Managing Internet Portals Jan Damsgaard Dept. of Informatics Copenhagen Business School

EBUSSJan Damsgaard, Internet Portals u Portals are a World Wide Web sites that originally were starting sites for users but they have developed into ending points or walled gardens u Horizontal portals focus on general issues and include Yahoo and America Online's AOL.com. u Vertical portal focus on specific topics and include Garden.com (for gardeners), Fool.com (for investors), and WebMD (for health related issues)

EBUSSJan Damsgaard, Portal markets u If you join the wrong portal –High switching costs & Low network externalities u The winner is not necessarily better –Expectations are important –Control over the installed base of users is crucial u Evolution –Compatibility with installed based –QWERTY –Black and White Vs Color TVs, Intel Processors

EBUSSJan Damsgaard, Competing for a prize u The winner can make extremely large gains u A monopoly is hard to challenge because of high switching costs and network externalities u Since the prize is so tempting, there is often very fierce competition –which actually sometimes may lead adopters to wait and see The prize is tempting but the contest itself may not be

EBUSSJan Damsgaard, Four forms of competition u Adapted from Besen and Farell (1994) u Pesky Little Brother –Wants to join larger and established bigger brother u The Battle of the sexes –Each prefers its own, but also prefers compatibility u Tweedledum and Tweedledee –Firms prefer to compete u …and Avoid Pesky Little Brother aka Big Brother –Wants to stay solo Besen, S. M., & Farrell, J. (1994). Choosing How To Compete: Strategies and Tactics in Standardization. Journal of Economic Perspectives, 8(2),

EBUSSJan Damsgaard, Tweedledum and Tweedledee u Tweedledum and Tweedledee agree to have a (standard) battle –Building on early land –Attracting the suppliers of complements –Product pre-announcement –Price commitment

EBUSSJan Damsgaard, Battle of the sexes u Both agree that there should be only one! u Possible outcomes –Agreement, industry standard, persuasion –Adoption of a hybrid standard –Commitment to joint future development

EBUSSJan Damsgaard, Pesky Little Brother u Firms are asymmetric u One firm has –an installed base, a good technology, and a powerful reputation u Three cases –Nothing can be done to prevent compatibility –Asserting intellectual property rights or changing technologies frequently –Partial compatibility (Apple running DOS)

EBUSSJan Damsgaard, Content phase u Focus –In the content phase the focus is for the portal to attract customers to the portal and sample its services. u Degree of lock in –Low u Strategy –Marketing u Stance towards competitors and established networks –Pesky little brother u Key part of the organization –Marketing department u Crisis to handle –Get users to return

EBUSSJan Damsgaard, Community phase u Focus –In the community phase the focus is for the provider to facilitate the building of a community that exhibit high network externalities. u Degree of lock in –Moderate u Strategy –Build community out of users u Stance towards competitors –Battle of the sexes u Key part of the organization –Sales department u Crisis to handle –Build a critical mass of users

EBUSSJan Damsgaard, Customization phase u Focus –In the customization phase the focus is for the portal to make the customers adopt and use a service that is owned/controlled by the provider u Degree of lock in –High u Strategy –Bundle open with proprietary services. Extend open services. u Stance towards competitors –Tweedledum and Tweedledee u Key part of the organization –Research and development u Crisis to handle –Establish proprietary service

EBUSSJan Damsgaard, Compatibility phase u Focus –In the compatibility phase the challenge is keep the evolution going, stay backward compatible, and incorporate new services and technologies. u Degree of lock in –Monopoly u Strategy –Incorporate and embrace innovations. Block for gateway innovations. u Stance towards competitors –Avoid pesky little brothers u Key part of the organization –Market researchers and R&D u Crisis to handle –Avoid revolution

IIIIIIIV Focus Attract users and get them to return Attract a critical mass of users and build a community Install proprietary service to the community Keep evolving and avoid revolutions Degree of lock in LowModerateHighMonopoly Strategy Pesky little brother Battle of the sexes Tweedledum and Tweedledee Big Brother Overview of PMM

Healthcare portalNetdoktor.dkNetdoktor.seVerkkoklinikka CountryDenmarkSwedenFinland Date when launched Number of fulltime employees Horizontal, vertical and geographical scope Scope: Vertical Geo: Local Scope: Vertical Geo: Local Scope: Vertical Geo: Local Type of servicesHealth related information UsageNumber 1 in healthcare portals Community3 communities2 communities, 200 discussion groups 61discussion groups CompetitorsDuopoly in the market Almost a monopolyDuopoly in the market. PMM phasePhase II

Mobile portalJippiiTelia MobileMobilstationen CountryFinlandSwedenDenmark Date when launched Fulltime employees1463 ScopeScope: Horizontal Geo: Local Scope: Horizontal Geo: Local Scope: Horizontal Geo: Local Type of servicesNicknames, ring tones, logos, games, etc. Mailadapter, ring tones, logos, games, MMS, etc Ring tones, logos, games, and MMS UsageThird most visitedOne of the leadersNot among top 50 Community20 gaming groups, 13 chat rooms and 70 discussion groups No community CompetitorsAbout 4 strong competitors. None, since it mainly provides services to existing customers PMM phasePhase IIPhase I

EBUSSJan Damsgaard, Building a community u Traditional wisdom –Build the community wide to increase the likelihood of including someone that will be active in building the community u However it is far better to be more to a few people than little to many people u Club theory –The more member the less the perceived value of active participation

EBUSSJan Damsgaard, Managing the community u Traits of an online community –Roles - from new comer to old timer t The membership life cycle –Leadership and managing leaders t Official and unofficial –Etiquette –Events –Rituals –Subgroups – clans, clubs and committees u All these will evolve regardless of you being active in inscribing them or not A. J. Kim: Community Building on the Web

EBUSSJan Damsgaard, Challenges u Mobile communities –threat or opportunity u Ad hoc communities –Smart mobs u Access technologies –Network: WLAN, UMTS, DVB etc. –Gadgets: PDA, Mobile phone, TV etc. u What is the real value of Internet portals –Historical examples of Radio and TV