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Abstract
Really simple syndication (RSS) technology enables an alternative delivery mechanism for online content. Instead of waiting passively for users to pull online content out, websites can push it to potential users through RSS. This is expected to significantly affect user behavior, website profitability, and market equilibrium. This research uses an economic model to study the impact of RSS adoption and examine whether it increases a website’s profit and competitive advantage. The findings are intriguing: they demonstrate that RSS can either increase or decrease website profit. In a competitive context, RSS adoption can actually be a disadvantage; in some cases, it hurts the adopter but benefits the competitor. Moreover, under certain conditions, the first mover will be worse off when the competitor mimics its adoption decision, which discourages the earlier adoption and thus creates an obstacle to using RSS. Derivation of the adoption equilibria in sequential and simultaneous games shows that multiple market outcomes may result. Finally, regardless of whether or not a website operator adopts RSS, it will still benefit by increasing user awareness of RSS technology, but only up to a certain level. Once this critical awareness level has been reached, websites will not gain by continuing to promote RSS to users. As a whole, these results show how technology adoption will have an impact on firm performance and market outcome, and illustrate the complexity of technology adoption strategy in a competitive setting.
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Notes
1. Many RSS readers and software applications are free—such as Feedly, NewsBlur, Digg, and The Old Reader—and numerous online manuals and video tutorials are available to assist users with setup, which usually takes only five to ten minutes.
2. Push describes “anything from broadcasting to selective content delivery using sophisticated evolutionary filtering agents” [Citation20].
3. For example, NYTimes.com lists its free RSS feeds online (www.nytimes.com/services/xml/rss/index.html). These feeds include news headlines, summaries, and links to the nytimes.com site for full articles.
4. For example, the New York Times reported that its RSS feeds generated 5.9 million page views in March 2005, which represented a 342 percent increase over the previous year and a 39 percent increase over the previous month [Citation40]. And Yahoo! News reported that adding RSS feeds to My Yahoo! attracted 26 million additional visitors in one month.
5. Weekly RSS usage rate for the same period was roughly 4–7 percent, which actually shows a slightly decreasing trend. See blogs.forrester.com/reineke_reitsma/13-03-15-the_data_digest_usage_of_rss_feeds.
6. This concept is similar to, though not exactly the same as what Stahl [Citation38] proposed. He argued that users have different attitudes toward shopping. Some derive enjoyment purely from shopping itself, while others do not.
7. Advertising revenue support is critical to monetize websites [Citation25]. In practice, multiple pricing models exist for online ads, such as charges per impression or by click-through rate. I assume that online ads lead to disutility for users. As long as this assumption holds, all analyses and results remain valid.
8. Most RSS software can block online ads. Although there has been debate about adding ads to RSS feeds, this is not common.
9. A common business model for websites is to sell some product, experience, content, or service and earn revenues from the sale [Citation4], all of which are considered content-sales revenue in this work.
10. This research sets all else equal for the two competing websites but allows choice of content delivery method, so that the analysis could be focused on the impact of RSS adoption.
11. Otherwise, some users will switch from the higher traffic website to the lower traffic website until equivalence is reached.
12. The two websites have different numbers of visitors but the same amount of effective traffic. Otherwise, some conventional users will switch from the website with higher traffic load to the website with lower traffic load until equivalence is reached.
13. Otherwise, more users will use RSS feeds to visit website A until there is no positive utility left for RSS visits.
14. This situation will be analyzed separately later in the study.
15. If the nondegeneration condition does not hold, Case <1,0> and Case <1,1> are the same as Case <0,0>. No one will use RSS even if it is offered. If the critical awareness condition does not hold, the outcomes described in Propositions 2 and 3 are no longer valid. This will be analyzed separately later in the study. In addition, it is worthwhile to point out that the nondegeneration condition in Case <1,1> is more demanding than that in Case <1,0>, so I only need require that the nondegeneration condition in Case <1,1> hold. The two critical awareness conditions are the same in Case <1,0> and Case <1,1>.
16. In addition to RSS adoption, websites can use other strategies to further optimize profits, such as adjusting the prices of their online products and services, varying specific content coverage, or charging to subscribe to RSS feeds. These potential profit-improving strategies are not within the scope of this research; in this context, the only decision for a website is whether to adopt RSS. This lets me focus on the main research goal: how the RSS adoption decision affects a website’s profitability.
17. They are the same values as in the Sequential Equilibrium Proposition (Proposition 5).
18. This corresponds to the range of pR ∈ [pR1, pR2].
19. In this example, the nondegeneration conditions require pR ∈ [1.3, 2.6], and the two threshold values are pR1 = 1.6 and pR2 = 2.
20. These sites prefer RSS for content distribution also because of their narrow information coverage and unstable update periods.
21. Most RSS ads now are just a few lines of text, differing in color from the headlines and summaries inside the RSS readers [Citation28].
Additional information
Notes on contributors
Dan Ma
Dan Ma is an assistant professor of information systems and management at the School of Information Systems, Singapore Management University. She received her Ph.D. from the Carol G. Simon School of Business at the University of Rochester. She specializes in the economics of information technology (IT). Her research interests include the use of game-theoretical models to study the dynamics of competition between software providers, pricing issues for the share of IT services, and the diffusion and impact of new IT technology adoption.