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November 11, 1998 Event
Dominating A Genre: Building The Ultimate Category Killer While the success of today's portals has dominated the attention of media and masses, the less-publicized popularity of specialized sites deserves a closer look. Genre focused sites such as ESPN.com, eBay, and E*TRADE are emerging as favorite destinations for Internet users who seek depth in a particular area of interest. What makes these sites so compelling? And as competition intensifies and user sophistication grows, how can they dominate their vertical areas and become category killers? The answers may lie in skillful cross-implementations of content, services, and community. Successful content sites, such as The Wall Street Journal and Consumer Reports, provide best of breed content and draw loyal, repeat users, some of whom even pay for access to premium content. Very few players, however, solely rely on depth and quality of content to franchise users. ESPN.com, for example, builds community through fantasy games and polls and provides online ticket purchasing services through a partnership with Ticketmaster. Leaders in the services area, including E*TRADE and HomeShark, earn their livelihood by facilitating real-world services online. Yet many of these sites go beyond their service roots to attract users. Amazon.com, for example, has become much more than a low price e-commerce merchant. Through its acquisitions of PlanetAll and the Internet Movie Database, it offers Web-based address book, calendar, and personalized reminder services as well as top-notch movie and television content. Online communities like iVillage and The Globe provide congregations for groups of users around specific themes. User-generated content and critical mass of community creates great affinity but may not translate into revenue. Adding relevant content and especially e-commerce services can help to monetize this traffic. Women.com, for instance, produces a wide array of detailed content for its users along with extensive context-specific shopping services. While an initial focus of specialized sites was to succeed in either content, services, or community, many today are leveraging combinations of the three. E*TRADE has changed from the "smarter way to trade" to the "destination web site for self-directed investors." eBay has evolved from an auction site to "your personal trading community." Even Amazon.com seeks to engender a deeper sense of loyalty through its community offerings. Perhaps the key to building a category killer truly is to offer a relevant cross section of content, services, and community. Ultimately then, breadth in depth may be the most effective solution.
Premium Content Providers to Charge
Key Learnings
WHAT IS A CATEGORY KILLER?
A category killer is a niche market that is dominated by one company. However, category killers need not be standalone sites; portals can create category killers within their networks of vertical properties (e.g. Yahoo! Finance, Microsoft Expedia). This model is similar to Time Warner's ownership of several print media category killers such as People, Sports Illustrated, and Fortune.
Popular branded content will continue to be successful, but cannot be considered category killers. Branded sources such as the WSJ and News.com are not category killers because of the many other sources for news on the Internet. There are very few true category killers. Most are the inventions of I-bankers and VCs who proclaim them as such in an attempt to cash in on Internet mania.
Just like television, the Internet will have a few huge networks (portals) and many cable stations (category killers). The portals will not be able to kill the category killers due to their niche focus and specialized set of services. Furthermore, there will be plenty of opportunities for small vertical sites to compete with AOL or Yahoo! in the creation of hyper-focused communities.
CONTENT, COMMUNITY, SERVICES
What exists on the Web is not community, but rather a commonality of interests. Commonality of interests will do less for a business model than good content and services. In order to compete with the big guys on the Internet, category killers need first to develop services and then to build content and community around those services.
The true function of community is to offer context for commerce. The most successful ones deliver value through content and services for a specific demographic rather than by subject area. Demographically oriented offerings better meet the personal needs of consumers. Service offerings that bundle comprehensive solutions to consumers' problems are the wave of the future.
Pure media-model category killers need deep pockets to be successful. They don't have e-commerce revenue and only a few major brands can attract any sort of subscription money. Traditional audience building is their route to ensuring reliable advertising revenues. However, banner ads are not the answer, and because broadband access is still years away, these advertising revenues may be delayed.
QUOTE OF THE NIGHT
"Critical mass does not equal community; pure numbers will never engender passion, enthusiasm, or commitment."