China Internet Companies Profit Model Study

Ten years ago, the Network Economy bubble burst, and the global Network Companies were hit. Several famous Chinas Network Companies eventually closed down, merged or changed jobs, so that such consequences made people once lost confidence in the Network Economy. Studying their failure, the Network Companies did not find a reasonable profit models and just pursued the effects of eye-catching but did not know how to get profits. However, the Network Economy which has overpassed the Industrial Economy is regarded as the latest economic form now. Its vitality and potential should not be just apparently so. In recent years, the global Network Economy has been recovering continually. In particular, Chinas Network Companies are thriving as well. Actually, many new successful examples are appearing with the blooming. This trend continues to bring the power to new technology and information revolution, and to promote the entire economic greater and greater. Therefore, in order to ensure the healthy development of Chinas Network Economy, we must carefully study and analyze the Network Economy profit model. We should start from the most fundamental operation laws of Network Economy construction and rationally analyze the problems of its construction and selection to strengthen the companies'viability and competitiveness.On the basis of the previous research, this paper rationally summarizes the current analysis for the Network Company, their analysis of related concepts and gives more reasonable definitions and interpretations. Always run with the mainstream of the operation laws of Network Economy as the theoretical basis of the whole text to make the analysis of this paper more reliable.The full text is divided into six parts. The first part mainly reviews and summarizes the results and shortcomings of the previous research. In the second part, on the one hand, this paper defines the Network Economy, Network Company and profit model. The Network Economy in this paper is defines as the sum of the economic activities based on the network (the internet in particular), and the Network Company is the enterprise that mainly provide digital products,the construction of the network profit model is mainly divided into the user side, the company side and the competition side. On the other hand, this paper introduces some cardinal operation laws of Network Economy such as"the top three laws in the innovation of network technique"and"the top two of network decrease laws". In the third part, the network profit models is divided into"cross-subsidy"model,80/20 rule model, transaction distribution model, advertising model, long tail model, virtual currency model, and popularity-conversion model by they originates from traditional economy or network's endowment under a more general and applied point of view. And then the paper analyzes their construction with the operation laws of Network Economy to help network companies build and select the appropriate profit models. The fourth part starts from the external environmental factors and company's own factors to analyze the prominent obstacles when network companies are running their profit models in order to help them be more vigilant and resist risks. The fifth part is still based on the operation rules, and starts both from the view of government and company to give some suggestions that can help network companies sustain the healthy development. This part mainly summarizes the contents and conclusions of the whole paper and prospects for the future study.