AT&T "stumbles into online content" with its PrePaid Web Cents card

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.

So many search engines…at least for the moment

Search engine expert Danny Sullivan reviews the search engines of the past and present, with some hints for what is to come, on Clickz.

It’s easy to forget, in this Google-centric universe, how many search engines there have been, and how ruthlessly Darwinian was the process that led to the current situation.

I was surprised by the degree and speed of the consolidation in the business over the last five years, probably because I underestimated the cost of upgrading and maintaining a working search engine relative to the (short term) costs of simply buying the results. The trend toward paid listings will no doubt hasten consolidation because it requires a very new kind of selling infrastructure.

However, the sheer number of players and the low (in absolute terms) price of doing it yourself drive down the value of even a consolidated property.That’s what former high-flyer Inktomi discovered and what Overture is discovering.

Services, not content, generate fees for publishers

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.

The censor upstream

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.

People who consume news or sausages shouldn't watch either being made

The first time I went to work at a newspaper, I was startled by how much it was like a factory. Inspired by Chris Gulker, Tim Porter tracks a lot of the current purposelessness of the newspaper business to its factory mentality.

Of course, every newspaper contains a real factory — its printing presses churn out hundreds of tons of news and advertising every day, and its fleet of trucks deliver them to doorsteps in a coverage area of thousands of square miles.

Inside the news factory, productivity is sometimes measured in inches and not in insights. Sure, there may be a surprise in your local news package, but the rest of it is as surprising as a Happy Meal.

The factory mindset pervades newspapers like a grimy fungus. It manifests itself in rote stories scheduled by calendar (Hey, it’s August, time for back-to-school features) and sourced by a familiar rolodex of people who will take reporters’ calls. [ Read: Robert Thompson watches TV for a living, Salon ]; advertising staffs that rely on revenue from department stores and national brands while driving away local, community-based businesses with exorbitant ad rates (thereby creating an advertising product that is of little use to the actual residents in the market); and IT departments that hard-wired entire enterprises to legacy platforms and proved to be more truculent than defense contractors when nimbler technologies arrived.

The newsroom itself is perhaps the most factory-minded of all. It values tradition over invention; it sets deadlines to maximize press-room or distribution efficiency while compromising quality of content (can’t get the big game in the sports final? too bad); it continues to embrace managerial hierarchies that emphasize “dues-paying,” discourage collaboration and drive journalists to think they can actually improve their professional lot by aligning with the Teamsters when contract time comes around

I never imagined so many talented, creative, smart, funny, insightful, knowledgeable people could produce an editorial product of such stultifying banality as the typical daily newspaper.

There are about 1500 daily newspapers in America. Why do they all look the same? They’ve learned their ways from one another a long time ago, probably before you were born.

The next revolution is still up for grabs. Technology has empowered a lot of writers and reporters to be their own publishers. But, there are also plenty of economic reasons why future Internet news media and the networks they run on could be more concentrated–and even more like factories.

MediaSavvy's a tiny bit faster, thanks to the Web Page Analyzer

The Web Page Analyzer at WebsiteOptimization.com is really useful for understanding what might be holding your page performance down. [Thanks, WebWord]

I’m pretty obsessive about things like graphics size and quantity, and page size, but it made me realize that I was running too many items on my home page. This was a relic of my last vacation, when posting was very sporadic. It’s mercifully shorter now. Of course, it doesn’t matter unless you believe the myth that readers care about page load times.

Jupiter puts online content sales at $1.5 billion

Jupiter says that online content sales will rise from $1.5 billion in 2002 to $2.0 billion in 2003.

Jupiter didn’t define online conent in their public statements: “The $2.0 billion forecasted for paid content spending is fragmented across over a dozen categories ranging from news to sports to health to adult content, making it difficult for any one company to collect a significant share of that spending.”

Without further detail, it’s impossible to compare that number to the Online Publishers Association number of $1.3 billion in content sales in 2003. The OPA didn’t include adult content and Jupiter may not have included services and personals.

“For at least the next 18 to 24 months, most online media companies should generate 60% to 70% of their revenues from advertising.” says Jupiter analyst David Card. That average confuses the issue, probably by including some sites and sources that shouldn’t be lumped into the average. I estimate that non-adult online publishers are getting less than 10% of their revenue from content sales.
UPDATE: David Card tells me in email that their number does include such services as personals and greeting cards. Also, they put pornography at less than $250 million/year, with little growth.

Uncertainty is the problem with the economy, and it'll get worse before it gets better

The real problem with the economy now is uncertainty.

What’s going to happen to the economy? How will the war affect the economy? How will the war affect advertising? How will the war affect gas prices? How about tech spending? What happens if the war takes an unexpected turn? How much will it cost to put Iraq back together, if we’re given the opportunity? What if there is a major act of terrorism? What the hell is going on with North Korea?

Scott Rosenberg’s “Eve of Destruction” DaveNet essay encapsulated a lot of my concerns. We have no clue what will happen over the next ten days, ten months, or ten years, and GWB is presenting victory as a foregone conclusion. The White House has discussed alternative outcomes internally, but none have been suggested to the citizens. The big lesson of war is that the outcome is usually a surprise. If it weren’t, there’d be fewer and shorter wars. Certainly the last ten years have taught us not to underestimate Saddam Hussein.

Generally, I feel that the president doesn’t have a lot of control over the economy. But GWB has a lot of options for reducing the amount uncertainty in the world. For some time he has been increasing the amount of uncertainty. In such an uncertain market, what are the odds that you’re going to do any hiring?

Holovaty's review of NCAA bracket implementations

Adrian’s Holovaty’s review of Web NCAA bracket interfaces is great. He discusses both the technology used and how well it works.

Adrian’s winner is Flash, so this may be a case where Flash is the best tool for the job. It’s by far the best-looking. But Yahoo’s HTML (and JavaScript-less!) application does very well indeed. And Adrian himself chose HTML with a JavaScript-free option for his own implementation.