[LINK] Telstra merges departments/divisions

[Chirgwin, Richard]

Glen, in re "audience lock-in". The business model doesn't map from (say) TV
broadcasting to the Internet. There's no territorial "integrity" in Internet
advertising. 

>From the BigPond content point of view, this means we have a free product
designed to promote a paid product to an audience of 9 million (ie
Australian households).

But many/most of the viewers of the free product are not even potential
targets - someone looking at the free "The Basement" content in Nova Scotia
won't ever be a BP customer. So most of the dollars Telstra spends shipping
that free content out to viewers is completely wasted.

Hell, of the people who view the content in Australia, the "free content" is
only an effective mechanism for the tiny proportion of users who:
a) are ready to either sign-on or churn; and
b) fit the "BigPond" target profile; and
c) would make a service provider decision based on "content value add"
rather than price, speed, brand recognition, and word-of-mouth; and
d) can make the switch without attracting a contract penalty, etc.

The more I think about it, the more I am convinced that >>as a marketing and
business development proposition<< Telstra is completely off-beam with the
"BigPond content" strategy. Nobody's ever going to switch ISPs just because
they can get "a little more" AFL or V8 Supercars. The value add is too
small; and the total available market is too small; and the content strategy
is a waste of money.

Even on a specifically content network: Optus *** still *** makes more money
- by several multiples - terminating telephone calls on the HFC network than
it makes on pay TV. 

RC

> -----Original Message-----
> From: Glen Turner [mailto:glen.turner at aarnet.edu.au] 
> Sent: Tuesday, June 01, 2004 10:46 AM
> To: Richard Chirgwin
> Cc: link at anu.edu.au
> Subject: RE: [LINK] Telstra merges departments/divisions
> 
> 
> On Tue, 2004-06-01 at 08:56, Chirgwin, Richard wrote:
> > It could be nothing at all ... the merger could be 
> pre-emptive politics, so
> > that Telstra can defend itself from Those Awful 
> Interventionists in the ALP
> > saying "divest Foxtel".
> 
> Telstra are having that dream about being a content provider again. 
> 
> The strategy being to use the content to drive lock-in to carriage
> services.
> 
> The problem with the strategy being that it doesn't offer 
> good value for
> advertisers (the audience reach without lock-in is greater). So the
> major source of revenue for media operations is compromised.
> 
> It seems to me that Telstra are also having their usual problems of
> execution of strategy. Rather than adopt the strategy as a long-run
> principle with opportunistic implementation (an art which Kerry Packer
> does well), they want to do it tomorrow. So rather than picking up the
> media assets cheap they're paying top dollar.
> 
> -- 
> Glen Turner         Tel: (08) 8303 3936 or +61 8 8303 3936 
> Network Engineer          Email: glen.turner at aarnet.edu.au
> Australian Academic & Research Network   www.aarnet.edu.au
> 
>