Category Archives: Business strategy

Latest thinking on corporate strategy.

Fees as a revenue stream

There are reasons why Comcast is such a terrible company but this week when I called them to complain that our phone and Internet connection was down, before even apologizing for the interruption of service or promising to do anything about it, the agent first threatened that if the technician came to fix their equipment and if the fault was ours (the technician gets to arbitrarily decide whose fault it is — imagine the potential for abuse if someone does not have masters level education in engineering like me?) we would be slapped with a $50 fine (it was not clear if they will fix the problem or expect me to fix it anyway). Alternatively, the cheerful agent suggested that while we were sitting without a phone and Internet because Comcast had problems, we could sign up the Xfinity Service Plan Protection (SPP) for a monthly fee to pay them to service their equipment.

Definitely, Comcast is not alone in figuring out that the easiest way to add to the top line is by charging fees for items that have traditionally been free, for example, to bring your bags alone on a trip if you pay for the ticket. The airline industry has been one of the most remarkable success stories in finding new revenue streams from existing infrastructure. The banks have done so with ATM fees recently (now it costs nearly five bucks to get your own money out from a machine). The credit card industry also relies very heavily on fees.

As disgusting as it sounds for us as consumers, the lesson here is that once you figure out that your customers are helpless and can be bullied, it is easy to add revenue through fees without any significant investment.

Will newspapers become like magazines?

I have talking about the print/digital transition for a while and it seems that the decline of print continues. Surprisingly the print media is still slow to reacting to the powerful forces of change. Take New York Times for instance. Despite the writing on the wall being so clear, the company still keeps pushing newspaper subscription through direct mail (I stopped the paper subscription in 2003 but I still get their letters in the mail) and online advertising. I am hoping that they will finally pay attention to the Pew Report on the State of the Media, that concludes, “A growing number of executives predict that in five years many newspapers will offer a print home-delivered newspaper only on Sunday, and perhaps one or two other days a week that account for most print ad revenue.”