Many service and entertainment businesses sell identical products through multiple sales channels, at different price points and customarily on a time release schedule. This is called price discrimination (think movie theater release, then DVD, then cable, then broadcast…).
Would the world be a better place if you could purchase an airline ticket ONLY from the airline website instead of through travel discounters like Expedia? No way! Thank you price discrimination!
What if you could only see a movie in the theater and nowhere else? It would cost $70 a ticket and that wouldn’t be good for consumers or the movie business. Fuhgetaboutit! Price discrimination allows us to watch movies at home and on iPods for less.
What if you could only buy Calvin Klein underwear on Madison Avenue but not at Macy’s? Guess what? You’d be paying $100 for your Calvins if that company was prevented from making money through multiple sales channels like Macy’s and Sears.
This applies to online site content as well, although many producers don’t think it does. Just ask Gucci – they make money selling through sales channels NOT on Madison Avenue (like right here). So can online publishers by selling premium, preferential, first-look experiences with a sales force; and also by selling quality discretionary inventory to ad networks. Just like Gucci does at BlueFly.com.
And just like Gucci, online publishers can therefore keep their marquee products accessible, so a homepage placement doesn’tcost the moon and the stars. Ad networks subsidize brands and stabilize pricing– what’s so bad about that?
No brand is so good it can’t be sold through multiple channels as price discrimination allows. Gucci, Calvin Klein, Delta, General Motors (see new eBay sales channel here), books (hardcover then softcover = price discrimination) and movie studios all do it…why should an online content producer sell itself any differently?
The only markets that can avoid this are monopolies (i.e. Calvin Klein is the only underwear producer in the world and you must buy it for $100. Ha!), hence the enormous success of the ad networks today, and tomorrow.
Publishers and networks can be successful together, just like the examples mentioned here.