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Tuesday, November 13, 2007
Research Note: Locked Into Obsolescence
Some free advice for portals.
Turn your strategies inside out. Make ad networks instead of locking yourself into a loser's game - paying more and more for less and less valuable content.
This is a sucker's bet. Because it's a zero or negative sum game: I lose market share today, I bid more for content tomorrow (read the article in detail, note the Yahoo example).
No real value is created, costs are just shifted across a limited set of players. And, ultimately, the portal model decays, and value shifts totally to content players.
But the payoffs in the game are still dictated by context - context is very much king.
And that's why portal players would be infinitely better off shifting from core to edge: if they don't, they're gonna be locked into an obsolete form of competition whose escalation actually benefits radical innovators.
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