Evaluation of Ebay and Youtube's Business Models

1.1Introduction

In this report we are going to evaluate the efficiency of two websites YouTube and eBay and looking closely at their business models. The reason why we have chosen to evaluate these two companies in particularly is because of their enormous success in their field making them the leaders with competition lagging far behind. The reason behind their success was the fresh idea and the correctly chosen business model that allowed them to maximize their profits. We will also be analyzing the competition, consumers and the websites design to provide the reader with a closer inside into the company. And we will also be providing models to visually illustrate our point. At the end of our report we will be able to understand why the particular business model worked so well for the previously mentioned companies.

2.1Analysis YouTubes’ of Business model

Youtube is a Web2 application that creates an e-community providing users with an easy way to upload and share videos. Because it only provides a user with a virtual space where 2 parties can meat and does not actually sell any tangible thing, it has to acquire revenue in some other way. Because their running costs are huge approximately $5 million a month, their only safe bet was to relay on advertising business model(Unknown,2006). The advertising plan of YouTube changed a lot during the 5 years of running, it started with just banners now it has traditional banners, sponsorship, partnership, promotions, contextual advertising and now they’re even trying Intromercials and Query-based Paid Placement. All of these ideas have worked pretty well for them by generating a monthly turnover of around $15million a month (Ethan Lyon,2010). Now they came up with a new idea of introducing “Introcomercials” at the beginning of highly watched videos which should generate even more revenue, however they are very hesitant to do so because people that are targeted are mostly people that are easily distracted, meaning...