2/14/2002 2:12:24 PM
Posted By:
Robert Spears
I think this is was a brilliant move by American Greetings. They actually stand by their products and services, and are not afraid to request fair compensation in return. I actually have an egreetings.com subscription with them. I hope it succeeds and that they will reinvest some of their earnings into hiring more creative talent. Now if only Hallmark and Yahoo! would follow their lead, they might have a viable market on their hands. And in turn, the rest of the online space would benefit. (By the way the article stated that American Greetings traffic only declined by 10% for its main-site and by 22% for Blue Mountain Arts).I would be also interested to read comments on some subjects that were not addressed in the post: 1. What are the risks to offering FREE content and services?
(How can one ignore the number of companies that have recently gone out of business based on free and ad-supported products and services?) Let’s not forget that it was the Internet space that produced such ingenious business models as Buy.com’s - selling products at a loss in order to sell advertising to “customers”. 2. How does “the cardinal rule of online content” play out in the long-term? There is a big assumption in this example that free e-greeting card providers have viable economic models. (If so, American Greetings might have to change their strategy but I seriously doubt this. Even so, they could always differentiate themselves by quality (e.g. actually having cash-flow that can afford to hire the best creative talent in the space)). 3. How does attempting to charge for products and services “look like a losing hand” in the long-term? I am in complete agreement, however, that in the short-term consumers have huge power with so many free options. (But it is up to the industry players to create a viable market that is sustainable in the long-term). Here is my advice for American Greetings (and Hallmark and Yahoo, etc.): Charge for products and services and quit the price-competition (a cardinal rule of price competition is that no one wins). If it is such a brilliant idea to offer free cards, why hasn’t the paper card industry followed a similar plan? (Perhaps they could instead charge for full-service services? (e.g. color selection, humor analysis, …)) Regarding lessons to be learned – the online information/media/content business is going nowhere if companies continue this destructive practice of free. There is nothing magical about digital content and services – the bottom line is that it costs time, money and resources to produce them. And they provide benefits to consumers. Robert Spears
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