Monday, December 3, 2012

Stock competition

Zynga, -16.33% (Sep.24-Nov.30)
Baidu, -14.99%(Sep.24-Nov.30)

Stock Competition

My two stocks were Disney and Sirius XM.

I paid $51.5 per share and bought 194 shares of Disney.
I paid $2.64 per share and bought 3, 787 shares of Sirius XM.

Disney is now down to $49.31 per share, while Sirius is up to $2.80 a share.

Disney -$424.86
Sirius XM +$605.92

Total: $181.06

So Sirius was my best stock. Huh.


Oh come on, Apple

Successful launches of two major products and your stock declines. Don't ask me if you want trading advice.

Activision did the "best," with a less than 2% gain.

SYMBOL               PRICE NOW        PRICE PAID         GAIN/LOSS         GAIN %               
AAPL                     586.74                   664                        -$386.30               -11.64%              
ATVI                      11.31                     11.12                     $45.79                 1.71%   
GCI                         18.06                    18.03                     $6.66                   0.17%   
Total                                                                                   -$333.85              -3.34%

Angela's Stock Report: The Edward Effect (Whether We Like Him or Not)

Formula = (Price_1 - Price_2) x Number of shares

52.07 - 49.72 = -2.35
-2.35 x (5000/52.07) = -225.66

Lions Gate
14.96 - 16.53 = +1.57
+1.57 x (5000/14.96) = + 524.73

524.73 - 225. 66 =  +$299.07 

Sunday, December 2, 2012

Huei Jun's stock report

price on 9/29/12
price on 11/30/12
investment (USD)
present value (USD)
profit & loss (USD)
result (USD)

Saturday, December 1, 2012

Mark's stock report: A whole lotta meh

The last two months were generally not too good for my stocks: Overall, I came out with $9,486.43 of my $10,000, so while my proverbial nest egg isn't gone, it's certainly not getting any bigger. What's most interesting is how they landed at that number -- I hit on two stocks, really missed on one, and had one that looks really bad, but I actually almost broke even on. Here's how my stocks fared, from best to worst:

Cinemark (CNK), 112 shares -- bought at $22.76, currently at $27.20, +19.51%

Easily my best stock. The price has risen quite steadily since I bought it, and it also paid out a 21-cent dividend in the middle of November. The two big positive events were Cinemark's purchase of 32 theaters from Rave Cinemas and strong third-quarter results as a result of growth in Latin America. Neither of those things were part of the reason I bought the stock -- all the strong attendance I expected this fall won't show up in an earnings report for a few months -- but hey, I'll take it.

News Corp. (NWS), 100 shares -- bought at $24.86, currently at $25.22, +1.45%

Modest growth here, but that's fine for me during a volatile time for the market. Their road to get back to my purchase price was pretty rocky, though: First the stock rose after an Australian regulator cleared News Corp.'s attempt to buy out a pay-TV service there, then fell when it was rumored to be interested in buying the LA Times and Chicago Tribune (Wall Street rightly thought that was a bad idea). It reached its lowest point when News Corp. was first rumored to be buying a share of the YES sports network, but jumped up when Rupert Murdoch sold all his nonvoting shares. Things are never boring with ol' Rupe, that's for sure.

Microsoft (MSFT), 84 shares -- bought at $30.18, currently at $26.62, -11.81%

Just bad all around. There was initially some good news about Windows 8's success that helped buoy the stock price for a little while, but traders hated most everything else Microsoft did, including buying a couple of small mobile media firms and especially paying out a dividend. It's still getting some buy recommendations, though, so maybe I was just ahead of the curve?

Fisher Communications (FSCI), 67 shares -- bought at $37.18, currently at $25.11, -32.46%

So this drop is actually really misleading. In actuality, Fisher's stock was steady for almost all of the time of this contest -- its gigantic drop was due almost entirely to a huge $10 dividend it paid out in October. If I actually held stock in the company, I would have received the dividend, but since I am only a mock owner, I don't get the dividend, but instead just get the theoretical stock drop. So this one looks really bad, but if I were really a stockholder, I would have come out just below even.

Sunday, November 18, 2012

Design for Newspaper Lovers

A new design for newspaper lovers

The truth is, building a newspaper for people who love newspapers is somewhat revolutionary.

For decades, the newspaper industry designed papers for people it hoped would read them.

 Interesting comments by Dr. Dane Claussen:

There's still that old dichotomy between at-risk readers, who think newspapers are not serious enough, and marginal readers, who find them too heavy going, and that's mostly about content, not design. So, while you're at it, News-Tribune, maybe try to make the print paper substantively better for at-risk readers, and make your digital versions substantively better for marginal readers. (While satisfied readers, who are neither marginal nor at-risk, can choose or read both???) 

Sounds like a good idea? 

Wednesday, November 14, 2012

virtual pay

A glass of water, 5
15 min of idle time, 3
Fresh air, 3
An online news article,3
A song streaming from an online radio station, 2
A youtube clip, 3
A news tweet, 1
A piece of email, 1

The Long-Tail Economy: An Inspiring Concept

A model for online retailing/entertainment industries: Amazon, iTunes, YouTube, and Netflix.

Unlimited shelf space: From "hits vs. misses" to seemingly unlimited choices

The death of distance: Easier to get a critical mass in a much larger geographic market 

Tools for content access: Search, algorithm-based recommendations, user reviews


Does the availability of options and navigation tools shift consumption from the head to the tail?

Some argue that the greater choice, navigability, and searchabilty will actually strengthen the hits relative to the niche products!

Empirical evidence:

Therefore, it is NOT any easier to be a niche content producer financially than it was in the old media environment. 

Three business models for online music in practice:
  • iTunes
  • Pandora
  • Spotify
Pandora vs. Spotify

Who Really Profits from Your iTunes Downloads?

Implications of audience segmentation for ad-supported media

Long Tail - Wag the Head?

I agree that ‘Long Tail’ by Anderson is a compelling idea, which clearly shows how digital technology might be changing both markets and business models. It’s a ground breaking work on new business principles. However, I am also interested in Anita Elberse’s refutation that “the web may have actually increased attention to mainstream content, often referred to as the "head," while Anderson believes that consumers have used the internet to embrace niche content.” According to her, the continued dominance of big media and mainstream content has much to do with a human desire to experience culture communally. She argues, thus, that "the internet simply amplifies that drive." In this context, can we conclude that the (long) tail really is wagging the head with the advent of digitized era?

Spotify and the successful failure of the long tail

To me, nothing exemplifies the potential and shortcomings of the "long tail" approach as well as Spotify. For the uninitiated, Spotify is a streaming music service that lets you listen to a massive library of music (legally) over the Internet whenever you want. It has a free version (which is ad-supported) and several tiers of paid editions (which allow mobile access, offline access, and other features).

For me as a music consumer, Spotify has been a long-tail paradise. Over the past year and a half, I've used it to explore all kinds of genres and sub-genres of music -- many of them obscure records or album tracks that I'd never hear on the radio and probably wouldn't find at most record stores, either. I've done a ton of Spotify listening, and almost all of it has been deep in the long tail. It's all listening that simply wouldn't have been possible 20 years ago, at least not without thousands of dollars to buy and try out all of those albums.

But for the media companies themselves, my long-tail indulgence has been almost worthless in monetary terms. Spotify pays labels per listen, which in turn distribute that money to their artists per listen as well. According to this article, each of my plays of a song on Spotify Free is making the artist somewhere between 1 cent and 1/10 of 1 cent. Don't spend it all in one place, guys! I could listen to thousands of songs (and I have), and it would still only add up to a few dozen bucks collectively for all of those artists.

But that just means Spotify is making a bunch of money off me instead, right? Wrong. Since I'm not willing to pony up for a monthly fee (I don't have a smartphone and my laptop is always connected to the web, so mobile and offline access don't mean much to me), Spotify has actually been losing money on me.

So whose perspective do we take on the long tail? For me as a consumer, it's been an amazing development. But as a business model, at least in my case, it's worthless. There are surely other, better ways to make money off the long tail (even Spotify's subscriber services are making gobs of money), so this isn't necessarily an indictment of the long tail as a whole. But it's one data point suggesting that it's quite a bit more difficult to make money off the long tail as Chris Anderson makes it sound.

Tuesday, November 13, 2012

Who and what to blame?

The "ceiling effect" in profitability of physical mainstream media products makes sense since (1) there are limits to the common denominator formula (2) physical markets tend to be much smaller than online markets. 

But these limitations don't apply to online stores. On the internet, while online stores can still carry "mainstream" products to aim at the common denominator audiences, the online environment eliminates the two possible ceiling effects with 1) low to zero cost for storage and distribution and 2) elimination of geographic markets. In other words, online media stores have the best of both worlds in terms of offering endless content amd having countless potential consumers, both of which are reason enough for the triumph of long tail effects.

I think the competition media companies in the physical world whines about (for the lack of a better expression)  is not necessarily one of "online vs. traditional" per se - but one of "who is better at satisfying the needs, or even quirks, of their customers/audiences?"  The news industry faces the same problem.

Legacy media industries, arguably, never took the time to fully understand consumers/audiences in their geographic region to cultivate loyalty and rapport, and to improve customer/audience satisfaction. For example, Borders in Brooklyn, NY should not carry the same items as Borders in Lubbock, TX, but chances are they probably did carry identical things for the reasons Chris Anderson detailed, and I think this is really a shame because "localness" is one of those attributes that online stores can never take away from physical stores. 

In sum, market negligence in the physical world is a worse enemy than the "traditional vs. digital" debate accounts for. In other words, in order to stay competitive in the 21st century, unless physical stores can carry as much content choices as online stores do to entice their customers/audiences, they better figure out what their unique attributes are -- stop talking in terms of "what I can offer you" and start elaborating on "how I can meet your X and Y needs in ways that the online stores cannot." 

Monday, November 12, 2012

The community's role in newspapers' technology use

For my final paper, I have one big, huge, overarching question and a whole bunch of different ways to tackle it. Here's a very short version of what I'm looking at -- I'd love to hear your feedback.

My overarching question: “What leads newspapers in different geographical and social settings to use technologies in different ways?” The key area of newspapers I'm interested in are community newspapers, but this question would allow me to compare those newspapers to other types as well.

For me, that means the dependent variable would be use of interactive technology -- which could be measured through a content analysis of newspapers' websites, mobile apps, and social media presences.

Where things get sticky is with the independent variable. There are a number of different ways I could go with this:

Attributes of the newspapers' geographic community. Possible research questions here:

What is the relationship between a community’s technological access and the use of technology by its newspapers? Could be measured through public FCC broadband access data.

What is the relationship between a community’s structural pluralism and the use of technology by its newspapers? Could be measured through Census data regarding race, education, poverty levels, and occupational classification.

What is the relationship between a community’s media use habits and the use of technology by its newspapers? Could be measured on a case study level, through a community survey.

The other area would be community journalists’ perceptions of their geographic community. Possible research questions:

What is the relationship between journalists’ perceptions of their community’s technology use and their own use of technology within community newspapers?

How do journalists’ perceptions of community technology use interact with other economic and professional factors in influencing their use of technology?

Both of these could be measured by surveying journalists about their perceptions of their community's technology use and their decision-making process regarding use of technology.

A lot of good (?) ideas, but not much direction. I could use some soon!

Blind to Media Economics?

At the end of 2010, Korean incumbent government granted four conservative national dailies the new licenses to operate new cable TV channels. Korean major newspapers had been desperate to win the licenses because they believed that the new broadcasting business will help overcome the recession of newspaper industry and leverage their print dominance to television. They, thus, had competed for the newly-opened cable television ever since 2009, when the government lifted Korea’s traditional cross-ownership ban that had prevented a corporation from owning both newspapers and broadcasting company at the same time.

The government’s decision was made after years of severe nationwide debate, division and cross-industry bickering. The government contended that the deregulation was for producing better contents that would help the Korean media companies strengthen international competitiveness and become global media companies.

However, there had been widespread concern over not only the deleterious effects of the new channels on journalism such as the harm to diversity in public opinion but also the thinly-stretched budgets of advertisers.

Although it was very questionable whether the market could create additional TV advertising spots from advertisers, the government claimed that the new channels would generate enough advertising revenue. However, they have been operating at a loss due to the very low viewer ratings and poor advertising spots. Even though the new channels have greatly lowered their price for advertising spots, they are keeping “drowning in red ink.”
The government and the newspapers really did not know that television advertising is price inelastic? Or, just because of the political thinking, they were blind to media economics? 

This study will explore how the newspapers depicted the new cable TV channels, which show whether and how much they concentrated on media economics perspective regarding their approach to new business model.

<Research Question>

RQ1: What differences, if any, were there in Korean major newspapers’ frames of the new cable TV channels?

RQ2: What differences, if any, were there in Korean major newspapers’ tone of stories about the new cable TV channels?

RQ2a: What differences, if any, were there in Korean major newspapers’ tone of the frame used most frequently?

RQ3: When Korean major newspapers covered the new cable TV channels, what sources did Korean major newspapers mainly depend on?

RQ4: When Korean major newspapers covered the new cable TV channels, to what extent was such coverage based on media economics data?

From meaning to perceived importance: Predicting news consumption with news utility (working title & research idea)

-- Story line --

Economics suggest people innately seek to maximize utility, but scholars rarely discuss the utility of news to audiences. They often explore "why people consume news" (which has proven to have lukewarm predictive power from the uses and gratifications literature) but not how useful news is to audiences. This study offers two ways to understand news utility (what is news and how important is it?), and examines how they predict news consumption.

-- Research questions --

RQ1: What does "news" mean to audiences?

RQ2: How important is news to different news audiences? 

RQ3: How does the audience's definition of news influence perceived importance of news? 

RQ4: How does the audience's definition of news influence their news consumption from a) local newspapers, b) national newspapers c) network national news, d) cable (CNN, MSNBC, FOX), e) local TV, f) social media (Facebook & Twitter), g) aggregators (Yahoo & Google) ? 

RQ5: How does perceived importance influence news consumption from a) local newspapers, b) national newspapers c) network national news, d) cable TV, e) local TV, f) social media, g) aggregators?

Attention Economy

(Sorry for the long wind-up, it was mostly for my sake, not yours. Skip to paragraph 3 if you wish to cut to the chase.)

People may not be willing to spend their money online or on mobile devices. But they may be willing to spend their time. My question is where that time is coming from.  In economic terms, attention is a scarce resource that consumers decide how to distribute based on their desires to maximize utility. To focus on a narrow application of this idea, a person might decide to dedicate a certain portion of their attention to news consumption. This news consumption might be entirely from a morning newspaper, or split between the Internet and local TV news, or any other combination.  If a person wanted to use a new medium for news, say because they received an Amazon Kindle for Christmas, they would have to cut back on other media use because their attention is a scarce resource.

But I argue that attention is not as fixed a resource as some might suspect. First, increasing media use may take attention from other areas of life (a person may go out less, for example).  Of course, there are still only 24 hours in a day, so at some point there are no other parts of the pie to steal from. But secondly, what if new technologies introduce efficiencies into the attention system such that person has more expendable attention? Instead of simply waiting in line – what used to be attention essentially wasted – people frequently consume media on portable electronic devices. Not that this wasn’t possible (people have always brought books to waiting rooms) but it now requires no advance thought because a cell phone is, for most people, a constant companion (unlike a book, for most people).

It may be that, in a world of increasing choice, people are more able to exercise their preferences (as Prior says), and hence simply swap one medium or news source for another that better suits their preferences. But it could also be that access to the Internet anywhere has fundamentally changed how and when we choose to consume media, pushing media consumption into heretofore media-less areas of our lives. I find some evidence of this in my study of how journalists use smartphones and tablets, which enable them to work at times and in places where it was previously impossible or prohibitively inconvenient. This new convenience of Internet access may be wiggling its way into the nooks and crannies of our lives, leading to a surge in busy-ness.

Proposition: Mobile Internet technologies are not “or” media, but “and” media. (The language of substitute and complementary would seem to apply, but I think that would imply some sort of relationship between the media. My sense is that they are NOT related, that mobile internet consumption fits into a new gap that it created for itself.)

Data required: Media usage across several years, but preferably at least the last five years. Hours working. Leisure time and recreation data. Some measure of busy-ness, maybe stress or anxiety could be a proxy here. The idea is to get a sense of how much attention people have to spend, and then decide whether that has changed with the adoption of mobile Internet devices.

Sunday, November 11, 2012

Competition between SMS and social message applications

Research Topic:

Text messaging, also known as Short Message Service (SMS), is a important profitable service to mobile service providers, which contribute about 20% revenue of mobile service providers's total revenue. However, SMS faces huge challenge to the social messaging applications on smartphone and social networking services, such as: WhatsApp, LINE, Facebook, Twitter, etc.

Last month, OVUM released a report, which forecasted that social message applications would make mobile operators losing the revenue about US$54 billion by 2016.

The different pricing types between text messaging and social message application could be one of the main reasons why social message applications grow up so quickly. Traditional text messaging was charged by usage, although there are some wireless operators have provided unlimited text messaging services with a flat monthly rate, however, consumers only have to buy the applications (sometimes consumer can even download the applications freely), than use the social message services on smartphone without paying any fee.

To consumer, social messaging application could be a more economic choice, however, in some countries, mobile operators were highly regulated by government, especially the pricing. For instance, all of the rate plans of mobile operators have to get the permission from NCC (National Communications Commission) in Taiwan, and once a service were reduced the price will never be permitted to raise the price again. However, the regulators cannot regulate the applications providers which might lead to an unfair competition environment.

Research Questions:

How to create a fair competition environment by regulations between mobile operators and applications providers? Should regulators dismiss from the pricing regulation? What is most benefit to consumer? How do the mobile operators deal with the challenges from application providers?

What kind of data I need?

  • SMS usage and revenue statistics in five years.
  • The changes of mobile operators revenue combination.
  • The performance of social messaging application companies.
  • The pricing regulations of mobile operators in main countries.

What’s the storyline

  1. The emergence of social messaging applications.
  2. The decreased of short message services.
  3. The correlation between social messaging applications and short message services.
  4. How to make a fair competition environment which can benefit the consumer, operators and industries.

Wednesday, November 7, 2012

In 10 Years Time

When I am 34 I think we will have more advertising revenue coming in from the online segment, and paywalls will be a thing of the past. I think a larger percentage of news will be consumed on the web than today, with shorter stories. We will have more online ad companies to compete with Google ads. I also hope that computer systems are like Iron Man's.

In ten years

To make sure that people can access to the internet everywhere anytime will become one of the most important responsibility of the government. Who owns the platforms, like telecommunication infrastructure, fixed line, or mobile base station, could be the most powerful person in the market. And I will think of today while we can still enjoy print media.

The future..? Well..

It’s hard for me to predict and imagine the future, but I believe that in 2022, the print media will restore the novel status after having experienced hard economic times due to the Internet, providing audiences with differentiated news contents such as in-depth and investigative news.

10 years

When Zach is 10, "newspapers" will be known as "news services" which still have a team of professionals dedicated to gathering and evaluating the day's intelligence and distributing it via a number of platforms. The number of people required to do this will be fewer than the number employed today. This is because revenue will be less, but there will be less duplication of effort.

Too Much, Too Fast, Too Small...

Because too much information that comes at too fast a pace through too many screens (that are too small) tires news consumers out, about half of the news organizations will no longer exist and the other half survive because they provide niche content or rely on user generated content. 

When Zach is 10

... print news from big name organizations (e.g., Dallas Morning News, NYT) will be luxury good. Print newspapers will be a symbol of social status, and Zach's generation (if not those younger than Zach) will be taught that quality news is something desirable and valuable.  It will still be an era of information surplus online, but people will have learned to "pay for quality" both off and online when Zach is 10. Hopefully.

Carrying the print edition of the NYT, you are so rich!

Print edition of newspapers will become a luxury item in 10 years.

Demise of the golden age of newspapers?

It seems to be true that there have been transition from provider business to consumer business in news industry. One of the reasons for the change is the surplus of information and technological development, which allows audiences to have an easier and complimentary access to news contents. One of the two opposite directions that the impacts of the changing media landscape on news are pulling in is the demise of the traditional news media.

I am very interested in an OECD paper - The Evolution of the News and Internet. According to it, some observers argue that “the golden age of newspapers and journalism when quality and reliability were arguably higher is now sadly gone.” That is, the growing financial pressures and the emergence of “free news” put this golden age increasingly at stake. In addition, novel forms of news creation and distribution and especially Internet-based offerings do not yet constitute a viable alternative to more traditional ones. This is because no online business model has been elaborated which would sustain expensive news coverage. The Internet may be a good platform for a cacophony of voices but the latter leaves the reader in doubt about the accuracy and the interpretation of the information. In other words, the online news ecosystem offers a profusion of opinion, but there is little reporting, and little is subject to any rigorous fact-checking or editorial scrutiny. As a result, most online news players and portals such as Google and Yahoo simply relay information from traditional news organizations: original news material without gathering independent news themselves or adding a lot of value. Is this really the alternative models in sight that will save both the news companies and journalism? In fact.., I have no idea. However, it seems to be quite plain that “the current online news ecosystem ends a period in which news monopolies controlled the news.”

Tuesday, November 6, 2012

Big wave is not here, yet. Do not predict online advertising revenue, yet.

Growth of newspaper industry comes with a development of postal service and infrastructure. Perhaps, it was more expensive to send letters and newspapers via postal service in 1800s and early 1900s. Reflecting from the history of growth of newspaper industry, it is more appropriate to consider a development of broadband services and diffusion of smartphones or tablets when we talk about transformation of newspapers to online edition. However, much discussion narrowly focuses on online revenue and advertising expenditure on online news without consideration of infrastructure for online editions.

Newspaper industry, specifically in the U.S., has multiple layers of market structure; from monopolistic market structure of the community newspapers in rural area to competitive market structure of metropolitan newspaper. Thus, it is hard to generalize general strategy of newspaper in new media environment. In rural area, change of media platform or pricing on online news are actually up to a supplier of news since it is a supplier market where there is no competition. Readers do not have any option, but only follow what supplier drives.

On the other hand, newspapers in a competitive market should consider many factors including readers’ response to their policy change. Individuals in this market have many alternative newspapers, so that they can easily discard their first choice upon the condition that quality of news contents is not much different.  

However, those two different markets might be merged with together at a certain level if cheap broadband services, and smartphone and tabloid are available to the public. Easy access to online editions will abolish clear boundary of readership which is defined by deliberative capacity of newspapers. Upon change of those environmental conditions, some regional newspapers, which struggle a lot, might transform themselves to the online media. The benefit of transformation is saving a lot of cost for printing and delivery system, so those papers will have capacity of reallocating their resources to penetrate into new terrestrial markets. More news coverage on new market will give the public an incentive to switch their news outlets. The public does not need to rely on print version of newspapers to get informed their local news.

In light of this, prediction of online advertising expenditure does not ensure what will come to newspaper industry in the future because the prediction is based on the fixed probabilistic model of current status. Change of newspaper industry is still at an early stage when only minor symptoms are seen at this point. Perhaps, newspaper readers will drastically change their attitude and behaviors when they see a technological revolution. The successful transformation of print editions to online editions depends on the change of infrastructure. Who would think in 1800s and 1900s that everyone could read newspapers in the future? It won’t be surprising to witness that everyone read their news on new medium in 2020.

Monday, November 5, 2012

Making Use of Secondary Data

Pew Research Center for the People and the Press -- Biennial Media Consumption 2004, 2006, 2008, 2010

Pew Internet and American Life Project

ABC -- Newspaper/Magazine Print Circulation Data (click on eCirc)

Newspaper Next 2.0 -- Advertising Spending Data
1. Market Selector
2. Online Spending Analysis
3. 2007 Online Spending Per DMA
4. Future Tools (one for each quintile)
5. WebAudits (one for each quintile)
(No longer online -- data are available on a CD.
Background information is here: )

ABC's Audience-FAX online database (registration required):
Data on newspapers' average circulation, average print and online readership, total combined audience, and total unique Web site users as well as a variety of print demographic information for both national and local newspapers.

ABC's Audience-FAX* eTrends Tool (registration required):
The tool is designed to allow users to create trending reports by reporting period on newspaper's average circulation, average print and online readership, total combined audience, and total unique Web site users.

Newspaper Association of America -- Trends and Numbers: Newspaper Web sites (Reach by DMA)
(Click on menu items on the top and on the left for more stuff)

Scarborough -- Free Reports (Select "Newspaper" or "Internet" from the jump menu)

Some example reports:

The 2008 Scarborough Newspaper Audience Ratings Report (Combined audience numbers for newspapers in DMAs)

Audience Aggregation and Audience-Based Selling: A New Approach to Growing Audience and Advertising

20 Free Social Media Monitoring Tools

Quantifying Twitter activity

Friday, November 2, 2012

Online paid content: Back to the future

It's amazing to see just how thoroughly the newspaper industry's attitude toward charging for content online has changed since Farhi's article in 2008. In that piece, he has to preface the idea of charging for news with the description that the guy in favor of it "sounds like a man from another century." It just wasn't something that could be proposed without invoking eyerolls.

Today, just less than four years later, it's gone from almost unspeakable to the default strategy for major metro newspapers in the U.S. Reading between the lines, it seems as though newspaper publishers bought the idea that the future was online (which is true, at least in part), and responded by jumping onto the free-web philosophy full-bore, without putting much thought into how they were going to make money off of it. It took most of them a few years, but they've all realized that the business model just isn't there yet (and that's a key word), and they have to do something to make it feasible financially.

So I think what we're seeing now could be the best of both worlds -- an approach to the web that's aggressive about finding genuinely innovative ways to inform and engage audiences, along with a realism about what it takes financially to sustain that kind of quality, and an approach (charging for online news) that matches that realism -- all without walling themselves off from the web. As much as paid content's critics might call it a retrenchment, it does seem like a way forward, at least for the time being.

Tuesday, October 30, 2012

Pay for compelling content? Why not?

Anderson’s model for the future newspaper industry “paying people to get other people to write,” as he mentioned himself, stemmed just from his personal experience. Moreover, the model seems to be limited to the economics of media down to “hyperlocal level.” Amateurs who are organized and taught by professional journalists and write for non-monetary rewards may be good at covering their own communities. However, it’s a different matter with “news content” to my mind. Information is one thing, news is another. I am not sure, for example, how much one who works as a civil engineer by day and write about something he/she loves by night can gratify the desire for in-depth stories and differentiated content of audiences. The 'Free' information itself does not make money at all without advertising. In addition, although ‘GeekDad’ is making some money from advertising, I don’t think the model can be appropriate for the future of news media industry.

A study (Peitz and Valletti, 2008) compared the degree of market failure arising in two market structures: pay-tv and free-to-air media platforms. While pay-tv has two sources of revenues, advertising revenues and revenues from viewers, free-to-air receives all revenues from advertising. The result showed that free-to-air television tends to provide less differentiated content whereas pay-tv stations always maximally differentiate their content. The study also found that market failures are smaller under pay-tv than under free-to-air. The result may not always be true, but I believe that audiences are willing to pay for unique and compelling content they value.


Free vs. paid: Can't we all just get along?!?

As I mentioned in class yesterday, I fall somewhere in between Chris Anderson and Malcolm Gladwell on the debate over the primacy of free vs. paid on the Internet. I think Anderson bases his argument on a basic fact of recent technological history that is difficult to refute: The power to store and distribute information is continually getting cheaper and cheaper, and thanks to collaborative tools, more and more people are willing to produce that information for free as well.

The problem with Anderson's argument comes, as Gladwell points out, when he tries to turn this simple technological observation into some sort immutable law that's an ordering principle for the way the world should be run. In some cases and markets, economic principles based on free goods, services, or content makes the most sense. In other cases, it doesn't. Just because it works in some cases doesn't mean it's a binding (or even relevant) principle for others.

On the other hand, I do think free content/information/goods/services is a phenomenon that needs to be taken seriously by businesses, especially in the media industry. It can't just be waved off as "utopianism" or "freeloading" -- it's a real, actual phenomenon that has real, actual economic forces and explanations behind it. I think the vigorous defense of paid economies by Gladwell and many others in publishing industries is motivated in part by self-protectionism -- a desire to preserve a world in which the work that they do remains important, regardless of whether it actually is.

There's a sense on both sides of this argument that the other is living in a fantasy world: Paid says the free advocates are ignorant of the fact that someone is paying for all this "free" stuff, and free says the paid advocates are desperately trying to hang onto a model where their content/labor is worth a lot more and is a lot less replaceable than it actually is. I think both sides both have a piece of reality, and if they'd acknowledge some merit in the other's points rather clinging to their absolutism, we'd make some real progress toward a mutual understanding of how the Internet economy actually works.

Wednesday, October 24, 2012

Maybe print media is not comparable with online media

The definition of “good” could be changed in different times and places. When disruptive technologies appeared, the definition of good could have a brand new meaning. Therefore when we find the MP3 effect was emerged from many areas, maybe the new product is not an extension from any existing product, but a totally new product with a new function. Therefore, people do not change their requirements of the quality, they just have different requirements to different products. Although print media and online media both provide news to the audience, however, people could have different mindset to consume these two media. Just like sometimes we want to eat ramen noodles, even though we can have steak without worry the deficiency of money.

"Online news is an inferior good!" So, less gratifications?

It is said that inferior goods are not of poorer quality than other goods, but rather they are simply goods that people consume less when they have more income. In other words, inferiority is related to affordability rather than the quality of the good. Inferior goods are affordable and adequately fulfill their purpose, but as more costly substitutes that offer more pleasure become available owing to income increase, the use of the inferior goods diminishes.

From the perspective of “adequately fulfill purpose” or “offer more pleasure,” it seems to be associated with the theory of “uses and gratifications” whether a good is an inferior or normal one. In other words, normal goods should offer consumers more pleasure than inferior goods do. That’s because normal goods displace inferior goods when people have enough income to purchase normal goods. In this context, if the argument that while online news is an inferior good, the print newspaper is a normal good is correct, the print news media should more adequately gratify audience’ needs and desire. Does this make sense?

Some studies argue that “from the mostly comparable levels of perceived news gratifications obtained between offline and online news consumption, it is clear that these two news outlets are supplementary in their ability to serve the audience”(Uses and gratifications of online and offline news: New wine in an old bottle).
According to other findings, "news media substitution does not depend on functional equivalence of media in providing gratifications and gratification opportunities or types of content. Instead, media use depends on habit and media accessibility" (Are news media substitutes? Gratifications, contents, and uses).


Tuesday, October 23, 2012

Can you really compare print media and real-time media "all things being equal"?

I think the inferior good concept is a really enlightening way to think of the true value people place on various media forms, but I also think there's an inherent weakness there. Namely, in some cases you can't make a ceteris paribus comparison, and trying to do so cancels out one of digital media's biggest strengths -- timeliness. This isn't as big of a problem with the digital media landscape at the time Iris did her research as it might be if you tried to repeat that research now.

For example, if I asked people whether they preferred news on a newspaper or Twitter, if they had the same content at the same price, that would be kind of a ridiculous question, because it's simply not possible for them to have the same content. A major distinguishing feature (perhaps the major distinguishing feature) of Twitter is the fact that its content is always coming from just a few minutes or even seconds ago. You couldn't possibly produce a newspaper with that attribute to its content.

So in that case, asking the question of preference with the same content takes away the biggest strength of the digital media platform, which is that its immediacy indelibly shapes its content. If you ask me if I'd rather have a newspaper or have Twitter minus the immediacy (which is what ceterus paribus would be asking), I'd take the newspaper in a heartbeat. But in almost every actual situation, I'd take Twitter in a heartbeat. The ceterus paribus aspect of the inferior good comparison is necessary in some ways, but it's flawed when a medium's form is so inextricably linked to its content that its content can't be placed on another medium.

Inconsistency between perceptual traits of sensory and cognitive rationality

I cannot forget the moment at which I could download unlimited music files from the Napster without paying any money for those in 2000. There was a debate at that time whether music in MP3 format could be shared with others through a web host at no cost. For a while, people have taken for granted free consumption of music files, and there have been inertia to resist paying for this music files which anyone could get from many websites for free. There are still many file sharing websites now, but the perception that MP3 music files are free has changed dramatically. People are willing to pay for their music files on iTunes. This example shows that consumer behavior can change over time.

The article about ‘online news is a ramen noodle’ indicates how human behavior is hardly changed. In spite of the fact that information delivered both on print and website of traditional newspaper are almost identical, people are reluctant to pay for online news contents, which have been considered as free stuffs. So, their response brings a question of whether medium matters in their decision making. The survey results showed that people prefer medium to print, which is contrary to the recent trend of declining newspaper readership. I assume that there is an unresolved issue to be explained why strong preference to the print does not stop declining newspaper readership.

I assume that it is because preference to the print is a perceptual trait of human behavior.  People have been 
accustomed to read print version of papers for a long time. They do not forget the feeling of flipping pages. Since technology is an extension of human sensory, print medium has been a part of our sensory, which is optimized to read news. And, unconsciously, our sensory remembers old time traits. On the other hand, our cognitive rationality forces us not to pay for free news contents. Since nobody is paying for free news, why do we need to pay for the free contents? I believe that there is inconsistency between our cognitive rationality and perceptual trait of sensory.

As music industry claimed a copy right for music, similar action is required for news contents. Those contents are intellectual products of private company. Even though newspapers are devoting themselves for virtue of society, pursuing profits is quite natural for private companies. Therefore, their copy rights should be protected by a law, which will prevent individuals from copying and pasting news contents at their own. If newspapers cannot claim their right for their products, why are they not eligible for government subsidy in exchange with abandonment of copy right? There is no single private company who lays back and takes for granted the violation of their rights. Moreover, it will be fair to compare the willingness to pay for contents between online and print based on the same condition that people need to pay for same contents. It will be interesting to see which medium is chosen from the public.

Inferior goods

I'm interested by the idea that inferior goods are those that are perceived as inferior, for whatever reason. They may not actually be, objectively, inferior, but if they are perceived as inferior, then consumers are willing to pay less for them. I thought about this at the announcement of the new iPad mini today.

The new iPad mini is equal to or worse than its Android-powered competition in the 7-inch tablet market (Kindle Fire HD and Nexus 7). But it costs 65% more than the competition, which is a huge premium for being part of the Apple ecosystem. (And as we have seen, the ecosystem is a huge part of the tablet experience.) But as I thought more about it, I wondered if Apple made the price high as a conscious decision to separate it from those other 7-inch tablets. In other words, this is not a cheapo mini tablet that you are buying just because you can't afford an iPad, this IS an iPad. I wondered if maybe the price itself is part of the perception of quality and superiority. "Oh, it's more expensive, it must be better."

I don't think this would work for news products, mostly because of what (diffusion guru) Rogers calls observability. Nobody really sees you reading "fancy" news the way they could see your fancy iPad every time you conspicuously whip it out of its case. So the perception of superior/inferior rests entirely on personal preference, which could be based on any number of factors. I think it would be fun to develop a survey that would try to determine which factors of a person's experience with a news product make up their preference for it. I'm sure work has been done in this area already, but the news product landscape is changing so quickly that there's always room for an update.

Monday, October 22, 2012

The tablet presentation

Don't miss it!


Only disruptive thinking can handle disruptive technologies

Traditional media, especially print media, has been suffered from the challenge of new media more than ten years, however, just like the examples in the “Disruptive Technologies: Catching the Wave”, the more successful companies and more experienced managers could be more difficult to learn the disruptive technologies and would lose their predominance inevitably in the end. Although print media recognized that they had to accomodate to the communication technologies, and must take some measures, however, most of the executors were the same people who had been well trained to be professionals in print media and very proud of being newspapermen, therefore most of the “digitalization” of print media merely put the news from paper to internet.

Before the bursted of internet bubble in 2000, I had been worked in a new internet media, most of the managerial level, including the CEO and chief editor were very senior newspapermen from a well-known print media in Taiwan. The supreme rule of this new internet media was to create a newspaper-like media in the internet, because the target  audience of this new media still focused on the newspaper readers, so we had the masthead, dateline and nameplate in the internet media. Lacking of the sense and intention to understand the new media technologies might explain why most of the leading internet media are not the traditional media.

Sunday, October 21, 2012

Disruptive Innovation & Creative Destruction

While sustaining innovation does not create new market but just evolves existing value networks, disruptive innovation or disruptive technology - the former is now preferred - creates a new market and value networks. However, as Bower and Christensen mentioned, only few companies may be able to overcome the handicaps of size or success when they are confronted with disruptive technologies. So, they “kindly” offer several tips for spotting and cultivating disruptive technologies, such as “determine whether the technology is disruptive or sustaining.” That sounds great, but how to do so? It doesn't seem to be so easy to discern in advance what the disruptive technologies are. I think, thus, there should be first a change in “mental model”, for instance, from the convergent thinking to divergent thinking. For that fundamental change in existing companies not in start-up firms, I’d like to rely on the concept of creative destruction

As describing capitalism as the perennial gale of creative destruction, Schumpeter argues that “… the opening up of new markets, foreign or domestic, and the organizational development from the craft shop to such concerns as U.S. Steel illustrate the same process of industrial mutation—if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism …”

It seems to me that the perpetuity of capitalism itself is based on disruptive innovation because it is the “free market’s messy way of delivering progress.” It is, thus, sometimes said that the CEO (Chief Executive Officer) in the free market industry should be the CDO (Chief Destruction Officer).

The end of commodity journalism

According to a Bloomberg Businessweek’s article, an average life span for a multinational company – Fortune 500 or its equivalent is between 40 and 50 years. It is not surprising to witness that corporations have their own life expectancy and physical cycles. Corporations die off after having failed to adapt themselves to new environment, which is often affected by technological advancement. Many studies show the failure cases of the leading companies in the market, and point out their failure of adaptation to the cutting edge technology.

However, it is a challenge to decide on whether the companies need to incorporate the new technology into the product lines because technology, itself, does not have any useful meaning to us. For instance, innovative items, such as a robot pet, showed a technological advancement, but they did not succeed in the market. As seen in the case, it is critical for corporations predict the consumer reactions to the new technology. The bankrupted Kodak is a typical example, where it underestimated the audience behavior changes to digital camera.

I wondered why newspapers have struggled upon the arrival of new technology. The newspapers catch the new trends in technology and cover their stories firsthand. But, their resistance to adopt the new technology may be an indication of their lack of understanding of its implications.

On the other hand, the newspapers market may be in the normalized process resembling to that of private companies. I could not find the life expectancy of newspapers, but I assume that the life span for the newspapers is longer than that of the private companies because of its unique market structure. However, competition between newspapers, small or large intensifies in cyberspace, and the life expectancy of the newspapers will naturally cut short. The market structure of the newspapers is changing.

Therefore, I assure that it is time for newspapers to execute a constructive destruction for their survival. As Picard suggested a few options, such as vertical integration and one source multiple use, newspapers need to forgive some elements of their core duty. For instance, people do not seek newspaper reviews on restaurants or movies. Instead, they go to Yelp or Yahoo movie. I believe that newspapers should trim out those they lack the comparative competency. Since audience behavior is changing, newspapers should rapidly respond to the change for the survival in the new environment. The idea of commodity journalism should be terminated, if the newspapers are believed to be private companies.