Market bundling strategies in the horizontal portal industry
AbstractThe arrival of the Internet offers opportunities for both incremental efficiency gains and complete industry redefinition, presenting new value propositions and hence leading to the emergence of new businesses and industries. One particular case is that of the horizontal portal industry, such portals being consistently the most visited sites on the Web. Nevertheless, despite ongoing market concentration, overall profitability remains low. In this paper we contend that, although the industry has great potential for value creation, value appropriation in such information-based businesses remains problematic. The only way to achieve it is through cross-market bundling; that is, portals selling their products packaged with Internet access and proprietary content through system competition. We support our claims with theoretical argument and empirical evidence, analyzing the information distribution value chain in its entirety.
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Bibliographic InfoPaper provided by IESE Business School in its series IESE Research Papers with number D/480.
Length: 17 pages
Date of creation: 15 Oct 2002
Date of revision:
Portals; information goods; Internet advertising; Internet service providers; content provider;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-01-19 (All new papers)
- NEP-COM-2003-01-19 (Industrial Competition)
- NEP-IND-2003-02-03 (Industrial Organization)
- NEP-NET-2003-01-19 (Network Economics)
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