What Music Companies Can Learn from the New York Times' Pay Wall
-- There should be a few learning lessons after the New York Times puts up a pay wall to its content at its website and mobile apps. Any entertainment business that sells digital goods should follow the success or failure of the Times' strategy.
Starting on March 17 in Canada and March 28 in the United States, the Times will limit visitors to 20 free articles per month. Subscribers to its print newspaper will receive free online access. Users of its mobile apps will be able to read only the "top news" section and must pay for access to all other content (such as opinion, sports, technology and business).
Music services are somewhat similar to a news subscription site. The customer gets a lot of content for a single price. Not just a lot of content, actually, but more than can possibly be read or heard by any single person (more so for news than music). Granted, news isn't the same as music, but paying for online news could be a precursor to paying for digital music in a similar fashion. It's an idea that is taking some getting used to.
So when the Times asks people to start paying after 20 free articles, we should see just how much news people need from a single source. Do they pay for everything so they can read 30 or 40 articles per month? Or do they reach their limit and seek news elsewhere (and there is plenty of news elsewhere)?
In addition, there may be some insight into the hoops cheapskates will jump through to get free news. That's because the Times will not limit the number of free articles that come from some search engines or social media services. So if you get a lot of news from Facebook or Twitter links, you can keep reading without paying. And browsing the main page and the front page of blogs will be free, too. The limit applies only to unique articles.
Finally, the pay wall should provide some insight into the impact of Apple's role in subscriptions. The Times will start using Apple's in-app subscription on June 30, according to Reuters. In music circles, people are worried that Apple's 30% cut of in-app subscription revenue will act as a fatal blow to a nascent subscription music market. But the magnitude of an impact will be driven by the number of customers subscription music services get through Apple versus other avenues. We can look for clues in the number of new customers Apple drives to the Times compared to the Times' website -- assuming the numbers are either reported by the Times or leak to the press. (Reuters)
JMP Securities Downgrades Apple's Stock
-- On Wednesday, JMP Securities downgraded Apple's stock. The analyst lowered the stock to "market perform" from "market outperform," and cited "a noticeable deceleration" in its primary manufacturing partner Hon Hai (the parent company of a manufacturer).
But other experts still see Apple as a strong investment. An Oppenheimer analyst disagreed, writing that a slowdown at Hon Hai was of no concern and that Apple doesn't account for much of the manufacturer's revenue. Then Credit Suisse came out with a 100-page report titled "The Most Valuable Company in the World?" and raised its target price to $500. The iPhone is still the clear market leader and the iPad will have up to a 50% share in the long term.
(Business Insider, Wall Street Journal)
San Francisco Startups May Descrease
-- Could San Francisco lose its footing as the premiere place for tech startups? It seems unlikely, but it may happen if the city goes through with a plan to tax the gains on stock options. "[B]eing shaken down by the Board of Supervisors for tens of millions of dollars, and regularly trashed in the press, may be a little too much for these startups and their venture capitalists, to handle," writes TechCrunch's Michael Arrington.