Thursday, September 24, 2009

Creating value through scarcity.

It's been a crazy month for me and mine as we try to plan a wedding across the continent. Now that summer is officially over it's time to hunker down and relieve everyone's curiosity. and catch up. So, to make for a post-free month here are two short posts sandwiched into one.

The newspaper business is demonstrating that you can't cut your way to growth. Newspapers and media companies spent most of the 1990's cutting costs as a way to grow margins and revenues. As a result, most local newspapers now just reprint wire stories, attach them to local ads, and distribute them to local merchants and subscribers.

Online, publishers are taking this "hollowing-out" a step further. Rather than selling their own ads to their audience they're using ad networks to move "remnant" inventory, often with disastrous results.

If you believe that tomorrow will be like yesterday - and that publishers will continue to cut down on original content as well as their sales force - then the web of the future will be a bleak landscape of AP, Reuters, or (God help us) UPI articles sandwiched between Google AdSense ads.

But then, what about the bloggers. A couple weeks ago, Nic Brisbourne made the point that the Future of News is Scarcity. Specifically, he claimed that the way to make money as a content creator is to pick a niche, create (or source) high-quality, original content or opinion, and then generate multiple revenue streams from it. He goes on to discuss how "news" today is ubiquitous and free, but analysis and intelligence is - or can be - highly valuable.


And finally, the FCC held several workshops on online privacy, security, and openness. My boss was invited to a few of the sessions. In typical DC fashion, the discussion centered around whether or not the government should restrict behavioral targeting, or at least allow users to opt out (like the national do-not-call registry). But Chris Kincade offered a different idea -- what if BT providers were forced to describe the data that they collected, and how they planned on using it? And what if they did this in a scalable way, using a standard protocol, so that browsers could allow users to intelligently manage the data being collected about them. It's kind of like the FCC Broadcast flag, but, you know, not stupid.

And that brings me to my final, random point -- way back in June the U.S. Supreme Court ruled that Cablevisions "virtual DVR product," which allowed subscribers to record video in the cloud -- was, in fact, legal. This is pretty mindblowing. A colleague of my described this as nothing less than the supreme court extending eminent domain into the cloud. "I pay for cable, I 'own' that episode of Heroes, so I should be able to record it into the cloud and retrieve it on demand." This poses an interesting question on the legality of p2p file distribution. For example, if I subscribe to basic cable, and choose to download House instead of DVR'ing it, or watching it on Hulu, is that also now legal? What about Mad Men? Or any HBO content? And if this is legal, what is it going to do to the cable company's own on-demand businesses? Or iTunes?

It's an interesting world we live in. Enjoy it.

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