Make Them All Play Fair

Make Them Play Fair - Email To a Friend is a viral letter writing campaign orchestrated by the cable companies in an attempt to foist the responsibility for rising cable rates onto the networks.

We modified our letter just a little from the suggested version. Here's our version:

As you probably know, our cable company sent us an e-mail asking me to protest the rate increase it has received from the two primary providers of sports programming. We don't buy it.

We are paying for these networks' failure to execute a profitable business model without gouging the consumer. We recognize that cable companies have to pay cable networks for the right to distribute the networks' channels to cable customers.

We are also aware that ESPN and FOX receive revenue from advertisers on both their cable and regular networks such as ABC in addition to subscriber revenue from cable companies and that they have the ability and responsibility to control their own organizational costs.

We also know that the cable companies find it easy to blame the sports networks, particularly Fox Sports and ESPN, for increased costs, which have dramatically increased prices, and that this is driving up the price that customers are asked to pay for cable television.

It appears that both the cable companies and the networks believe that the demand for sports programming is totally inelastic, and that customers will pay anything to see overpaid athletes perform poorly.

The sports networks, particularly Fox Sports and ESPN, need to moderate their price increases to help keep the cost of my cable bill only as high as it is now, even if it means dropping the extra versions of these brands.

If these networks want to continue to have viewers, they need to pass this cost along to the advertisers and sports leagues, not the viewers, if they are unable to control their cost structure through better negotiations and cost reductions.

These networks also need to be more aggressive in negotiations with the leagues so that this is not necessary. Athletes, owners and advertisers are making huge profits while local games are blacked out due to arcane rules, which are eroding the long-term prospects for a local fan base for professional sports. Where are the customer rebates for blacked out games that the rest of the country sees on ESPN for the same price we pay, while we see a black screen or, worse, an infomercial for which they make still more revenue?

If ad revenues do not warrant paying the prices the leagues ask, or the networks cannot use their leverage to pressure the NFL to rescind the blackout rule, these networks should not pick up these products. Consumers should not pay for the mistakes TV Network executives have made in bidding for football, baseball and other broadcast rights.

Additionally, the cable companies need to realize that they also bear responsibility for any price increase, and that simply blaming it on the big bad networks as if they have no power to negotiate their deals doesn't sit well with consumers.

Worst case scenario, our cable company should be allowed to include only the basic ESPN and Fox Sports channels and place the additional sports channels like ESPN2, ESPN Now and ESPN Classic, which were introduced to create the illusion of value, on an optional tier which consumers can choose whether or not to buy.

This will help keep the cost of our cable bill only as high as it is now, which is already outrageous.

We are also sending this to our elected officials so that they understand that the rapid and unrestrained rise in sports TV network costs, along with the networks' and cable companies' lack of responsibility for their own business models, are further threatening the already tenuous value of cable television for American consumers.

It will be interesting to see if they still send it.

Memoware Makes Info Portable

Looking for a reference guide for your PDA? How about a little humor from Dilbert? Whether you need a reference of Nascar champions, or the 1979 Episcopalian Book of Common Prayer, MemoWare can help you keep the content at your fingertips with its downloads of eBooks for PDAs.

According to the site, many of the downloads are free. Some include readme files that ask for a donation to register the download, much like a traditional shareware site. Others, including most of the "most popular" titles require a paid download, making Memoware somewhat of an e-book "mall" for PDA users.

A search on the word "free" still yields over 300 pages of results, though, including the Bible, a Dictionary of Acronyms, and various medical texts. Check this out if you want to load up your PDA.

Anti-Spam Stress Reliever

Torture a Spammer Game : Step 1 & 2



Too much unsolicited commercial e-mail (aka "spam") in your inbox? The folks at emailsherpa.com, which is part of the MarketingSherpa family of sites, have come up with a fun new way to help you deal with the stress of hitting that delete key over and over.
Torture a Spammer is a little game that allows you to zap the evil "Viagro," porn and other common spam characters in the game, then, if you zap enough of them, tortures the little cartoon figures with your choice of several different punishments.

Doesn't do anything for the real thing, but it's a fun diversion. To play the game, you need to provide an e-mail address, but trust these folks when they say the e-mail address you provide will not be used for any other purpose. If you'd like, you can get a free report on permission-based e-mail if you are a marketer, or a free report on controlling "spam" if you are a consumer.

Dear Fox10

Usually, I don't share concerns of this nature, but as a loyal morning show viewer, I just wanted to let you know that I was disturbed to see Fox10 enabling the sheriff's constant hunger for publicity this morning. I find Sheriff Arpaio's constant publicity stunts and his justifications citing alleged peripheral crimes that might occur because of prostitution much more disturbing than the prostitution itself. Crime surrounding prostitution, like crime surrounding drugs, is most often a direct result of the fact that the activity is illegal, rather than an inherent consequence of the activity itself.

The only real law that has ever been "enforced" with regard to prostitution is the economic one of supply and demand. Obviously, men are paying these women or they would not be successful. Why not legailze prostitution so that it can be regulated and taxed?

Personally, I don't care if these gals operate in my neighborhood at all. I don't really pay attention to my neighbors' sex lives. Obviously, these women are very discreet or there would have been complaints. If there are complaints, it is appropriate for law enforcement to act on them, but this type of entrapment is wrong. Centuries of experience have proven the futility of legislating morality in this instance.

I also find it ironic that the channel that brought us Temptation Island, Who Wants to Marry a Millionaire, and the "Skills not Pills" story that was teased right after the "sting" story is the only one that was willing to enable this latest stunt.

In the 8 o'clock hour this morning, the Johns were finally mentioned, and the Sheriff tossed out a remark in candid footage about keeping us safe from sex for two or three days. That picture of the sherriff was a sharp contrast to the one in the story originally shown in the 7 o'clock hour, when the Sheriff was shot at a very flattering angle with artistic lighting while delivering prepared remarks.

If my tax money is paying for a two month investigation bordering on entrapment to stop guys from visiting entrepreneurs that provide them with sex in exchange for money, the result of which will have the impact of curtailing the activity for two or three days, I want my money back!

Thanks for listening to my little rant.

Roxio and Napster -- Meant to be?

Since this is a hot topic in my current section of Customer Behavior, and, in my opinion, a rare example of a currently occurring fundamental shift in the way a product (music) is delivered that is occurring because of a huge change in customer behavior, I decided to do a little research on Roxio and its reformed iteration of Napster.

Roxio's core technology business, which is a natural fit, is used to burn CDs and DVDs and comes bundled with many CD-R, CD-RW, DVD-R and DVD-RW drives. Given the fact that its technology is used to burn CDs, the Roxio name is undoubtedly familiear to many former Napster users:

"Roxio, which makes the bulk of its revenue from the sale of its flagship CD and DVD burning software, is entering the marketplace at a time when rivals are in the midst of rejiggering their pricing policies to lure subscribers."

(http://ecommerce.internet.com/news/news/article/0,,10375_1607541,00.html)

I found it interesting to learn that 60 million people had used Napster at the height of its popularity. The segment was a group of young early adopters whom the Roxio is hoping to win back to the pay model. Roxio's research last summer indicated that 47% of online music fans would pay for what they had formerly downloaded for free. This number may be a little low, because the research was conducted before the criminal cases against downloaders were filed. Yahoo! Finance describes this set of customers as rebels:
"Napster has tried to preserve the counterculture image associated with the original Napster, a music service created by Shawn Fanning that was shut down during the summer of 2001 because of its file-sharing capabilities. Web surfers who hit Napster.com can watch the animated Napster cat break out of jail and into the music industry. Print ads show a dark graveyard, with an empty hole surrounded by dirt in front the Napster cat's gravestone.
But despite the rebel hype, this version of Napster falls firmly within the establishment, and the key question is whether Napster's formerly loyal fans will pay for what used to be free - especially when other no-cost file-sharing services such as Kazaa and Morpheus continue to operate - and other big-name companies enter the space. " (http://biz.yahoo.com/djus/031009/1659001100_2.html)

The new Napster will provide both streaming audio and downloadable music in a paid model which will return revenue to the music companies. In addition to deals with the music companies to license legal downloads, as part of its marketing plan, Roxio is leveraging strong strategic alliances within the computer industry to tap into the desire Napster users have for portable digital music. On September 30, atnewyork.com reported on a strategic deal that will help position Roxio ahead of its competitors in this space:

"In a coup for Roxio (Quote, Chart), the soon-to-be-relaunched Napster 2.0 has found a home on the upgraded WindowsXP Media Center Edition 2004, putting the paid download music service before a potentially large audience. Napster 2.0, which Roxio expects to launch before the holiday shopping season, has been embedded on the second iteration of Microsoft's hybrid platform to let music fans browse, sample and buy digital music by clicking on remote controls."
(http://www.atnewyork.com/news/article.php/3085701)

Additionally, Roxio will bundle the software with its own technology, and that of PC makers. According to an October 9, 2003 article in Yahoo! Finance:
"On Tuesday, Napster and Microsoft announced a specially designed Napster 2.0 interface, which will be included on Microsoft's new media center product. Also, Gateway Inc. (NYSE:GTW - News) agreed to install Napster 2.0 software, along with 150 songs, on the hard drives of certain computers." (http://biz.yahoo.com/djus/031009/1659001100_2.html)

Napster's success in creating a profitable model depends on creating a revenue model that can cover its overhead, by far the biggest component of which is the royalties on the music. Earlier this year, eCommerce News reported on the difficulty Roxio faced in its ultimately successful negotiations with the music companies. The February 23, 2003 article, Roxio Plans Legit Napster Comeback, discussed the cost component of the business model and the challenge of meeting the music industries royalty demands and maintaining profitability:
"(Jupiter Research Analyst Lee) Black told internetnews.com the biggest impediment to launching a successful premium service is the cost to acquire the licenses from the music labels. 'The business model gets destroyed by trying to buy the content. Only five players -- the labels -- control the pricing and they are able to set the prices very high,' he explained.

On average, the labels ask for about 50 cents on a download that's sold for 99 cents and, when overheads and bandwidth costs are calculated, the music services end up making next to nothing. 'The price they have to pay to get the licenses from the major labels is steep. It would be interesting to know if the music services have to give up equity or put up a retainer fee to acquire these rights,' Black said."

(http://ecommerce.internet.com/news/news/article/0,,10375_1607541,00.html)

Because it already offers a complementary technology to downloading music, the company has some degree of brand recognition among members of the target audience, and, because it has already bundled its burning software with hardware, existing relationships with manufacturers that have enabled it to leverage co-marketing arrangements others could not. On July 28, 2003, internetnews.com reported that Roxio plans to leverage the synergy of its core business with the new model:
"Digital media software firm Roxio (Quote, Chart) plans to bundle the reborn Napster 2.0 service with its popular CD/DVD burning tools and roll out what it calls the first online music play offering unlimited a la carte downloads alongside a subscription option.
Roxio chief executive Chris Gorog used the spotlight of the Jupiter Plug.IN Conference & Expo here to release details of Napster 2.0, which is expected to go live in time for the Christmas holiday with about 500,000 tracks for sale via individual downloads, by monthly subscription, via Internet radio, or in any combination."

(http://www.atnewyork.com/news/article.php/2240801)

On October 10th of this year, e-Commerce News described one analyst's take on why the new Napster has the potential to become more than just a way to share music. The idea of creating a virtual listening community online that is actually a group of niche communities may play heavily into Napster's strategy for engaging its customers, and may also pose an interesting challenge to the site:

"GartnerG2 analyst Mike McGuire, who has been testing the trial version of the new Napster, told the E-Commerce Times that Napster's subscription service has some intriguing features, including the opt-in ability for a user to post the songs he or she is listening to and find out which songs are on other users' playlists.

According to McGuire, Grateful Dead lyricist John Perry Barlow once said people have an innate desire to share things that are cool. Illustrating this point, McGuire cited the prevalence of music-based communities, such as the Deadheads, long before the Internet's rise.

The challenge for online retailers is to extend music listeners' sense of community into the e-commerce arena, he said.

McGuire added that he can foresee a time when communities based on certain genres of music, such as speed metal or reggae, could congregate at Napster, and he noted that Napster faces an interesting challenge in terms of how best to engage these enthusiasts. For example, if the company overmanages its forums, he said, they will become less attractive to users seeking community and may limit Napster's ability to maintain customer loyalty."
(http://www.ecommercetimes.com/perl/story/31831.html)

To date, Napster has not joined its competitors in creating a shopping interface for items related to the music, such as shirts, collectibles, CDs and the like, but this is another potential revenue stream the company could exploit. (http://www.boston.com/business/globe/articles/2003/10/06/new_business_models_emerge_in_net_music?mode=PF)

The goal of Napster's re-birth is a total shift in the way that people listen to and pay for music. Driven by behavior and research, Roxio has a vision of music everywhere, anytime.

"He (Gorog) declined to provide details on pricing or subscription rules terms. On the subscription side, Gorog said downloads would be tethered within the PC environment. Over the next year, he said Napster would embrace complete portability, including the ability to transfer tracks from the PC to the car and to the entertainment center in the living room.

'We're working with hardware and technology partners to ensure a seamless, integrated platform to make the music available everywhere. Within 12 months, Napster 2.0 will deliver on that vision,' he said."

(http://www.atnewyork.com/news/article.php/2240801)

If Roxio succeeds in executing a profitable model for downloadable music, it will be well-positioned to lead the segment, although there are others currently in the space, which would not be bad for a $5.3 million investment. Roxio appears to have an advantage both in the relationship of its current brand to the legacy Napster customer base, as well as the benefit of strong industry alliances for co-marketing and bundling deals that will enable Napster software to ship on most new consumer PCs. The question is, are the customer ready to pay?