Stephen Foley: Papers should profit from Groupon's model
Saturday 19 February 2011
US Outlook: Of all the supposedly crazy valuations being put on social media companies ($10bn for games maker Zynga, $50bn for Facebook, etc) the only one that looks certainly bonkers is $15bn for Groupon, the online vouchers company.
Relative to other firms it has high costs, because it needs to hire marketing folk to sign up local businesses in each new city it enters, and nothing to stop new competitors emerging.
And here come the competitors: copycats like LivingSocial; niche sites, designed for lovers of high-end restaurants, say, or the gay community; and – let's hope – local newspapers.
If I were running a local paper right now, I would see starting a "deal of the day" email service for readers as a no-brainer. The advertising department already has all those local business contacts. Could Groupon's idea save newspapers?
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