Profit Model For Internet Busines

Nowadays, China internet companies come into a rationally developing period.They realize that a proper profit model is essential to their success, rather than pursuit thebrand awareness and market share in their early stage development. Only when theirprofit model boosts sustainable and profitable development, can they be outstanding inthe fierce competition. Therefore, studying on profit model of internet companies drawsmore and more interests from researchers. And due to the difference of internetcompanies from companies in other industry, pertinency and innovation to profit modelof internet companies are remarkably important. Tecent is one of the biggest internetcompanies growing with many others in China. Its development with vast productcoverage represents the evolution of China internet business industry, and its profitmodel sets a very successful example to other internet companies.This paper, firstly, presents the background, value and research methodology of thetopic. Then, on the basis of existing theoretical results, the author illustrates a modifieddefinition on the profit model of internet companies including its features andcomponents. In the last part, taking Tecent as an example, the author describes the threecomponents of Tecent’s profit model, which covers profit sources, customer value andmanagement operations. In further, the author analyzes Tecent’s finance reports (Year2004-2011) from multiple aspects, in order to explain how successful Tecent’s profitmodel is, which may theoretically and practically help other internet companies developtheir own profit model.