Roy Weissman's Octopus: Doubling Profit Margins by Empowering People

Is Crowd Sourcing more valuable than The New York Times and Wall Street Journal?

The New York Times latest effort to try to charge for its content is a waste of time.  They may convert a small audience to paid subscriptions however with their current editorial, over time that audience will decline substantially.

General news and information is available everywhere at no cost to readers so why should readers pay for the New York Times.  The Wall Street Journal is now more general than ever and I believe that News Corp has reduced its enterprise value as a result.   Supply and demand is determining the market.

In the future the most valuable information will come from the users; Crowd Sourcing from the best of the best in the crowd.

Imagine a membership only forum of the top 100 people in corporate finance.  How much would it be worth to have access to their articles, posts and comments?  Of course membership would be by application only and limited to x number of members.

How much would an apartment seeker in New York pay for access to no fee listings or to be the first to see new home listings?

This idea is not new and some companies already exist with this strategy.  However I believe this strategy will become a primary approach going forward in content creation.

The Ladders was created with this concept of exclusive access in mind although, in its effort to grow the business, has diluted some its objective of the best candidates and for an exclusive list of jobs.

To be truly successful an organization like The Ladders should strictly limit membership of both companies and subscribers.  Growth would come from creating a lot of very niche Ladders properties.

The future successes in monetization of content will come from those who offer the most exclusive and valuable information.   

The days of the general newspaper are quickly dying with the concept of the Associated Press being reborn.  A few news organizations that can survive and succeed with enormous distribution (syndicated across many web sites and devices); a low revenue per reader but enough readers to generate substantial collective revenues…they’ll make it up on volume.

Will it Ever Be Free Enough?

The “newest” business model being discussed online is the ”Freemium” concept of offering a free version of your product with options for paid upgrades.  Chris Anderson has just published a book entitled, Free, the Future of a Radical Price and of course is offering it for Free, under certain conditions.

This whole “free” thing is nothing that new, it has been around for a long time (sorry pundits) in the form of free sampling used to get consumers to try a product.  Lay’s Potato Chips had a slogan years ago, “…bet you can’t eat just one”.

Whatever happened to creating a valuable product or service and charging for it?

Have people been “seduced” by the low incremental cost model…just get 100,000 free members and if 10% upgrades at $20 per month…we have a business!!!

…or is this like the old saying “…we’ll make it up on volume”?

I don’t hear any online companies talking about creating a value proposition for their product.  Online companies talk about having 400,000 subscribers and 1 million visitors per month.  Who cares if no one is paying and only 10% of those subscribers have ever returned to the site.

I’m a big believer in creating strong value propositions which lead to lucrative brands like Coach, Coca-Cola and Four Seasons. 

Of course online no one seems to pay for anything.  The top 10 websites, Google, YouTube, Facebook and others are all free to the user.  The major revenue source online is advertising.

I guess I better read Chris’s book.  Here are the links for the free Scribd and audio versions.  Let me know what you think.

Scale of Justice: BodyTrace the weight loss program that shrinks your wallet too!

If you’ve never wanted to tell anyone your weight this product from BodyTrace is for your worst enemy.  It’s a scale that broadcasts your weight to the Internet.  The basic concept is that it integrates with a weight loss program that you manage online.  The website promotes the “motivational interface” where you can work by yourself or as part of a group.

 

To me the best part of this is that purchasers still keep paying even after they have purchased the $119 scale.  Subscribers pay $19.99 every three months.  Considering that most people never seem to reach their weight loss goal this could be a perpetual revenue machine for BodyTrace.

MySpace, Sony Music and Google…The Music Facebook?

Should Jonathan Miller and Rupert Murdoch sell MySpace to MTV?  Given MySpace’s key driver, music, MTV would surely seem like a better home for MySpace success.

 

BreakingViews espouses the theory that Viacom and Sumner Redstone could come back into the picture and could possibly take the deal for $1 billion.  But does Sumner have the cash to do it?

 

MySpace sure seems like a “fish out of water” at Fox? After Jonathan Miller’s mass layoffs it’s now a “goldfish out of water”.    Something has to happen before MySpace is truly a lost cause.

 

I’m amazed that through all this time we have never heard a peep from the music companies.  Who knows more about marketing music than Sony Music, Warner, EMI and the others?   

But the music companies and Viacom aren’t flush with cash so who is the “sugar daddy”?

 

So here is the deal…a smart acquirer, say Sony Music, goes to Google and partners up to acquire MySpace.  Google puts up the cash and gets its own Music Facebook, Sony gets to create the ultimate Independent Music marketplace (while building traffic from one of the largest trafficked websites in the world) as well as access to any breakout artists and both create the largest music marketplace in the world!

TV Anywhere, Time Warner, Comcast On Demand, Boxee, Hulu, Netflix and Roy's Cable

Comcast will soon be testing its online “On Demand” service for its subscribers to watch their cable programming on their PC at any time.  Starting with a test of 5,000 subscribers, Comcast will focus on perfecting its authentication technology to assure that only current cable subscribers will be able to access the service.  Time Warner has agreed to license programming for TNT and TBS to Comcast for the trial.

While no one wants to pay for programming, the good news is that cable operators are ahead of the curve this time taking the initiative to move towards additional distribution channels.  The other good news is that it’s paving an “official” way for TV and other programmers to “come out of the closet” for web initiatives.

A very significant message here for online exhibitors is that it also paves the way to create a subscription revenue generating business model for online consumption.   

These efforts by cable operators are paving the way for competition.  Once programmers create a model for online exhibition of their channels then anyone can become a cable operator.

We’re talking Hulu cable, Boxee Cable, Netflix Cable…even Roy’s Cable (watch out Brian Roberts!).

 

Netflix..Sold to Comcast, Time Warner, NBC, HULU or Sony?

Netflix would be the 3rd largest cable operator if it were a cable system as well as a formidable competitor to pay tv networks HBO and Showtime if it were a pay tv network.

Netflix is the best kept secret in the entertainment industry.  While most are familiar with the company they don't realize the true significant value of the company.

With 10.3 million subscribers (up 25% from 2008 as of 3/09) Netflix has a very valuable audience of movie lovers.  Even better Netflix has something the pay tv networks and cable operators don't have...a database of what their customers like. Netflix has created software that analyzes their customer's tastes so it can recommend movies they would be interested in.

Reed Hastings should be Hollywood's favorite guy but he is still fighting them for rights to stream their films online.  Hello Warner Bros., Sony Pictures, Walt Disney and others...the first one in gets the goods.

While, Will Richmond of Videonuze predicts that Microsoft will buy Netflix, I predict Comcast as the acquirer.  Brian Roberts has built an impressive Comcast Interactive Media who has been very active and unabashed acquirers. 

Hollywood, wake up this is your chance to finally own a pay tv channel and be able to target your films at the hungriest customers and to sell direct to the consumer...oh those margins!  Remember Premier?  Now you can start the movie industry Hulu...if the networks can do it why not the studios?

10 million movie hungry subscribers paying $1.36 billion dollars and the most extensive movie usage information in the world.  What is everyone waiting for?

MTV Starved for Audience?

Turned on VH1 on cable last night (9/7/08) at 9pm only to see a message on the screen suggesting that we tune to MTV to view the MTV Video Music Awards.  Is MTV is getting desperate for audience? ...are they losing viewers to online or other stations?  Doesn't look good when a totally separate channel has to send viewers to bolster the audience.  I'm not sure if Viacom execs believe that VH1's ad revenue is so low that a "redirect" is more valuable or if MTV is so needy that a "redirect" is necessary.

Internet Radio and Pay for Play

Great post by Doug Perlson on Payola and Internet Radio at Silicon Alley Insider.  The question is how will Internet Radio survive given the egregious music performance fees levied by the Copyright Royalty Board.  Other than disclosing that compensation was received for playing certain songs, I think its a great idea. 

I am still baffled that the struggling music industry does not try to embrace Internet Radio rather than strangle it. All one has to do is note the successes for Independent artists on MySpace, YouTube and other online outlets to see the enormous opportunities for musicians online. The only question is whether the record companies will be embracing this opportunity offensively or defensively.

Jerry Yang of Yahoo - Don't you like customers?

Within the last few months it has become known that Yahoo is no longer accepting applications for their Ambassador Program.  This is their program to certify Search Engine Marketers as experts on Yahoo PPC marketing.  This is similar to Google's Qualified Individual's and Company's program. 

Who wouldn't want a sales force that costs you nothing and pays you for the privilege of selling your product? That's what these certification programs are.  They are excellent ways to grow your business.  Why Yahoo would cancel such a program is unknown but I believe that its a very poor decision.

Further in this post they present a rumor that Yahoo is only discontinuing its Ambassador program for the smaller players and still working with the largest agencies.  This is better than nothing but truly demonstrates Yahoo's lack of understanding of their business.  While there is no question that the largest accounts drive the volume of the business, its the smaller guys that typically drive the highest margin business.   

Yahoo's ability to nurture the smallest and most profitable players with a certified expert "sales force" is very valuable.  But it seems that Yahoo continues to reinforce Carl Icahn's efforts by making decisions that hurt rather than help their business.

Don't you hate the check out line? Buy an Apple anything!

I may buy something at an Apple store just because its so easy.

How many times have you gone to a store only to abandon a purchase due to a long line at check out?  I do it all the time.

Starbucks wants to know how to improve sales...speed up check out.  Its painful to watch cashiers study the register to find the right button or have them repeat the double latte vanilla with chocolate order for the third time.  I truly believe the check out line in most stores is one of the greatest "sale killers".

I was at the Apple store in SOHO the other day to investigate a potential purchase and, while the store was quite busy, there were many employees eager and knowledgeable who answered all of my questions.

But the best part was that they all, and I mean ALL, have hand held credit card swipe machines.  Every floor employee was able, not only to answer my questions, but to take a payment and process the order.

Is Apple and Steve Jobs so smart or is everyone else so dumb? 

By the way these hand held devices are hardly new. They have been in operation for at least 20 years.  Republic restaurant in Union Square has been using them for at least 10 years.