• by Lydia Loizides , Op-Ed Contributor, September 17, 2007

In the mad panic to capture the hearts, minds and total online minutes of online users, the latest craze is the "exclusive" content deal. Let's review. In the last few weeks we have seen a flurry of exclusives -- Bruce Springsteen and iTunes, Celine Dion and Amazon, and others.  But we have also seen content owners exercise their ownership rights in a new and often aggressive way. The question still remains, though: Does exclusivity drive audience loyalty? Does multiplatform access negatively impact overall value?

Now, for those who know me, you know I am a sucker for academic papers, especially anything that comes out of the Ivy League. And as it happens, there is an excellent exercise in evaluating the impact of exclusivity, multi-platform distribution, content rights and overall pricing strategies from Harvard Business School that I am urging you to read.  And, yes, you may have seen it referenced on paidcontent.org,  but I have taken the liberty of including the Executive Summary below for your perusal.  Take the time, people -- it is definitely worth the read. And if you think that you don't have the time or the need to engage in such trivial pursuits, no problem. I am sure your users won't mind going somewhere else.

Exclusivity and Control , August 31, 2007, Andrei Hagiu and Robin S. Lee

Executive Summary:

Music, television shows, movies, Internet and mobile content, computer software, and other forms of media often require a consumer to join a platform in order to access or utilize the media. This affiliation may take the form of a subscription to a distribution channel or purchase of a hardware device. One of the primary means of differentiation and competition between platforms for consumer adoption is the acquisition of premium or quality content. However, whether or not certain content is exclusive to one platform or is present on multiple platforms varies significantly from industry to industry. One can even view Apple's exclusive U.S. provision of the iPhone to AT&T as even more variation in the degree of exclusivity across industries. Why is it that some forms of content are available only on one platform, while others are distributed through several or all platforms available -- that is, they "multihome"? This paper analyzes industry propensity for exclusivity and presents a model of platform competition. The key driving force is the nature of the relationship between the content and the platforms: outright sale (all control rights, particularly over content pricing, are transferred from the content provider to the platform) or affiliation (the content provider maintains control rights over pricing). Key concepts include:

• The key is control rights over factors such as content pricing and cash flow. Strategic interactions around control rights between platforms and the content provider can push the industry structure in either direction.
• High-quality content will multihome, because foreclosing a portion of the market by being exclusive will be too costly. Mid-quality content will be exclusive and can soften price competition at the platform level enough to offset the losses from excluding a portion of the market. Low-quality content will multihome, since it would not yield any comparative advantage if it were exclusive.
• A platform that has exclusive rights to content may prefer to relinquish control over pricing and associated revenues to the content provider in order to relax price competition with a rival platform.