# Business Models for the Internet of Services: State of the Art and Research Agenda
## 2 Theoretical Foundation
### Business Model  
A business model is a \"conceptual tool containing a set of concepts and relationships to express a business logic. It must consider which relationships allow a description and representation of what value is provided to customers, how this is done, and the financial consequences\" [16].  
The business model has been employed mainly in trying to address or explain three phenomena: (1) e-business and the use of information technology in organizations; (2) strategic issues, such as value creation, competitive advantage, and firm performance; and (3) innovation and technology management [17].  
Although there is a consensus on how important a business model is for the business' success, the literature has yet to conceptualize what business models do and how they intend to create new structures for an innovative market [8]. The emerging Business Model Innovation (BMI) literature raises new applications as servitization, open innovation and dynamic capabilities [18]. Nevertheless, \"little is known about how a shift toward service-driven models affects the firm's existing business model and the structure to support the new business model\" [19].  
Despite the various terminologies and the lack of a uniform taxonomy for building a business model, an approach accepted both in the practice and literature [20; 21; 22; 23] is the Business Model Canvas developed by [PERSON] & Pigneur (2010) [24]. It identifies nine building blocks or components including customer segments, value proposition, channels, customer relationships, revenue streams, key resources, key activities, key partnerships, and cost structure.  
The Business Model Canvas representation is understood as interrelated building blocks that address the four meta-components: value proposition, value creation, value delivery and value capture [20].  
The analysis of the business model dimensions is crucial for designing a solution considering the key functions of an organization. \"The mechanisms for creating, delivering, and capturing value reflect components that are well understood in the BM and BMI literatures--namely, value proposition, target segments, value chain organization, and revenue capture mechanisms\" [18].  
Instead of explaining business solely through individual activities such as marketing and R&D, or through mechanisms influencing business outcomes such as value chain or pricing, the research on business models highlights the development of holistic, multi-dimensional, system-level business model frameworks [17].  
There are several types of business models for digital services, which present different payment methods and exploited properties. Among the examples discussed by [PERSON] and [PERSON] [25], there is the subscription model in which users pay a fee for using the service, like in the massive online game World of Warcraft. There is the freemium model, when some users receive the service for free while others pay for using the service, e.g., Spotify. There are the multisided digital mediation platforms, such as Airbnb, in which the users pay for the mediation services provided by the platform.