Saturday, 20 October 2012

The Internet Business Model




I had told a colleague that I had created a web application.After the usual congratulations about building something, an inevitable question followed.  "How are are you going to make money?"  I have since gotten used to this question; almost everyone asks it.

Well I told him the usual form of making money online like advertising and charging for the service. He seem to understand the advertising method even though he had doubts about it's viability given the limited presence of businesses in Africa on internet. You just don't see them advertising online thus his skepticism.

About charging for the service he just couldn't understand how one could charge for the service given the limited availability of online payment methods available local. Besides that he also pointed some of the most useful websites like Facebook are free and even if he had the payment method he wouldn't pay.

I just couldn't find a way of convincing him of the viability of the internet business model that I had told him. What he thought was the business model for companies like Facebook and Google is that telecommunications pay them according their use. He argued that telecommunications are the one who make money by charging for internet access; something which they do exorbitantly. They should be having some form of agreements on revenue sharing with the developers of the applications, he continued reasoning.


When I told him there are no such agreements he was baffled and  told me that he still felt that telecommunications must share their revenue with developers. This idea I have found is shared by many people in Africa. Everyone you have discussion with always suggests this showing that internet business model is still unfamiliar  to a lot of people here.

The idea of internet business is still confusing here and it will be a long way before the ordinary people can understand it. This means that raising money from friends and family is going to be very difficult. Even raising  money from prominent business people is still a long way. Africa will have to wait for foreign investors who are also still skeptical of it.

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