Thursday, June 26, 2008

Cable TV Model for Some Parts of the Content Ecosystem

"An unconstrained profit-maximizing platform charges a positive fee to the other side of the market if and only if content providers value additional consumers higher than consumers value additional content providers."

In other words, platform and service providers have opportunity to earn revenue from content partners when new, emergine or highly-focused content partners want expedited carriage, placement or promotion on platform portals.

It's the same sort of thing the cable industry long has had as a business practice. Popular networks get paid, low-viewership networks often must pay to get carriage (shelf space). In a service provider context, the analogy is that promotion, targeting, location, billing and other features and services can be so useful a content partner might be willing to pay to obtain them.

If, on the other hand customers highly value a particular content provider, a rational platform simply will make sure the popular provider is well supported, and will do nothing to impede customer access.

It's still an emerging sort of thought, and the services and applications platforms can offer partners isn't so well developed. But it is coming.

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