As Microsoft begins to roll out its live strategy, there are some interesting business model decisions to be made. First of all, let me list the cast of characters. We can begin with the service providers (S) that provide things like mapping services, books available for sale, auction items, rental properties, etc. A third party (M) that will create this mash-up for consumers. Then there is the advertising engine (A) provided by Adcenter or Adsense.
A service provider must decide whether to charge for the service or not. If they charge for the service, do they charge per API call or do they have a threshold beyond which they will begin to charge? If they go with the free model, do they reserve the right to serve up Ads to the consumer? These Ads could be embedded within the service or does it show up on the third party's (M) website? If the ad-engine (A) generates revenues based on the mash-up do they share the revenues with the service provider and the third party (M)?
As for the third party (M), do they share revenues that are generated by the service provider (S) ads and/or the ad-engine (A)? The other option would be for M to directly share revenue based on transaction that they generate for S. These decisions get complicated when S also provides A or if S1 and S2 provide ad services. While things will get better for the consumers of these services, the next wave of applications delivered on platforms like Live and Google will determine the answers to the business model questions.