Arnold Kling  

Online Content Bundling

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Steve Levitt asks


In general, it doesn't seem like a good idea to give your product away if you are a company, but given that most newspapers do, why doesn't the WSJ? ...Either the WSJ is making a mistake or other newspapers that do give stuff away are making a mistake.

Tyler Cowen speculates,

A free web site would make it too easy to cherry-pick the interesting content, strip it down, and reproduce it and circulate it without the ads.

...We return to the potential dangers of unbundling, and the possibility of picking apart the WSJ until it isn't a newspaper any more. An upfront charge makes sure the value is reaped before most of the paper is discarded.


To me, the mystery is why there is not more bundling. Suppose that you could aggregate many newspapers--or blogs for that matter. At some point, the aggregate would be large enough that consumers would be willing to pay for a subscription.

Six years ago, I wrote The Club Vs. the Silo.


the "silo" model tries to maintain an anachronistic wall between the content in one silo and content in other silos. In the world of physical magazines, it certainly makes sense that a subscription to "Business Week" does not entitle you to read "Forbes." Clearly, they are two separate physical collections of paper.

On the Internet, however, this distinction is not a physical necessity. Most consumers in fact pick and choose articles from a variety of online magazines. In contrast to the physical world, consumers can engage in extensive content aggregation without imposing meaningful costs at the margin.

A second thing wrong with the traditional silo model is that it ignores a critical component of value. Because of the volume of content available on line, the marginal value of additional articles has gone down. The marginal value of annotation, filtering, and recommendations from other consumers has increased. As J.C. Herz put it in an article in "The Industry Standard," the "digital future is probably in the margins, rather than on the pages."

...For an economic model, I continue to recommend the idea of "clubs." A club would provide content aggregation, recommendation, and annotation services. Journalists would be paid by clubs, rather than by individual publications. For a consumer, joining a club will provide access to value-added services relative to online content.


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TrackBack URL: http://econlog.econlib.org/mt/mt-tb.cgi/661
The author at The Free Thinker in a related article titled "Club" Media, or Free Media? writes:
    Arnold Kling makes the case for online content bundling, suggesting that people would be willing to pay for a club [that] would provide content aggregation, recommendation, and annotation services. But why should readers pay for access to a club when [Tracked on March 5, 2007 11:42 AM]
COMMENTS (12 to date)
Ben Fulton writes:

Aggregation is becoming easier at the user level as well, though, making it unlikely to be paid for. I read this article through my blog aggregator Google Reader, for example. I don't have any particular interest in reading, let alone paying for, an aggregation of articles that somewhere someone else thinks I might be interested in.

KipEsquire writes:

The W$J also exhibits something of an agency-principal phenomenon, in that most print subscribers don't pay for it -- their employers do.

So perhaps Dow Jones figures they can optimally extract a fee for online from the print subscriber, since that subscriber would still be paying out-of-pocket only once (or not at all).

Robin Hanson writes:

Why is there not more bundling? That is the key excellent question. My best guess is diseconomies of scale in management.

Vincent Clement writes:

Hmmm, bundling appears to be viable. I subscribe to feeds from Freakonomics, Marginal Revolution and EconLog and have been able to 'follow' this thread about newspapers from Freakonomics to Marginal Revolution and now to EconLog. Three separate sites, all discussing the same issue. I call that bundling.

Nathan Smith writes:

But Vincent, Marginal Revolution and EconLog are free. Arnold claims that "at some point, the aggregate would be large enough that consumers would be willing to pay for a subscription." That seems to be still in doubt. The question is: Can paid media compete with free media in the internet age? In niche markets, yes. For general readership, I doubt it.

Tom Myers writes:

The trouble is that much content is worth money, but only if it's free. When TimesSelect started up, I thought about subscribing on the grounds that access to the conversations was certainly worth the price--but as soon as that material went behind the subscription barrier, it was no longer part of the conversation and was not as valuable.

I don't know how to resolve this, except to mention that I've bought a couple of Arnold Kling books because I read this blog. If you edited blog postings and comments (and other-blog reactions, with your own comments and summaries) into a book, I would probably buy that too. Newspaper columnists have long produced book versions of their output...but I dunno how long this will last.

Ajay writes:

The fundamental mistake with these speculations is that they assume that businessmen are familiar with these concepts. I bet if you actually talked to any of the people who were in a position to implement any of this you would find that they had no real notion of bundling, that they were simply following the example of someone else. And if you traced that chain back to the originator, it would be someone who just chose that sales method randomly or in a flawed analogy to some older content model, just as you say that the silo is a flawed analogy to a physical magazine.

I would add another category to your dichotomy (trichotomy?) and that would be 'the street'. On the street, you pay cash and only get what you want. On the internet, that would be micropayments, you were wrong to dismiss them so casually. The street/micropayments will prove to be the winning method (although club-type services will still be important for their filtering ability, they will be paid for with micropayments also).

It's interesting to come across this discussion, since for the last week or so, I've been conceptualizing a service that would provide custom bundling of content links driven by keyword-tagged RSS feeds.

It might be similar to the idea of the bundled feeds, but could also be displayed dynamically on intranets or Web sites, as a way to provide information to customers or others visiting company or organization Web sites.

The idea would be to provide a business with human-selected tagged content in various feeds that could be posted on intranets or Web sites. Other components could establish additional social media elements, such as team blogs, Wikis and bundles of feeds.

The average businessperson (and, at least in my experience)even many technology people don't get what the rapidly-growing spectrum of what could be termed Web 2.0 and social media applications, including blogs, wikis, tagging, rss and feed readers can do for the way that they carry on customer conversations.

I agree that most users I would consider potentially the best subscribers for this service would not want to or need to understand all the buzz words, just the benefits to their businesses.

The key benefits would be the ability to provide fresh, relevant, human-selected content in a format for display or internal use as research. Near real-time updates with items matching specified names or keywords.

Organizations could choose the level of staff involvement in content creation with an easy to edit (but optional to update) content display page with dynamically updated news or other types of hand-selected Online items related to the company's goals and needs delivered via keyword selected feeds and bundles.

As mentioned, niche markets seem to be the best candidates for this type of service.

Fast access to information seems like it would be particularly valuable for companies monitoring specific vertical segments, trends and issues, and possibly trade organizations within industries. Companies who want to provide a value add for customers would also be potential clients for a subscription like this.

Businesses that can leverage the technology without needing to understand all about blogs and wikis and other technical jargon getting in the way would appear to be better positioned to compete as more consumers begin to expect an online conversation, or at least the option of having one.

Is this service be something that might work? I'm interested to hear your thoughts on whether a service based on this type of model is likely to be understandable, viable and beneficial to businesses and organizations? What potential pitfalls might exist?

Thanks in advance for any thoughts on this concept.

Best regards,

Susan

Ajay writes:

Susan, I'm not sure if you're pitching this service to us or looking for market research but it sounds similar to factiva, a dow jones business that I just watched a video interview about yesterday. My suggestion to you is that if you can't bring real technology expertise to bear, either in terms of knowing how to filter better or how to build a very efficient server farm, there are already plenty of people running around with woolly ideas about "human-selected tagged content in various feeds" "to provide a value add for customers." You and the rest of these people will never get anywhere against someone who actually understands the technology and doesn't spout fuzzy MBA/technology buzzwords.

Wow, my post was merely an question about an idea I've been tossing around lately with some folks who are working with social media in different ways and approach the topic from different perspectives. Since the service I asked about does not exist, rest assured that my intent wasn't to pitch anything, only to ask for your opinion about the model as it might apply to niche vertical markets.

The post was what it was, merely a question about the viability of such an approach. I'm sorry if the question offended you.

Factiva, with which I am familiar, is a great service for its target audience, providing traditional media feed coverage on a much larger scope than what I had envisioned.

While the idea proposes services like Factiva's in a very general way, there are a couple of big differences in the services. First, the service I had pictured involved a selective, actual human tagger or taggers, not an automation technology for selection of the featured articles.

Second, the target audience would be much smaller companies (SMB) and organizations than those targeted by Factiva, ideally in well-defined niche spaces.

Finally, rather than highlighting content primarily from national and international traditional top-tier media publishers, the hand-selected service would focus on content primarily from niche vertical sources and customer-generated buzz.

As for the assumption that my ideas were "fuzzy MBA buzzwords" spouted by rote and absent understanding of the technology, I found it somewhat puzzling. First, when I earned my MBA, we barely even had PC's--It was still the 80's. I'm assuming you didn't read my work or Google me, when you classified me as one of "these people."

While I've only been testing, writing about and studying specific "woolly ideas" about feed models, tagging and folksonomy for about two years, I've been blogging for four and creating and publishing Web content, and online and print content related to Web technology for twelve. Pre-web, my work involved database and personalization technologies.

If the impression that I was a newbie splogger without a clue about the technology came from the layman's term explanations I proposed, that is understandable.

Your astute observations that business decision makers don't understand this technology, nor understand its implications for brand management, were among the reasons I posed the question here.

Part of the hypothetical value proposition was whether it would be possible to effectively boil complex technical issues down to simple benefits and tools that would be understandable, effective and affordable for SMB decision-makers concerned with actual brand management.

Thanks for your thoughts. I appreciate your indulgence of my brainstorm.

Best regards,

Susan

Ajay writes:

Perhaps I was a bit dismissive in my response but I did phrase it as a suggestion. The rationale was to wave you off if fuzzy MBA/technology buzzwords is all you can bring to bear. It is presumptuous of you to assume that I was offended by your original question, all I did was suggest that there are a lot of people running around with similarly badly-thought-out ideas. Good to see you've heard of factiva, as I didn't know what they did till I saw that interview (may have heard the name in passing): I'm not in the enterprise. It is also good to see that you have a particular market and set of information sources in mind, a niche that you claim is not filled. The problem is that there is a reason niches are ignored by companies like factiva: it isn't cost-effective to go after them. How you plan on specializing in each of these niches and hiring human editors and keeping it all cost-effective is something you need to think about, I don't think it can be done in the way you describe. I just googled you as you asked and I see that your background is in PR and marketing, which only reaffirms my notion of you as an MBA person. You clearly are not a newbie as you spout a lot of current technology buzzwords (web 2.0, social media, folksonomy) but my point is that those buzzwords get you nowhere. The whole web 2.0 crowd is pretty clueless (and hypocritical, if you actually examine what they say and compare it to what they do). If you're aping them, you get nowhere (simple question: How many of them make any revenue, let alone profits? That's all you need to know about them.). Also, you claim that your post was based on my astute observation about technology and brand management but I never mentioned brand management in my first comment. Rather, brand management is a subject that YOU are interested in.

Since you are interested in it, let me tell you what I think is going to happen there. In the past, brand management could be done to some degree as there were few information sources and they often depended on the same companies for advertising. Still, brand management is just putting lipstick on a pig, there's not much you can do as a PR person. In the future, as the world gets deluged with information, companies will have to be built from the ground up with human principles in mind. You will never recover if you start doing things your customers don't like, whether it's having bad customer service or using deceptive pricing. As a result, PR positions will disappear and a new position focused on consumer principles will spring up, someone with executive power within the company who is responsible for always keeping in mind how every decision will affect consumers. There will be no opportunity to communicate with consumers once the gaffe has been committed, the goal will be to structure gaffes out of the picture from the beginning by having a process that takes the consumer and their information power seriously from the beginning. This may seem fanciful but look at where companies are today compared to a hundred years ago, when there were even fewer information sources. So that's my prediction for brand management, it's dead as the lipstick won't work anymore, you have to not build a pig from the beginning.

Richard Darden writes:

Anyone can become their own news aggregator with a service called News Circles at: http://www.congoo.com/user/circlebuilder

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