a study on strategies for online content providers · a study on strategies for online content...

A Study on Strategies for Online Content Providers :

Ahmad RUSDIANSYAH & De-bi TSAODepartment of Industrial Engineering and Management

Tokyo Institute of Technology, Japan

A case study of an Indonesia’s leading provider

3rd Asian eBusiness Workshop, TITECH, August 6-9, 2003

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Outline

1. Preliminaries2. Online Content Providers (OCPs)3. Strategies 4. Case Study

5. Conclusion

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Preliminaries

Objective :

n To analyze several strategies that are suitable for OCPs

n To provide examples of such strategies implemented in the case study

Background :

n How to keep online content providers (OCPs) can stay on their business ?

n Which strategies should be taken ?

4

Outline


5. Conclusion

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OCPs : Definition n Internet companies that are engaged principally in the delivery to consumer

and business users of professionally-produced, copyrighted content [1] , such as :

• News• Song • Video Game• Ebook , etc

[1] “Online Content Providers”, Harvard Business School, Case Study No; 9-801-261, December 2000

OnlineRetailers /brokers

Portals

OCPs Transmitting Information as a final purpose

- Navigational Assistance / directories- Linking to its partner contents

Providing content to gain successful transactions

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OCPs : Categories of Contentn Why the content will be used

ü News ü Informationü Entertainment

n How long content will be relevant after it is produced ü Quickly obsolete => newsü Longer “shelf life” => entertainment

n How one pays to receive itü Indirectly => viewing advertisingü Upon each use => “pay per view”ü Through outright purchase => downloaded contentü By subscription

n Bandwidth requiredü Modest bandwidthü A high bandwidth connection

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OCPs: Creating value for users

• Produce and then distribute widely (expensive to produce initially but inexpensive to reproduce subsequently)

• Available at any time, and can be accessed anywhere with internet access.

• Remember users’ preference

• Networking capabilities

• Costless copying of copyrighted materials

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OCPs : Business Model

Creating value for users

Monetizing user traffic

Acquiring new users/visitors and retaining traffic

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Outline


5. Conclusion

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Sustainability of Competitive Advantage [2]

n Operational Effectiveness

Doing what the competitors do, but better

Internet-basedbusiness

n Strategic Positioning

Doing things differently than the competitors to deliver unique value to customers i.e competing in distinctive way

i.e. Rivals tend to copy quickly

Strategy in the Internet Age

[2] Porter, M.E., “Strategy and the Internet”, Harvard Business Review, 2000

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Porter’s Strategic Positioning Principles

n Starting with the right goal

Adistinctivecompanythat offers

uniquevalue

n Continuity of direction

n Enabling to deliver sets of different benefits

n Being reflected in a distinctive value chain

n Making trade-offsü Abandon some product features, services in order to be unique at others

n Making interdependent activities throughout the value chain

üDifficult for rivals to copy a whole system of competing

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Strategies for OCPs

　　Syndication

Other Strategies:

i.e. Monetizing user traffic

Core Competence

Strategic Positioning

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Core Competence (1)

n Growing from the core :ü A foundation for growth : a clear definition of the company’s core business -> core products / services

ü the core is the most likely source of profit

Ø Involves one or more : [Zou and Allen , 2001]

ü The highest profit potential ü Most differentiated and strategic capabilitiesü Most critical product / service offeringsü Most important channelsü Strategic assets : key patents / brand

n Pursue opportunities that align with the core competencies

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n Moving Beyond the coreü Too much insistence on core competences => rigid and

unreceptive to promising new opportunities

Core Competence (2)

Ø Look for opportunities nearby with the most potent sources of competitive differentiation and advantage

Ø Evaluate the business that are closely to the core business

Ø New Regulation/Technology => Redefinition of the core

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n Needs collaboration / partnership : Ø To reduce :

• the cost of technological development or market entry• the risk of development or market entry• Development time and commercialize new products /

services

Ø To stay on core business, build new products / services in collaboration with other companies that have know-how, such as

Syndication (1)

SyndicationNot a new model, but it can be performed thanks to internet

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What is Syndication ?

Syndication (2)

… Licensing content or e-commerce for redistribution by other companies

Charles Schulz

Originator

United Feature Syndicate. inc

Syndicator

MagazinesNewspapers

WebsitesDistributor

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The Syndication Roles :

n A company can :- play one/two/three role, and shift from one role to another role

Originators :Create Original Content

Distributors :Deliver content to customer

Syndicators :- To Package the content for distribution, often integrating it with content from other originators- To manage relationships between originators and distributors

NetworkConnected,instead of

linear chains

Syndication (3)

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Syndication ≠ Outsourcing :l deal with information than physical resource l=> infinite number of partners with incurring no

much additional costl Can be automated and standardized

Core Capabilities could be assets to sell

Reshape Business Organization

Syndication (4)

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n Cash License Feesn Ad revenue generated

by partner’s siten Brand exposuren Flow back traffics

=>seeking more details

n Risk of loosing usersn Partners=>Direct

competitor by producing content in-house

Syndication (5)

Trade-offs : ….

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Outline


5. Conclusion

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CS: Historical Data

l Name : detikcom [www.detik.com]

l Built in 1998 by a number of journalists that want to develop anews site.

l First player, with initially 10.000 page views/day

l It does not rely on any printed press [4]

l Condition : in that time, there was a very restricted law for “conventional” press, but no law for “online” press

l Gain much reputation of being the most accurate breaking news site (the fall of Suharto’s regime, 1998-1999) [4]

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Frequent Updated

News-mainly

Political-

Menu of Features

Previous News

CS: Front Page

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CS: Market Profile

512.000Year [3] Subscriber

sUsers

1998 134.000

2002 667.002 4.500.000

2003* 800.000 7.550.000

[3] Indonesian Internet Service Provider Association, 2003 [www.apjii.or.id]

n 1 Million unique visitors / day

n Mostly access is performed through :

Ø Internet cafés

Ø Office

1. Email 2. News and Reference3. Entertainment4. SMS Service from websites…21 Shopping and Purchasing22 Travel Information / Booking23 Online Auctions

InternetFor what ?

Country’s internet subscribers Detikcom’s User Profiles:ü 80% Menü Middle-Up level Societyü Mostly productive ageü Professionals / Workersü Well educated ü Mainly in big cities

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CS: Strategic Positioning

n Mission : To share information to public QUICKLY

n News are produced by own journalists

n “detik” means “second” in Indonesian language

Competitors :• Portals providing links• Online Version of Leading conventional newspapers

StrategicPositioning

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CS: Core Competences (1)

n Growing from the core

Company’s core business : Providing Breaking News, especially Political and Current News

ü The highest profit potential :

²The breaking news content ≠ regular news è attractive for users to revisit è generating Ads

ü Most differentiated and strategic capabilities :

²In-house produced quick breaking-news, not just providing links

ü Most critical service offerings :

ü Most important channels :

²a first reference to find breaking news

ü Brand Image :

² “detikcom= A QUICK BreakingNews Provider”

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NewsStorage

News EditorsReporting

Coordinators

assig

nmen

t Reporters

Breaking NewsNews Production Cycle

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00:25 First 12:00 15:32 19:2700:35 12:11 15:46 19:2704:55 12:25 15:46 19:4305:22 12:35 15:48 19:4306:42 12:53 16:11 19:5206:55 13:03 BOMBS ! 16:12 19:5507:39 13:04 16:18 20:1008:17 13:12 16:23 20:1308:22 13:23 16:27 20:2109:34 13:25 16:35 20:3609:53 13:38 16:46 20:4009:56 13:43 17:14 21:2210:13 13:54 17:15 22:0410:13 14:13 17:18 22:0610:15 14:16 17:40 22:0910:28 14:20 17:46 22:1510:35 14:21 17:50 22:2410:46 14:28 18:01 22:4511:12 14:49 18:03 22:4611:16 14:56 18:13 23:3311:32 15:03 18:24 23:4411:38 15:13 18:36 23:5111:41 15:13 18:38 23:57 Last11:52 15:15 18:5711:58 15:28 19:01


Example:Typical

Breaking News Appearing in detikcom

- Taken on August 5, 2003-“Bombs” exploded in Jakarta around 12.30- First breaking news 33 minutes

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BOMB !!! BOMB !!!First News 13:03 13:20Last News 23:51 21:35Range of Time 10:48 8:15Number of Breaking News : 56 28Average Interarrival Time (Minutes) : 15 15

* run by the biggest

newspaper, "KOMPAS"

Comparison

23:5822:19

6322

23:5723:32

9814

DETIK.COM KOMPAS.COM *)All

0:25 1:39All

Unique Value !!

- Considering “hot” news- Faster - Higher number of breaking news- More frequent updated


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n Opportunities aligning with the core competencies

PoliticalEntertainment

/ SportArticles

WomenColumns

Food andHealth

English Breaking

News

Finance,IT,

Columns,etc

content provider functions

e-Auctions e-Shopping Mall

e-commerce functions

Travel Booking etc

email Chat-rooms Site directories

Community building & portal functions

etc

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n Moving beyond the core

Ø Providing short-news via cellular phones (SMS) Ø Producing printed “quick” newspaper, based on the online content, which is distributed 2 times/day (later is closed)Ø Advertisement via SMS to be displayed on the webØ etc

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Features Originators Syndicators DistributorStock / ForExc Rate e-bursa.com e-bursa.com detik.com

Stock Feature etrading.co.id etrading.co.id detik.comIslamic Study Resources Abdullah Gymnastiar manajemenqolbu.com detik.com

Business Analysis Gede Parama dynamicconsulting.com detik.com

Distributor

CS: Syndication

Newspapers (online and printed)

Solo PosSuara MerdekaNusaAnalisaMedan BisnisMandiri

Portals :

CBNDnetBhinneka

Originator and Syndicator :

-News-Photos-Mobile Content

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CS : Monetizing User Traffic

n Advertisement èMainly Source

n Subscription Fees:• Access to Premium Features

• Access from Cellular phones (SMS)

n Commission fees• Syndication / Partnership fees

• Event / Seminar ticketing box

• Tour and Travels ticketing

n Other Sources

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Conclusions

We have discussed some strategies are suitable for online content providers, such as

- Core Competence- Syndication- Monetizing user traffic

and demonstrated a case study on how an OCP implement these strategies

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Thank You

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References1. “Online Content Providers”, Harvard Business School, Case Study No; 9-

801-261, December 2000 2. Purbo, Onno W.”Indonesia Digital Review”, taken from www.ipdf.org3. Information on www.detik.com4. Mello, Adrian, “Creative Destruction or Concentrating on the Core : Which

is Right Path to growth ”, Harvard Business School, Management Update, January 2003]

5. Werbach, Kevin “Syndication : The Emerging Model for Business in the Internet Era”, Harvard Business Review, May-June 2000

6. “Online Portals”, Harvard Business School, Case Study No; 9-801-305, December 2000

7. “The Wall Street Journal : Print Versus Interactive”, Richard Ivey School of Business, Case Study, 1999

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Features Offered by Detikcom

n Content n Political and Event

Newsn Finance Newsn Entertainment News n IT/ Internet Newsn Sport Newsn Stocks n Health Featuresn Food Featuresn Expert Columns

(religion, business, etc)n Novelsn etc

Navigation :n TI Services (Site Directories)

Commercen Tour and Ticketingn Advertising sent from Mobile Phones (SMS)n Ticketing Box

Social Building Features :

n Chat roomsn Message boardsn Polling

Personal Productivity n Web based email

OCP Portal

a study on strategies for online content providers · a study on strategies for online content...

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