Abstract

In this paper we examine how digital information should be priced in a network world. The goal of this research report is to examine how information content providers can win in a networked digital economy. We begin our analysis by analyzing the unique nature of information followed by a discussion of the general strategies for pricing information content. We also look at how pricing strategies are affected by the Internet and the increase digitalization of content.

With this understanding of information in a network economy, we develop a model for showing how content should be priced. We then select four case studies to validate our model. Finally, we conclude the paper with some lessons we have learned from our four case studies.

Introduction

No doubt about it, the Internet is hot! There are more than 25 million U.S. households with Web access, and an additional 22 million through U.S. businesses, government and educational institutions, plus approximately 8 million foreign users. This brings the total current worldwide estimate to more than 55 million Web users.

The advent of the Internet combined with a world where more things are being digitized has created a new economic paradigm called the network economy. In this economy, technology improves dramatically every year while enhancing competition by offering entrants new ways of competing against established firms. In this network economy, consumers are conditioned to count on drastically superior quality for lower price over time. Content, hardware, and software prices in the network economy will eventually settle down to nearly zero, while features and performance continue to expand and improve. Who would have ever imagined the day where a major software company would be giving away its source code for free?

In the emerging digital economy, there are many possibilities to price digital information content and services. Currently, consumers of information content buy movie tickets, rent videotapes, subscribe to magazines, cable television and internet access and license application software. These revenue models are directly being challenged by the proliferation of digital media. As content assets are rapidly being digitized and migrating to computer networks, content publishers must now cope with an increasingly complex array of pricing alternatives and strategies

We are blessed with the hindsight of numerous content pricing blunders that took place in the early 1980s. The old pricing paradigms of the past do not work in our new digital network economy. In fact, we have seen that misjudgments in the pricing of media content are both common and costly. The two classic examples are the pricing of videotext service and pre-recorded movies.

In our first example, attempts to sell consumer oriented videotext services in the early part of the 1980s failed due in part to a pricing structure that was more expensive and more complicated than traditional substitutes such as magazines and newspapers. Even those who are in the media business have failed to understand the complexity of pricing information content.

Secondly, when the VCR first made its mass-market debut in the early 1980s, many Hollywood executives attempted to establish the VCR as a first run release window. These executives assumed that consumers would be willing to purchase video movies at more than $70 each. As it turns out, this strategy failed miserably until the advent of movie rentals and lower prices.

To the benefit of all of us, a market for consumer oriented information services and digital content did emerge in the 1990s. This was made possible through the unbundling of components associated with on-line services and the practice of incremental pricing and versioning of information. For example, unlike the ill-fated videotext service of the 1980s, the successful launch of America Online and explosion of the Internet did not require consumers to purchase a stovepipe device such as a dedicated terminal. Instead, these new information purveyors piggybacked their services and products on the PC platform that consumers had already purchased for other reasons. At first many on-line service provider charged a usage fee to access their service. This is how America Online and Internet Service Providers make most of their revenues. Before AOL adopted an unlimited use fee strategy, customers paid a fixed price to access the service for a certain number of hours per month. Any additional hours of usage over an above their allotted time would be charged to their accounts. However, AOL realized that in the long run time based fees make less sense. According to Armstrong and Hagel, on-line service providers "will need to maximize the number of members and encourage them to spend increasingly more time on-line - posting messages on bulletin boards and chatting" in order to make their service attractive to others. Usage fees do not encourage members to venture on-line and discourage them from lingering there. For this reason, Armstrong and Hagel believe that most electronic communities will eventually turn away from usage fees.

The pricing and distribution of home movie rentals is another example of a successful strategy for managing information content. The home video industry skyrocketed when entrepreneurs figured out that consumers were willing to rent a movie for a few dollars a night rather than paying $70 to own the movie forever. Figure 1 shows the impact of home video rentals on the growth of motion picture entertainment in recent years.

As in many other industries, once pricing for home videos is driven down to near impulse purchase levels, the content suppliers can increase their chances of building critical mass and creating positive feedback. Disney's pricing of its first home movie release of Lady and the Tramp at $14.99 established a new reference point for home movies, which was quickly copied by all the other studios.

In addition to bringing down the cost of home videos to impulse levels, the major studios have done extremely well in versioning their content. Figure 3 shows how the studios are using versioning to create new revenue streams for their motion picture content. There now exist a plethora of new channels and avenue of distribution that motion picture content producers can exploit in reselling and repackaging their content.

The Economics of Information

We are moving into a new economic wave driven by information. Like all new economic waves, we need to develop a framework to study and analyze the key drivers of our economy. Previous economic models are well adapted at understanding the manufacturing and selling of tangible goods such as widgets and cars. However, we need to develop a commercially robust way of buying and selling easily copied intangible goods like electronic data and digital content.

In a paper submitted to the Office of Technology Assessment of the United States Congress, Professor W. Curtiss Priest offers an economic framework for understanding the unique nature of information goods. Professor Priest argues that information has different characteristics from most physical commodities. In his paper, "An Information Framework for the Planning and Design of 'Information Highways," Dr. Priest propose a new framework for understanding the unique value of information. Dr Priest's 14 different properties of information represents a great starting point in helping us quantifying the impact that information has on our new economic wave. For the purpose of our project we have isolated six properties of information that will guide us in developing our pricing strategies (see appendix A for a summary of all fourteen points).

• High Investment to Reproduction Cost Ratios: The initial costs for creating information are high relative to the costs of reproduction. This contrasts sharply to most other goods where the production of multiple units of a good require considerable factor inputs of capital, labor, and materials. The development of information is labor intensive. For example computer animated film footage used in the Motion Picture Titanic can cost $2000 a second to produce. This characteristic has great implications to the issue of intellectual property.
• Inappropriability: is the difficulty in taking possession of the worth of something. One of the major consequences of inappropriability is the under production of information since it is difficult to exclude people from using information who have not paid for it. Therefore, if the producer of information cannot appropriate its full market value, the producer will only produce information where he can recover costs and make a profit.
• Indivisibilities (of supply): Information users are confronted with an all-or-nothing option: they may either acquire the whole amount of information available at the prevailing price or buy no information at all. For example, in order for us to read the movie reviews in the San Francisco Examiner, we have to purchase the entire paper. As a result, information must be purchased in lumps; even though these lumps may be vastly greater than the information actually sought.
• Uncertainty and Risk in Production: Information content providers will not produce information when risks and uncertainties are present. When risks increases to the point that the producer lacks the ability to diversify enough to assure a success, the producer will withdraw.
• Information/Knowledge: This definition infers that information is an experience good. The less the buyer knows about a product, the less likely they buyer is to purchase it, or to purchase it at the correct price. Therefore, to counteract this problem, producers of information rely on "brand recognition." Producers of information must develop a reputation for the value of their information. According to Priest, property rights will enable the producer to attain higher appropriability and thus will encourage the producer to provide more information about information.
• Transaction Costs: This represents the additional costs incurred by the producer in appropriating the value of information. Transaction costs involves the costs of negotiation, contracting, and enforcement which exist even when exchange is bilateral. Priest argues that as we attempt to reduce indivisibility by breaking information into pieces, we increase transaction costs as we attempt to appropriate its value.

These six characteristics of information make it necessary to treat information different from other economic commodities and therefore being able to price it effectively. The outcome according to Priest shows there are many ways in which information will be under-produced without adequate property rights and pricing alternatives. In order to solve some of the inherent problems of information such as appropriability, transaction costs, and to encourage more information about information, Priest suggests that we must use intellectual property rights. However, the assignment of rights also exacerbates the economic problems of information when there are high social returns to the easy and free access to information.

1. High Investment to Reproduction Cost Ratios

One of the biggest appeal of network based digital content is that the marginal cost of producing an additional unit for consumption is virtually zero. Once the content producer cover their fixed costs, all incremental revenues go straight to the bottom line as show in the case of a Hollywood blockbuster movie.

In the example of motion pictures movies, the producers would like to extract as much revenue from their investment as possible. For example, the production and development cost between a blockbuster movie and a break-even movie are generally the same. Blockbusters are more profitable because all the incremental revenues flow directly to the bottom line once the production costs are covered. Therefore, movie producers would like to milk their cash cows as long as possible and promote their content into different channels and segments.

2. Inappropriability

Since one of the major consequences of inappropriability is the under production of information since it is difficult to exclude people from using information who have not paid for it, the studios have been active to enforce copyright laws and licensing arrangements. As the cost of high quality duplication equipment continues to decline, major Hollywood studios have cracked down heavily on video piracy.

Purchasers of movie entertainment are confronted with an all-or-nothing option. For example, in order to see the amazing car chases in the French Connection, we must purchase or rent the entire film. There currently does not exist a market that can sell us a particular scene in a movie.

Landmark Hollywood films like Titanic and the upcoming Lethal Weapons Part IV would not have been financed if there does not exist an alternative distribution channel for the studios to diversify their risks. The use of versioning can make a box office dog into a cash cow for the studios. The classic example of this has been the recent set of Kevin Costner movies. Despite being box office flops, Waterworld and the Postman went on to make money for the studios in foreign release, pay per view, airline viewing, and home videos. Without these alternative distribution channels, it would be difficult for the studios to invest in another Kevin Costner movie.

Since watching a movie is an experience good, moviegoers are more likely to choose a movie based on their familiarity with the content of the movie. The less a moviegoer knows about a particular actor or director, the less likely they will attend the showing. This helps to explain why certain Hollywood actors and directors can command such an astonishing salary. The studios have invested heavily to develop a reputation for producing movies with mass appeal. For example, James Cameron is reportedly being offered $50 million plus a percentage of the gross proceeds for directing his next project Planet of the Apes.

6. Transaction Costs:

This has great implications on how we should price digital content in a network economy. Under this scenario, once transactions on computer networks become secure, it will be possible to sell individual content pieces for pennies a piece to extract the maximum value out of content. We call this microcommerce which we will examine in greater detail later the paper.

As publisher of information based content enters the networked digital economy, they are faced with a broad spectrum of pricing options. At one extreme, consumers can purchase a media product (such as a book or music CD) and obtain the right to use that product forever. At the other extreme is a transactional model found in video game arcades and pay per view television. In between these alternatives are various subscription, licensing, and utility models that content producers can apply to the pricing of digital content. Despite the fact that network computing and digital technology has perplexed content producers, digital technology and computer networks are helping content companies to better price their information product. New advancement in transaction databases and processing systems are making is easier for content companies to apply different pricing models to fit changing market conditions. A utility-based model combining basic rates, premium services, versioning, and transaction fees has great appeal to many content producers. A major challenge for content producers is to avoid overly complex pricing schemes common in industries with high fixed costs, which can confuse and frustrate consumers and thereby hinder the growth rate of these new business opportunities. For example, we have all experienced the frustration in buying airline tickets following the deregulation of the industry. Instead of adopting a value pricing strategy, the airlines embraced a highly complex pricing structure in an effort to differentiate their services. At one time, American Airlines had over 500,000 different fares on its reservation system.

With so many pricing options to consider, we now turn to an examination of pricing strategies rooted in economics.

General Pricing strategies

Due to the nature of digital information, a traditional uniform flat rate pricing scheme would not be efficient enough to extract sufficient surplus. In today's competitive business environment, industries have heterogeneous customers that demand differential services and products. The costs of conducting business also vary widely across customers. Therefore, it is crucial for companies to develop flexible pricing strategies that accurately target at the needs of specific customer segments. In other words, price discrimination needs to be carefully and widely implemented in regards to pricing information. In the following section, we will discuss the classic definition of the three categories of price discrimination in Economics (Varian, 1992 ) and how they should be applied to pricing information content.

First degree price discrimination involves the seller charging a different price for each unit of the good in such a way that the price charged for each unit is equal to the maximum willingness-to-pay for that unit. This is also known as perfect price discrimination. In this type of discrimination, pricing is mainly based on the value of the product to the consumers and not on the actual cost. Different customers have different price sensitivity and expectation. Some customers are only interested in the product if they consider the price a bargain, while some are willing to pay extra money to obtain supreme products and services. Therefore, products and services should be differentiated and customized to increase their values to individual consumer. In order to efficiently apply personalized pricing, market research should be conducted to study the customer's profile, their interest and need. Promotions are good ways to estimate the price sensibility of different customers as well as the market response to price changes. In the context of digital information, due to its very low distribution and reproduction cost, marketing could be more individualized and interactive. Information could be "mixed and matched", i.e. fully customized, according to the customer's demand and past purchasing record.

Second-degree price discrimination is to charge consumers different prices depending on the number of units of goods bought, but not across consumers. This involves such practice as quantity discount, where the revenue a firm collects is a nonlinear function of the amount purchased. This is also known as nonlinear pricing. A common way to apply second degree pricing is group pricing; i.e. pricing policy directly based on group identity. There are four reasons to target groups rather than individuals: Price sensitivity, network effect, lock-in and sharing. First, different groups have different price sensitivity. Second, network effects occur when the value to an individual depends on how many other members of his group use the product. Third, if a group has already chosen a particular standard product, the switching cost to another brand would be high due to the costs of coordination and re-training. This results in lock-in. Fourth, information intermediaries sometimes are needed to help the group to manage and organize the information. This is called sharing. Market research should be conducted to identify different groups and their specific needs. Then tailor-made pricing strategies should be applied to target their individual need. In the context of information content, for example, software companies should offer quantity discount and site licenses arrangements to reduce transaction cost to a group. In addition, certain promising groups, such as students and young uses, should be specifically targeted to create "lock-in" and build customer loyalty. Information bundling (offer complimentary goods) should also be used if it reduces the variation in willingness to pay. Electronic information should contain features that differentiates it from the printed version: it should be searchable, sorted etc.

Third-degree price discrimination is to charge different consumers different prices, but each consumer faces a constant price for each unit of goods purchased. This is probably the most common form of price discrimination. Versioning is an important tactic to optimally serve different market segments by offering different versions tailored to their need. Versioning could also enable self-selection: to let customers select the version that is the most suitable to his/her need. Obvious, to successfully carrying out versioning, we first need to identify the dimensions of the information product that are of great value to some customers, yet of little importance to the others. Then you need to use these dimensions, such as delay, user interface, image resolution, speed of operation, format, capability, features, and comprehensiveness to version your product. The number of versions provided is highly situation dependent. Normally that should include a low-end and a high-end versions and maybe something in the middle. Note that there should be significant gap between versions to prevent high-willingness-to-pay consumers from purchasing the low-end counterparts. In the context of digital information content, information products should be versioned so that the customers could perform self-selection.

To ensure the success of the business and maximize the profit margin, all three degrees of price discrimination should be applied extensively in the marketing strategies. From the above analysis, it is obvious that in order to carry out all categories of price discrimination, it is crucial to know who your customers are, what their specific needs are, the cost of serving different groups of customers and apply market segmentation, differentiation and personalize pricing accordingly. After sufficient information on the customers has been gathered, different pricing strategies need to be made to target different market segments: a focused or niche strategy aimed exclusively at the most cost-sensitive market segment (the customers who are looking for bargains); and a focused or niche strategy directed at the most quality-driven customers (the customers who are willing to pay for supreme services and products) (Clemons & Weber, 1994). This implies that firms should add superior values and serve the high-profit customers well to keep them as well as cut the service to the unprofitable ones to save cost.

Strategies for Selling Information Content over the Internet

Companies selling information content over the Internet can use price discrimination to extract surpluses from consumers. These companies can also use the Internet to add new values for their customers. Companies can use the following strategies discussed in the literature to take advantage of the Internet technology.

According to Ghosh (1998), the Internet has created four new opportunities. First, through the Internet, companies can establish direct links to customers to complete transactions. Second, the Internet technology lets companies bypass others in the value chain. Third, companies can use the Internet to develop and deliver new products and services for customers. Fourth, companies can use the Internet to become the dominant players in the electronic channel of a specific customer segment, controlling access to customers and settling up new business rules. But Ghosh (1998) also mentions two dangers created by the Internet. First, companies risk damaging their existing distribution relations. Second, companies risk losing their established brand reputations on the Internet.

Evans and Wurster (1997) point out that the Internet allows rich information (in bandwidth, customization, and interactivity) to reach a large audience. Companies used to bundle their information content together to amortize the high distribution cost. But now companies selling information content over the Internet can unbundle their content because they are no longer constrained by the high distribution cost. Evans and Wurster (1997) also point out that lower distribution cost makes traditional sources of competitive advantages like strong sales force and supreme brand obsolete. Finally, Evan and Wurster (1997) predict that providers with broad information product lines will lose grounds to the more focused specialists because the Internet allows information to be unbundled.

Rayport and Sviokla (1995) explain that companies can use the Internet to develop and deliver new products and services. They suggest adding new value by helping customers gather, organize, select, synthesize, and distribute information.

To succeed in cyberspace, Kiely (1996) explains that companies need to sell unique products. Companies can make their products unique by bundling together products and services that hitherto have been available only separately.

Armstrong and Hagel (1996) point out that companies can provide value by organizing electronic communities to meet multiple social and commercial needs. They explain that companies establishing communities on the Internet can own a specific customer segment across the full range of its interests and needs.

Dyson (1997) explains that companies can only influence, not control, their corporate images on the Internet. Dyson (1997) suggests that companies should be honest with their customers about their actions.

Kiely (1997) mentions that companies should gather information about customers for marketing purposes. But to gather information, companies should forewarn consumers about how the gathered information will be used, offer customers the choice about how they want their information to be used, safeguard the gathered information, and provide customers access to the gathered information. Finally companies can give customers discounts in return for gathering information about them.

Deighton (1996) explains that the Internet allows companies to market to individuals. Companies can gather and remember responses from individuals. To carry out interactive marketing, companies need good Web designs to give customers reasons to stay at their sites. Companies also need good technical skills to make sure their Web sites can handle their customers' loads. Finally, companies need to spend a lot of effort to create exciting content so that customers will want to come back to their sites.

Shapiro and Varian (1998) offer many suggestions for selling information content over the Internet. They suggest using price discrimination to extract consumer surpluses. They suggest bundling products with complementary goods to create more values. They suggest using on-line advertising as an additional source of revenue for selling the content. They suggest taking advantage of the economy of scale to become the cost leaders. They suggest using free sample of build a customer base. Finally, they suggest that companies should try to maximize the value of their information instead of over-protecting it against piracy.

The Internet has created many new strategies for companies selling information content over the network. There are four reasons why these new strategies are possible. First, the Internet makes the delivering of information more efficient. Second, the Internet reduces the transaction cost of doing business between consumers and suppliers. Third, the Internet allows companies to create new values for their customers. Fourth, the Internet allows companies to take advantage of the economy of scale on both the supply side and the demand side. Companies can use these four advantages to devise new strategies for selling information content over the Internet.

The following is an analysis of microcommerce, an idea of using microtransactions to sell goods or services ranging from a few cents to a few dollars. In the past, microtransactions were economically prohibitive because these small transactions cost more than the price of the goods. But the Internet has lowered the distribution cost for selling information content over the network. Thus we see microtransactions as being the nucleus of a strategy to broaden digital content commerce. Microtransactions work on the basis that the cost of processing transactions is near zero. Therefore, content producers can generate more revenue by selling a wider variety of information goods in small quantities.

While the enabling technology for microtransactions does exist, the major challenge for content producers is to persuade consumers to start using them. For example, if customers buying information content have to jump through too many hoops, they will lose interest in these transactions and will find alternative sources for the content. Therefore, it is imperative that the content providers adopt a simple process when using microtransactions.

We believe that many Web-based content publishers will begin using microtransactions to allow them to sell per-unit purchases and short-term subscriptions. By leveraging the value of microtransactions, content producers can sell content by the piece and eliminate the need for consumers to purchase the entire content. By offer customers selective access, information content providers would alleviate the common complaint customers have about buying information content that often is bundled with lots of irrelevant information.

The Internet lowers the transaction cost of doing business between consumers and suppliers. The Internet reduces consumers' transaction cost by making it easier for them to compare prices. With access to price information, consumers on the Internet have lower switching cost and search cost. Therefore, companies should customize their products so that they don't need to compete solely on prices.

The Internet also allows companies to charge customers a fee based on actual usage. Usage fee is possible because the Internet reduces the transaction cost on monitoring usage. For example, before the Internet, software providers can only charge their software per copy regardless of how often the software is being used. Now, the software providers can also charge a usage fee based on the actual usage. There are three advantages of having an access fee and a usage fee. First, companies can attract more customers with a lower access fee and then use the usage fee extract surpluses from them. Second, two fees allow companies to give consumers the option to decide later how often they want to use the product. Third, usage fee gives suppliers incentives to constantly improve their products. Finally, companies can even give access away for free and charge only for usage. Then companies can benefit from superdistribution where word of mouth can help advertise their products.

The Internet also makes it possible for information providers to supply directly to customers without having to go through several middlemen. For example, a writer does not need to go through both a publisher and a distributor to reach his audience. However, he still needs one middleman to help consumers identify good content. To eliminate some of the middlemen, companies can either acquire the skills of these middlemen or form allies with those that have these skills.

The following is an analysis of superdistribution, an idea of freely distributing the content and then charge customers based on actual usage. Superdistribution proposes to build an information age market economy around the difference between manufactured goods and information goods (Cox 1995). It is difficult to replicate manufactured goods and monitor their usage. In contrast, it is easy to replicate information goods and monitor their usage in a computer network. In the superdistribution model, each computer in the network will report the usage back to the content provider. Superdistribution incorporates meterware into the digital content to make the information useless except on machines that will report its usage.

Under superdistribution, vendors can distribute digital content for free in expectation of a usage-based revenue stream (Cox 1995). Superdistribution approach allows information to flow freely, without the resistance from copy protection (Cox 1995). Supporters of superdistribution argue that using copy protection and complex software licensing are the wrong approaches for dealing with easily replicable information goods. In contrast, superdistribution takes advantage of the ease of copying by encouraging free distribution of digital content.

The Internet technology has created new opportunities for companies to add new values to their information content. For examples, companies can help their customers better gather, organize, select, synthesize and distribute information. Companies can use the Internet to provide valuable new services inexpensively like building electronic communities. But each additional value added by one company weakens the business proposition of another company in a small way.

Another way to add value for customers is to sell complementary products related to the information. For example, a company can bundle its cooking recipes with their ingredients. By bundling complementary products, companies can provide one-stop shopping for their customers. Companies can also let customers bundle their own products. For example, a music company can let its customers bundle the music they want in a CD. So companies should take advantage of these new business opportunities created by the Internet to increase values for their customers.

The Internet has created a new medium for suppliers to advertise their products. Suppliers need good content to attract customers' attention. Therefore information providers can use their content to sell on-line advertising to generate more revenue.

On the Internet, companies can become the cost leaders by taking advantage of the economy of scale. For example, a content provider can take advantage of the economy of scale to make its product better and cheaper. On the Internet, there is a strong first mover advantage for being the first company to serve a particular market. Only a few companies are needed to serve a particular market. Finally, companies can take advantage of the economy of scope to create synergies with other parts of their business.

Companies should take advantage of the network effect offered by the economy of scale on the demand side. Network effect is important because people in a virtual community want to interact with other people. To take advantage of the network effect, companies need to first establish their brand identities on the Internet. Since information is an experience good, brand identity is very important because it provides confidence in the quality of the information. Companies can spend a lot of money on advertising to establish their brands. Companies can also use free sample to establish a customer base. For example, when CNN News first appears on the Internet, it gives its content away to attract viewers. Another way to establish brand identity is to form partnerships. Companies can sell their information through well-established channels on the Internet. For example, companies can leverage the size of a big Internet Service Provider to establish their brand identifies. Or companies can ally with other companies to create a cascading value chain. After establishing its brand identify, a company can take advantage of the network effect to lock its customers in and extract rent from them.

Companies can devise new strategies based on these four advantages to sell their information content on the Internet. For example, companies can combine versioning with microtransactions to extract consumer surpluses and alleviate the information overload problem. Using these two strategies, information providers can offer short-term subscriptions in three flavors. First, they can offer unlimited access in a brief time period. Second, they can offer limited access by restricting the total amount of information that customers can obtained in a brief time period. Third, they can charge the information according to usage in a brief time period. This example just illustrates one of the many possible strategies companies can use to sell their information content over the Internet.

Recommendation

The strategies a company should use for selling its information content depend on two factors. First, they depend on whether the information is static or dynamic. Static information does not change with time while dynamic information does. Examples of static information are music and images. Examples of dynamic information are stock quotes and newspaper. With static information, a company needs to worry about others pirating its information because there is demand for repeat view. With dynamic information, a company does not need to worry as much about piracy because timeliness of information is very important. The second factor depends on whether the company enjoys market power or not. An example of a dominant firm is Microsoft in the desktop operating system. An example of a small firm is DJ.com in selling music CDs. A dominant firm can use its market power to extract surpluses from consumers. A small firm, on the other hand, lacks the market power to price discriminate. Therefore a small firm needs to differentiate its products so that it doesn’t need to compete solely on prices.

We illustrate our recommended strategies by picking one company from each category. We pick the National Museum of American Art in providing museum content as an illustration of a dominant firm selling static content. We pick DJ.com in providing music content as an illustration of a small firm selling static content. We pick the Wall Street Journal in providing financial news to illustrate a dominant firm selling dynamic content. Finally, we use Quote.com in providing stock quotes as an illustration of a small firm selling dynamic content. For each of our case study, we first describe the company and the environment it faces. Then we describe and evaluate the current strategies used by the company. Finally, we end each case study with a set of recommendations for the company.

The dj.COM Case Study