November 24, 2014

Ad Free Future for the Internet?

Google just recently launched a project called Contributor which allows for users to pay to have access to particular websites without any advertising.

Traditionally, advertising has supported free access to content on the Internet for majority of websites. Google has taken a substantial share of the advertising spent on the internet not just via their search engine but also through their Google Display Network.

How does Contributor work?

Step 1: Users select their monthly contribution rate (between $1-$3).
Step 2: Visit the participating sites. Part of the contribution goes to the website and as a reminder of your support, a thank you message will appear, often accompanied by a pixel-pattern where ads normally appear.

Some websites who are already using this include Mashable, imgur, wikiHow and the Onion.

Again Google continues to innovate and push the boundaries of what is possible. Instead of milking the existing business model that works so well for them, Google continues to experiment and challenge the status quo.

November 18, 2014

The Participation Scale

I found this interesting graphic as I was browsing through the HBR website and reading through an article on new vs old power. It's called the Participation Scale and I thought it was a really interesting way to show the different levels of participation.

There is a very common marketing tool we call the path to purchase that marketers use to learn more about how consumers purchase their products. This participation scale actually takes a deeper dive into the part of the path wherein one has already converted and consumed a product or service and expounds on the different ways people now participate in a product's consumption. Gone are the days when consumption starts and ends with actual physical consumption.

November 17, 2014

Business Valuation, Warren Buffett and Duracell

I have always been curious about how one is able to valuate a business that is not publicly traded. This past weekend, in our Advanced Financial Management class, I finally got my first glimpse on some ways how it is done.

Quite coincidentally, over the weekend, news broke on Warren Buffett's latest acquisition: Duracell.

Berkshire Hathaway purchased Duracell from P&G in exchange for the roughly 53 million P&G shares that Berkshire held worth around $4.7 billion. It's a unique exchange that saves Berkshire millions in capital gains tax it would have paid had it sold the shares in cash and paid the cash to P&G. For P&G, they too gain some tax savings while being able to gain back a large part of their outstanding shares which they can either retire or reissue.

November 15, 2014

The Challenge with Twitter

Yesterday, Twitter's bonds have been classified as "junk" and a "speculative" BB-, three levels below investment grade. Why is this important? Credit ratings normally tell us about the capacity of the issuer to service its debt. Capacity to service debt is dependent on several things but is obviously heavily reliant on earnings.

It's always a challenge to monetize an idea. This is especially true for social network Twitter. Unlike Facebook, Twitter has yet to crack this problem of how to generate substantial revenue from its huge user base. 

Twitter is free to use for consumers and its revenue is generated mainly through advertising. The advertising model it uses is quite simple. It offers advertisers the opportunity to become a "promoted" account or have a promoted "post" that will be shown to the advertisers targeted users.  It's very similar to the Facebook advertising model. However, one key difference is the way the newsfeed works on both sites. Facebook has an algorithm that allows it to filter the posts shown to its users showing users the most relevant posts. Twitter works simply using a chronological algorithm showing users the most recent posts. 

November 13, 2014

YouTube Music Key

So this just happened. YouTube has now officially launched a paid premium service for music streaming. 

November 5, 2014

Spotify and Taylor Swift

Ever since the explosion of the internet and digital music, the music industry has struggled to keep pace and find ways to monetize their product. iTunes was ground breaking in that it flipped the business model for musicians (selling more singles at a cheaper price point than selling less number of whole albums) and provided an online distribution channel for musicians and labels that today brings in billions in revenue. Spotify and other music streaming services have brought a new dimension to online music distribution in a continuously evolving landscape.

Probably in a effort to gain more control over how her product will be monetized, Taylor Swift and her management team have pulled out her music catalog from Spotify. This was timed perfectly with the launch of her new album.

November 3, 2014

Wi-Fi for Everyone

I found this interesting article on (link here) talking about a report from wi-fi provider iPass saying that there is now one wi-fi hotspot for every 150 people worldwide. This is of course an average number as I imagine the ratio is probably much higher in the Philippines. But this just shows that when there are gaps in the market, people are quick to fill it in if it is a real need.

The research shows that majority of the hotspots are in homes as people have begun to turn home wi-fi routers into public hotspots. This works especially well in densely populated areas like Manila where the mobile networks cannot keep up with the growing demand for more bandwidth.

The market in the Philippines seems ripe for the entry an independent, 3rd party, wi-fi provider as many consumers have become disenchanted with the poor service (and high prices) being provided by the top telecom companies.