[IP] more on so it begins
Interesting, but as they point out, not a new model. AOL did this
during its heyday (1998-2000) with some success. Only when their
service started to tank did they open up to everyone. Don't know
whether this is long-term viable, but we'll find out.
I view this as another way to get folks to pay for content. Not many
providers have been able to make the customer-pay model work; WSJ and
Consumer Reports spring to mind, and there are some specialty
websites that people are willing to pay for. Doing a deal like this
has a strong upside for the content provider, but carries risks as
well, especially if the ISP demands an exclusive.
Incidentally, do you remember when we discusses two-sided markets,
and noted that sometimes the intermediary pays the provider rather
than vice-versa? Well, this is a case in point. If Google started
doing deals like this, it could be a very powerful model for them
(maybe). After all, they are the ESPN of the Internet (i.e., the
must-have service).
Professor Gerald Faulhaber
Business and Public Policy Dept.
Wharton School, University of Pennsylvania
Philadelphia, PA 19104
Professor of Law
University of Pennsylvania
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