Mini-laptops and the un-netbook

Thanks to Kelly, I started wondering about some other newer devices. A little digging around showed some interesting notes on the sales and production points for mini-laptops, netbooks and un-netbooks (er, aged-out laptops). Looks like the minis have gained an edge with their diverse functionality and affordable price points.

A snippet from one article: Mini-laptops in the second quarter accounted for 22.2% of mobile PC shipments, almost a fourfold increase from 5.6% of the market in the same period a year ago, the research firm said. Shipments of traditional laptops accounted for 77.8% of the market, compared to 94.4% a year ago.

Kelly - eReaders are overpriced, InfoWeek

eReaders like the Kindle cost from $200 to $500, but they're overpriced for two reasons: 1) People are used to reading text on other devices, including small screens; 2) Everybody's used to new technology quickly falling in price. This article suggests that eReaders are essentially inferior goods that shouldn't fetch more than $50.
http://www.informationweek.com/news/hardware/handheld/showArticle.jhtml?articleID=219501468

Adapt of die Part II - Journalism Schools

Most of us are journalists or former journalists who plan to teach in journalism school. Is it not relevant to find out how J-schools are doing in this harsh times? Or, to find out J-school professors are being paid the amount they deserve?

Are they cutting cost by 40%? Are they lowering the salaries of teachers? No, I don't think so.
The New York Times ran a story about Universities like Oklahoma transforming their journalism education program last May. More curious than not, schools in many parts of the world as well as US are expanding the J-school progam.

Some examples from the blog.
http://www.editorsweblog.org/web_20/2009/06/j-schools_maneuver_journalists_relations.php
A case of DePaul Univ. in Chicago
http://www.editorsweblog.org/web_20/2009/09/teaching_twitter_at_j-school.php
Or a case of Columbia Univ.
http://mashable.com/2009/06/19/teaching-social-media/

Well, one thing is common for J-school. You don't have to downsize or give up salaries to adapt.
Economic theory to explain? Schumpeter's theory of innovation and creative destruction. Innovation will create new demand, push the curve to to the right side. Price will rise, quantitiy will expand. Hopefully.

Adapt or die? Definitely adapt. [Alice]

Last semester, I took a course and the instructor spent a lot of time criticizing how terrible it is that readers are not paying for news, citizen journalists producing stories without in-depth thoughts, or less people now appreciate hard-copy version of newspaper. The list can go on and on and on. Believe or not, sitting there listening to this kind of preaches is like a nightmare. As a future journalist and a kid grew up in digital era, I think it’s hard for me to say how much journalists deserve being paid. I’d never want to jump into a low-pay occupation. However, I know that I wouldn’t spend even only 75 cents on a newspaper everyday when I can read it online for free.

Do journalists deserve low pay? I guess no. But the problem now is nobody is willing to pay for intangible information. We’ve been so used to retrieving information for free. If some news organization, say NY times, decided to charge users online, we switch to other newspapers. I have no idea whether journalists, or their work, deserve low pay. But I’m sure that as long as there is free online information with acceptable quality, nobody will pay.

To put what we learned in economics here, I’ll say the demand curve is extremely sharp. No matter how the supply curves look like, the price will remain low. The chief editor of Texas Monthly once came to our class and he said, “The business is gone, and it will never come back.” (This is the direct quote.) I guess that’s the situation we’re facing. We can only adapt or die, or waste our time trying to “teach” audience that they should pay us.

This is actually the reason I became interested in marketing and economics of news media. Before I came here, I was so anti-business. I didn’t even finish my two-semester economic class. Now I think marketing and economics are the only solution for newspaper. News media is losing ground. Old people can complain and stay in nostalgically “oh-the-good-old-days” mourns. Young people, like me, can’t. It is us formed the anti-fee generation so we should be able to find out how news industry will be tomorrow. Well, I might sound silly or naïve, but I guess I’m young enough to be silly.

Yonghwan's response

This chapter is helpful in understanding of what are the causes of a change in demand/supply and how markets work. I think the concept of elasticity of demand is interesting and has some applications to media economics because it depends on the nature of goods.

We may raise questions regarding media products such as how the concept of elasticity of demand works when it comes to new media (e.g., online news media or other online services like blogs); and further, is media we are using normal good or inferior good? Dr. Chyi (forthcoming?) proposes a question, “is online news an inferior good?” and contends that online news is an inferior good based on a theoretical framework (normal vs. inferior goods) that “when income increases, the demand for an inferior good decreases; when income decreases, the demand for an inferior good increases, other things being equal”. It seems interesting that hypothesis was supported even after controlling for other media use (newspaper, television news, and radio news). Regarding this study, I’d like to talk more about why online news is an inferior good; what about other newly emerging media; and other possibilities regarding this.

As of other possibilities affecting the result that online news is an inferior good, we might think characteristics of market. In other words, whether online news is an inferior good or not may depend on the nature of markets. For example, to what extent people consume online news may differ in geographic characteristics of market (e.g., distance or market segment) and systems of market (regulatory system).

Ting's response (HMF and Picard)

An interesting point I found in chapter three is that two products can be substitute goods and complementary goods at different time point. Especially when a new media technology shows up, we often think that it would replace the traditional media since the amount of time available for the consumption of various types of media is limited. However, it still could be possible like VCR or DVD player complement the theatrical exhibition of movie for time shifting. Therefore, it will be interesting to find out how new technologies compete with each other or integrate with each other (like there is a lot of Internet applications integrate with each other). When a gadget such as iphone or google phone includes all kind of services, does each of the services complement each other and make a win-win situation? For example, when you take a picture, you want to use a camera build in your cell phone or you want to bring another one? Therefore, the relationship seems more complicated then just displacement or complementarity. When we think about the free online content is displacing traditional print media or television, there is still argument that with users of online news in a specific content area also being more likely to seek out news in the same area from traditional media outlets.

In Picard’s article, the real measure of journalistic value is value created by serving readers such as accessing sources, searching through information and determining its significant, and conveying it effectively. However, the technology empowers individuals nowadays to have these capabilities. To weight more on economic outcomes, journalists need to find out a creative way for their reporting to attract audiences. In the relationship of supply and demand, news becomes more infotainment nowadays to attract more audiences, even includes a lot of daily information (such as where to eat or where to shop) in the newspaper like Apple Daily. Journalism seems in a dilemma that it tends to be profit-oriented in the market of digital era and it also needs to hold its moral standard not to be over sensational. Can news media maintain their news quality in this dilemma when considering supply and demand? In this case, is there any resolution? Or the market will force everything to change?

Sandra-HMF, Blodget, Picard

First I try to use what we learn about the determinants of supply and demand to see why the threat or fear of news business exists.

From the determinants of supply parts:

1. Price of related goods/services (too many substitute goods, and the news business needs to create more complementary goods or use the news or resources they have creatively)

2. Taste (which the ads can manipulate, so why not the news business creates the taste of audience, or make your products more attracting or special to them)

3. Maybe there's no problem of number of buyers because they want more and more subscribers; however, they possibly have the problem of which group do they really focus on. It seems like they try to draw all the attentions as decades ago, would it make the special niches disappear because too greedy to include everything and miss the focus or what they are good at or what they can do best under limitation of resources?)

From the supply part:

1. What are the prices of resources? It seems they always say they spend so much money in producing the product, but with the advanced technology, doesn't it help at all in cutting budget or saving time and energy in gathering information, reaching news sources, or producing news? Just saying cutting budget or cutting the number of reporters is not a rational enough strategy, must realize where the big profits they earned in the past go? Is it really because the huge amount of reporters' or editors' expenses, or is it because of the failed investment in other areas or just disappear in anywhere else?

2. As the number of suppliers increase, how can one news company compete with them (other business, bloggers, and free access, etc.), not just asking people to pay more or take readers' responsibility to pay, but how to make yourself survive and fit their changing needs in the changing environment?

The connection of three articles:

From the responses of active readers to Blodget's article, most of them (readers, consumers, audience) keep mentioning the content matters. Picard also points out the products reporters or newsmen created need to change or be differentiated, and the new skills they need in the new era. That's also what I feel for a long time. To me, content and the quality of news product matters a lot and are the roots of the industry. Platform is just a way for us to reach out those news stories (of course we know there're lot of meanings behind the adoption of the technology and the platform will change our daily life, but not the focus in this case).

It's important to use, adopt, and have the skill of masteing the new technology; however, how to equip the journalists or journalists-to-be the new professional skills to survive or to be creative in current environment is crucial, which is not just the way to put the information online or in print, but the knowledge to process, analyze, and organize all the information and find its meaning to the audience. With more and more people know how to gather news information and with the increasing competitive suppliers, what make news or news workers "professional" or valuable in the market and how the school or the academic field could help rather than criticizing them is a big thing and always interests me when I first stepped into this area. The two articles are so related because one just purely states from the owner's perspective and those budget-cutting, raising fees terms or strategy, which is the mainstream in today's business but also causes lots of troubles, but the responses and Picard's article voice out from users' perspective.

I have no answer or better way to save newspapers right now, but I do think trying some more creative ways that related to content, and keeping what makes news different and valuable to others are the niches of the news business. Without values, a business cannot last long.

(sorry, I didn't expect it would be so long... the topic just too intersting... :p)

Kang-HMF & Picard

There is an interesting myth that the demand for lipstick or miniskirts tends to increase when the economy is going through a slump. Although it might not be based on a theoretical assumption, it would represent one index that may explain the economic circumstances we are facing today. But what about media economics? Do we have any indexes that explain or predict what the media industry is going through or how it would be? For example, by applying the economic myth above, can we say that if the economy is falling, readers would quit subscribing to newspapers, as Asian consumers are not willing to purchase Disney’s home videos? I do not think so. Media goods, especially, journalistic products, are not explained as simply as the law of demand and supply relative to physical goods. I believe this is because journalistic products permit a value judgment. Even if households have been struggling with decreased income, stopping their newspaper subscriptions might not be the first solution they use to reduce their expenditures (although people may reduce the number of subscriptions they have). As a journalism student, I believe that people are willing to be exposed to media messages and search by themselves for the information they need and want. In a sense, the media industry is less sensitive to common (elastic) market law that is influenced by price and other diverse external factors, such as income and taste.

However, new technology has challenged the stability of the media industry, especially the newspaper industry. The new platform asserts that newspapers are more accessible to audiences and offer more unique content as adopting the new media technology. To avoid the demise of the news business it seems be must; however, I do not agree that newspapers would perish because of their failure to adopt a new technology as Picard argued. He does not seem to give much credit to the professionalism of journalists; rather, he is concerned that their main role is to give people access to information more easily and effectively, and give them unique and attractive content. That is a real value for consumers and Picard himself. Of course, the challenge posed by new technology would be a good chance for journalists to go out away from mannerism; however, it cannot be said that it is a “real” valuable work of journalism for consumers and society overall. As the Internet developed, other less-than-mainstream media, such as blogs, Twitter, and even mobile phones have played roles as news platforms. Also, this new area permits citizens to produce and deliver news products; thus, the deep-seated notion of the difference between journalists and audiences (citizens) has faded. However, I believe that we should not ignore journalists’ professionalism. Can we say that more accessible and unique information is indeed valuable for consumers? Do they only guarantee the value of journalism or journalists? I argue that the newsroom is still regarded as a credible platform that produces and delivers information, despite the fact that people have been attracted to popular bloggers.

I believe that the news business and new technology would produce an excellent complementary relationship; however, it would be better if we considered the relationship between the two entities by mere adopting or die. Instead, we should answer why the new technology adoption is important for saving journalism, and how the failure to adopt it is harmful to the news business. That is, media economics needs normative economics perspectives rather a positive one.

Pete Blodget

While Blodget makes a strong argument in favor of a Wall Street Journal-style Web fee, his suggestion of trimming the newsroom budget by judging productivity on page hits is flawed. An example of this is Huffington Post, where scandalous celebrity stories routinely get the highest clicks.

While the New York Times obviously isn't going to start writing about celebrity gossip, there is a parallel phenomenon visible on their "most emailed" list, where the most emailed articles over the last 30 days are for the most part lifestyle pieces. Placing a higher value on writers that produce those types of stories will possibly impact the value of the paper by changing its focus. A similar argument can be made against the suggestion of shutting down bureaus.

As for the subject of charging for access to the site, David Carr of the New York Times makes the point that this may work for the Wall Street Journal because of its usefulness, but not so much for say, the New York Post, which is largely an indulgence. It's an interesting point, but it also makes me wonder if it is useful, in the sense that celebrity gossip bloggers often get information from the Post's Page Six.

Sung Woo - Blodget,Picard

I was glad to see the sinking Titanic in Blodget's blog. It gave me ideas about what I should say about his plan. All three recommendations of Blodget are very much correct, it seems to me. Problem is, are they the right recommendations for a sinking ship?
1)Cut the cost 40% by 2010(!) In the corporate history, how many firms have succeeded reducing that much cost in a year without resorting to radical measures such as filing for bankrupcy? The agony of media management leadership is not that they don't know what to do. It is about how to do it. It is like asking the Titanic, "Hey, captain! Fill up that hole underneath, and you will be safe."
2)I don't think raising print prices will save NYT either. It is true that many newspapers are doing this. Suddenly, we are applying the law of demand to the suppliers in the market. Price should go up as quantity decreases? I doubt Adam Smith will agree to that prescription. Moreover, increased revenue will soon be offset by decreased subscription. Again, it is like asking the Titanic to scoop the water out of the ship with buckets.
3)Charging online subscription fee is something I can consent to. A way to fix NYT may be to find a business model as digital media and transform itself. We know that is a way to save the Titanic, we just do not know how. WSJ' hybrid system may be part of the answer, but not all.

As for Picard, I think his arguments are based on wrong assumptions. First, I would not say that majority of journalists claim that their work has sacred values, at least, not any more. More importantly, he did not give any empirical evaluation about the present pay of journalist in the market. Is the value of journlist's labour overpriced right now? Is it sustained by non-market forces such as journalist's claim as guardian of democracy? Without answering basic questions, Picard argues that low pay will save media business. I found the essay very lengthy but not scientific.

Kelly - Blodget

Blodget shows either arrogance or ignorance, and maybe a little of both. He ignores demand or atg least assumes there is demand simply waiting untapped. While his first suggestion, to cut costs, makes send he also contradicts himself on equilibrium – here’s how.
1) In admitting the need to cut costs to compensate for lost revenue (lost interest/waning demand) he concedes that demand is down for the Times.
2) But his solution is to charge more for what is becoming, essentially, inferior goods.
This isn’t an indictment of the quality of the Times, it’s a recognition that there is dwindling perceived value to the Times by the audience. No buyers, no sales… especially at a higher price! It seems to me that Blodget wants to capitalize on the old economy of scale which made sense when there was no targeted alternative to the mass audience mass media. But now that just seems naïve. The Times used to be filet mignon… it’s becoming Ramen noodles.
And actually, Picard penned a much better response to Blodget than I did. If there aren’t buyers, if your product or service has decreasing market value, you should charge less… not more.

First Response

Doing more with less seems to be the big phrase in media this year and Blodget's idea of cutting the staff at the New York Times probably wouldn't hurt to save money. While I'm not in favor of anyone losing their job, we all know there are those who don't do as much as others and you think would they really be missed if they weren't here?
While initially I was thinking that Blodget's idea to charge for the New York Times was heading in the way Rupert Murdoch is going to charge for content, I think he makes some valid points that fall in line with the article by Picard.
In order for someone to want to pay for content they need to know they are not going to find this type of reporting somewhere else for free. Blodget makes the point that the NYT's has a style of journalism and reporters you can't find anywhere else. In addition, paying $80 per year for access to the NYT's from your computer is much cheaper than having the paper arrive at your home for the year. On a personal level I do feel like I tend to skip several stories when I view the paper online verses when I'm holding it in my hand. Some articles that I typically wouldn't be interested in I will find myself browsing over.
But if Blodget is right about the reporting style than that would help form Picard's argument that there needs to be more original reporting for journalists to deserve the credit and “pay” they receive. I have often felt the way Picard does when it comes to journalism. Why are there four stations in a city when typically everyone is covering the same content night after night? News Directors would argue that different personalities attract different viewers, that's why the anchors make the big bucks. But I do feel journalists need the skill to go through information to determine what are the facts and what needs to be questioned. For example, if the public had only politicians to hear from night after night and not be questioned by reporters then the public would get a very skewed look at what is happening at the Capitol.
Picard does make a valid argument not so much about money but about creating content that is original. I think journalists can get lazy and getting the official sound bite is always the easiest route, leading to news that looks the same from station to station. I took away from his piece that you need to bring original content to the table for the viewer to truly take an invested interest in what you have to offer. Earn your money don't just make it.

Avery - Maybe we should invite Picard over.

Here's a link to the Media Business blog Robert, ehm, Row-Bear, carries on blogspot. The first read correlates with what we're working on to a degree.

Avery - Blodget a good start, but ...

Finding a solution to the evolving landscape of journalistic media isn’t easy, as Blodget points out. That said, it’s not difficult to take a first step, which is what this examination seems to offer. I particularly found the comment under the “Cut Cost 40% by 2010” header interesting not necessarily for it's content, but for it's tone. Change MUST be made.

If journalism leaders continue denying there is a problem or remain stale in their solutions, then what? How would the scope of journalism economics change if no change was made at all?

From an economic standpoint, the initial supply-demand theories are correct in Blodget's argument, but the numbers used are fast and loose. Is there a stronger way to locate and implement these numbers?

Elsewhere, there seems to be an ocean of “experts” offering non-economic based solutions for saving journalism as well. A Google search for “Saving Journalism” brought up more than 2.45 million hits. A quick skim shows little economic foundation in these suggestions, making Blodget's argument a stronger start.

Kelly Kaufhold - health care economics

In reading the first two chapters I wondered whether our health care system was more command or market economy (p. 5) now and which direction it would go in if a government option passes. Does the existing insurance bureaucracy share similarities with government bureaucracies like the UK's National Health Service; or, because U.S. health insurers are profit-motivated, is our current system clearly market oriented? And would new government competition increase market dominance or nudge it more toward command dominance?

There's a study in today's Statesman showing that preventive care won't save as much money as politicians are claiming it will.
http://www.statesman.com/search/content/news/stories/nation/2009/09/01/0901preventive.html

Kelly Kaufhold - Skype may be for sale, more

e-Bay thinking about parting with Skype
http://www.bloggingstocks.com/2009/09/01/ebay-may-be-selling-skype-can-it-get-what-it-wants/

Google previously wanted to buy Skype
http://www.businessinsider.com/google-tried-to-buy-skype-2009-9

But just last week the FCC announced it would look into Skype, so it may not be a good deal
http://www.businessweek.com/technology/content/aug2009/tc20090827_292514.htm

Let's blog!

Hi all,

This blog would serve as the platform for us to exchange great ideas in J395!

A few things to do here:

1. Respond to readings

Please post a short response to assigned readings (by 3 p.m. the day before we discuss the readings in class).

The purpose is to make sure you read the readings as well as to provoke analytical/critical/creative thinking on issues to be discussed in class.

You should first read through the assigned readings and then share your thoughts/questions/examples with us. If you have an online example, please include the link in your post.

Please label your posts using both "your screen name" (please be consistent) and "last name of the author".

2. If you see any relevant news stories, please also feel free to post the link here.

Thank you!

(If you have questions on blogging, we'll cover those in class.)