Classroom Companion: Business

19.4
 Digital Business Models
In a digital business model, the value proposition is related to a digital good or ser-
vice. Typical examples include the business models of Facebook, Spotify, Twitter, 
Wikipedia, Microsoft Windows, and Skype. The definition also includes the busi-
S
1
S
n
S
1
S
2
Text
(+/+)
Stakeholder with name ’S
1
’.
Notations used in the SRM
Group of identical stakeholders with
names ’S
1
, S
2
, ..., S
n
’.
Relationship between stake
holders with description ’Text’.
Network effects between stake
holders indicating positive (+) 
or negative (-) network effects
. . .
. Fig. 19.3 Notations used in the stakeholder relationship model. (Authors’ own figure)
19.4 · Digital Business Models

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ness models of sharing services—such as Uber and Airbnb—since the platform 
that enables mediation between buyers and sellers is digital. Platforms used for the 
sale of tangible goods—such as Amazon and eBay—are also examples of digital 
business models.
Every digital good or service is associated with a unique business model. For mul-
tisided platforms, for example, Facebook, it may sometimes be convenient to specify 
more than one business model. Facebook may have one business model for attaching 
users and another business model for capturing advertisers and other stakeholders 
buying access to data Facebook collects about the users. In this case, there is a strong 
relationship between the models because of strong cross-side network effects.
Definition 19.3 Digital Business Model
In a digital business model, the value proposition is a digital good or service.
7
Case studies 
19.1
, 
19.2
, 
19.3
, 
19.4
, and 
19.5
 present five examples of digital 
business models that have had a substantial impact on the evolution of the digital 
economy: World of Warcraft, Spotify, Facebook, Wikipedia, and Airbnb. These 
examples represent different types of business models since they exploit the various 
fundamental properties of the digital economy differently. 
.
Table 
19.2
summa-
rizes the business models according to type and the most fundamental properties 
exploited by the particular digital service. Note that the business models presented 
in the case studies do not represent an exhaustive list of all business models avail-
able for digital services.
. Table 19.2 List of presented business models. (Authors’ compilation)