Archive for January, 2010

Erick’s points on communications are right on… if you are a communicator, ignore them at your peril. Having been one for many years, the hardest thing is knowing you rarely have all the information – and the easiest thing is acting like you never do.

PR is not supposed to be fiction and spin. At least not all the time. Occasionally the communications professionals at companies, particularly publicly traded companies, are supposed to actually tell the truth. And perhaps help journalists and bloggers with a story instead of sending them off on a fake trail.

The trick here is a “no comment” actually helps both the communicator and the journalist.

Nick Carr gets at much of the flawed thinking on the New York Times metering content. In essence, The Times are introducing a new product, at a new price point. Another way of thinking about it is they have attracted a monumentally large number of beta users and are now looking to convert those to paying customers. More from Nick…

Jarvis might want to spend some time reading about the fundamentals of pricing, particularly Hal Varian’s classic work on the "versioning" of digital goods. Varian is a distinguished economist who teaches at Berkeley and is also now Google’s chief economist. Here’s a little of what he says about "versioning information goods," which is extremely pertinent to the Times’s strategy as well as the news and media business in general:

One prominent feature of information goods is that they have large fixed costs of production, and small variable costs of reproduction. Cost-based pricing makes little sense in this context; value-based pricing is much more appropriate. Different consumers may have radically different values for a particular information good, so techniques for differential pricing become very important … [One] particular aspect of differential pricing [is] known as quality discrimination or versioning … The point of versioning is to get the consumers to sort themselves into different groups according to their willingness to pay. Consumers with high willingness to pay choose one version, while consumers with lower willingnesses to pay choose a different version. The producer chooses the versions so as to induce the consumers to “self select” into appropriate categories …

[Consider the case] in which the seller knows something about the distribution of willingness to pay [WTP] in the population, but cannot identify the willingness to pay of a given consumer. In this case the seller cannot base its price on an exogenous observable characteristic such as membership in some group, but can base its price on an endogenous characteristic such as the quality of the choice the consumer purchases. The appropriate strategy for the seller in this situation is to choose two qualities and associated prices and offer them to the consumers. Each of the different consumer types will [select] one of the two quality/price pairs. The seller wants to choose the qualities and prices of the packages offered so as to maximize profit.

The intention is to get the consumers to self-select into the high- and low-WTP groups by setting price and quality appropriately. That is, the seller wants to choose price/quality packages so that the consumers with high WTP choose the high-price/high-quality package, and the consumers with low WTP choose the low-price/low-quality package.

Jonathan posts a great note as Sun merges with Oracle. I was lucky enough to be a part of Sun for a number of years. He’s right, there are many remarkable people there. Oracle is going to be even more remarkable as a result.