Pete's final stock picks

		Google Inc.	GOOG	497.00							3	588.82
		Apple Inc.	AAPL	184.02							25	198.64
		Cablevision Systems...	CVC	24.98							33	25.08
		Time Warner Cable Inc.	TWC	42.24							40	42.86
		The Washington Post...	WPO	462.03	3 414.90 Final total: 10, 518.42

My stock..

Name Symbol Last price Change Shares Gain
Google Inc. GOOG 588.61 1.1 18 10594.98
The McGraw-Hill Companies, Inc. MHP 30.6 0.26 5 153
Yahoo! Inc. YHOO 15.25 -0.06 14 213.5
Archos JXR 4.24 -0.76 7 29.68
HTC Corporation 2498 365.5 -2 7 2558.5
ASUSTEK Computer Inc. 2357 63.6 -0.2 8 508.8
Hewlett-Packard Company HPQ 49.29 0.31 8 394.32

Portfolio value: +13.47 (0.12%)

Okay, buy technology products, don't buy their stocks

Yonghwan's Results

Yonghwan's results of the investment.

Acer
Before: 81.9 x 50 = 4095
Now : 82 x 50 = 4100

Google
Before: 498.53 x 10 = 4985.3
Now : 589 x 10 = 5890

NYT
Before: 8.39 x 100 = 839
Now : 8.62 x 100 = 862

Total
Before: 9919.3
Now : 10852
---------------
(+) $932.7

I can get a new laptop.

Sung Woo's earning.

I am out of the contest, because I earned less than a thousand.
Here is link to my portfolio.
http://finance.yahoo.com/p?k=tpf_cA9Qw52_jrS0ITg-

Kang's media stock competition

Here is the result of my media stock competition.

Kelly's picks

Well, not so good. I should have followed my wife's advice and bought all Google (up 23%) and Apple (up 16%) but I spread it around to my dismay. I especially should have followed Avery and bought ONLY Google.

News Corp. investment arm -5.99%
News Corp. media arm -0.07
Walt Disney Corp +6.33
Time Warner +4.85
Google, Inc. +23.48
Apple, Inc. +16.12
Viacom, Inc. +13.52
Gray Television, Inc. - 8.94
Belo Corp. +10.82
Discovery Communications +12.74
______________________________
Total +10.90
+ $1,098.37

So I finished with about $11,000 - not enough to keep up with Google.

I think I did well

The good news from what I can tell is all of the stocks I purchased have gone up in price.

Apple was purchased for $171 is now trading for $199.

Disney was purchased for $27 a share is now trading for $30.

Netflex was purchased for $47 a share and is now at $58.

And Viacom was purchased for $27 and is now at $31.

That means I have a net gain of 17.53% and I'm up $1740.90.

Go! Amazon!!

How exciting to check the portfolio in the crazy end of semester! After checking it (around 12:00 p.m. on Nov. 30, 2009), I'm more optimistic toward the future...:p

Amazon is amazing! Is it also because the black Friday that brings the stock up? Anyway, I'm satisfied with my earning, especially to the one who lacks the sense/knowledge of stock market like me! :D

Advertising online is better in video

Even the WSJ is now doing a "newscast" online twice a day.

http://www.nytimes.com/2009/11/11/business/media/11adco.html?_r=1&em

Google pays big money for AdMob

Google just absorbed an established online ad company for $750 million. Apparently the folks at Google think there's a future in online advertising.
http://www.tmcnet.com/usubmit/2009/11/09/4471016.htm

Is online news really an inferior good?

What we have this week seems to reminding me of the concept of elasticity of demand and a question that "is online news an inferior good?".

Here's what I posted at the beginning of the semester:

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).

Now I'm kind of confused.
Is online news really an inferior good? It makes a perpect sense according to Dr. Chyi's article (in terms of theory adapted and method and analysis used).
However, then, is online news's quality really bad/lower compared to traditional forms/platforms news??
Assuming there's no significant difference of quality in between offline vs. online news, can we still say that online news is an inferior good?

Another thing is whether young people who are likely to get information on the Internet (including online news) are going to demand online news less when they get a job and their income increases?

Another survey about paid news content.

A combined research effort by Ipsos Mendelsohn and PHD has revealed that 55.5 per cent of survey respondents would be very or extremely unlikely to pay for online newspaper or magazine content.

http://www.editorandpublisher.com/eandp/departments/business/article_display.jsp?vnu_content_id=1004030681

But I don't think this is all that pessimistic for the News Corporation.
Because, when questioned further about specific publications such as The Wall Street Journal and Consumer Reports, both of which are exisiting pay sites, 81.5 per cent of online users said the sites were good, very good or excellent value.

Bob Shullman, president of Ipsos was quoted as saying "the message that came out is that you can charge, but you better have incredibly compelling and unique data."

When news become public goods?

Mon journal offert, my free newspaper program has officially begun in France.
http://www.nytimes.com/2009/10/28/business/media/28papers.html?_r=1

We mentioned about this briefly in class.
It has started two days ago. About 30,000 youth signed up voluntarily. Government is releasing Ad. campaigns also.

Can the news be supplied by the government like bridges or roads? What happens to consumer behavior then?

If you are 18~24 you can sign up for 1 year subscription of any newspapers.
French govement is spending 600 euro, which is about 900 million dollars.

I personally think this is a stinky business. Because many newspaper owners are Sarkozy's friends. The French president has been in charge of subsidizing newspapers when he was an Interior minister.

The Guardian reported that French people had little respect for news publications today, "in a climate where politicians rewrite their own interviews for publication and the president's powerful business friends, from construction to arms manufacturing, own several major papers or TV stations. "

http://www.guardian.co.uk/media/2009/jan/23/sarkozy-pledges-state-aid-to-newspapers

Why can't we adapt to the Moore's Law?

The first day I went back to KXAN this semester, the only task I had was change the archive date of several pages. By default, all of our story pages will be archived one year later. This model works fine with stories, but not for our subindex pages. Therefore, we spent around half day simply to change the archive date of tons of pages so that they wouldn't be automatically offline soon.

We changed the date to 2016, which isn't really far from now. However, all of us know that we will NOT be using the same system at that time. We definitely will have new pages for that time. Four years doesn't sound like a very long time, but on web, it's like forever.

Thanks for the short life cycle of desruptive technology, nothing will be the same after two years.

But isn't everchanging also part of Journalism's nature?

Why can reporters deal with news, that's different everyday, but not techonology, which changes significantly only every two years? I know this is not a fair analogy, but think about it this way. News industry should have most information to understant and predict the movement of technology development. And maybe, just maybe, if the resource is used well, news industry can be better prepared for the technology evolution, which never happened.

Why?

Innovation is always going to lead to new and improved products. Within the 12 years I’ve been a reporter I’ve seen that first hand. When I started out in 1998 in Clarksburg, West Virginia we were shooting on SVHS cameras. These cameras were heavy, the tapes were cumbersome, and the quality was horrible. For larger stations they shot on BETA, which provided a better quality, and now P2 cards are the wave of the future. The tape has become obsolete in the TV world for stations that can afford the technology.

But as time goes on all new technology becomes not so new and the cost of the products goes down. I remember my first 5 disc CD changer that my parents got for me and I saved up for was $500 back in 1989. Now, who would pay that much? But then there’s technology television stations are taking advantage of that costs nothing.

Right now if we want to go live from a location we use a microwave truck . The trucks cost stations money because of the gas, the repairs, and updating equipment that gets old. But now with the “new media” craze we’re using Skype. It also allows a reporter to set up their own live shot without the use of a photographer. One big down side is that while technology is supposed to make our lives easier it has also led to more work at least in the TV world. As I tell our interns it will be interesting to see what technology is big once they get in this business. http://www.youtube.com/watch?v=t6hnagSBZbc

Who drives the technology evolution? Customers or Industry?

Let’s examine the cellular phone market. In the late 1990s, when I was a freshman in South Korea, it was hard to find anyone who had a cellular phone, because it was much more expensive than a beeper, which most students had at that time, and cellular phones were not well-supplied to the market. Thus, we would have to wait in a line at a public phone to call someone or check voice messages from a beeper. Today, it is hard to find anyone who does NOT have a cellular phone and the supply for both beepers and public phones have dramatically decreased.

Moreover, competition in the cellular phone market has been getting fierce. As innovative technologies have emerged, the cellular phone market has adapted to the new technology as much as they can to meet the consumers’ needs. When I got my first cellular phone in 1999, I did not imagine that I could eventually call my friends while seeing their faces, watch movies, listen to music, check emails and even help me when I lost my way. I cannot imagine now what could happen next.

So, who drives such new technologies? Is it the consumers or the industry? If consumers are not against the new technologies, their need to adopt the technologies will increase. Then, of course, the industry would try to adopt and introduce the new technologies to meet the consumers’ needs. In this sense, it seems that consumers drive the market. However, the market might determine and even control consumers’ tastes, no matter whether they wanted to adopt the new technologies or not, and could urge consumers to accept the new products. Then the older products would not exist any more (as happened to public phones). As Anderson argued in his book, it is probable that we do not have choices for the things we do not know.

Is Google really gate-keeping?

When we were talking about that Google is acting "psuedo-gatekeeping" today in class, an idea came to me. "How scary! Even though I don't want my taste of news be decided by computers, I'm still too lazy to look for news outside Google news!" True, Google is not really setting a gate and block information, but the impact is similar in terms of what users receive eventually.

So I'm getting curious about how great the impact is. If we can pick some stories from a news organization, and see how much Google news contributes in terms of traffic when the story is on Google news, versus when it's not on Google news. I think Google news has turned the competition between news organizations more bloody. If your story doesn't beat all other similar stories, the story will lose most of the traffic from Google news. (If we can track how many users do go to news stories other than the one Google picked, that will be even more interesting because we can really see the difference.)

Anyways, getting stories onto Google news will be important if the revenue comes from traffic. (KXAN has been trying to get its news onto Google news, but ... And Statesman is always there!)

News find audience

It's very interesting to see the law of long tail since it is still a case in the era of media-abundance and seems to be the case forever(?). Even though there are infinite media contents and channels out there, they are still be in long tail in media market and several media companies has high percentage of readership and gets popularity.

Regarding fragmentation of public opinion/audience, this phenomenon can be a explanation that fragmentation won't be the case or at least will be moderate.

But there's several cases some of media which were in long tail group get success in terms of readership and popularity--for instance, see how blogs get popularity and there are several factors leading top-bloggs such as posting original story and ideological stance etc. And this could be lesssons for the new economic models/ways of news media: make a story attracting audience. Yes, again, it's a matter of attention.

Another way of this is "news find audience." Given the ambient-news era, meaning news everywhere, news media companies seem to need to find a way of finding their audience (e.g., by using social media such as Twitter and SNSs).

The fate of San Francisco Chronicle

Do you know how to say "Law of the jungle", or "Survival of the fittest" in Chinese?
"The weak, meat. The strong, eat."
It's funny because even in English, it rhymes.

Pete mentioned the New York Times creating a Bay-area version.
I think the San Francisco Chronicle, is becoming a meat.

"The 144 year old paper lost more than a quarter of its daily circulation in the first half of 2009, according to the Audit Bureau of Circulation, dropping a steep 25.8 per cent to under 252,000 readers."

It is really ugly, because every newspaper including the New York Times experienced circulation slide of more than 10% in the second quarter.

Zero-sum game for attention

So how many new choices did we really get?

Long tail has a long tail effect on media studies. I heard people using this theory to explain the future of newspaper in the media market. Anderson's version has realistic connotation because it provides practical examples and recommendations.

Rule 1: Make everything available.
Rule 3: Help me find it. (Let's forget rule 2)

Rule 3 is a logical outcome of Rule 1. You have too many choices, you need someone to sort it out.

But at the same time they are contradictory. Rule 1 seems democratic. Rule 3 seems kinda tricky. If you influence someone to make a choice, is it really a free choice?

Rule 1 is what makes the new media different from the old mass media. The old media deducted the number of shopping list. The new media adds to the shopping list. But as for Rule 3, it's the same old game. The old and new media all influence the audience to make decision. When you do information search or shop for DVD's, do you go through all the pages?

There may be infinite numbers of choice out there. But the numbers we actually pay attention to are finite. Selecting one thing means discarding the other. I think influencing that selection is the source of power of media, whether it's new or old.

Beneficial or not? (for markets or for consumers)

It is interesting to see the recommendations of Amazon.com and other filter mechanism as a pre-selected personal taste for the consumers. Does that mean that we lost our control on making decision to select? I would see that personal using patterns whether they are heavy users or light users on the specific media as a precondition for the recommendation lists in digital entertainment economy to exert influence on the consumers. Probably, it could be the other direction which is the information related to consumers’ interests effectively provided by the services that makes consumers become heavy users. When consumers heavily rely on that media, they will not only pay attention to what content or product the media select for them, but they will also practically have purchase intention and behavior. Otherwise, they will choose to believe another way of word-of-mouth.

Indeed, digital market provides greater supply consumers than the offline market. I like the saying in the article that “many of our assumptions about popular taste are actually artifacts of poor supply-and-demand matching – a market response to inefficient distribution.” By expanding the shelf space and guiding the consumers to find out the product they like, hopefully the online news providers can have some idea from this. However, if following this kind of pre-selected mechanism, will it become another gatekeeper?

The fantasy of the digital market

Anderson’s piece gives us a sense of the new economic model for the media and entertainment industries. It is especially useful nowadays regarding how the digital entertainment economy really works. However, here is my big question about the law of the digital entertainment economy. Is the online market really a world of abundance? If it is, to what extent does it guarantee that abundance will be available to individual consumers? As mentioned in the article, online markets, especially the digital entertainment market, limits individual tastes by, for example, the recommendations of Amazon.com and pre-selected music on the front screen of Rhapsody. Such filtering mechanisms are likely to influence consumers’ personal taste. Ultimately, the markets will not provide other products to consumers unless they have been requested. There is a similar effect with Facebook. The Web site suggests people who live in the same area or belong to the same social groups as I do. Thus, I agree with the law, to some degree, which argues that the digital entertainment market guarantees greater supply to consumers than did the offline market. Still, I wonder to what extent the online market law is different from the offline version.

The approach taken to the digital news economy compels me to think about the digital news economy. Would it be the same as the law of the digital entertainment economy? Would the hit-driven mindset work for the news too? For example, in the entertainment industry, recommendations are a remarkably efficient form of marketing, since they indeed influence the tastes—and decisions—of individual consumers. Would recommendations about news also influence the tastes of news consumers? It might be better to define these tastes as opinions and attitudes relative to news consumption. In addition, in the digital entertainment market, a “power law” demand curve seems to be at work. So how might the consumption of news change? Would the law—an increase in supply results in a decrease in price that ultimately affects the increase in demand─still work for the news consumption model in the digital market?

Music and newspaper industries are scarily similar

I think Anderson is at his best when he writes about the physical constraints of old media and the unfettered nature of new media. I especially like his reference in the book (not this article, unfortunately) to the democratization of the tools of production , in which the price of news must fall because anyone, anywhere, can now “report.” In fact, I’ve been joking about teaching a class called “Reporting by iPhone” which would prove that.

The perspective on the record companies, on page 4, and their onerous infrastructure costs to maintain and stock music retail stores is frighteningly analogous to newspapers. Papers have high infrastructure costs; their traditional model is being shaken by digital media; and digital distribution is threatening to undermine the business model. The biggest difference that I see, ironically, is that newspaper content doesn’t have to be pirated to be free – the news outlets did that themselves. No wonder RIAA is better positioned.

So are top brands like the NY Times and WSJ “hits?” Or are only the top brands within the top brands hits, like columnist Maureen Dowd at the Times? And what’s the value in news of user recommendations – are those good or bad for national news outlets? Local news outlets? I think Chris Anderson’s ruminations are really interesting because, without offering a roadmap, they at least lay out how things are, and why.

This book, the Long Tail, is the straw that convinced me to join Netflix. My selections are way down at the end of the long tail… I prefer TV series from the 60s, 70s and 80s, like MacGuyver and the original Mission Impossible. But for $5 a month I can get that, thanks to the infinite shelf space of digital information. I rarely make selections based on the recommendations, but it happens. I liked the Mel Gibson movie “Payback” and Netflix recommended “Point Blank” – the 1967 original of the same story. Ditto with “Ocean’s 11.” Now the original movies, starring Lee Marvin and the Rat Pack, are among my favorite movies. I don’t think the tattooed, pierced guy at the video store could have recommended those flicks, and I know the store wouldn’t have had them in stock.

The scarcity of time and energy... (or ability)

It seems the cost of current information consumers/user is not only about the monetary cost but also the cost of time and energy. If the cost of searching information is lower (fewer time, easier subscription procedure, clearer or well-organized interface, etc), it's more attractive for people to pay a bit than totally free to use the information.

The cost of searching and full understanding the information also plays significant role in the free information aspect. In making political voting decision, most relatively uninformed people may use information shortcuts (require little effort to acquire information) such as friends, coworkers, political parties, and other groups to gain brief and simple idea of certain policy and to make their decision rather than fully understand what does the policy contain.

The other thing is about the inferior goods theory that Iris mentioned in class. The labels fear the "channel conflict" of cheaper MP3 downloading and the decreased sells of CD; however, will the consumers are still willing to pay more according to the inferior goods theory? To what extent the pricing distance between the inferior goods and the superior goods will affect each other?

Circulation drops again on newspapr price hikes

The NY Times and USA Today both saw circulation drop. News Corp, ironically, saw print circulation increase after raising the price of online content.
http://www.bloomberg.com/apps/news?pid=20601103&sid=a3zVFwU3wo7A

Does the "Long Tail" stand at odds with "Free?"

• Compare Anderson's candy experiment with his statement on the Longtail: "By offering fair pricing, ease of use, and consistent quality, you can compete with free."
• An interesting chart from Anderson's blog on increased demand for less popular titles as Netflix has grown.
• An interesting criticism of the Long Tail: The Long Tail" told us consumers were losing their taste for hits, and it argued that making available online more obscure titles would level the playing field. Between this study and the research of Professor Elberse, we have evidence that popular titles now represent a greater share of sales and merely making songs available online does not put an artist at an advantage.

Record labels need to wake up

When you look at the big picture of marketing music and selling it to the mass audience there are so many things to consider. It seems to make sense that online companies such as Netflix would profit better from certain movies than chain stores since Netflix operates out of what I can assume to be one hub, while Blockbuster has to have centers all over the country. What is wrong with the bigger picture is greed I believe.

Anderson mentions that the record company has to charge 65 cents per song to the whole seller in order to make up for lost profits because the consumer will likely not buy the entire album. I think that is the old way of thinking for the record company. I would think as a producer of music you would consider the fact that fans of a band may only buy a few songs, so why in the end produce an entire album. Sure there are die hard music fans that will want it. But why not just put out a few songs, see how those do, and then if it does well go back out and produce an entire album? I’m just a little confused by that. It’s almost like television stations remembering the good ole days of advertising revenue in the 1980’s. I think they still look back on that business model and think we need to generate money like we did back then.

While the article talks about taking online music for free being a gamble that is true in a sense. Sure it takes more time since you will likely download a song that sounds like someone recorded it off the radio. But if you take the time to download 2 or 3 versions of that song you will likely find one that sounds right off the CD. Of course if you get caught I’m sure it wouldn’t be worth it.

Newspaper model reversing?

The NY Times now makes more money from circulation than from advertising - a dramatic reversal of the traditional business model. Of course, the Times can profit from circulation as a "superior good" but what's the fate of, say, the Statesman?

http://business.timesonline.co.uk/tol/business/industry_sectors/media/article6886390.ece

Will Google pay Journalists, too?

For some reason, I think a lot of people try to copy the model of music industry to news industry. True, there are some similarities.
1. Long time ago, people could only paid for it.
2. Not too long ago, people learned how to receive it for free, legally or illegally.
3. Both industries want users, or somebody else, pay for them, and are working on this direction.

The key point might be, it was illegal to download mp3 for free, and it is illegal now. (Most of the case.) But news articles, video, photos are now legally free online. (And you don't even need to search for it, they are just everywhere.)

There for, from downloading illegally to legally, users' utility rised. As long as the price matches the marginal utility, people might pay.

Then how can we add some value to online news, so that users will pay?

Better way of selection and organization? Google does it well, at least a great number of users think so, but Google doesn't care if it gets paid from users.

I'm still think the mp3 downloading example in China. Will Google pay news organizations, too? (Then Sung Woo's topic will be popular!)

Gladwell is closer to right than Anderson

Some thoughts on Gladwell's review of "Free: The Future of a Radical Price" and author Chris Anderson's response:

• Amazon can refuse to pay newspapers for content all they want, but at some point it will drive newspapers out of business and there won't be any content.
• Anderson's experience of shopping out his hiring of writers for GeekDad doesn't constitute a trend.
  
• Chris, Gladwell is threatened because he perceives this thinking as influential.
  
• Blogs love to laugh at newspapers and journalists as they freak out about the future of the industry, but take a look at a site such as Daily Kos: most of their frontpage content links to and criticizes newspaper journalism.
  

Google/Facebook music services on the way

Our class apparently has its finger on the pulse of new media—almost as if they heard our discussion on Tuesday, Google and Facebook announce music initiatives.

I'm NOT paying you to post the story

Malcolm makes some interesting points that ideas are making money vs. stuff. The only challenge I had in trying to see the bigger picture of profiting from the Internet was how does the little guy do it? All of the companies mentioned are multi-billion dollar companies with hundreds if not thousands of employees to make this all possible. I realize they all started at one point with an idea and probably one or two people, but it’s hard to see how the majority of sites could go from free to for profit with consumers going along happily for the ride.

The Bloomberg articles makes a very confusing argument for paid content on the web. Why on earth should you pay a newspaper for reposting their article when their article is free to begin with? On top of that if you post something from that site it could either draw more traffic to the news site through a link or make someone want to go directly to the site after reading the article to learn more. I think it’s a silly idea that will never take off. Plus who is going to be the watch dog over this to make sure all the zillion of websites out there are following the rule?

Apple has "two growth engines," great earnings

For those of us who bought APPL, we're in for an escalator ride today on earnings that beat company and Wall Street expectations...by a lot! Maybe Avery bought 10k of the wrong stock!
http://www.smartmoney.com/Investing/Stocks/Market-Update-Tuesday-Oct-20-2009-19906/

Gresham's law of knowledge

Ghosh's model of trade on the Internet was interesting. Treating knowledge as sort of a currency of Net economy is also illuminating. But I think his models or arguments are metaphors, rather than scientific propostions.

"Life on the Internet is like a perpetual auction with ideas instead of money." "Every exchange of knowledge is like the trade of economic goods." Such statements depicts the net economy well, where knowledge travels freely and accumulated knowledge yields power.

However, knowledge and economic goods or currency may have things in common but are not identical. Knowlege market is always an incomplete one. Quality of knowledge is overwhelminglyl important and differentiated. If we let mechanism of supply and demand decide the distribution of knowlege, I think in most cases, "bad knowledge will drive out the good." Some knowlege, such as public information has to be constantly supplied, I guess, regardless of the demand.

Collective responsibility for news? Really?

Washington Post legend Len Downie, with journalism scholar Michael Schudson, wrote this:
"American society must now take some collective responsibility for supporting news reporting – as society has, at much greater expense, for public education, healthcare, scientific advancement and cultural preservation, through varying combinations of philanthropy, subsidy and government policy."
http://www.guardian.co.uk/commentisfree/cifamerica/2009/oct/19/newspapers-media-journalism-future-local

Seriously? Government policies and subsidies? Why not government subsidies...just take my tax dollars to save the Post. He has some good ideas, including models like our new UT Web initiative, but I don't agree that "journalism, philanthropy, higher education, government and the rest of society" have a responsibility to ensure the future of journalism - at least not in its current form.

Pricelessness, complementary goods, and surplus

Rishab Ghosh makes a point that is vital to understanding how Internet information is different; it’s instantly interactive. Like he says, we aren’t online “just to read books, but to participate in discussions, to meet people and share ideas.” And this was a decade before, say, Twitter. It seems obvious but intriguing that the “Daily Me” allows everyone to craft their own “most valuable” content, often at no monetary cost. So we have a resource on which much content is generated by free volunteers, accessed by unpaying customers who desire it for intrinsic, not monetary, value. I like how he describes this as “pricelessness” rather than “valueless.” But how in the world do you make money in that environment? Provide better content? Target the few people willing to pay you for your specific content? He writes about his e-mail alerts which led to a growing subscriber base and wonders whether people might be willing to pay. But he gave it away, first. That’s one of many ironies on the Web. For example, we have fewer journalists, being paid less, but asked to create multimedia content so they’re working harder while being seen less. Then Ghosh hits the nail on the head – who should pay, the readers or the writers? Will foundation-supported news outlets like MinnPost and the St. Louis Beacon compete for readership to ensure the next round of Knight Foundation funding? Will online news outlets become like radio stations, giving away cash during “ratings” to increase audience?

Chris Anderson’s article about Free is fascinating. I wonder how many companies earn entire livings as complementary goods (like shaving cream)? It occurs to me that the opposite of this used to be payola. A record company or artist would pay a radio station to air a song so they could sell more and make their “investment” back. That was the carrot version – now the Recording Industry Association of America uses a stick – they’ll sue you for grabbing free content. Online I think this gets much more difficult than with shaving cream. For example, shaving cream runs out but you can always find another P2P download site; food spoils but a song digitized in 1995 sounds just as good now. And complementary goods are everywhere. There are multiple free browsers, open-source shareware to compete with licensed software, and perhaps thousands of sources for the same news story (you can’t avoid balloon boy). Is news a complementary good? Or is this the future of news: “anything that touches digital networks quickly feels the effect of falling costs”? Buried on page 6, Anderson writes about scarcity, reputation, attention, money and externalities. In an information economy, if free is what you want, free is what you get. Just hope your paycheck doesn’t depend on being paid for digital content.

Malcolm Gladwell shares a great quote from Stewart Brand – “information wants to be free.” Then a couple of sentences later he uses the word “bloodbath.” I feel like I’m reading about Armageddon – years of strife followed by the dawning of “a new role for professional journalists.” I’m starting to wonder what Anderson means by professional. However, the insight on the popularity of free Hershey’s kisses was fascinating. That’s why some newspapers argue that they have more readers than ever before, online – free is attractive. So how do journalism outlets get in on the “huge amounts of money ‘around’ the thing being given away” when they’re the thing being given away? Sure it’s good for Amazon or Google, but what’s the content worth. I think I just got nudged, for the first time, in the direction of the publishers who want to charge the aggregators for content.

"Free" magic

"Free” is a very attractive term to consumers. When I heard the news from my friends that they got some fancy software from an online site, my first question was always, “Is that free?”
I am very much enjoying products such as music, movies and other kinds of software which can be easily downloaded online. If I had to spend my money on music and movies, I would probably quit such hobbies or try to find other sources which guarantee free usage. Strangely, I do not feel guilty when I get goods online as compared to offline. When I have gotten anything for free offline, such as when I got beer for free or complimentary books, I always feel lucky. However, when I get goods online for free, I do not feel lucky; rather, I think that those goods should be free. As the articles said, there are differences in the consumers’ mind-set between offline and online markets. Offline, we tend to think that the products are scarce, so paying for the products is acceptable for getting them, while we are likely to think the online products are abundant and unlimited, and thus we do not need to pay because we can get them anytime. It is interesting that the more expensive the products, the more consumers are willing to buy them in the offline market, but their behavior in the online market is the opposite.

Model in the freeconomics?

Dual Model in the freeconomics market?

In the debate of charging news content on news aggregate sites and the points made by Ghosh and Anderson, it seems a dual model emerges and could lessen the pains of current news industry: first, to negotiate the ads revenues with Google, Amazon, etc. and second, to generate the values of the news product.

The questions to the first include,

1. how to calculate the amount of advertising revenues of newspapers’ online content or online traffic which is moved or grabbed by Google or other news aggregate website?

2. Since DMN paid so much cost in generating content (how much in generating only the content and how much for other investment?), how much is reasonable for Google to pay? If Google doesn't aggregate the news, will DMN’s online website attract enough attention?

3. Similar case, is 30/70 a fair deal and a good model? (DMN and Amazon)

(4. Why the case focuses on DMN?)

The ideas to the second one includes Anderson's and Ghosh's non-monetary rewards, and it seems the human resources concept is used in Anderson's GeekDad case: how to find the best person to write and how to manage the covered issues.

As the famous bloggers in Taiwan, many are good at transforming the nonmonetary resources (reputation, attention, reproduce the content) to monetary rewards. They might not earn money from blogging directly at the beginning but are beneficial from it in a different format. However, not everyone is good at or fit for this strategy, especially to big news organization, which can use its content in different way but need to consider the objectivity idea and the welfare of the employees. In addition, under the growing nonmonetary reward system, is the labor issue easily ignored?

I think Anderson's article itself exemplifies how to make the best use of the content, the product, by promoting his website and the new book naturally within the articles.

Who wants to pay when it can be free?

I think Chris Anderson’s notion that “free” is a market strategy within itself is an interesting point. I think many of us look at free as just free. You don’t have to pay. But looking closer it is a marketing strategy that has come to be expected on the Internet. For example in class on Thursday when I mentioned the aggregator for RSS feeds called www.shrook.com I mentioned how it was free but only for 30 days. I saw a couple of faces look down and go “oh”. They did that because they know if this one site is going to charge chances are they can find another site that does the same thing that is free. So that leaves the question of why should a site charge for its services when another could offer a similar product for free?

Of course every site is going to claim they can offer something the other site can’t. But how many sites out there are really offering something others can’t? I say there’s only a handful. I find it interesting that this conversation has been going on since the late 1990’s, especially before the tech bust. I would have thought everyone would want to charge back then since it was new and no one using the Internet knew better.

That fact that the debate of free vs. fee is still going on shows that no one has found a business model that works. I just did a search on YouTube for “How to make money on the Internet” and I came back with 36,800 videos. Some people explained how they made their millions (sure!), some were promoting making YouTube videos for money, and others really didn’t have any helpful advice. I don’t think there is any question that free is always going to beat paying a fee.

The tacky techie conundrum-Seth Godin

I found a blogger, Seth Godin, whose concerns are similar to what we discussed in class.

GE & Comcast, lack of confidence?

GE and Comcast are discussing a $30 billion deal to sell just more than half of NBC Universal. GE has been trying to get out of the media company because it is less lucrative than jet engines, housing and military contracts. But it seems like Comcast is less than thrilled, offering barely half and wanting an easy out in three years.
http://www.reuters.com/article/newsOne/idUSN1214454620091012

Dallas Morning News increases print price

This is interesting. Anybody would like to analyze what would happen next?

Dallas Morning News takes premium value approach

http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-DMN_11bus.ART0.State.Edition1.3cf5397.html

Strong language from print against aggregators

Wow, check out all the strong language from the AP chief and News Corp's Rupert Murdoch:

"it is time for search engines and others who use news content for free to pay up"

"We content creators have been too slow to react to the free exploitation of news by third parties"

"We content creators must quickly and decisively act to take back control of our content"

"We will no longer tolerate the disconnect between people who devote themselves — at great human and economic cost — to gathering news of public interest and those who profit from it without supporting it"

"The aggregators and plagiarists will soon have to pay a price for the co-opting of our content. But if we do not take advantage of the current movement toward paid content, it will be the content creators — the people in this hall — who will pay the ultimate price and the content kleptomaniacs who triumph"

Ironic that my link is on Google, hosting AP:
http://www.google.com/hostednews/ap/article/ALeqM5j-QHPkd1wPcAZL8SOqSTACDn33TgD9B7G7TG0

Twitter bottlenecks & potential

I thought this was interesting. Tweets are routed through a central server, unlike Facebook or Microsoft Outlook Exchange... that's why Twitter slows down sometimes. Users with a lot of followers, like ABC News journalist George Stephanopoulos, have so many followers (nearly 1.4 million) that the bottleneck at the server. Twitter doesn't limit the number of followers - in comparison, Facebook and other social network tools limit friends to 5,000 and require reciprocal friending.

This author also suggests that Twitter could make money along the lines of how Microsoft makes $2 billion a year, with minimal subscription and access fees.

http://www.techcrunch.com/2009/10/04/twitter-should-decentralize-and-make-money-via-twitter-server/

Making use of secondary data

Pew Research Center for the People and the Press -- Biennial Media Consumption 2004, 2006, 2008
http://people-press.org/dataarchive/

Pew Internet and American Life Project
http://www.pewinternet.org/datasets.asp

ABC -- Newspaper/Magazine Circulation Data
http://www.accessabc.com/products/freereports.htm

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)
http://www.naa.org/TrendsandNumbers/Newspaper-Websites.aspx

Scarborough:
The 2008 Scarborough Newspaper Audience Ratings Report (Combined audience numbers for newspapers in DMAs)
Understanding the Digital Savvy Consumer (Guess which city is the most digi-savvy in the U.S.?)
http://www.scarborough.com/freeStudies.php

Newspaper Next 2.0 --
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)
http://www.newspapernext.org/2008/02/online_revenue_resources.htm

Borrell Free Data -- 2008 U.S. DMA Ad Spending (newer but not as detailed as Newspaper Next 2.0)
http://www.borrellassociates.com/freedata.aspx

Newspaper Association of America -- The Newspaper Audience Database or NADbase (membership required)
http://www.naa.org/Resources/Articles/Circulation-The-Newspaper-Audience-Database-or-NADbase.aspx

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.
http://abcas3.accessabc.com/scarborough/login.aspx

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.
http://abcas3.accessabc.com/audience-fax/default.aspx

Too many newspaper too little profit

For some reason, reading these two articles reminds me of a story about China's economic. This is going to be an awkward analogy, but maybe the revenue of online news is just like China's economic: growing rapidly, but from a very low point.

Will the idea of subscription work? For laptop or PC, I don't think so. Just think of how tedious it will be when you need to login to read any news story that you're interested in. Even though the cookies can be stored in your computer, you still need to login again and again when you switch computer. For example, when you want to use the computer in CMA lobby to check today's news just real quick. Besides, will you really store every login? That's something going to cost you money. Can you really trust everyone who might use your computer?

But for mobile device, I think that's possible. Because the hardware itself can be used as a identification. Actually this is already happening in Japan. Japanese can be said as heavy cellphone users, generally. They can buy almost whatever you can think of with their cellphone. And, most important of all, their system has be so sophisticated that websites can be designed that only certificated cellphone can browse. (In fact this brings a lot of negative effect, say, Internet bullying among teenagers.) Base on this technical reason, I think charging for content on mobile device will work.

However, charging users for content might work on books, music, movie, but I really doubt if that will work on news. I hate to say that, but there are just too many substitute. As long as there is one, even if only one, news organization offers their content for free, users have 100% reason to switch to free content.

Of course you can argue that if one offers news story with higher quality, people will still buy. The problem is, how many people appreciate and will pay for a "better" story? Given the quantity, and the amount they are willing to pay, can the revenue cover the cost of producing better stories?

I think arguing "we have better content" is relatively weak. If the content comes along with better service, then that might be more attractive. This is totally based on personally experience. I'm subscriber of KKBOX, a music content provider. I paid 20 dollars for half year, and I can listen to all the music on their site. I can also download the music, but the downloaded file can only be played in their software.

I've been using this service for 3 years. The reason I started buying it is because their interface saves my effort of organizing files in my computer. If I download private music, I need to create different folders and organize them in a way that I can remember. (Usually I couldn't find them right after I downloaded them.) But if I use this software, I can just do search. And I know a lot of users subscribe base on similar reason. Their content is fine, but we won't subscribe if that's only content.

So what service can newspaper offer? Search function that can help college student finish their final project? Adjust the length of different story base on users taste? I can't really think of many. But I do think news stories should be provided along with better service.

Dead end?

• The traditional concept of business as a “winner takes all” contest is giving way to a realisation that in the networked economy, companies need to both co-operate and compete. This perspective will need company to come up with business strategies that try to create maximum value in the marketplace. However, it seems to me that the co-opetition relationship between newspaper company and search engine sites such as Google and Yahoo is that newspaper companies are always in an inferior position. Even though they move their advertising revenue to online environment, the online ad revenue seems not grow fast enough to replace what they lost in the old media as the AJR article mentioned.

• Different media might need different model after a thorough assessment of a company’s network of players and a deep understanding of the business environment. An article I read (A framework for analyzing emerging business models: Cases of China’s media industry), proposes a participation business model concept after reviewing the existing perspectives of IT business model. The model consists of five dimensions:

1. information technology
2. business environment
3. value
4. the firm in terms of capability and resources
5. firm boundary

• This model might be able to be adopted to newspapers’ online sites due to the technology-driven environment and the participatory features employed by newspaper company. There should be a way out for not being in an inferior position in the relationship with those search engine giants. Can newspaper company find out new open ad networks or new ad models that could reform the relationships?

Back to the Penny Press?

I remember reading Patterson's PEJ project just two years ago, which was cited in Fahri's article. And how outdated it looks now. His recommendation that time was "Just play new better online!". Nowadays, I don't think many will believe that making stories with lots of interactive feaure will save the mainstream media.

It is outdated because Patterson's recommnedation is based on the old business model. Standardized news symbolized by AP stylebook, hypocratical ethic of Objectivity, strong brandname such as New York Times, Bob Woodward, Walter Cronkite...and most of all heavy depence on mega size adverisers.

I get angry when scholars say that media refused to change. It's almost sad! I think they have tried to change for a long time. The association of newspaper had opted for a slogan "We are digital!", several years ago, before Patterson's recommendation. But their effort was fruitless because they thought competition was against another online news media. In actuality the threat was from aggregators, search engines or craiglist.

I like the way David Carr put it, the old media decided to "shoot their way out". Well, many media cannot escape the fate of death even though they charged for their news, I think. Because it is not only aggregators who are parasites of contents. In reality, substantial proportion of old media don't have their own contents. They relied on AP or other media, meaning there ain't anything for them to sell.

Paid contents business model is not totally new to the industry. There were time when a Yellow Kid would run around shouting "Read all about it." So paid news is not abondoning the practice that media had from the birth. It's more of back to the past, when they relied more on pennies from the subscirbers, rather than on million buck from advertisers.

The secret formula known as advertising

Whoever finds the magic formula to create advertising revenue on the Internet the way it has been produced on television and in print ads will be a wealthy person themselves. It’s very interesting to read the tension and the stress that so many in this industry are going through as they not only struggle to keep what they do profitable, but also keep their jobs. I’m very well aware that advertising revenue pays my salary and making an advertiser mad could result in the loss of my job.

I think one of the important points those in this industry who are in the process of trying to come up with a new model for advertising need to keep in mind is to not get greedy. I look back at the 1980’s in the television industry when news was king on TV. Reporters from back then will brag about the days of a big story breaking in Washington DC and the station would fly them there on a moment’s notice to cover it. Pitching a story in another country and finding the funds to send a crew wasn’t a problem. Now just pitching an idea like that will have the bosses laughing in your face because they know there is no budget for it now or anytime in the near future.

The conversation surrounding new models for advertising will hopefully continue but in a more constructive way. Instead of people bashing those who try something different, such as paid content on the web, why not embrace the new idea and if it fails it fails. Without innovation we wouldn’t be in the place we are now.

Inferior audiences

David Carr, NY Times, http://www.nytimes.com/2009/04/13/business/media/13carr.html?fta=y
You know, you can argue, as the “digital evangelists” do, that monopoly newspapers should have saved for a rainy day while they were pocketing 15% profits, but when ad revenue drops 48% in a single quarter http://www.huffingtonpost.com/2009/01/28/new-york-times-ad-revenue_n_161607.html it’s like kicking a guy when he’s down.
You can tell when content generators and content aggregators are using language like “parasite” and “shut up” that things are getting interesting.

Especially interesting in the video Yonghwan posted are the comments of Denver Mayor John Hickenlooper talking about the importance of competition. So which is it – were newspapers arrogant monopolies which refused to save a bit of their obscene profits or were they aggressive competitors in two-paper towns fighting for the best journalism because that’s what sold? You have to admit, the quality of the journalism is getting a lot worse now, after cutbacks and buyouts... after the economics of media tanked, not before. I’ve said this before – I don’t think daily newspapers or the AP were broken a few years ago (I think they are now). I think what’s broken is the audience. If people strove to stay informed about their communities there would be more value for local newspapers, which still provide unique content – as Google has learned. Inferior goods? How about inferior consumers, who are the driving force behind this: “consumers...are used to paying for entertainment.”

Scarcity versus surplus & "inferior goods"

The Taloussanomat case study is interesting because December 2007 is the earliest I know of any newspapers ceasing print publication altogether. The Christian Science Monitor didn’t stop until April 2009; http://www.csmonitor.com/2008/1029/p25s01-usgn.html.

Taloussanomat’s 10% spike in online readers with the cessation of print is amazing – I think that’s a pretty impressive jump given that most U.S. print readers also read online. Of course, it loses its luster when compared to the increase in online consumption of the Guardian and London Times. Now, the fact that the spike lasted 5 months is a mixed bag – is it good that it didn’t drop off after just a few weeks or is it bad that it dropped off at all? It’s a bit scary from an advertising perspective that online readership continues to fall. That means the payoff from the online-only gamble is entirely staked in cost savings, not an increase in online revenue. Scary. On page 6, Thurman and Myllylahti finally get to the crux of the decision – the paper was in dire straits and abandoned print out of desperation (losses of 31%). In that environment it, literally, pays to experiment.

I love the discussion of the key difference in economic principles of print versus online – the economics of scarcity versus surplus (p. 7). That’s fascinating and betrays that it will be hard for “inferior goods” like newspapers with dwindling audiences to be able to compete strongly online. Rather than a clash of the titans it’s a clash of the cheaps – low production cost versus low renumeration. How do you make the cost numbers small enough to run in the black from minimal and capricious online income? You use the Web to do what newspapers have long done – you target a subset of reliable, lucrative readers like the Taloussanomat is doing with the e-mail, and you “re-purpose” content so you can sell it twice, on other sites and in other publications. Interesting.

Most interesting is how the change to online only has affected the paper’s journalism: fewer original enterprise stories; more narrative rather than scholarly economic reporting; more stories from other sources, including PR people. Is this the future of American journalism? Can online-only outlets like the Voice of San Diego or Spot.us pick up the slack and tell the important stories? Or will corruption become easier to get away with without traditional newspaper journalism? It seems sadly ironic that newspapers will follow the ways of TV production (p. 13) – first, fast, piecemeal updates – when TV news in the U.S. has been riding newspapers’ coattails for decades.


Paul Farhi, Online Salvation
http://www.ajr.org/Article.asp?id=4427
Wow, the NY Times draws more than 10% of ALL online newspaper traffic and still is losing $18 million a quarter? And they stay for a minute a day – 20 seconds a day at the next nine newspapers? Ouch. The Farhi article mentions “hard core” visitors online and I suppose people like me and Kang fit that profile. We both still read print newspapers but Kang raises a compelling point. With print circulation you can reasonably predict to advertisers how many people will read your product next week or next month. Even with dwindling readership you can promise some number. But online who knows? I know that, unlike with print, online advertising is paid for after it runs, not before, which means this is more vital for news outlets than for advertisers. Also, I read papers in print and online, but I also go first to news aggregators, like Kang mentioned. Is Alice beginning to influence my behavior? 

The Patterson study is already dated – it’s from 2007: http://www.hks.harvard.edu/presspol/research/carnegie-knight/creative_destruction_2007.pdf
But it’s interesting, finding that brand names matter, probably more than anything else. In Miami and elsewhere, local newspapers teamed up with local TV stations in coverage partnerships, sharing some resources (video, reporting) and cross-promoting each other. Given that both are sinking ships, that model hasn’t been very stable either, with rotating TV stations and newspapers signing and breaking deals. And Miami is a big-paper town, with Tribune’s Sun-Sentinel and McClatchy’s flagship Miami Herald. TV stations are familiar with CMP – it’s how they set ad rates based on ratings. But if it takes 10 (or more) online readers to replace 1 print reader, that won’t compensate for the savings – even 70% savings – of printing and distribution. Look at it this way – the San Jose Mercury News “touted plans to increase its share of Internet revenue to 20 percent – by 2012.” So 80+ percent of revenue comes from print (90% for the Times). Saving 70% on publishing costs you 80% in revenue – and that’s bad math. My new BFF Craig Newmark seems to agree.

Nothing will work?

It seems very hard to find a business model for media companies and even very pessimistic to fine it:

"Nothing will work. There is no general model for newspapers to replace the one the internet just broke."

http://www.youtube.com/watch?v=OuGRGqHYTj0

Given that this issue has been centered in media economics field, lots of efforts should be made to suggest (a better) business model for news media companies.

Then what has been done both in academic field and professional field in terms of proposing appropriate models? Nothing was working?

What would be a good way for graduate students to (start) come up with doing research touching on media business model?