Online Businesses Are Changing Their Business Model

Business Week:

In February, a cool Web startup called AllApartments changed its name. While it was at it, the company rehauled its business model. What started out two years ago as a simple online listing of apartment rentals available in the U.S. suddenly was something far more provocative. The new business, called SpringStreet, still sells ads on its site, where it lists some 7 million apartments. But now the startup wants to make money in completely new, weird, and unexpected ways.

These days, the San Francisco-based company throws in quotes and deals on furniture, moving-truck rentals, and loan possibilities–all for free and often at a discount. SpringStreet makes money by collecting transaction and commission fees from about 35 partners, including Visa and Ryder Moving Services (R). Every time a consumer requests a car insurance quote or applies for a loan, SpringStreet gets a fee that starts at $4. ”We want to provide people with free services and save them money,” says Sophia Kabler, SpringStreet’s vice-president for marketing. ”The good part is, we make money off of all that.” And how. SpringStreet expects the new fees to account for nearly 50% of revenues this year.

Like SpringStreet, online businesses old and new are re-creating themselves, jolting their rivals, and sending their investors scurrying for their calculators. Let’s face it, a lot of the ideas will be duds. But amid the dozens of wacky proposals, propositions, business makeovers, and other E-business madness, ideas are taking shape that will define commerce for decades to come.


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