents by means of fast backbone networks.
Both players offer the Internet media providers the hosting of their application and/or the technical infrastructure for the distribution of their services. Depending on their size, the companies reserve for themselves the necessary know-how or procure it on the market from external technology providers or software developers/ programmers. The Internet media providers place various contents at the disposal of the user.
The Internet offers usually have a specic orientation, whereby the focus can, for example, be placed on information, education, or entertainment content. Mixed
forms like infotainment are also frequently encountered, whereby the goal of the broader design of the offer is to attain the highest possible number of Internet users. The content is not always domestically produced. The offers are rather often either complemented by or based on external content. This external content is among others contributed by content providers or franchisers. However, some of the business models of the Internet media providers are based on a direct revenue model. Most frequently encountered are business models which are based on indirect revenue models, whereby great importance is attributed to advertising in general and
to the advertisers in particular.
A further signicant aspect is the focus of the services provider on the user, since the highest possible acceptance increases the spread of their own services. It is particularly within the framework of content procurement that the user can be
integrated through user-generated content and by a high involvement, in the offer created by the service provider. Figure 12.2 presents an overview of the main actors and interactions on the Internet market.

	Value Creation Structures

The value creation of media products in the Internet sector is ave-stage value chain (Baubin and Wirtz 1996). In therst stage,nished content of any kind as well as information for the generation of domestic content is externally procured. Domestic
content is then internally domestically produced in the second stage. The content that is now available is processed and compiled in the third stage (packaging).
The packaging increasingly often becomes personalized, i.e., it is tailored to the individual needs of the customer. One example is the offer of the web browser Mozilla Firefox. This entails an option for the registered user to specify preferences, content, and services that are of particular interest to him. The corresponding offers are then displayed in a prominent position on the personalized start page of the
browser. The provider has to dene subject-specic packages in order to be able to offer such a personalization feature.
The fourth stage covers the technical production. This is the programming of the websites, over which the content will be made available in thefth stage. In this last phase the contents are protected against unauthorized access during transport, which is of high importance. Internet media companies typically do not adopt all the stages of the value chain. Besides the external procurement of content, the technical
implementation of the content management system is often outsourced. The main focus of Internet media companies is typically on the compilation and above all on the packaging of content. Figure 12.3 provides an overview of the entire value chain.


	Core Assets and Core Competencies

The employees, the brand, the networks, and the customer base count as part of the core assets of the Internet media companies. Employees are a core asset particularly in the content compilation sector, since the content constitutes the central core of the service.
The brand is a core asset on the Internet, since it indicates to the users a trustful and efcient provider of the diversity offers provided over the Internet and as such reduces the perceived risk associated with the acquisition and use of online content.
 

Networks are important for the Internet media companies at each stage of the value chain.
A part of the content, for example, cannot be created domestically, but rather procured from other providers through content syndication, for which a network for the procurement of exclusive content is required. Networks are often also used in the production and distribution of content and as such represent a core asset.
Due to the network effects, the customer value of digital goods is enhanced by an increase in the customer base. The range of the customer base therefore has a positive effect on customer loyalty and thus represents a core asset.
The core competencies conducive for the use of the core assets by Internet companies are the content sourcing, the content creation, the format, and the technology. Content sourcing competence is the ability to procure input goods not only in the form of data and information for domestic content production but also in the form of attractive, pre-compiled content for further exploitation.
Content creation competence is the ability to select the content in accordance with the needs of the target group (trend competence), whereby input such as the compilation of appropriate information for the target groups and the conversion of this information into content (cultivation skills) as well as the structuring of the content in a manner that is comprehensible for the user (structuring competence) is of decisive importance.
Format competence is of great importance in regard to positioning in the user market. It describes the ability to develop new and attractive content formats. An important part of the format competence is the access to content formats in terms of their market appeal and renancing potential. Thus, format competence is of great importance for the product policy of the Internet media companies.
The technological competence is of great importance to Internet media companies in the highly technology-driven Internet sector. Convenience benets for the user and efciency gains in the companies can be achieved through superior use of technology in content management or by the billing. It is as one of the most
important core competencies of the Internet media companies.

	Business Models

The service offer of the companies will be used as a delineation criterion for the different business models. The business models of the Internet industry in the business-to-consumer sector can be classied on the basis of the 4-C model into segments: content, commerce, context, and connection (see Fig. 12.4).
Hereby the content segment covers the range of digital content like online news or music downloads, whereas the initiation, negotiation, and/or settlement of transactions on the Internet takes center stage in the commerce segment.
The marketplaces for companies (e.g., Covisint), auction houses (e.g., eBay), shopping mall providers (e.g., Amazon), and the Internet presence of manufacturers (e.g., Varian Medical Systems) are highlighted in this context. The context segment entails the classication and systematization of the information that is available over
the Internet. This pertains in particular to search engines and web directories. The connection segment, in conclusion, pertains to providers of products that bring about the possibility of an information exchange. This includes Internet-based communi- cation offers as well as the access to the Internet itself.
The services of Internet media companies thereby limit themselves traditionally to the content business model, which places the creation or else provision of digital content over the Internet at its forefront. Over the last few years, a trend to an integrated business model across all the 4-Cs can be observed as a result of the convergence within this industrial sector (Wirtz 2018).
A former pure player, whose web directory offers originally focused only on the context segment, is Yahoo!. Meanwhile Yahoo! offers connection products such as
“Yahoo! DSL”and Content products such asnancial market information“Yahoo! Finance.”Due to this development toward integrated offerings, all four basic business models on the Internet will now subsequently be explained in broader
terms, whereby the focus will be placed on the content business model.
In the following, the revenue and service provision models in the Content segment will be portrayed before the special features of the business models; content, commerce, context, and connection are individually discussed in detail. The revenue model of the content companies has several special features. The different forms of revenue can be differentiated based on the criteria: direct versus indirect revenue generation, as well as transaction-based versus transaction- independent revenue generation (see Table 12.1).
Whereas the direct transaction-based revenues of content companies pertain to user fees for the number of downloads or the time use, subsumed under the direct transaction-independent revenue are the base fees that are levied for the provision of
a regular, potential use of Internet content. The importance of the respective forms of revenue varies signicantly across the individual Internet media companies. An
isolated use of the revenue models is rarely encountered. The case is rather that several different forms of revenue are combined. An important business decision of Internet media companies is the combination and weighting of the different forms of revenue in order to optimize the source of revenue stream.
The focal points of the service provision of content companies are the procure- ment, production, and distribution of content. Of particular relevance for the man- agement are the cost and revenue structure of service provision. They allow for the identication of potential savings and revenue increases. An ideal type of cost and
revenue structure is very difcult to dene, because the individual content providers
vary extremely.
Thus, the cost and revenue structure is, for example, subject to the format of the content and the life cycle of the company. An above-average share of direct revenues can, for example, be assumed for technically complex formats such as online video
and audio, since the willingness of the users to pay for such products tends to be classied higher. The cost structure of companies in an early life-cycle phase is often characterized by a high share of research and development costs. Another character- istic of young companies is that they often report negative prots.
Figure 12.5 provides an overview of the cost and revenue structure of the
manufacturing in Internet media companies, whereby the provided values pertain to averages. The share of the total advertising revenues is, at about 82%, the highest. The remaining revenues are derived from Internet services that are subject to a fee, such as broadband services, music downloads, premium mail, etc.
The costs of the content providers are almost exclusively comprised ofrst copy costs. This is mainly attributed to the fact that no physical media (like paper) are used
for the service distribution in the content segment. The easy reproducibility of the digital content therefore leads to the above-describedrst copy costs effect that is accountable for the reduction in the unit costs due to rising salesgures. The cost of the content production that also entails the costs of the content procurement can, at
about 42%, be seen to represent the largest cost block.
	Content

The content business model consists of the collection, selection, systemization, compilation (packaging), and delivery of content on a domestic platform. The aim of the business model approach is to make the content accessible to the user over the Internet in an easy, convenient, and visually pleasing form. The offered content can be informative, educational, or of an entertaining nature. The content business model is accordingly further subcategorized into the business models subcategories E-information, E-entertainment, and E-education.
A fourth subcategory is E-infotainment, with an emphasis on a hybrid of infor- mational and entertainment content. Figure 12.6 shows the entire content business model.
E-information providers place the informative character of the content at the forefront of the value proposition. Content is informative for the users when it entails information for the solution of a problem or covers a general or socially relevant area. Politicians, for example, are very keen on using the Internet to transfer information in order to win voters or to in general spread party-political information. An increased demand for problem-solving information is, for example, information which is derived from the economic sector, in the event that a credit or investment decision has to be made.
Entertainment content serves the users as a form of pastime as well as for diversion and relaxation, and as a means of distraction from everyday situations, and represents the core of the service offer of the E-entertainment business model. The delineation to the informative content pertains to the fact that the multimedia data recorded by the user cannot directly be used to solve a problem or accomplish a task beyond the scope of the media use.
The integration of entertainment and information aspects is realized through the E-infotainment business model. The summary of relevant information with multi- media aspects of entertainment value is for the most part attributed to the aforemen- tioned trend, whereby media companies prefer to diversify their service offers rather than take on the role of a niche provider in order to increase the number of active users. This strategy is further attributed to the revenue model conventionally used by the content provider that is for the most part indirectly based on the advertising revenue in order to make the offered content freely available.
Overall, educational content can, of course, be stimulating and entertaining. However, electronic educational content (e-education) has one distinguishing char- acteristic in common, i.e., that it works specically toward a learning process
 

through didactic preparation and conrms that a user has gone through this learning process through a document, such as a certicate of participation. E-education can be further differentiated into virtual universities and adult education (public education),
such as Vu.org or Onlinelearning.com.
In summary, it can be stated that the content areas e-information, e-entertainment, e-infotainment, and e-education described above are characterized by different content objectives and represent subcategories or business model variants of the higher-level content business model. Figure 12.7 shows an example of a content business model.


	Commerce

The commerce business model entails the initiation, negotiation, and/or settlement of transactions over the Internet. The business model can accordingly be further subcategorized into the business model subcategories E-attraction, E-bargaining/E- negotiation, and E-transaction. E-tailing as a further subcategory covers the entire process of selling goods and services to consumers over the Internet. Figure 12.8 provides an illustration of the commerce business model.
The business model subcategory E-attraction refers to all measures that support the initiation of transactions. These factors can, for example, include the banner placement and the provision of marketplaces. Hence, other commerce business models are in turn possible in these marketplaces. The sector that pertains to the business relationship among the consumers, so-called C2C-relationships, is hereby becoming increasingly relevant. These arise, for example, over the eBay platform, when a private provider sells to a private bidder. Since the eBay platform is in the meantime also used by a large number of professional providers, B2C transactions are also handled and, where appropriate, even B2B transactions.
The business model subcategory E-bargaining/E-negotiation focuses on the negotiation of the terms and conditions. An important parameter that often remains to be negotiated for a given product or service is often only the price or else conditions of purchase. Auctions represent a pricing service which is frequently used in this context.
The provider of the service must not necessarily moderate or have to take on the role of conducting the negotiations in such business models. The well-known example of the auction house eBay shows that the subject of the business model can already pertain to the provision of the technical platform, on which the providers and buyers then conduct their negotiations.
Price-seeking is another business model subcategory in the E-bargaining/E-nego- tiation sector. The customer in price-seeking makes his offer known for the desired product. Then, the company determines the fairest offer for the product selected. Price-seeking offers have gained increasing relevance in recent years. An example of this business model subcategory is pricegrabber.com.
The business model subcategory E-transaction is devoted to the settlement of transactions conducted over the Internet. The E-transaction subcategory in turn can

be subcategorized into payment cultivation and delivery. A payment system that is specically designed for the settlement of transactions over the Internet is, for example, PayPal. It is hereby possible for Internet users to send and receive money in over 200 countries.
The delivery can in addition to the payment cultivation also be counted as a subcategory of the transaction sector of the business model. The distribution of information-based products such as software can be conducted directly over the Internet. Physical products in contrast are shipped by traditional means to the customer. Insofar as the domestic distribution capacities of the manufacturer or else dealer are not used, the assumption of the shipping services is borne by external service providers such as FedEx or United Parcel Service (UPS).
Electronic retailing (also referred to as E-tailing) covers the entire process of the selling of goods and services to consumers over the Internet. Online retailers therefore often offer an integrated offering comprised of multiple commerce services—from the presentation of the offer, up to the settlement of the transaction. Some major online retailers in the meantime go on to even take on E-bargaining
offers. Amazon.com can be cited as an example of a successful online retailer.
After the products or services have been delivered by the various manufacturers, they are collected and then systematically presented to the customer. Incoming customer orders are received. Subsequent to payment (e.g., direct debit or bank
 

transfer), the orders are then internally routed further and the products packed and shipped.


	Context

The focus of the context business model is the classication and systematization of the information that is available over the Internet. This function can be subcategorized into search engines, web directories, and bookmarking services
(see Fig. 12.9). The use of context offers has thereby been increasing for years, whereby studies show that 5.6 billion search queries were made daily worldwide in 2017, of which about 92% were processed only by Google (Live-Counter.com 2018).
Context providers in the E-business sector can be further distinguished in that they primarily do not offer their own content, but rather offer navigation aids, and increasingly take on the role of an aggregator on the Internet. The users consequently often set a context page as their home page, from where information, interaction, or transaction offers of other providers are accessed by the respective user. Complexity reduction is also a major task of the context provider in addition to the essential navigation aid for the user.
The information is compiled by the context provider according to specic criteria and clearly presented to the user in a context-specic manner. The objective is to
 context business model. Source: Wirtz (2001a, 2019a)
 

improve market transparency and to achieve a continuous improvement of the returned search results.
Internet search engines are generally represented by the E-search business model which can further be subcategorized into general search, special search, meta search, and desktop search. Thereby, the basic function of a search engine relates back to the information retrieval system. Search queries are submitted to the search provider and return search results of the indexed inventory of the collected information sorted according to the frequency of use. The returned information is sorted based on the use frequency of other users.
In contrast, web directories as well as the ofine versions, such as the yellow pages, are in most cases subject to editorial control and allow a better average quality
or relevance of search queries compared to the traditional search engines.
Bookmarking, as a further subcategory in the context sector of the business model, has only gained special prominence pursuant to the developments within the framework of Web 2.0 or social media. E-bookmarking describes the collabora- tive indexing of Internet-based information by the users. Therefore, keywords can be assigned in the web browsers through Web 2.0 applications, so that other users with
similar search queries cannd the information faster. This type of indexing is particular successful with respect to well-dened user groups since the information can be efcientlyltered according to the target group relevance. Furthermore, the decentralized storage of bookmarks facilitates an independent use apart from the
private device.


	Connection

The connection business model addresses the establishment of options for informa- tion exchange in networks. Thus, the services of the connection business model often enable the interaction of actors in virtual networks that would not be possible in the physical world due to the prohibitively high transaction costs or due to commu- nication barriers. The connection business model can be subcategorized into an intra-connection subcategory and an inter-connection subcategory. Figure 12.10 provides an illustration of the connection business model.
The intra-connection subcategory of the business model describes the offer of commercial or communication services within the Internet. This includes, for exam- ple, the community sector, which can be subcategorized into social networks, social messages, customer exchanges, as well as customer opinion portals. In all these subcategories, a platform is offered to the users in order to establish contact with peers or friends and to further share information, knowledge, opinions, or also data
les.
Due to the hype about new Web 2.0 and social media applications, the platforms
of the social networks are currently attracting the most attention, achieving strong growth in number of users. Aside from the community subcategory of the business model, mailing services such as gmail.com is another subcategory of the intra- connection. Email or greeting cards can be sent via these providers. Mailing services
are mainlynanced through advertisements attached to emails sent, through banner advertising, or the provision of so-called premium accounts with extra features such as increased storage space.
Providers in the inter-connection subcategory do not offer communication opportunities within the Internet but supply access to the physical networks. This includes, for example, the Internet service provider (ISP), which enables customers technological access to the Internet.
While using axed connection the user is locally bound, i.e., there is only a wired dial-in option into the network at axed location, the M-connection user in contrast is not bound to a specic location and can, for example, dial mobile into the Internet via smartphone. With regard to the physical connectors, direct revenue models
dominate. They are usually represented as transaction-independent setup and/or basic fees as well as in the form of transaction-based connections and/or usage fees. Due to the high usage intensity and the related attractiveness as advertising
 

media and transaction agents, the companies often also pursue indirect revenue models.


	Business Models in Social Media

Due to the increasing acceptance and growing commercial use and dissemination of the Internet, online marketing and digital business models have become a key success factors for companies.
Social media plays an important role in this context (Aral et al. 2013; Wirtz and Ullrich 2008), consisting of innovative platforms and applications with high poten- tial to shape the future of the Internet. Users and providers collectively dene and shape the content through collaborative participation and thus determine the devel- opment of social networks (Turban et al. 2015). The aim of social media applications
is the distribution of content and the networking between users (Laudon and Traver 2017).
The development of information and communication technologies is shaped by a fundamental increase in users of social media applications. Both customer and corporate side have signicantly contributed to the increase in attention on social media in recent years (Laudon and Traver 2017). Given the widespread dissemina- tion of social media, it has become increasingly relevant in the context of media
management and with regard to respective digital business models. Since the year 2005, social media has signicantly changed the Internet economy, giving rise to a variety of hybrid business models and leading to a particularly strong hybridization of“traditional”Internet companies.
When investigating social media, one often comes across the term Web 2.0. Since
both social media and Web 2.0 are relatively youngelds of research, there is no clear demarcation between these two terms. In the academic literature, both terms are frequently used with similar meaning. Most denitions of social media and Web 2.0 combine characteristics such as interaction, dialogue, networking, and user-
generated content.
The focus of interest within social media and Web 2.0 is the exchange of information, experience, and perspectives in online communities (Wirtz and Elsäßer 2012). Against this background, this sectionrst discusses the differences between Web 2.0 and social media. The heart of Web 2.0 is the communication or interaction between Internet users (O’Reilly 2005; Little 2007). It uses basic functions that
allow the user to continuously contribute and modify web content. Web 2.0
technologies are, for example, (Kaplan and Haenlein 2010):

•	Adobe Flash: Common method for programming and displaying multimedia and interactive content, such as animations, audio, and video streams
•	RSS (Really Simple Syndication): A web feed format for simple and structured publication of consecutive changes on websites
•	AJAX (Asynchronous JavaScript): A technique for obtaining data on web servers to update web content without altering the layout and operation of the website

Social media, by contrast, is a group of Internet applications, technically and ideologically based on Web 2.0. They allow to post and exchange user-generated content. Hallmarks of user-generated content are:

•	Publishing on social media platforms
•	A degree of creative personal contribution
•	Contributions outside of professional routines and practices (Kaplan and Haenlein 2010)

Figure 12.11 compares the characteristics used in the literature and gives respec- tive examples.
Against this background, the term social media comprises different features and aspects and is thus dened as follows:

 

Social media offers companies a variety of applications to communicate with customers and other stakeholders (Dahnil et al. 2014). From a channel perspective, there are several social media applications that have to be taken into account (Scott 2015). Table 12.2 provides an overview of current social media applications, using
an exploratory classication of business models, service offers, and the delivered user value.
Social networking refers to platforms that use computer-mediated communication to link individuals in groups or communities, so-called social networks (Laudon and Traver 2017). Examples of social networking sites are Facebook, Twitter, or Instagram. The business model of social networking includes the compilation and provision of user-generated content on a single platform, generating revenue based on ad sales and data mining.
The service offer provides the opportunity of self-presentation for the users, as well as networking among users and between users and content. Thus, users can basically present their proles on the web and interact or network with other users. In particular, the mediation of social contacts through digital interaction and the high suitability for use in the mobile environment provides value to the user. These social
media applications can be quickly and easily set up to start interaction and thus are highly relevant within an e-business setting (Scott 2015).
Due to their scope and growth in recent years, social networks are among the most popular applications in the social media business (Beynon-Davies 2013; Wamba and Carter 2014). One of the world’s most popular social media applications is WhatsApp with around 1.5 billion users in January 2018 (Statista 2019a). With approximately 2.38 billion users, Facebook, the company that owns WhatsApp, had
even a larger user group in March 2019 (Facebook 2019). But also Instagram with around 1 billion (Statista 2019c) and Snapchat with 3.5 million have high user numbers (Buggisch 2017). The business network LinkedIn has approximately 546 million users (LinkedIn 2019).
Blogs and RSS feeds provide online publishing opportunities for businesses and organizations and enable visual presentation of content (Laudon and Traver 2017). These technologies reside more or less between traditional print and broadcast media and mainly serve information purposes. Some of the most popular blogging platforms include Blogger.com and Jimdo.com.
The business model of blogs and RSS feeds involves the systematization and compilation of online diaries and generates revenue based on ad sales, usage or subscription fees, and data mining. Its service offer entails the provision of an
authoring tool for creating blogs, as well as the hosting and categorization of blogs. The opportunity of publishing and visually presenting unltered and personal content represents the core user value. Overall, these applications are quickly and easily set up and thus reect helpful tools to keep customers informed.
Microblogs represent a more specic type of blogging through which users can
publish short messages that often have less than 140 characters and that can be made accessible to the public or a selected group of people. Twitter is the world’s leading and by far most frequently used microblogging service.
 
The business model of microblogs includes the compilation and provision of user-generated content on a single platform and generates revenue based on ad sales and data mining. In particular, the fast and convenient opportunity to publish and the high suitability for the mobile context provides value to the user. For companies such a service may be an important mean to approach the general public, bind customers, and advertise their own brands and products.
In addition to blogs and social networks,le exchange and sharing is another type of social media. Among the most popularle exchange and sharing websites on the Internet are, for instance, YouTube, Flickr, and SlideShare. These platforms spread
multimedia content like photos or videos usually uploaded by users. File exchange and sharing applications allow users to share media content, which here primarily refers tole transfer and content distribution. Accordingly, the business model ofle exchange and sharing contains the archiving and systematization of user-generated content (e.g., videos), generating revenue based on ad sales and data mining.
The service offer entails the provision of online storage and the systematization of content, for instance, through categorization and ratings. The opportunity of broad- casting for“everyone”and the access to a large number of users or audience represents the core user value. These services also offer their members social
 

features. For instance, users can watch, rate, and comment on videos published by companies on YouTube. The comment feature also allows companies to communi- cate with users. However, many users of these websites do not have a membership but only visit them to look at photos and videos.
If companies have an own channel on YouTube, users can subscribe to this channel to obtain information on a regular basis and to be able to directly access further video posts of the company. These posts, for instance, may also contain product and service offers, as well as information with regard to discount promotions or new products. Overall, these applications can provide a lot of potential for businesses by informing users through additional media channels. Unfortunately,
professional and sustainablele exchange or sharing communication usually requires expensive and complex preparation, like video shootings, photographers,
etc. (Sheldon 2015).
Rating portals such as yelp.com are further important social media applications that foster independent product and service reviews. This creates market transpar- ency, supporting and inuencing decision-making processes of users. Especially this characteristic makes rating portals a double-edged sword. Digital word-of-mouth
recommendations enjoy considerable trust among users and negative impressions may hinder e-business service provision. Hence, companies have to care for objec- tive online feedback and actively manage associated web content (Yoo et al. 2015).
The business model of rating portals involves the aggregation and systematization of product and service-related information, generating revenue based on agency commissions, ad sales, and data mining. The service offer comprises the aggregation of product and service information, the provision of user-generated reviews of products and services, as well as price comparisons with links to online stores. In
particular, the independency of reviews from other users, as well as the simplica- tion and support in the decision-making and buying process provides value to
the user.
Instant messengers such as WhatsApp or Viber are social media applications that allow users to quickly and conveniently exchange messages. More specically, their business model includes the exchange of text, audio, and video messages and content, generating revenue based on subscription fees, cooperation with companies, and data mining. The service offer accordingly includes the instant exchange of push
messages, as well as support of data, audio, and video streams. The value for the user lies particularly in the speed and convenience of exchange and the high suitability for use in the mobile context.
The most famous example of an instant messenger is the mobile messaging app WhatsApp that has pretty much replaced the function of SMS use on mobile devices. Beyond normal text messaging as well as audio and video calls, WhatsApp users can create groups and send each other images, video, and audioles without limit. Companies are increasingly using WhatsApp to communicate directly with their
customers and to inform them about company news.
Podcasts are helpful tools that enable users to consume online content at any place and at any time. Popular podcast providers are, for instance, Libsyn or podcast.com. Similar to blogs and RSS feeds, podcasts allow a quick and easy setup of an
 

additional online information application. Users can subscribe to these podcasts and stay informed about the respective content.
The business model of podcasts contains the provision of audio or video content, generating revenue through pay-per-use and subscription fees, as well as ad sales. The service offer not only comprises topic-specic audio and video content, but also the possibility to subscribe to respective offers. In particular, the location and time- independent use of content provide value to the user.
Wikis are collaborative platforms that serve as community-based knowledge creation and sharing exchange stations. Users aggregate subject-specic information and participate as collective editorial team, creating extensive knowledge encyclopedias. Thus, wikis provide an excellent opportunity for collaborative knowledge creation between users andrms in an e-business setting.
The business model of wikis entails the collection, systematization, and further
development of information, generating revenue from donations. The service offer comprises tools for creating and editing content, as well as the provision of a platform for searching and presenting information or knowledge. The value for the user lies particularly in the aggregation of subject-specic information, the freedom with regard to content and authors, as well as the collective creation process among
users with regard to editorial work.
Tagging and social bookmarking applications such as delicious.com classify and systematize Internet offers through the individual editorial workup of bookmarks. Accordingly, the business model of tagging and social bookmarking services consists of the classication and systematization of Internet offers, generating revenue based on the sale of click streams for data mining purposes. The service
offer comprises the central archiving and ubiquitous availability of bookmarks, as well as the tagging of bookmarks and the access to link collections of other users. Thus, users can also share their links with other users and create common collections. While the individual editorial workup of the Internet provides value to the user, service providers can market their portal by creating the possibility to tag their service offer. Apart from that, companies should seek to be present on tagging platforms to create user awareness and actively market own bookmarks.
Online forums such as topix.com are technology-based and topic-oriented dis- cussion platforms on the Internet, where users can publish content and share their thoughts, opinions, and experiences with other users. The exchange of information follows the principle of a bulletin board or starts with an initial user post to which other users respond. The resulting thread is mostly presented in chronological order. Moreover, moderators or administrators usually monitor online forums.
The business model of online forums includes the compilation, classication, and provision of user-generated content on a single platform, generating revenue based
on ad sales and data mining. The service offer refers to the exchange of archiving of thoughts, opinions, and experiences. In particular, the increase in knowledge, the problem-solving through the community, as well as the structured documentation of topics and opinions provides value to the user.
Mashups such as parkincarma.com describe the creation of new content based on combinations of already existing content. In the context of e-business, the business
 

model involves the combination of different online software products or API services, generating revenue through ad sales and membership fees. The service offer contains the creation of new media content by recombining already existing content. The value for the user particularly results from the synergies between the diverse social media applications and the associated time saving.
Given these social media application characteristics, social media can be gener- ally expected to become more and more important for B2C communication and interaction (Huang and Benyoucef 2013). Against this background, social media adoption will constantly increase, making it a top priority on every e-business agenda (Wirtz and Göttel 2016).
Furthermore, microtargeting increasingly plays a signicant role in the context of social media. In this context, microtargeting refers to gathering data or information about individuals via social media and using it to target and approach specic target groups with personalized messages. For example, microtargeting is regarded a crucial driver of President Trump’s success in the US presidential election 2016. More specically, Trump’s election campaign was supported by a company that created personal proles of potential voters based on their likes on Facebook and then targeted them with personalized marketing messages (Forbes 2016).
However, it is essential to consider carefully the desired social media purposes with their respective benet potential. Against this background, blogs and content communities should be mainly used for information purposes, while social network- ing sites are rather suitable for B2C interaction. Apart from that, wikis and podcasts are helpful tools to build up knowledge-creation platforms, as well asle exchange
and sharing platforms that support information diffusion through respective
applications (Sheldon 2015).
It is characteristic of social media that almost all tools can be linked to each other or integrated. This represents an important feature of social media, since most members of a particular social network are often active in other platforms as well. Examples of integration (or mashups) are:

•	The Facebook page of a company can be linked to its Twitter account to present tweets outside of Twitter.
•	YouTube videos can be embedded in the company’s blog or Facebook page.
•	If a company links bookmarks on	delicious.com, other blogs can automatically publish their posts.

Altogether, the abovementioned deliberations suggest that social media have specic characteristics that distinguish them from other media. However, the litera- ture lacks a systematic analysis of the broad characteristics and trends associated with social media, even though such a framework would clearly be useful for Internetrms by offering a clearer picture of the new challenges and opportunities
involved, as well as indicating ways in which their current business models should
be strategically adapted (Wirtz and Göttel 2016).
A suitable approach to explain the characteristics and the opportunities in media management through social media is the Social Media Four Factors Model (Wirtz
 

et al. 2010). This is one of the few integrated models of social media, which is empirically validated (Wirtz et al. 2013a). The four dimensions of the model are:

•	“Social Networking”: Networking of groups and individuals via Internet platforms and applications
•	“Interaction Orientation”: Interactions between companies and users on social media applications
•	“Customization and Personalization”: Segment-specic alignment and adjust- ment of the market offers to the needs of users or user groups
•	“User-Added Value”: Value created for and by users on social media platforms

The four dimensions of the Social Media Four Factors Model are each composed of several components. Figure 12.12 illustrates these dimensions and their components.
Interaction orientation represents the ability to effectively manage the demand of the general public for more intense and more authentic two-way communication businesses (Rayport et al. 2005). This factor manifests itself in four important subfactors: customer centricity, interaction conguration, customer response, and cooperative value generation.
Customer centricity puts users at the center of attention and orients the business activities toward the users. This brings along a major paradigm shift for many businesses, which requires a strategic and operative reorientation toward the cus- tomer. Interaction conguration particularly refers to the structure of the interaction process, focusing on the content of the information exchanged and the interaction
partners involved, as well as the reasons and motives underlying the interaction.
Customer response describes a company’s capacity to manage the dialogue with the customer, especially referring to its ability to react appropriately to user requests or feedback in order to establish sustainable relationships to users and thus to achieve 
customer loyalty in the long run. Cooperative value generation is closely connected to this component and reects a company’s ability to integrate the users into the respective business processes in order to cooperatively create value. For instance, the company may improve products or services according to the respective user feed- back (Wirtz et al. 2010).
The factor customization and personalization refers to the possibility for users to customize websites, applications, and online offers to their needs and preferences. It is composed of the subfactors personal customization, group customization, and social customization. Personal customization gives users the opportunity to recon-
gure a portal or website to their particular needs and preferences. For instance, Facebook users can select whether they would like to receive email notication when there is a status change or a new post on a Facebook fan page.
Group customization enables a group of individuals connected through the Internet to design, build, or recongure platforms, products, services, and so on. Businesses, for example, may consult customers for the naming of new products. Their suggestions are subject to ratings by other users and an ofcial jury thatnally
decides. Social customization refers to customized products or services that are primarily offered to distinct social layers.
User-added value is concerned with value creation through involvement of users that contribute content, creativity, innovation, and contacts and thus add value through new information and innovation. Accordingly, this concept comprises various phenomena, including user-generated content, user-generated activity, as well as user-generated innovations and revenue/contacts.
User-generated content covers various content types including proles, video or audioles, as well as other website content (e.g., recommendations or reviews). In the same way, users can participate through user-generated creativity, contributing a
completely new perspective and bringing in innovative ideas for the further devel- opment of companies.
 

In the context of user-generated innovation, this is how they become a critical part of product and process innovations. This kind of user involvement has been strongly facilitated through open-source programs and APIs (application programming interfaces) (Wirtz et al. 2010).
The component of user-generated revenue/contacts describes the possibility of expanding the range of service offers through user contacts, as well as the resulting added value (Goh et al. 2013). Companies can benet from active users in various ways, for instance, through user recommendations of interesting fan pages on Facebook. This kind of ability to attract and benet from new users has become an
important value driver for companies in theeld of e-business.
Social networking describes structures of online interactions among individuals
and consists of the four subfactors social identity, social trust, digital word-of-mouth, and increasing customer power. Its underlying concept is the connection of individuals and social groups via online applications and platforms that are often based on certain topics (Beynon-Davies 2013).
User participation in social networks is mainly driven by the search for social approval and the desire for group membership. Social networks are of vital impor- tance since the information put online in these networks becomes a trusted source of
knowledge for various personal decisions. The subfactor social identity refers to the users’desire to belong to a specic social group and to manage their image in particular online environments. These can be fullled, for instance, by means of specic company channels on YouTube.
Social trust is similar to social identity as it builds upon the behavior of people, who believe that benecial behavior in their interactions with others will conversely lead to benecial behavior from their side. This underlying belief creates condence in the information provided by other users. Examples are wiki projects and collabo-
ration projects.
Digital word-of-mouth is also closely related to the two abovementioned subfactors but rather refers to informal information exchange between users through email, blogs, and review websites and so on. Increasing user power is a result of rising interaction through social media, since it creates transparency and user
opinions become ubiquitously available. In this connection, users act as multipliers, for instance, by sharing and linking a company’s fan page on Facebook they have liked (Wirtz et al. 2014b).
Summing up, the Social Media Four Factors Model provides a clear conceptual guidance as well as the key characteristics for using and adapting suitable social media applications. The performance of social media business is based on various social media applications that involve social media users. These applications enable
the fulllment of the respective challenges regarding the factors of the different dimensions of the Social Media Four Factor Model to meet the requirements of the
users involved.
Apart from the systematic analysis of the broad characteristics of social media by means of the Social Media Four Factors Model presented above, a systematic
 

analysis of trends associated with social media reveals two major developments the social media landscape has been undergoing recently.
On the one hand, social media services are becoming increasingly concentrated within a few companies through strategic acquisitions. Facebook, for example, has acquired more than 50 companies since its formation in 2004. Among its most famous takeovers are the photo-sharing application Instagram for 1 billion USD in 2012 and the mobile instant messenger WhatsApp for 19 billion USD in 2014. Moreover, Facebook also tried to buy the image messaging service Snapchat in 2013 but the 3 billion USD acquisition offer was turned down by Snap Inc.
On the other hand, social media offers are increasingly assimilating or converging in terms of their set of features. Facebook and Twitter, for instance, have repeatedly imitated certain features of each other in the past. While Facebook adopted the so-called hashtag feature from Twitter, the latter introduced a title picture in addition
to the prole picture, shortly after Facebook had launched this feature. Other social media providers pursue a similar strategy. Snapchat, for example, was originally a
messenger app through which users could send each other pictures that were automatically deleted after a short period. In the meantime, it has developed more and more into a service like WhatsApp, which is more suitable for the mass. Just like with WhatsApp, Snapchat users can now also send each other videos as well as text and audio messages or make phone and video calls.
This convergence of social media offers or emergence of me-too products especially results if an acquisition is not possible. If a company cannot take over its competitors, it needs to imitate their products or create similar ones in order to cannibalize their success and prevent them from maximizing their market shares.
Moreover, companies seek to keep their users in their own product world and prevent user churn particularly to those competitors with similar value propositions. From a strategic point of view, a main reason why Facebook acquired Instagram and tried to take over Snapchat was not only because both companies were innovative start-up players with similar value propositions but also in response to user churn with regard to younger users who increasingly prefer to use Instagram and Snapchat (iTech Post 2016).
Another signicant reason for such strategic acquisitions is user growth. For instance, when Facebook took over WhatsApp, it acquired about 500 million active
WhatsApp users. From a strategic perspective, companies aim to achieve a high user base to use it as a strategic barrier to market entry and thus to increase their market power.
Finally, the abovementioned acquisition and convergence strategies also repre- sent measures for companies to achieve their goal of an integrated product or service portfolio. If companies accomplish to cover and satisfy the full range of user needs, the user is likely to have no reason or desire to leave.