This morning we're getting started with a panel and discussion about the business of content, with AOL's CEO Jon Miller, Yahoo COO Dan Rosensweig and CNET CEO Shelby Bonnie.
All of these companies have been in a transition from the free/dial-up Internet to the fee/not-so-free broadband Internet. It's very early in this phase and interesting to hear their perspective on the transition.
Can they differentiate? Will consumers pay more than one set of premium subscription fees?
Yahoo says they use a funnel model --- free content, account-derived services, and paid services. This allows them to serve many customers.
They're focused on taking care of their existing user base rather than trying to get new customers. Can that be???
Jon Miller believes consumers will subscribe to many different premium services on subscription.
Esther wants to know if they will really "unbundle" services, versus aggregation.
Lots of hedging and uncertainty coming from the panel about how they'll package premium content and services.
Discussion is moving on to the role of advertising in online content, rather than services.
CNet lamenting how a content and advertising business focused on the tech market for the past few years has really sucked.......but trends are good, he says. Claiming a resurrgence in online advertising, it's not a dead market.
Jon Miller is arguing that as the Internet environment gets richer (e.g. Flash), that it becomes a more mainstream media where advertising can be effective. I buy this, and it reinforces the radical improvements in ad results coming from the use of rich media platforms. As the ads and the environment are more integrated, this should accelerate.
Shifting the discussion to the semantic web and the use of structured data. Does this change things?
CNet highly leverages structured data in search and analysis tools for consumers -- e.g. comparison shopping, etc. And this is value for the consumer as well as something that can be syndicated. This is a new, growth business -- e.g. the downstream channel for data.
Yahoo says the Internet is pretty straightforward....it's a giant database....and vaule comes from targetted views/activities into this database. "They don't need to see how the sausage is made". Yum. Boy, what an insight....databases make the web more useful....
These guys don't seem to be tapped into the role of Web APIs (web services) and distributing content and services. This must stem from the fact that they are deeply focused on controlling the end-user experience. Dan (Yahoo) is arguing for database apps = sticky web.
CNet seems much smarter about the topic. We're talking taxonomies now, and how relationships between taxonomies can surface appropriate data to users. Now we're talking.
Jon Miller says that the experience is about to get a lot better. Broadband is changing the game in user experience. This will be a new Internet.
Esther says that this doesn't necessarily give any competitive advantage to these guys. This reinvention of the Internet and online services based on broadband and rich clients is wide-open, and no-one has really fully embraced it. My theory is that both horizontal and vertical portals will get shaken up as rich client apps roll out over broadband.
Yahoo is arguing that their aggregation and personalization facilities provide a context that consumers will always turn to, rather than going to distributed services.
Shelby (CNet) says there has been a real change. Years ago services were very thin, then we moved to portals and things got thick, but now things are going back to thin, as core search continues to be a primary value for customers.
We're having a discussion on the issue of opt-in in signing up for free services, and how portals then intrude on users by pushing other for-fee services. It's turning into a semantic issue....
Esther wants to talk about the balance between subscription versus advertising revenue. AOL says they're dominated by subscriptions, and their core business will be acquiring customers and driving them into billable relationships. This is the heart of it. Paid content all the way!
Yahoo is the opposite. It's pretty much dominated by advertising. This is over 50% of revenue. All of the ad arenas are growing for them. But they'd like to see subscription revenue grow, and are counting on it. They'll even have full paid services with no advertising. Paid content metrics will continue grow in numbers of subscribers, but revenue from that will not grow nearly as fast.
Spam discussion. It's bad, it's costly, they wil crush it.
What's new on the services horizon?
Yahoo is pitching their Premium offering --- first attempt for packaged content for pay. Says the next 1-2 years will see paid services for "bread and butter" stuff -- email, spam blocking, etc. But at the same time video-based services are seeing a lot of adoption, but whether people will pay for it is still an open question.
CNet is arguing that basic gated subscription content is not taking off. He says that the winners are when the user value is much higher --- either through aggregation or a much richer interactive experience. Quality product = propensity to pay.
Jon Miller says the only way forward is paid content for this part of the Internet economy to survive.
We're still recovering from the boom years where the assignment of value to content and online tools was crushed by market-share grabs which drove people to give away everything for free. We're now seeing companies really assess the cost and value of their online content and services and putting real revenue models behind it.
AOL --- it has to move to paid services. Period.
It's great to see such resolve from these guys (AOL in particular) about the need for paid services, and the focus on quality product, original content, really building this out as a unique media platform.
Moving on to audience questions.