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23 2 BUSINESS MODEL INNOVATION IN DIGITAL LIBRARIES – THE CULTURAL HERITAGE SECTOR Harry Verwayen Introduction This chapter focuses on the challenges and opportunities faced when designing new business models for a digital library. Our approach will be first to introduce the reader to the particular characteristics of the cultural heritage sector and the theoretical framework of business model innovation which has been applied to Europeana, the European portal to digital cultural heritage objects, as an illustration of the issues. In order to do so we will introduce the reader to the background to the Europeana project. This will clarify some of the challenges faced when designing a fitting business model for a digital library of this scale and magnitude. Cultural heritage Although it is debated, for the purposes of this article we will use the UNESCO definition of cultural heritage as: ‘The entire corpus of material signs - either artistic or symbolic - handed on by the past to each culture and, therefore, to the whole of humankind (UNESCO, 2005).’ This definition is still quite broad of course and includes a whole spectrum ranging from monumental buildings to recorded oral history. In the context of business modelling and planning for digital libraries we are naturally focused on cultural heritage artefacts traditionally held within the walls of the cultural institution: images, texts, sounds and videos that provide insight into our past as well as context to the present, ranging from the Magna Carta to footage of François Mitterand’s famous answer to rumours that he had a mistress and a child, at the time of President Clinton’s indictment: ‘et alors?’. These are artefacts that provide context to the world we live in and as such represent great value to us. The selection, preservation and dissemination of this material have traditionally been vested in museums, research libraries and archives, collectively referred to as the cultural heritage sector. Although museums and archives have different organizational models and are often oriented towards a different audience, both types of institutions at their core have a common public task: to ensure that our collective memory is preserved and made accessible for future generations. The sector as a whole can be characterized as being loosely organized, mostly publicly financed and with organizational backgrounds that often go back centuries. BPDG_opmaak_12072010.indd 23 13/07/10 11:51 Harry Verwayen 24 Business model innovation The term ‘business model’ is used for a broad range of informal and formal descriptions to represent core aspects of an organization, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies. Although for as long as business has existed there have been models to support it, the process of consciously designing business models has gained importance in the second half of the twentieth century, and became a crucial aspect of developing new business with the advent of disruptive technologies such as the Internet. In an increasingly complex technological environment the need to understand and innovate in the field of business models will only increase. Recently the concept of business model innovation has spread beyond the realm of for-profit businesses and is currently – but hesitantly - applied in not-for-profit operations. In the context of this article a business model is understood to be ‘the rationale of how an organization creates, delivers and captures value’ (Osterwalder, Pigneur 2009). Figure 1: Business Model (Osterwalder, Pigneur 2009) The theoretical framework of the business model consists of interrelated building blocks which depict the logic of how the organization intends to deliver value: 1. Customer segments: an organization serves one or several customer segments. 2.  Value proposition: an organization seeks to solve customers’ problems and satisfy customers’ needs with value propositions. 3.  Channels: value propositions are delivered to customers through communication, distribution and sales channels. 4.  Customer relationships: each value proposition offered to a client group establishes a relationship. 5.  Key activities: the activities that are required to offer and deliver the value proposition. BPDG_opmaak_12072010.indd 24 13/07/10 11:51 BUSINESS MODEL INNOVATION IN DIGITAL LIBRARIES 25 6. Key resources: the resources that the organization needs to perform such activities. 7.  Key partnerships: the partnership network the organization needs to establish to perform certain activities that it cannot efficiently perform by itself. The building blocks are organized in a front end, the ‘what’ and the ‘who’, which define the revenue building capacity of the organization, and a back end, the ‘how’, which establishes the cost structure of the organization. Business model innovation...


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