The consumer may be reluctant to pay for comprehensive content. The consumer may be hesitant to pay an e-tailer anything remotely close to street value for merchandise. Don't blame the consumer, for the user is only reacting to what is being willingly offered. The good times might not last forever.
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There is no free lunch, only leftovers in the dumpster. So here we are, a few months into the launch of our Motley Fool Research product, and it begs the question that every effective marketer wants to know: Is it worth it? Wading knee-deep in the third wave of quarterly earnings reports, it might seem like a peculiar question to pose. But, golly gee, has it been good for you?
Behind the scenes, in regular meetings that you have the luxury of avoiding, we discuss everything from what company to cover next to whether financials should run in ascending or descending chronological order. Issues that might appear trivial get picked apart because we want to make you as comfortable as possible. We want you to be content with the content. By now, you've probably noted the analytical talent of my peers. Let me take this time to vouch for their dedication as well.
At the very heart of this venture was the definition of the one variable that we tried to project away, knowing full well that it was a random, hazy factor in our decision to move forward: Would our fellow Fools pay for premium research?
You own half of the answer. If you are here as a subscriber, you saw value in the service, signed up, and might now be taking hand to itchy chin wondering why I made this a feature-worthy topic. If you are here as a visitor, you either considered the offering and passed, or haven't studied the service carefully enough to form an opinion and are bracing yourself for a hard sell.
Nope. On both counts, actually. This article is merely a convenient springboard to launch into the debate of whether Internet users are willing to pay for content. In the real world, it's a fairly simple process. Do you watch the commercial-fed free television, or do you spring for the uninterrupted subscription channel? In many cases, you probably opt for both. You might even have a wealth of channels to peck at will from, yet, at the urge of that something extra, give the occasional nod to a pay-per-view feature.
The reason to pay up in that scenario is probably the quality and pure experience of the subscriber-based or one-shot premium option.
Then you have a more pragmatic issue like, say, schooling. Private school? Public school? I don't profess to know one iota of veritas on this subject, but being married to a teacher, I can vouch for the fact that private school teachers earn less than their public school counterparts in most cases. That certainly doesn't make education of that kind any less credible, however. (Yes, it's a private school teacher I'm married to.) That issue is for your own debate enjoyment. But in such a situation, it would seem that a major driving factor in opting for private education is the exclusivity of the product as well as any perceived community perks.
Premium financial research has assumed both of these faces in the past. Either through in-depth analytical substance or through the exclusivity of controlled access -- or both -- the product becomes an appealing way to empower oneself and to remain a few steps ahead of the investing community at large.
But if paying for quality and/or privilege is so accepted in the mainstream, why is the online world having such a hard go at it? Consider music-swapping haven Napster. Major record labels are biting their collective nails as they wait on an expected appeal ruling next month. The fear is that efforts to monetize the digital distribution of music may evaporate if the judgment to shut down Napster is not upheld. It's a fear that has been justified, as pay download sites like EMusic (Nasdaq: EMUS) and Liquid Audio (Nasdaq: LQID) are failing to draw the traffic that free sites like Napster or indie halfway house MP3.com (Nasdaq: MPPP) are generating.
In the personal finance arena, leading subscriber site TheStreet.com (Nasdaq: TSCM) went to a free format two months ago. While the site favors insight and commentary over comprehensive analysis, a niche every other major financial site was giving away, it's just another example of a demographically well-to-do audience that suddenly becomes pocket-prudish the moment the modem connects.
But while consumers might be skeptical of paying for unique content, companies have no problem buying information. Forrester Research (Nasdaq: FORR), Media Metrix (Nasdaq: MMXI), and Jupiter Communications (Nasdaq: JPTR) have recently reported profitable stateside operations, all catering to the corporate thirst for knowledge.
Does that mean that a company has more of a need to stay ahead of its competitors than individual investors do in the marketplace? In practice, yes. In theory, why should that be the case?
One explanation might come at the hands of the medium itself. We as consumers have embraced the Internet as a gateway to free information. While the offline equivalent might be a public library, the online landscape offers no limits, no crinkled highlighted pages, no past due charges, and no Dewey Decimal System. With access comes information, and with information comes freedom.
Even in the catalog-pretty field of tangible merchandise, user expectations have been fueled to irrational levels. The emergence of e-commerce was supposed to offer convenience over the physical shopping experience. In an ideal service-oriented universe, online users should be willing to pay a premium for goods they would have to drive out to fetch in the bricks-and-mortar world.
This hasn't happened. Why? Because every single competitor is a click away. So an e-tailer doesn't just have to undersell the local store at the other side of town -- no, that's just for starters. To close the sale, the Internet merchant has to be one of the cheapest -- if not the cheapest, period. So, you're not paying for the convenience of deskside shopping. You're actually steamed if the practice isn't discounted substantially over the price you would have to pay if you were to go out of your way to enter a physical storefront.
Absurd? Perhaps. But true. And logical when one considers the drive to acquire customers at any cost, which until recently was a fair practice. Yet in a tribute to market dynamics, those days might be numbered. As more and more e-tailers and once-ambitious content providers get forced out financially or pull the plug on ventures with unattractive metrics, those that remain might eventually reap the fruits of the convenience they provide consumers. This is why sector consolidation continues, with shareholders licking their wounds and consumers unaware of the weaning that is about to take place.
Because when just a few options remain -- in content and in e-tail -- we're back to teaching old economy markup tricks to new economy survivors. That's when the consumer will have the freedom to fill the pushtray as he or she desires, but knowing full well that a cash register awaits to ring up the lunch.
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