Archive for the ‘Business’ Category

With Lala acquisition, Apple aims to own the Music Cloud

Tuesday, December 8th, 2009

It could well be that I’ve missed this analysis – goodness knows there are a few newsies and bloggers that follow Apple – but the main point of the Lala acquisition may have gone over their heads for one key reason: the folks initially reporting the story haven’t actually tried to use Lala.

One of the key reasons to register with Lala is the right to stream music that you own to any computer: a great service and potentially world-beating if you can make it happen on portable devices as well.  (‘Ownership’ is defined as having a copy, regardless of how you might have acquired it.)  The catch – and it’s a big one – is that you have to download a program from Lala that reads your MP3 library and uploads ID information from each of your files.  If you have a large library, it’s an absurdly long process – I gave up in an hour with less than 5% of my collection read.  Even for a modestly-sized library, the upload routine is still odious, time-consuming and puts the onus on the user to do too much work.

(Aside: Why is this legal now for Lala but when the original MP3.com had a similar service back in the early years of the decade it was immediately sued out of existence?  That was even worse for the user; you had to download software and then insert all of your CDs for identification. At least in that model you had to prove you actually owned a physical – and presumably ‘real’ – CD. Puzzling.)

Apple, however, via its Genius feature in iTunes already knows what MP3s are in its users’ collections, which means it could be just a flip of a switch to allow users access to their music anywhere on any connected device.  If the purchase price really is as little as $17mm (as Techcrunch reported today), this is a total bargain to bring down one of the chief barriers to quick leadership in the “Stream Music Everywhere” market – not to mention avoiding all the negotiations Apple would have needed to go through with the copyright holders.

Pandora, Mog, Spotify, Last,fm and everyone else in the market may have just been trumped.  Lala’s current feature set added to iTunes takes Apple from nowhere to everywhere in single update for software that’s already ubiquitous. Small wonder that today’s gossip sees Pandora running like hell to expand its business into the car stereo market.

The Kindle Store: land of mysteriously missed opportunity

Friday, July 24th, 2009

My Kindle Store home pageIn an earlier post, I went into detail on the problems with the Kindle’s magazine store.  In spending a little more time in the books section, easily solved problems are present there as well.   It’s so compulsively simple and fun to buy books in the store that this represents a massive opportunity.  I’d say conservatively that Amazon could easily double its on-Kindle revenue with a few tweaks.

One big surprise right off the bat is the loss of Amazon’s Recommendations engine. My Kindle account is linked to my main account, where I have literally ten years of purchase and browse history stored.  My Kindle recommendations appear on the Kindle Store home page, as can be seen in the picture at right.  At best, I would regard these as ‘generic’ recommendations that have little to do with what I’ve ordered either in the past or over the Kindle. I also have 25 books stored in my “Save For Later” tab as well as a number of samples I’ve ordered.  Many of these are books about media & marketing, yet not one single business book recommendation.  Clearly these aren’t playing into the recommendation intelligence.

Kindle's top sellers - not much like the NYT's or USA Today'sThe Kindle Top Sellers proves to be pretty much useless as well as a discovery engine.  As you can see in the screen shot, the Top Sellers are a pretty weird bunch with little relation to today’s accepted Bestseller lists like those in the USA Today or New York Times.  What’s going on here?  With the exception of the Glenn Beck book, all of these are free.  While this certainly shows the power of price elasticity in the store (and again supports Chris Anderson’s Free, dammit), it also supports my earlier point: if you make it fun & easy to shop, people will buy books in droves – even titles they might not want that much. Sherlock Holmes making the Kindle Top Sellers list shows that people will ‘buy’ pretty much anything if it’s free.  At minimum, you’d hope that Amazon could separate out backlist or classics from the true contemporary bestsellers.

This goes to show an easy fix that should go on each line – there’s no easy access to price information! I have to open a link to each book to find out what I’m going to pay.  While the Kindle is advertised as having most books at $9.99, I can tell you after a few months of ownership that most of the books I’ve been interested in – many of which are true Bestsellers – are not $9.99.  I’d be curious to see a price distribution graph if anyone’s done the work.

The Sample Chapters program is half-baked. Their easy availability ois a great idea but in practice gives unsatisfactory results with no apparent rational oversight of content selection.  On Amazon proper, you can select a “random page” in most books just as you would in a bookstore; when you pick up a physical book to browse it, you naturally open to the middle not the Foreword.   All of the Sample Chapters I’ve received have been just the Forewords, not the ‘guts’ of the book, which is what I’m really interested in.  Worse, in many cases half or more of the sample is just the credits at the front of the book!

Finally there’s no linking from reviews and other sources, a longtime basic function of hyperlinking which Amazon supports with its open affiliates program.  Every Sunday I read the New York Times Book Review in search of ideas for things to read.  You’d think that the NYT on Kindle could at least have links into the store.  Even if that’s not feasible, there could at least be a menu on the home page (or even within) for “Recently Reviewed” by newspaper or magazine.  Instead I’m left to search, with each click making it a little less likely that I’ll make a purchase.  And then of course there’s the issue – key for all E-books – of whether all books will even be available when they’re reviewed.

All of these are solvable problems.  If even one of these can be fixed, I predict a huge increase in the vitality of the Kindle.  One wonders if these will be better addressed in the upcoming competitive devices from PlasticLogic and others – and if Amazon’s strength online will be an Achilles heel for its E-books business.

Baseball’s media strategy for its best customers: magazine subscriptions?

Wednesday, July 22nd, 2009

Several weeks after casting my dutiful homer “Vote For Pablo” to make the NL All-Star Team, I received an E-mail invitation from Major League Baseball inviting me to subscribe to MLB Insiders Club.  Baseball has always had backwards-looking marketing overly reliant on its heritage, but debuting a dubiously Official Magazine in the era of social networking and 24/7 sports news shows baseball’s marketing at its worst.

Baseball-dedicated magazines have been around since time immemorial and – like every other magazine segment – they aren’t exactly killing it these days.  Baseball Digest, founded in 1942, recently downshifted to an 8x schedule from monthly, while the baseball-heavy Sporting News showed a 39% decline in ad pages for the first half of 2009.  The biggest players in sports magazines, Sports Illustrated and ESPN: The Magazine, saw ad pages down 28% and 31% respectively in Q1 2009.  (Curiously SI for Kids is one of only 11 magazines that showed an ad page increase so far this year.)

MLB InsidersMLB Insiders Club would need to bring something different to the table in order to succeed and what it promises is attractive: “Behind The Scenes looks into the clubhouse and front office of MLB teams” and “MLB Insiders Club Fantasy League Tips!”  First off, it’s surprising to hear that a major league would directly support fantasy leagues.  It would be a lucrative opportunity for a major sport league to get involved in fantasy leagues, but it’s also tantamount to supporting gambling – which has a history, especially in baseball, of being the worst crime a player or manager can commit.  One wonders if the MLB Powers That Be is aware that an official licensed product of this tacit endorsement.

As for “Behind The Scenes,” a review on Baseball Reflection reveals that the magazine practically begs for user-generated content.  The official license may get some access, but it certainly doesn’t guarantee more or better; the premiere issue features an interview with Oakland A’s General Manager Billy Beane, but he’s probably MLB’s most open GM, frequently giving long interviews to blogs like Athletics Nation.  And if UGC is the majority of content, you can be pretty sure the fans mailing it in don’t have any special access.

MLB Insiders Club is published by North American Media Group, a company that specializes in niche media with a few key licenses, including the Professional Golf Association and History Channel.  In addition to magazines, it also pumps out expensive coffee table books.  So for $24/year, you get some indeterminate number of baseball magazines (they don’t say whether its monthly or what) and the opportunity to buy more books (or as the come-on says “Preview Great Books and DVD’s”).  Ouch.

Baseball’s marketing and media sophistication continue to be disappointing and well behind its rivals for attention in the NBA and NFL.  Few of MLB’s teams or players are involved in social networking, while Shaquille O’Neal is the world’s ninth most-followed twitterer (as of this writing) and the NFL has so many tweeters that it had to conjure a “No tweeting during games” policy.  When these other leagues and their team are putting together their communications strategies, they are way past trying to sell magazines to their best customers. With overall attendance down nearly 6% so far this year, MLB needs to do something to make itself more compelling – more necessary – to its fans.  A clever coordinated social networking policy would be an inexpensive, low-risk way to go, especially in light of the vitality of fantasy baseball – one of the original pre-Internet social networks.

More on point: yesterday the Giants E-mailed me an offer for $5 tickets for next week’s Pirates series for my “vote for Pablo.”  Now that’s something I can use.

Shrinking the aspirations of metro newspaper sites; Fewer uniques, please

Friday, July 17th, 2009

Traffic reports from the newly-online-only Seattle Post-Intelligence placed its April readership at 4.3 million unique visitors, up from 4.2 million in the same month last year. That’s a modest gain, but considering the population of Seattle-Tacoma metro is 3.3 million, it starts to look like a magnificent achievement.

Seattle PIThe catch is that despite this impressive performance, the monetization is not happening. Each time I’ve reviewed the site over the last couple of weeks, I’ve found a bare few national campaigns and a whole lot of ad network inventory. Sure, the latter can be ‘optimized’ (maybe) and sold for slightly-better-than-rock-bottom rates, but it’s still a long way away from charging premium rates to reach a highly targeted local audience.

Name-brand sites still want maximum reach, but this may be a situation that calls for a wildly different tack. With uniques handily exceeding population, there’s no way an ad team could claim its delivering a ‘uniquely Seattle’ audience to a local advertiser, much less one with certain desired attributes. On a local site with a local target audience, visitors from the rest of the web are not valuable. A restaurant in Seattle should not have to pay for an ad shown to a visitor from Schenectady. And this in turn drives content strategy: no longer should a newspaper site aspire to be the central hub of everything, but merely the central hub of its metro area. Leave the national news to the national sites.

Earlier today I picked up this year’s “Best Of” edition of Oakland’s East Bay Express. It’s chock-fat with useful content and ads from all over the East Bay, from sandwich shops to bakeries to beauty parlors. Long reliant on ads from big retailers, banks and real estate (among others)heyhe holy grail for SeattlePI and other MSM newspaper sites is to get these advertisers into their ecosystem and away from Google AdWords. And the way to` do that may be antithetical to everything they’ve ever wanted to achieve: get smaller.

inland+studyIn fact, under the radar (and probably not on purpose), the ‘getting small’ strategy is already well in use. According to the Inland Press Association (via Newsosaur), the newspapers with the smallest circulations have actually had the least impact on their bottom lines. That’s because they were never reliant on the big retail, bank and real estate ads that drove old newspaper profits. The weekly independent papers actually stand to recover well and retain these ads because of their long-standing relationships with local businesses.

So, yes, I see a future where the San Francisco Chronicle is no longer the dominant player in its metro area, but independents like the Bay Guardian and SF Weekly stand tall. These smaller papers with distinctive editorial voices and tighter relationships with local advertisers may be the future of the newspaper.

The question for the reputable MSM big-city dailies is how they can get true local businesses – the restaurants, nightlife, storefront businesses and so forth – to advertise. In these narrow margin times, that means putting out a marketing solution they can afford. So long as CPM remains the measuring stick, newspapers will need to reduce readership to make it truly affordable and guarantee they can reach the audience they need. Starting point: the number of uniques is something less than the metropolitan population.

In an era of worries about media and business homogenization – the ‘Walmart effect’ and c. – going small may be the best defense for keeping local media, attitudes and businesses flourishing.

Book Publishers: Embrace The E! (or else)

Thursday, July 16th, 2009

Yesterday The New York Times reported on book publishers’ discomfort with releasing books simultaneously as E-books and through traditional channels.  One idea, not supported universally, is to release E-books later than hardcover editions in the same manner that paperbacks are held back for at least a year.  The reason proffered is to preserve the initial $20-35 hardcover price versus the $9.99 becoming commonplace for E-book editions.

sQ1EMoVD81yp2ywxp7yFX4gt_500The ‘hold-back’strategy is ridiculous and totally ignores how most readers actually use their books.  While E-Books only represent a small slice of total sales today (but growing fast), there’s little question that somebody willing to shell out $200-300 for a ‘reading device’ is likely to be a passionate reader.  As one of those, I would surmise that many of the sales on E-Readers are actually incremental to publishers’ income, keeping people like me away from used book stores and libraries.  That’s where the E-Books goldmine is for publishers: not in keeping existing sales but in diverting money away from long-standing secondary and ‘free’ markets.  While its true that publishers get a nice arbitrage gain from the de facto DRM of a first-edition hardback (tough to reproduce cheaply, tough to read freely in its reproductive form), that gain can in turn be picked up by the reader upon completing the book by selling it or trading it.  An E-Book edition is essentially non-transferable.  I pay less – and perhaps the publisher makes less – but its fungibility also destroys its secondary market value.

Take, for example, my current reading: Infinite Jest.  It’s been fifteen years since it was first published, so there are plenty of used copies out there for around $10 and libraries consistently stock it, while a new copy runs $16.  Because of its ease of delivery and portability, I elected to get the $10 Kindle edition with the publisher getting some profit and no incremental printing costs.  Had I purchased a used copy, I would likely have resold it later for half-price – meaning no profit for the publisher, virtual cost of only $5 to me and $10 profit to the used book store (for selling it twice at 50% profit).  So where is the advantage to the publisher in holding it back?  It’s simply ceded its ability to profit off of its back catalog.

This is one of the central mysteries of Kindle Store availability to date.  It features plenty of hot new titles, but the back catalog titles is still mysteriously empty with many major authors most famous works; Roth, Mailer, Pynchon, Heller and Updike just for starters.  Wouldn’t a great cut-rate selection be a great source of found profit with barely any incremental cost?  I understand there may be unanticipated contractual issues (a la last year’s Writer’s Strike over web royalties), but the longer they wait, the more the price will drive towards Zero (as it did for the music industry and iTunes).  Already sites like ebooksbay.org are popping up with ‘free’ back titles.  (I found a fully convertible PDF copy of Gravity’s Rainbow last weekend.  There goes a lost sale.)

Click here for free Free

On this very same day by coincidence, Chris Anderson’s Free: The Future Of A Radical Price was released for free on Kindle and immediately shot up to #1 on the Kindle sales chart.  I’ll leave his argument for other bloggers, but in Anderson’s eyes, he’s able to do this because he (and presumably his publisher and agent and c.) can use it as a platform to make money other ways: speaking fees, leverage at his job, increased opportunities generally.  This is also the direction the music industry has taken with its ‘360-degree’ contracts for its biggest artists; Live Nation taking a cut of all of an artist’s revenue streams, from ticket sales to licensing.  The book publishing industry needs to figure out its ‘Freemium’ strategy quickly.  As a post on Mashable points out this morning, not all Free business models are created equally.  People will pay (as I have done with IJ) for convenience or added value.  What can book publishers bring to the table?  Figuring this out quickly before E-Readers become commonplace – look for them to spread like wildfire among textbook-toting students – is absolutely urgent for an industry that’s lived off the same industrial-based business model for hundreds of years.

Rethinking The Newspaper: It Can Be Done

Thursday, May 14th, 2009

newspapersA recent Clay Shirky post, “Newspapers and Thinking the Unthinkable,” says that the newspaper as a business model is dead, killed by its reliance on industrial printing technology.  The future, he tells us, will be based on experiments in journalistic form and not any particular form of media, new or old.  Meanwhile, as I talked about in an earlier post, magazines are withering away from pressure on CPMs and reduced interest in advertisers.

My bet – or, as last as things move these days, this month’s bet – is that we’ll start to see a merging of the forms.

As Malcolm Gladwell writes in this week’s New Yorker, the biggest handicap that underdogs give themselves is engaging in competition on the terms of the stronger party.  An underdog’s chance of victory nearly triples if it finds a way to not play the game.  Right now newspapers – whether they admit it or not – find themselves the underdog for information distribution but still (so far) the best at obtaining information.  So why do they insist on sharing the same distribution models as their potential destroyers?

The New York Times' new reader uses AIR capabilities to flow text and show video. (Credit: Rafe Needleman / CNET)

The New York Times' new reader uses AIR capabilities to flow text and show video. (Credit: Rafe Needleman / CNET)

The New York Times is one of the best at this.  To my knowledge, it was the first with a dedicated iPhone application, it looks great on a Kindle, and its new Adobe AIR format is simply spectacular.  Still, as everyone knows, the Times is hurting and in talks with everyone from Google to Geffen to find a suitor.

So instead of wringing our hands about public trusts and eroding institutions, perhaps we should be asking of our Third Estate “What can you do to adapt?  Something basic to your business model that doesn’t play to the other guys’ strength?”  Here are a few I’ve thought about:

  • Does it really need to be daily? If people are already receiving a stream of real-time news everywhere they go and at their desks, do newspapers need to be real-time, too?  Local ‘alternatives’ with a more magazine-like format and deeper stories like the Bay Guardian and SF Weekly are well positioned to take over many of the essential local functions of a newspaper – and with lower circulation, their ad rates are less prohibitive, meaning they get the bar, restaurant and nightlife ads that are essentially blocked from big dailies.  Reliance on major retailers to be your biggest advertisers is a recipe for death in an era where retail doors will close continuously, like, forever.  (But what about the recent SF/LA closure of The Onion?  I’ll address that in a minute.)
  • Does the news need to lead? Every news site has a ‘Most Frequently Viewed’ or ‘Most Frequently E-Mailed’ feature.  Let’s face it.  It’s very rare that the top stories, even on the most serious sites, are today’s news.  (Or as SFist notes about the Huffington Post today: “Boobies.  Boobies.  Boobies.  Boobies.  Boob.”)  I would hate to see our locals ignore the news, but why couldn’t it be treated like a magazine cover – with offers of advice, news coverage, quizzes…  Things that reel the reader in.Here are today’s SF Chronicle leads:
    *  A stricter, drier Bay to Breakers
    *  Craigslist cuts ‘erotic services’ section
    *  If state cuts too deep, it loses stimulus funds
    *  Senate testimony sheds light on alleged torture
    *  Young boost diversity as population ages

    Seriously, not a single one of these lines would sell a magazine at the checkstand.  No editorial viewpoint expressed, no help offered… simply no answer to“Why buy?”  Why not feature elements from throughout the paper?    “Take your medicine, it’s good for you” doesn’t work for marketers in any other industry, including medicine.  Why is it the norm here?

  • Does it need to be shaped like a newspaper? Why not a glossy cover?  Billions of magazines have done just fine that way.  In particular, I’m a fan of The Atlantic and The New Yorker’s newsstand strategy: a single compelling image with a flap violator that entices the reader to pick up the magazine and look inside.
  • Can it be targeted better than ‘It’s local, it’s yours’? In printing ‘All The News That Fits’, newspapers lose the single biggest weapon a marketer has: the freedom to select an audience.  It’s wonderful that the Chronicle expresses the region’s diversity and interests, but I think it’s fair to say that the news interests of, for example, a 70-year old woman in the Sunset and a 25-year old man in The Mission are very different.  So how come the same information in the same format is being sold to both?  Using copy splits, could different front pages go to different neighborhoods – and not just regional sections to outlying areas?
    It’s also worth noting that this could open up new revenue streams.  In my opinion, one of the seeds of the demise of The Onion in SF/LA is that it didn’t take the thinly-veiled prostitution ads that are easy money for the Bay Guardian and SF Weekly.  With CraigsList now discontinuing those same ads, that’s a lot of advertising cash set free.  Where will it go?  Well, if you had a well-targeted newspaper that didn’t need to worry about offending its audience with certain content/ads, you just might be able to scoop it up.  So, yes, I’m imagining a world where “Candy TS Outcalls” replaces Macy’s.)
  • Further, why is it serving so much of the area? In an era when advertisers pay more for the specificity of an audience, why is the San Francisco Chronicle the leading paper of Contra Costa County?  And Oakland?  And most of remote Northern California?  Surely some of these readers are more profitable than others.  And those that aren’t can get their news somewhere else.
  • Does every copy need to have the same content? When I received the Sunday paper, the first thing I did every week was throw away 50% or more of it.  Why not allow a la carte sections?
  • Is it automatic for its customers – and especially its best ones? Mark Cuban – who got me thinking about this originally and reels off another thousand or so ideas in his blog post on the subject – points out that his local paper was blowing one of the very basic elements of keeping him engaged: pricing policies.  Aside from receiving no volume discount, Cuban says that the billing policies discourage people from staying involved.  Why aren’t subscriptions annual – or far more?  In the core areas, closest to the printer and the most attractive identified customers, especially those that own their home and are less likely to move, why not offer 5 years, 10 years, even a lifetime subscription?
  • Finally, what unique advantages can newspapers bring to ‘real-time’ media? Yes, there’s still an opportunity for symmetric warfare for newspapers.  My old colleague Sebastian Provencher at Praized Media recently blogged on just this with regard to the Yellow Pages, but it applies equally well to local paopers.  His 2300-word post on real-time information flow between local merchants and customers should be required reading for local media outlets that seeks to make its revenue from being an intermediary in these relationships.  You should have a look, but I can boil it down to one tantalizing word: souq.

I’m curious for your thoughts on this since I know my few readers are newspaper lovers, too.  Don’t forget to comment!

Magazines Giving Up; Tabloids To Come?

Wednesday, April 29th, 2009

As an old print hand, the collapse of the magazine business model has been a sad thing to observe and play a small part in.  The typical big US title – think something you’d pick up at the airport or (tellingly) from a waiting area –has staked its business for decades on printing & distributing tens of thousands of unprofitable copies with the assurance that an attractive audience would be worth CPMs of $30 and up to advertisers.  The very largest titles could afford lower CPMs approaching television so long as there was enough demand for copies.

portfolio_As anyone who follows media knows by now, magazines have been hit with a triple-witching the last few years: collapsing CPMs for even the most difficult-to-target audiences (in light of the targeting capabilities of the Internet) and plus collapsing advertising page sales; slackening demand; and rising distribution costs.

The big bellwether is now upon us.  Conde Nast, really the last of the big-spending believers in magazine, first quietly packed off Domino and a few other titles and, more dramatically, this week closed Portfolio, for which the company had reportedly spent over $100mm to launch.  (Portfolio was a poorly-timed entry – a well-written glamor magazine about business caught up in, well, now.  But it was also schizophrenic.  Despite being targeted at business elite, it was also weirdly basic; a column in the first issue, for example, explained how interest rates work[?!?!].)

While most attention has been paid to falling ad pages, it’s really the CPM problem that most fundamentally egs the question of whether the magazine industry will get anywhere close to its old business model ever again.  Publishers formerly charged $30-100 to reach a hard-to-reach passionate target – say, ukulele players – while now that CPM on AdWords is not just catastrophically lower but also available by auction.  In other words, not just the price is better; it’s the buying process, too, with better information creating a more efficient market.

So what for magazines to do?  The most obvious choice is simply to start charging readers, which is what many of the newsweeklies are now trying to do.  Any subscriber to Wired can see that they are getting their magazines at a steep unprofitable discount.  ($12 for 12 issues written, designed, printed and mailed?  Probably more like $30.  Printing and postage alone is probably well more than $1.25 per copy.  I’ve long said that Conde Nast magazines are one of the great bargains of American life, like home plumbing and the US mail.)

But the reality is that it’s going to be a very hard road to convince readers to pay after being trained into receiving content for free (the Internet) or near-free (magazines) for their entire lives, no matter how great the reporting or photography.  In the face of low demand, we’ll see massive changes in how these magazines work in the next few years – maybe months.

Another possible answer could come from the manufacturing side.  The biggest challenge with magazine business models as they stand stems from their battleship-turning nature.  It takes a long time to build circulation to get to a saleable advertising proposition; it takes an equally long time to deflate that unprofitable circulation when the ads dry up.  (This is why you’ll see big circ magazines like George suddenly disappear.)

HP recently debuted a service called MagCloud that could potentially democratize the industry by allowing easy creation of micro-targeted magazines – for example, not just for the ukulele player but for left-handed ukulele players living in the Midwest. A more nimble manufacturing process could allow more short-term plays; imagine for example “100 Days” magazine to follow the excitement around the new President, killing it just as readers start to tire of it.  Magazines may survive in fact by forgetting about brand-building and going after hot content.  In short, a return to the tabloid times of our Founding Fathers.   More on this in a coming post.

Sports franchises need to take a cue from airlines and Apple

Tuesday, April 28th, 2009

Joba Chamberlain opens the second game ever at the new Yankee Stadium and empty seats outnumber full ones in the exclusive areas behind home plate and the dugouts. The Stadium was packed otherwise.  (Flickr / Fansherpa)

Joba Chamberlain opens the second game ever at the new Yankee Stadium and empty seats outnumber full ones in the exclusive areas behind home plate and the dugouts. The Stadium was packed otherwise. (Flickr / Fansherpa)

With all the fuss over the empty luxury seats at the new Yankee Stadium, I was mildly surprised to find something similar – dramatically so – happening in my own backyard.  We went to Sunday’s A’s-Rays game at the Oakland Coliseum.  All the ingredients for a great day at the ballyard were in place: sunny April weather, last year’s AL champions in town and a Sunday afternoon.  What we found instead was a micro-market in disarray. As the credit markets teetered last October, the market for sports tickets anecdotally seems to be following.

The first indication there was a problem was the total lack of online ticketing activity.  There were practically no offers on CraigsList, even from brokers, and none at all on eBay.  At the walk-up ticket booth, we found that we could buy any section in the house, including the Diamond Level.  This should simply never be the case.  The Diamond Level is a very limited “VIP” area, maybe 60 seats tops, right behind the plate on the playing field level.  Seats go for $225 but also include free food and drink service for the whole game.

Weirdest of all was the scene inside the stadium.  The A’s bifurcate each of the two seating levels – a minimum of two pricing levels in each deck.  In both decks, there was a cluster of people behind the plate, practically nobody for several sections as the seating moved towards the outfield, another cluster in the sections starting the new pricing tier, again fading to nothing.

The mystery to me is why shouldn’t the people forced out to the outfield be able to sit in these empty “mezzo-sections.”  The answer could come from a nimble dynamic pricing system at game time.  As airlines like Virgin and JetBlue have discovered with exit rows sold at check-in, why not enable ask fans as they arriveto purchase a better seat for an extra few dollars?  It would be an easy thing to equip ushers with Palm-style barcode and credit card machines like those carried by the clerks at The Apple Store.  Everybody gets the opportunity to move closer (or elect not to), getting rid of the weird empty spaces and (I’m assuming) presenting a better, more invigorating environment for the home team.  (I know they’re supposed to ignore the crowd, but ask any actor or musician if they’d rather play to a full orchestra than have the front rows empty and the crowd loosely dispersed.)

Meanwhile across the bay, the Giants are trying out a number of dynamic pricing policies.  First, the team partnered up with a firm to build elastic pricing around its unsold inventory for the least attractive games.  Last week, though, came the real reckoning – and a big indication that the team is running scared about its attendance.  Ticket prices were dropped 40% for the Giants series this week against the Dodgers, traditionally the most attractive opponent.  Granted the team is trying to stir up interest for later in the year – it appears they’ll be competitive in a moderately challenging division – but to have to do this so early and against the team’s best natural rivarly is surprising.  One wonders how scared the Giants are about advance sales for the rest of the year.

Susie is quick to point out that the lack of an Oakland A’s ticket market framed by the fact that the Oakland Coliseum is a horrible dump, getting dumpier every day.  The tarps in the third deck look weathered and horrible, while the bathrooms, parking lot and facilities remain some of the worst for a major league sport.  Nevertheless the empty seat patterns – along with all the unsold display ad inventory throughout the stadium – are clear indications that baseball is not recession-proof.  There are easy ways to make profit from making markets more efficient; marketing and pricing are the classics.  Let’s see if the A’s and their brethren take up the challenge.

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