Thursday, March 24, 2005

A publisher's business model in the digital age?

Consumers will patronize advertisers if they are given control of the process of content utilization from pay to play.

Monday, March 14, 2005

About ad perception

People will do almost anything to avoid advertising, except when it pays for something they really like, unless of course they are in the market for the product or service advertised and then they think of the subsidized stuff as a welcome bonus.

Wednesday, March 09, 2005

The Wal-Mart of Information

Newspapers still have valuable brands in their markets to leverage additional revenue opportunities. However, unlike others who argue the way to attract and keep readers is by improving and investing in journalism, I think that newspapers must broaden their content offerings outside of traditional features. Expand to include reference works and serialize fiction, non-fiction, and comic books and put the content online if it cannot accomodate print. Give readers a reason to frequent the site beyond today's headlines which are being co-oped by portals and aggregators like Yahoo and Google. In short, make newspaper sites the local Wal-Mart of information.

Why sports leagues are a productivity blackhole

Just as technology firms employing Moore's Law and Wal-Mart boosted US productivity and lowered prices for consumers throughout the 1990s and early 2000s, professional and certain college sports leagues hiked the price of being a fan far above the rate of inflation while not moving the needle on productivity (why this is so, I will get to later). As consumers improved their wages and saved a bit of money on their purchases, the Big Four (NFL, MLB, NBA, and NHL) professional leagues plus college football and basketball absorbed that surplus by demanding and getting from fans ever higher prices for their tickets, premium seating, licensed merchandise, and media rights fees.

Although the research firm, Team Marketing Report, documents in its Fan Cost Index that for a typical family experiencing a game is increasingly becoming a luxury outing, defenders of the price increases counter that the sports teams are just matching demand with supply. Even if true, the higher expense does not lead to greater output, the hallmark of productive resource allocation.

Sports teams, unlike normal business enterprises, can only deliver to their customers a chance at winning more games than they lose. However, because leagues are formed such that all the teams are intertwined in competition, the expected outcome across the league can only be a .500 record. Therefore, no matter how much money is poured into the league, the aggregate result will always have equal wins and loses. While modern athletes are bigger, stronger, and faster than ever before and coaching and conditioning techniques are state-of-the-art, the records of teams from the 1960s are just as valid as those of today, despite leagues being tens of billions of dollars richer. In essence leagues suck in more and more money but deliver the same product and equal results. Is there any greater example of unproductive work this side of the Atlantic?

If players' salaries were reduced by a factor of 10, do you think that kids who otherwise might have to work at McDonalds would still not compete as hard? Though players may be able to do things no mere mortal could do they are no entrepreneurs or other true risk-takers who earn their outsized pay. Others may pay these mavericks because they create and deliver a better idea, product or service or realize savings where no one else could. In short, productivity gets enhanced or else their customers look elsewhere and eventually everyone improves. This is not true of sports leagues; there is no pareto optimal condition that affect all fans which justifies ever climbing prices for the product delivered.

Tuesday, March 08, 2005

The king is dead?

In this digital age, should consumers be able to choose their advertisements like they already choose content? By choose I mean deliberately thought of not foisted upon. If so, will this lead to the next revolution in media?

Why subscription pricing sucks

Shelly Palmer, Chair of the NY chapter of Nation Academy of Television Arts & Sciences, grouses on why XM Satellite Radio recently increased its price for its subscription service to match its rival, Sirius. XM justifies the price hike by pointing to all the new content they just acquired, which doesn't come cheap. Palmer complains that as a Manhattan resident he has little use for the new features and programming that XM added to its lineup including ACC, PAC-10, Big Ten college football and basketball and traffic and weather channels. Moreover, as a subscriber he was never asked if he wanted all of this new content and its accompaning fee increase. Satellite radio does not subscribers the option to choose a la carte instead of all-inclusive pricing.

Instead of apeing cable TV's model of "more stuff, higher fees," satellite radio might want to take a cue from the Interent and other web-based services where the consumer is in ultimate control. The consumer dictates when, where, and for how much he will consume and pay for content online. Web 1.0 was all about replicating the top-down thinking of mainstream media (MSM), while Web 2.0 is all about empowering consumer choice.

Haloscan commenting and trackback have been added to this blog.