January 22nd, 2008

Services or Access? What sells? And who Pays?

I saw this press release from the NY Times and AT&T Wireless today. It’s an interesting business model that we discuss a lot in our research. Will people pay for plain old access for their cell phones as they do for their homes? or will access be bundled with services? or will it be ad-supported? or some combination of the three? And certainly there could be other models beyond consumer pays or advertiser pays. We saw Apple make the announcement a few months ago with free access to iTunes in Starbucks. Gives consumers a lot of new possibilities to load up on content outside their homes. This one lets AT&T customers access NY Times content – presumably without a data access subscription. I don’t see this evolving long term at such a piecemeal rate with each web/media property deciding one-by-one to subsidize access to grow their audience numbers to appeal more to advertisers. Yes, iTunes isn’t about advertising, but they are selling music and promoting Starbucks music. As more capacity is added into the networks, it becomes less of a scarce resource, but it’s hard to imagine advertising revenue alone paying for access. Will be interesting to watch where this heads.

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