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Thursday, September 13, 2012

MLB's Customer Alignment Problem, And How Cable TV Isn't Going Away Any Time Soon

Ken Arneson, late of the Toaster blog, writes a thought-provoking piece on the nature of baseball's customer relationships shifting from fans themselves directly (via ticket sales) to TV networks. It's an alteration that both changes the paying customer and removes the fans further from the teams trying to sell to them.
Amazon and Apple sell most of their products directly to their users. When their customers buy something they make, they know the product is good; when they don’t buy, they know immediately they made a mistake. Microsoft doesn’t sell directly to users– they sell to distributors and OEM manufacturers, so there’s noise injected into their feedback loop, and they land just a little lower on this spectrum. Google sells ads, but their ads are often directly related to what the customer wants; if someone is searching for jeans, they get an ad for jeans. Sometimes the ad happens to be exactly what the user wants.

Twitter and Facebook, on the other hand, need to inject their ads into an environment where the users wouldn’t really want to see ads at all if they didn’t have to. This leads to customer dissatisfaction, expressed not just in the Onion parody above, but also in a real-life alternative social networks like App.net who are trying to sell directly to users.

He also goes on to cite an interesting article claiming that most of the "cord cutting" in cable TV is really shifting to telco-owned cable company replacements like AT&T Uverse and Verizon FiOS. (This has been one of my big bugbears this year as the Dodgers' new ownership has basically placed an all-in bet that Fox or Time Warner will recoup their investment.) This should be a very interesting space to watch going forward.

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