Umair Haque / Bubblegeneration
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Design principles for 21st century companies, markets, and economies. Foreword by Gary Hamel. Coming January 4th. Pre-order at Amazon.


 
Friday, October 07, 2005


How to Arbitrage Micromedia, pt 1

Google Reader.

Not so long ago, I spoke to one of of the usual suspects and one of my recommendations was to drive growth in micromedia consumption at all costs. I suggested a newsreader; they kind of rolled their eyes (which really surprised me).

Their logic was that marginal revenues from microads are tiny. I thought that was kind of missing the point. The point is that a reader, when combined other services, becomes the browser 2.0 - the consumer interface to micromedia.

Now, here's a textbook example of how to arb micromedia, thanks to Google. Give away a reader; pick up nice marginal ad revenues from microads, but much more importantly, begin to build a profile-based ads competence, and hugely increase switching costs by creating demand side scope economies.

This is a huge (huge) arbitrage; you are essentially creating and capturing all this value for the price of the relatively minor fixed and almost zero variable costs necessary to run a reader. The returns are phenomenal. Textbook execution (well, except for the fact that Google reader kinda sucks so far :)

Another segment bites the dust (not really, there's gonna be a lot more action to come, let's see if Flock can deliver on the hype...)

-- umair // 7:55 PM // 0 comments


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