Tuesday, October 26, 2010

Mark Cuban on Aggregators vs. A La Carte

Amazing observation by Mark Cuban on Internet Business Models and what that means for TV.

"Look at the most successful business models on the net. All aggregators of content of one type or another.
Now take a look at all the folks who want to be able to just want to watch what they want, when they want to watch it , where and on the device they want to watch it. They want TV Networks to go ala carte.
Look at the companies who want to try to disrupt TV. What are they all trying to convince the TV networks and content providers to do ? They are trying to convince them to go ala carte. They are trying to convince them to go to a business model that assures their destruction.
Explain to me why they would want to do that ?
My Rule Of Thumb for disruption in the digital world:
Aggregators disrupt ala carte . Aggregators don’t disrupt Aggregators, they compete with them."
P.S. The reason that Aggregators on the Internet beat a la carte is 1) Aggregating has low costs because everything is a bit, and 2) Aggregators almost always subsidize their business with a revenue stream that is unreachable by the A La Carte provider. It's very hard to charge someone something directly on the Internet, but aggregating a crowd makes it easy to find a subsidy that can be very profitable.