Kang's media stock competition

Here is the result of my media stock competition.

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.

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?

"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.

New, but unexpected readers

The readings for this week posed a question regarding why media organizations, particularly the newspaper industry, have tried to stick to Web ads and the revenues they derive from them. Of course, one of the possible answers is because they believe that the online platform attracts both advertisers and readers. But here is a question. How can the newspapers anticipate how many readers will actually visit their Web sites? What facilitates newspapers’ ability to predict with any accuracy the potential number of visitors? Is there a dependable method of measuring the numbers that may ultimately contribute to a newspaper’s revenue? If not, then these actions may be viewed as nothing more than a gamble, since they cannot anticipate any return on their investments.

Alternatively, is it possible that the newspaper industry is misjudging the readers? Many comments regarding articles in the New York Times state that people are willing to pay for the valuable information provided by “the paper of record .” But what makes newspapers believe that paying for information is still attractive to readers in this technology-driven media environment? Regarding the readers, I do not believe that print readers and online readers necessarily belong to different groups. People who do not read print newspapers are no more likely to visit the newspapers’ Web sites and read the articles online than people who read print newspapers regularly. Of course, I do not belong to either group because I read print newspapers and visit their Web sites frequently. But I may be a skewed statistic: I am a j-school student who needs to be an information seeker. If my assumption is not terribly wrong, why does the newspaper industry seek to distinguish between its online users and visitors? To what extent does the newspaper industry trust consumer behaviors?

I do not believe that online news platforms are always attractive to users. In fact, they often seem more annoying. One of the studies surveyed South Korean online users, and the research showed that they are more likely to visit portal sites to get information than newspaper Web sites. The New York Times reported this online trend in South Korea. One of the studies that surveyed South Korean online users found that the plethora of online ads compels people to leave the current sites and move to others to get information. Further, the users said that overload information online lowers the credibility of the information.

The questions on attention

The readings for this week dealt with the intriguing topic of “attention,” but it also prompted the following questions for me.

Q1. Where do people pay attention to? For media products, do they focus their attention on the information channel (medium) or the information itself? One may have a different concept than the other and ultimately produce different effects.

Q2. I wonder how people get attention. This piece mentioned the effect of attention on media use, exposure, etc., but it seems to ignore where people’s attention comes from. Also, what are the differences between attention, interest, and exposure? Is attention a psychological dimension or behavioral one?

Q3. It is not true that people have the same degree of attention, thus I am curious about how the levels of attention (low, medium, and high) exert different effects on media consumption.

Q4. The pieces mentioned that the attention economy represents the laws of supply and demand, and that as the amount of information increases, the demand for attention increases. However, does the amount matter only? What about the characteristics of information as opposed to its amount?

Q5. Is attention the first condition for media consumption or information access? What are the other factors prior to attention; what fosters that attention?

My misunderstanding or their mistakes

Economic Growth and Advertising Expenditures in Different Media in Different Countries Richard van der Wurff and Piet Bakker, Robert G. Picard, Journal of Media Economics, 21:28-52, 2008

Purpose

It explores the relationships between economic growth (GDP) and advertising expenditures for different media in 21 industrialized countries (all long-time member states of the OECD)

Hypotheses

H1: Advertising intensity (a) increases in time and is higher in countries where (b) the primary sector is less important, (c) the secondary and tertiary sectors are more important, (d) a smaller share of production is exported, and (e) per capita GDP is higher.

H2: Advertising intensity of a single medium (a) is not influenced by the advertising intensity of other media and varies (b) in times as well as with (c) per capita GDP.

H3: The responsiveness of advertising expenditures to changes in GDP is higher for print media (newspapers, magazines) and outdoor advertising than for electronic media (television, radio, and cinema).

H4: The responsiveness of advertising expenditures to changes in GDP is higher in countries where (a) newspapers have a larger share in total advertising expenditures, and (b) advertising intensity is higher.

Results
· Advertising intensity varies considerably across time and countries.
· Newspaper advertising expenditures depend more strongly on economic development.
· GDP predicts ad spending better in countries where newspapers are an important advertising medium.
· GDP predicts ad spending better in countries where a larger proportion of GDP is spent on advertising.

The remaining questions

The weak tie between literature and its actual analysis.
· The authors mentioned the previous findings of the principle of relative constancy and unique
events influencing advertising expenditures; however, they did not analyze directly in this study.
· Regarding the intermedia competition, they considered the potential power of the Internet
Advertising; however, it was not analyzed directly in the study.
· For the first hypothesis, the authors did not mention clearly the influence of the manufactures variables

No clear explanation
· How do we define the long-term and short-term?
· How do we define economic declines and upturns? Any indicators to differentiate or standardize the periods?
· No clear analysis of the intermedia competition; why some media are more seriously affected by economic downtowns than others? The authors are more likely to find the answers from the previous research not their findings.
· What is “advertising cultures”? Does the advertising intensity or expenditures determine the advertising culture? Any factors?
· So….what..? why did we get that results? No explanation.

Questions for new media

Why do we pay attention to new media?

I cannot imagine the world without the Internet. In the Web world, I get information, meet friends, and even get rid of stress by watching movies. I do such activities more often online than offline. Going back to the theoretical world, people raise questions about why people welcome the Web-based world and what distinguishes it from traditional media. Several points can be summarized from the readings for this week; new media give people an opportunity to explore the truth and challenge professionals, eventually contributing to democracy. Nevertheless, we need to consider what they really mean.

What is “truth?”

The article, Among the audience, discussed that the new media permits multiple sources of truth as opposed to the old media, which offers just one such source. Does the truth exist beyond the area where the traditional media failed to report? Also, does the number of sources or channels guarantee a “better” truth? Can audiences really sort out what is truth, what is credible and worthwhile, and what is not? Given that we have little trust in the traditional media today, why do we tend to trust new media? Is it because new media gives us an opportunity to participate in the message production and distribution processes? If we do not trust the messages provided by traditional media since news is produced and selected through its institutional processes, do people believe that new media has no such institutional processes?

What is “professionalism?”

As stated in the article, we have competing arguments about blogging. On one hand, blogging is good because it gives everyone a platform on which to express their views. On the other hand, it is bad because unqualified amateurs weaken media professionalism. Is there a concrete definition of “professionalism?” It could be the difference between a professionalist and professional content. For instance, can it be said that professional content is a product that is produced by professionalists? What makes a professionalist professional? Can new media to become a “paper of the record” as traditional media is considered?

What is the “democracy?”

If it is a compelling argument that the Web is really a tool for democracy, then I wonder what democracy is. What are the vital elements of democracy? Is democracy intended to give everyone the opportunity to participate in discussions and express their opinions, or is it restricted to accessibility itself? Also, regarding the persistent discussion on electronic democracy, I have begun to wonder about the extent to which the Internet contributes to the diversification of voices in our political world. Of course, it is a positive development that the Internet enables people to express their opinions; however, if these opinions are forced to represent a homogeneous voice, we may encounter yet another problem. Can we judge accurately whether there are shared prejudices or common knowledge?

Advertising is good for me.

As Lacy said, when measuring online traffic, which record mouse clicks (page views) is not appropriate, what method should be used to measure real Web numbers? I do not have the right answer to this question. Most online research papers are likely to measure online traffic by measuring the number of clicks. For instance, A-list blogs were determined by the standard, which is measuring how many users read the page and how many other blogs or Web sites it is linked to. Based on this measurement, we assume that A-list blogs play a key role in connecting with other blogs that share similar political stances and ideologies. There are, of course, always concerns about click fraud; however, Jarvis’ article about the lessons from Google can be applied to Craigslist as well. Craigslist also focuses on talent, which represents a consumer-driven business that provides a community service. I believe that the success of Craigslist is a unique case, which sticks to old-fashioned ways. Most importantly, it is free from advertising pressure. However, I wonder how many any other companies can success as they do so far. Google and Craigslist are monopolies that impede other companies from entering this area. If other companies want to be like them, they must have more attractive content or guarantee more opportunities for a user-friendly platform.

I am more likely to depend on other users’ comments on products when I purchase relatively cheap items such as clothes and cellular phones. However, my attention is more likely to be influenced by advertising when I purchase relatively expensive products, such as a car or furniture, because I believe that advertisements offer more credible information about those products. In short, even though I believe that people are as good and trustworthy as Newmark believed, I do not usually trust information from anonymous users.

How do you choose stocks?

Picard’s arguments on media financing and the capital market represent the importance of financial management in terms of its ability to influence media performance, especially considering the financial and economic health of media firms. The stages of financial management (Ch. 8) inform us about how companies perform most effectively. Such stages are important for not only companies but also for individuals who intend ultimately to maximize their wealth. However, would individuals choose media products based solely on profit maximization? This is an interesting angle. It pays attention to individuals’ distinct personality, age, and background as factors that influence their investment decisions. Thus, not only individuals’ desire to maximize profit, but also their psychological and sociological dimensions could influence the financial and economic health of the market. Therefore, if we need to consider the behavior of individual players in the market, would the stages change? What else should we consider for each stage, including cash flows?

In chapter 9, Picard argues the new media shares in view of the stock markets. As he mentioned, while the new media has the potential for significant growth and future profitability, its low financial performance hinders further large investments. In a sense, to what extent does the future “potential” and current “uncertainty” of the new media influence the stages of financial management? Would it be different from the stages for traditional media?

As mentioned in chapter 12, media firms can be evaluated differently, regardless of their health, as seen in terms of market share; however, the defining financial and economic health of media firms could differ depending on market circumstances. In such a complicated and competitive media environment, how we have strong indicators for evaluating media firms’ health. Also, in such competitive media circumstances, which factors or indicators would be more important for market leader and market followers, respectively, for their financial and economic health?

Who would be the winner?

Let’s remember the network theory. In a competitive environment, any nodes can enter the network, and all of them get the profits. A few node get a high number of incoming links and other nodes tend to link to a few node. In a blogosphere, such A-list blogs, the best-known (most read, most linked to) blogs, play a key role in connecting with other blogs sharing similar political stances. However, the principle that the rich get richer is not always accurate. Instead, only nodes that have a certain attractiveness—that is, being differentiated from others—can be richer in a short hub. That is, the so-called “fitness” explains succinctly the nodes with higher fitness (nodes’ attractiveness) and more links. For example, those who have the characteristics of extroversion might have more Facebook friends—even though they may be beginners on the site—than those who started the site earlier. In a sense, this explains why Google could become a hub in the Web industry, even though it was a relative newcomer.

What about the media industry? As technology developed, social media, such as blogs and Twitter, have played influential roles in agenda building and diffusion. Having such user-centered interfaces, the media includes an advantageous structure and finally brings about profitable behavior and performance. Chrome, Bing, and You and Me have the same story. As opposed to Twitter, they seem to have some relation in close substitutes rather distinct product differentiation. No matter which market structure is evident, the price of a product remains an influential factor that affects consumers’ purchase decisions. By the same token, however, while the objective of companies is to maximize profit, the objective for consumers is to maximize satisfaction. Thus, as competition becomes increasingly intense in the media industry, product differentiation could become an effective strategy for maximizing profits.

Kang-credibility still matters

The readings for this week give us an opportunity to think of journalism in the context of the growing role of the online media environment. As online media, such as blogs, play a significant role in the public sphere, they are not only regarded as alternative media—which reinforces the weak points found in traditional media—but which also challenge the role of the traditional media in engaging in public discourse. However, even though the role of online media has grown in our society, it must still accomplish significant tasks to be considered as truthful a source or performer as the traditional media in terms of its service to the public.

Online and offline media are similar in that their main role is delivering news. However, we must pay increased attention to their differences. The main differences are the level of interactivity between media and readers (consumers) compared to the traditional media’s one-way communication. Online media gives the public an opportunity to experience interactive communication by emailing journalists, commenting on articles, and reading other articles and journalists via hyperlink. In this environment, readers are no longer passive; rather, they are active users. In other words, the public that engages with online media have more opportunities to share information not only with journalists but also with other members of the public. Thus, online media weakens the influence held previously by offline media, which traditionally sets the agenda for the public. In addition, the public has become part of the news production process; thus, they deliver lively news to journalists and the public. For example, bloggers open their own blogs and post their opinions or reports; they are not only reporters, but are also publishers and editors. Relative to the differences between offline and online media, bloggers give the public other sides of the stories that were not reported by offline media. Thus, they give the public the opportunity to express opinions and communicate each other without barriers.

However, we cannot ignore the problem associated with online media, news credibility. As online media delivers news much faster than offline media, the public can receive their news in real-time and they can post the news they want to see online. Herein lies the problem; much of the information posted by the public has not been proved as being truthful; therefore, we might be surrounded by false information. Thus, this problem has influenced the credibility of online media, and it is a chief task to be addressed by online media in order to become sufficiently influential to deliver correct and truthful information to the public.