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Source as accessory is one dimension of exclusivity, the least significant asset in one's collection of "social networking" capabilities, if you will. The greatest value assigned to exclusivity is the extent to which information provided by a source is novel or time-sensitive and, most important, actionable.  

Skeptics of MSM partitioning or "versioning" seldom give much thought to how publishers already differentiate low-value and high-value information products, perhaps because they are focused on a publisher's decision to impose subscription fee on low-value information rather than business cases (of which they may not be aware) that successfully collect fees for high-value information.

Fees demanded deliberately reduce search costs. That is the value proposition.

Or, like you, they are associate delivery of high-value information, whose determinants are wholly idiosyncratic, with ISP subscription itself.

FWIW, here is a column describing how publishers will implement price discrimination strategy with the cooperation of ISPs. I noted with interest reference to Hal Varian who I've quoted at ET along with the occasional Power Pricing rubric (Dolan and Simon). It begins.

Hal Varian, the chief economist at Google Inc., spends a lot of time talking about the economic state of the news business... His main credential in the debate is the book "Information Rules" that he wrote in 1999 with Carl Shapiro, a fellow professor at the University of California at Berkeley. In it, Varian and Shapiro apply durable business and economic rules to the Internet with particular attention to the value and pricing of information....

It's no wonder that Google and Facebook are suddenly courting publishers, recognizing that if news devolves into a world of screaming blogs, there will be less and less valuable [i.e. REDUNDANT INFORMATION] content to place ads [WORDS] against [TO INCREASE CTR  PROBABILITY]. More worrying, perhaps publishers will decide to ask Google and Facebook to pay for access just as they do their print and Internet syndication partners [COPYRIGHT ASSIGNS e.g. TPM, WN, AP, APPLE, etc].

Diversity is the key to economic and political evolution.
by Cat on Mon Jul 5th, 2010 at 12:35:58 AM EST
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Thanks for the link.  Good article - not that I'd be willing to pay for it!  Some excerps:

New York Times Should Charge for News, Google Too: Janet Guyon - Bloomberg

If he had to choose a newspaper to run successfully, it would either be one with a rich audience -- such as that of the New York Times -- and unique content, or the hometown paper with compelling news and local ads. "The hopeless case to me is a newspaper filled with generic, widely available content," he said in an interview.

Both models have something in common: they sell information that's not available elsewhere and that is targeted to a particular audience. While one source of revenue comes from advertising directed at this audience, there's no reason why content producers shouldn't charge consumers as well. That's called subscription. It's something publishers have been doing for decades.

Louis Vuitton

How much, where and when is determined by the competitive environment and how well a producer can distinguish his product in the mind of the consumer. That will be the challenge of the New York Times when it begins charging for online access next year.

"The issue is not how much people value access to a particular newspaper, but whether comparable content is available elsewhere for a cheaper price," says Varian.

Perhaps the most brilliant practitioner of getting people to overpay in a world of cheap knockoffs is Louis Vuitton, the luxury goods maker.

Louis Vuitton never goes on sale and charges $1,000 and up for a printed, plastic-coated canvas handbag. Last year, the company recorded revenue growth of at least 10 percent. Parent LVMH Moet Hennessy Louis Vuitton SA earned almost 2 billion euros on 6.3 billion euros in revenue from fashion and leather goods purely via the allure that items sold in its shops were authentic artistic statements worth multiples more than very good copies found on the street corners of New York City.

I'm not sure I buy the Louis Vuitton analogy.  Sure, people will buy a book by, say Steven King, because of his name recognition and relatively unique content.  But a couple of bad books and the word will get around, and in any case: Is such individualised brand loyalty transferable to a corporation?

True - the same article quotes NYT execs saying that after 2 years they have a print subscriber hooked for life.  But is that also true on the web?  (I used to be a regular Irish Times Reader, almost cover to cover.  Now I dip in and out online as I would with many other sources, and do not ascribe especial value to the Irish Times.)

News is ubiquitous, personal or imaginative stories are not.  We live in a sea of news - why pay someone to pre-package it when Google and news feeds can do it so much better?  To build a successful brand you have to build an emotional attachment to it.  Someone might pay for the NYT because they have a good features section, but news?

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Jul 5th, 2010 at 07:03:04 AM EST
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True - the same article quotes NYT execs saying that after 2 years they have a print subscriber hooked for life

I had a subscription for 3 years, switching to buying it each day when I moved to Manhattan. When I came back to NY, I only looked at it on the web, stopping to do even that during the Miller/Gordon buildup to the Iraq war. Nowadays, apart from some Krugman columns, I only look at it for the occasional specific NYC story.

by gk (gk (gk quattro due due sette @gmail.com)) on Mon Jul 5th, 2010 at 07:14:40 AM EST
[ Parent ]
The columnist's Vuitton interjection is indeed stupid. Varian never argues for a strategy to convert (cheap) internet readers into paying readers of (cheap) luxury brands; Varian argues how to monetize exclusivity by targeting a large number of qualified prospects. (Chris Anderson later elaborated and popularized the concept of "long tail" economics-choice theory and marketing.)

The NYT boast had to have been made over a couple bottles of very expensive whine -- which isn't to discount however a truth that time (and an evergreen renewal mechanism) mitigates churn by inducing passivity in subscribers. Look at AOL's base. A crypt. srsly.

As for "a sea of news": Somebodies need to make up their minds. Either the LA-Newscorp-Fox monopolizes "media" markets or it doesn't. If it does, duplication of stories, syndication, and "meme" are fitting attributes. If it doesn't, quantity of LA-Newscorp-Fox referrals online indicates consumer preference.

I'd pick three Varian 1999 imperatives to revenue optimization in a "networked economy" to predict the "migration path" to increasing subscription content over the next ten years.

  1. Managing lock-in. subscription digital migration, ISP (speed, storage, service area), software, hardware. i.e. before entering "content" markets.
  2. Digital rights management. Beyond RMAI. Varian asked: "Let's suppose that you are the owner of some intellectual property and have the legal right to market it as you will. {NB. ET work-for-hire] How should you think about the terms and conditions under which you will make your product available?"
  3. Collective switching costs.

In conclusion, I want to emphasize. Information Rules captured interntet management gestalt for the century; it hasn't missed a call. Varian is now chief economist at GOOG which is exceeeeeedingly well positioned to tip its user base. So don't be surprised, when one day you tune in to choose between "bundle" @ EU 5 or unit @ EU 0.99.

Diversity is the key to economic and political evolution.
by Cat on Mon Jul 5th, 2010 at 12:33:17 PM EST
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