the reflexions insider

The “prisoner’s dilemma” is an analogy in game theory that’s used to describe everything from crowd behavior to stock markets and employee group evaluations. One variation is this: you and an associate are each arrested and interrogated separately. The first to implicate the other will get a light sentence; the other is imprisoned indefinitely. If you implicate each other you both get a moderate sentence. But if you both stay quiet, you’re both let go. It’s about mutual trust and cooperation for a mutually beneficial outcome. If you look hard enough, economists and behavioral anthropologists will tell you, you’ll find it everywhere.

David Carr wrote an article in yesterday’s New York Times about why newspapers find themselves in this very predicament, but with a twist — there’s no way out unless they cooperate. Cooperating in this scenario would probably mean something like a subscription-based paid content model for a network of websites from large daily newspapers. If you pay the fee, you get unfettered access to all participating websites. If you don’t, you get very little (except what others might be willing to repost, a possible copyright issue lurking in the shadows of what has historically been a free and open [...]

(Image by nswlearnscope via Flickr)

Recently the ever-snarky tech/finance blog Silicon Alley Insider held a contest to propose how to fix what they called Digg.com’s “broken business model” (”broken” because Digg lost $2M on $6.4M in revenue, a staggering loss by any standard). The winner would have his or her proposal (and resume) delivered personally to Digg founder Kevin Rose and CEO Jay Adelson. The winner was Keith Cowing, an MBA student at Cornell, who suggested among other things that Digg generate revenue by selling sponsored posts on the home page and data to marketers about its users. Probably something Digg should consider but it’s hardly a revolutionary thought and not exactly the kind of model that will transform underperforming web 2.0 properties into revenue generators.

By and large the “web 2.0″ crop of business models has been disappointing. There are no shortage of examples. YouTube, purchased by Google for $1.65 billion, has a revenue model that’s “so secret, even Google doesn’t know what it is.” While Google doesn’t publish financial information about YouTube, its impact on revenue has been [...]