Category: News

AT&T’s prepaid card for selling content is a confusing idea. In an excellent interview on PaidContent.org, Mike Palumbo, sales director of AT&T pre-paid services, says, “We did not want to get in the “Visa space”…so we stumbled into online content.”

The business of prepaid calling cards has a certain logic: the variable cost of the product is very low, prepaid cards allow the selling to disguise the real cost of a call, the typical buyer is less likely to have a credit card or a relationship with a long distance company. But for these reasons, the prepaid calling card business is pretty grubby, perhaps a step up from the check-cashing business.

The prepaid business has some distinct competencies, such as charging for small transactions, managing millions of “accounts” with stored value, and retail distribution. But there are a lot of reasons why Web content is a poor match for them:

• Too many middle men: Because they’re not selling their own content, they’re adding two middlemen (themselves and the retailers) with high margin expectations compared to those of credit card companies, the traditional single middlemen for content transactions.
• Retail friction: So far, AT&T has two retailers for this business. For Shockwave.com, it’s a chain of convenience stores. For Vindigo, a chain of truckstops. How many cards do they have to sell to justify the space that they would normally devote to Slim Jims and Tic Tacs?
• The big disconnect: So, you’re on Shockwave.com and you want one of these cards. Do you bike over to the Quik-E-Mart with a couple of twenties, or do you surf over on to another site? Same deal for the busy executives targeted by Vindigo. Meanwhile, prepaid calling cards are sold by establishments and vending machines that are just few steps from a pay phone.
• The wrong target: This is a product, AT&T admits, that is aimed at people who either don’t have a credit card or don’t want to use one online. What’s the overlap between these people and the market for online content?

Both Vindigo and Shockwave.com’s Gameblast seem like good candidates for selling “content”. AT&T’s Prepaid Web Cents card doesn’t seem like a very good way to pay for it.

People are beginning to make the distinction between content and services.

AtNewYork has a good article from the Jupiter Online Media Conference that says, “Forget Content, the Money’s in Services“:

• Vindigo has moved from providing free information to selling information services to PDA users. They don’t create the information, but their subscribers pay to use it on their PDA’s. Vindigo is adding value through aggregation, software, and distribution.
• Homestead has moved from ad-supported web site creation, to selling hosting and site-building tools. A lot of folks are in the hosting business, and their software keeps them from being a commodity.
• Yahoo, of course, is depending on selling services like email, hosting, and personals for its future. It’s content revenue strean (e.g. Yahoo Platinum) is unproven.
• PlanetOut tried and failed to make money with premium content. But now, most of their revenue comes from personals.
• Weather.com plans to sell a “Weather Geek Tool” for weather freaks.

Making the distinction between services and content is a critical strategic skill for online publishers. The Online Publishers Association and Jupiter both include such services as personals and greeting cards in their definition of content.

This is not simply a matter of semantics, because there is a proven market for selling online services, but very little market for online content. Making money from online content may require rethinking it as a service. Turning content into a service requires more than a subscription charge. It means predictably and reliably solving real problems for your subscribers.

A Canadian site , YellowTimes.org, had to remove content deemed offensive (a photo of an American POW and a photo of a dead Iraqi child) by the company that provides Internet access to their host. [Thanks, Politechbot]

The upstream provider, Level 3 Communications [Hoover’s capsule] of Broomfield Colorado, is a multi-billion-dollar company.

Our communication infrastructure should not be in the hands of a few huge companies who can take the content or nature of our communication into account when deciding what to charge or even whether to allow us to use the Net.

Another Internet filtering company is warning corporations that their employees might be wasting resources checking the news, especially now that we’re on the brink of war. [Thanks, PaidContent.org]

ABCnews.com has an additional problem with their subscriber-only streaming news service. Many corporate firewalls block streaming media by default, regardless of content

This is not the first assault on workers’ use of news by a filtering company. The online news industry still needs to come to grips with this issue if they’re serious about exploiting at-work use as a market segment.

The big news isn’t that Overture’s stock dropped 10% on a rumor that Yahoo was set to buy a European competitor. The big news is that Overture’s stock price has dropped 50% in the last two months. The ostensible target of the takeover denies the rumor, but why was the market surprised that Overture is vulnerable to a change of heart on the part of Yahoo?

Both comScore and Nielsen//NetRatings announced daypart media planning tools yesterday. However, the dayparts themselves are still a subject of debate.

Meanwhile, Forbes is promoting a survey of 11,000 executives and senior managers that says the Web is an excellent tool for reaching C-Level executives (these are not executives who earned a gentleman’s C at Yale and then attended Harvard Business School):

management-level workers actively use the Web in the early part of the day, with nearly half (46 percent) going online before leaving for work. In comparison, 38 percent said they read a newspaper before work. Of so-called “C-level” executives (CEOs, CIO, CFOs, etc.), the numbers were even greater, with 53 percent going online before work and 41 percent turning to the paper.

…

In even better news for advertisers, executives are surprisingly willing to engage online advertising: nearly half of respondents (47 percent) said they click on advertising of interest. E-mail marketing fared less well, with 26 percent saying they read work-related promotional e-mails.

This recognition of daytime Web users as an audience that is valuable and hard to reach is long overdue — if we can only figure out how to count them.

AOL is promoting cruises in conjunction with Health magazine, according to the Atlanta Journal-Constitution:

AOL Travel has launched its first-ever AOL “Caribbean Cruise To Fitness” with Health Magazine. AOL members can get a cabin on the one-week cruise for $599 and up. Members who have participated in AOL’s online weight-loss support group are targeted for marketing.

Never heard of Health magazine ? Neither had I. It’s part of Southern Progress, an AOL/TW division that has a deal with Disney which includes an agreement to publish happy stories about Epcot..

Apparently, AOL may have put you on a list of fat people.

The Children’s Internet Protection Act hits the Supreme Court today. The Bush administration is appealing a ruling that reads in part: “The filtering software mandated by CIPA will block access to substantial amounts of constitutionally protected free speech whose suppression serves no legitimate government interest.”

From the Reuters story:

The government appealed the decision, saying libraries are not forced to carry pornographic movies and magazines and should not be forced to make similar materials available online.

“A public library may exercise content-based judgments in deciding what information to make available to its patrons without violating the First Amendment,” the government wrote in its appeal.

Indeed they may exercise judgments, but not if the Federal government requires them to do something else.

This is especially troubling in light of the fact that libraries and schools are the only source of Internet access for many Americans.

The top ad-supported sites’ revenues are growing quickly and they are beginning to run out of space. Meanwhile, smaller sites can’t seem to unload their inventory.

This imbalance has existed since the earliest days of the web, but it is now clear that the recovery will not be evenly distributed.

There is an opportunity to arbitrage this gap in the price of exposures to the same people from different sites. Some of this will be resolved as advertisers get smarter about the way they buy online advertising. Also, a lot of the slack will be taken up by keyword-oriented advertising systems from Overture, Google, and a few late entrants.

Unfortunately,this still won’t solve the revenue gap for most mid-sized web sites.

In the past 24 hours, the unnamed product that has “cluelessly’ tried to harness blogging for promotional purposes has moved from #19 to #5 on Popdex. No doubt this has been hastened by an item on Slashdot.

Steve Outing says, “Get to know the blog culture before trying to profit from it.” It looks to me that they’ve got us pretty well figured out.

I strongly recommend a long piece exploring the people, ideas, and dynamics of this phenomenon over at Chronotope. [Thanks, MarketingFix]

Prediction: When we look back on this history of weblogs, this incident will play a bigger role than Google’s purchase of Blogger.