I’m pretty new to the economics area, so please do go easy!
Like most people in class, I too picked up on the demand, supply and price elasticity from Chapter 2 of Media Economics: Applying Economics to New and Traditional Media by Hoskins, Colin, McFadyen, Stuart, & Finn, Adam.
In a blog entry, Terry L Heaton said: Restricting content is exactly the opposite of what we should be doing, for it's foolish to assume a limited capacity for information in a Post-modern world and arrogant to assume our content commands more attention than anybody else's. The law of supply and demand online is a paradox, and owning a bigger share of the supply is a more likely path to profit.
So clearly, paying for online content or for that matter, certain online news content did not work. If an online media bastion like the New York Times decided to make Times Select free, they obviously got one of the concepts wrong. A year ago, as in my blog entry, I would have vehemently disagreed. But current trends have forced me to change my opinion, So the established point here is that nobody wants to pay for anything online. Point duly noted and taken.
But the point remains: how is an online news site to make any money? Industry pundits have already started writing eulogies to newspapers in the US, so how is a newspaper to survive if it’s losing subscriptions and advertising revenue? Newspapers like the Austin American Statesman have tried hiking the price of their newspaper. But if this will work for them is still too premature to figure out.
Another scenario that has had even less success is trying to get consumer to buy subscriptions for all content online.
So there is a fall in demand when online content needs to be paid for. And although there is a lot of research and development in the area of online advertising and news media, the reality, however, is that we don't know much about how to really leverage online advertising, and we have a lot to learn.
Online publications, just like traditional media, have to develop a business model. In terms of advertising, the goal could be simple that online Web sites have to attract as many users who are the target audience to advertisers as possible. And once that system is in place, then we reach digital utopia.
Thursday, September 4, 2008
Wednesday, September 3, 2008
SeongBae's Web sites
I apologize for the late posting. I didn't know how to activate this blog until today. Here are three Web sites I recommend for the latest news on mobile technology.
1. mobile-weblog.com
- This is similar to blog. People post some newsworthy stories about mobile technology, and they leave some comments underneath the story to discuss the news. It's personally very interesting to see how people react to certain technology issues. (such as the article about a mobile phone that can be used as a computer mouse!)
2. techweb.com/wire/mobile
- Techweb has news stories sorted by company names. If you want to read about the latest technology development for a specific company, this Web site might be the best.
3. Wired
- Although several people have already recommended this Web site, I think Wired still deserves another recommendation. The Web site both covers news stories and blog postings that are usually interesting and controvertial.
1. mobile-weblog.com
- This is similar to blog. People post some newsworthy stories about mobile technology, and they leave some comments underneath the story to discuss the news. It's personally very interesting to see how people react to certain technology issues. (such as the article about a mobile phone that can be used as a computer mouse!)
2. techweb.com/wire/mobile
- Techweb has news stories sorted by company names. If you want to read about the latest technology development for a specific company, this Web site might be the best.
3. Wired
- Although several people have already recommended this Web site, I think Wired still deserves another recommendation. The Web site both covers news stories and blog postings that are usually interesting and controvertial.
Sam's Web Sites
Apologies for being a space cadet and posting on every other blog I write on but this. I can get that way when I'm highly caffeinated.
I usually check Wired, NYT tech pages and for the past two weeks, ThinkGeek.
I usually check Wired, NYT tech pages and for the past two weeks, ThinkGeek.
Kim's Web Sites
Apologies for not posting on readings by last night. (I hopped on a plane immediately after class on Wednesday and was out of cell and internet range until yesterday when I spent all day traveling again.)
Anyway, here are my web sites:
ZDNet
Gizmodo
Wired
(Though this was already listed by another student so maybe BoingBoing instead.)
Anyway, here are my web sites:
ZDNet
Gizmodo
Wired
(Though this was already listed by another student so maybe BoingBoing instead.)
Tuesday, September 2, 2008
Seth's response: New media, information, and the price of "free" (Week 1)
Hi, everyone. I missed the first class last week, so I look forward to being with you all tomorrow.
First, I have to mention how interesting it was to read this book and be confronted with terms and concepts once so familiar to me, as I took a Managerial Economics course in my MBA program some four years ago. (Quite frankly, it's astonishing how much you can forget in that span of time!)
Like Nan, I was interested in the discussion of supply, demand, and price elasticity from Chapter 2. I've been thinking about these things lately as we hear more and more about the "economy of free." Wired editor Chris Anderson, he of the Long Tail phenomenon, had a cover story about this recently; in it he wrote:
Indeed, that appears to be the trend in the newspaper industry: no charging for online content (of course), but increased prices for the print version. There's good reason for this. As blogger Jeff Jarvis noted upon news of the tear-down of TimesSelect's paywall:
OK, so back to the main point here: As we go forward examining media economics in the digital age, it's important to consider the emerging economies of "free" — or, better yet, recognizing how free offerings of services or information create value and profits in more subtle, behind-the-scenes sort of ways. (Ask Google how this is done.)
Of course, "free" is nothing new to the media industry: It's how radio, TV, and newspapers have long made their money, providing content for free (or at very low cost) and selling the mass audiences to advertisers to pay for their efforts. But as the Web extends this media business model to a wide range of industries — see Anderson's piece on this — it's a good time to step back and reconsider what these trends mean for the future of media (and media economics). How do these notions fit into previous conceptions of supply, demand, price elasticity, and so on? In what ways do they reinforce traditional economics ... and in what other ways might today's currents cause us to rethink old assumptions? What happens when the Internet is simply a copy machine? (As Kevin Kelly writes: "The digital economy is thus run on a river of copies. Unlike the mass-produced reproductions of the machine age, these copies are not just cheap, they are free.") If scarcity is connected with value, then what is of worth in a sea of free-and-easy copies?
Food for thought. See you tomorrow.
... Oh, and as for useful sites to follow the new media biz, I like some of those mentioned already (especially Wired), but here are a few others of interest:
-- The New York Times' sections on media/advertising, tech, and its Bits blog.
-- IWantMedia.com covers the latest headlines on the business of new media.
-- Jeff Jarvis of BuzzMachine fame is well worth reading. He's a media biz veteran who really understands Webenomics today.
First, I have to mention how interesting it was to read this book and be confronted with terms and concepts once so familiar to me, as I took a Managerial Economics course in my MBA program some four years ago. (Quite frankly, it's astonishing how much you can forget in that span of time!)
Like Nan, I was interested in the discussion of supply, demand, and price elasticity from Chapter 2. I've been thinking about these things lately as we hear more and more about the "economy of free." Wired editor Chris Anderson, he of the Long Tail phenomenon, had a cover story about this recently; in it he wrote:
You know this freaky land of free as the Web. A decade and a half into the great online experiment, the last debates over free versus pay online are ending. In 2007 The New York Times went free; this year, so will much of The Wall Street Journal. (The remaining fee-based parts, new owner Rupert Murdoch announced, will be "really special ... and, sorry to tell you, probably more expensive." This calls to mind one version of Stewart Brand's original aphorism from 1984: "Information wants to be free. Information also wants to be expensive ... That tension will not go away.")
Indeed, that appears to be the trend in the newspaper industry: no charging for online content (of course), but increased prices for the print version. There's good reason for this. As blogger Jeff Jarvis noted upon news of the tear-down of TimesSelect's paywall:
So much for the idea of charging for content — news content especially — online. Too much of it is commodified. There’s no end of free competition. The value is fleeting in time. The cost of charging is too high.
Whether or not content wants to be free, it is free.
Don’t let anyone tell you that this is bad for the content business. It’s only good sense. Having worked in the magazine business, I saw this even at the dawn of the internet: As I said above, a magazine has to pay up to $30-40 in marketing costs to acquire subscribers; it can pay up to $5-7 to print and distribute a copy of a glossy magazine; it has high editorial costs. Add that up, and a magazine can find itself in the hole $60 or more per subscriber in the first year of a subscription. And they get as little as $1 per issue in subscription revenue. Yet clearly, a magazine can make money because that subscriber’s value to advertisers is much greater.
It’s the relationship that is valuable. It’s the relationship that is profitable, not the control of the content or the distribution. That is the essential media moral of the internet story. It has taken 13 years of internet history for media companies to learn that, to give up the idea that they control something scarce they can charge consumers for, but they’ve finally learned it. That is the lesson of the death of TimesSelect.
OK, so back to the main point here: As we go forward examining media economics in the digital age, it's important to consider the emerging economies of "free" — or, better yet, recognizing how free offerings of services or information create value and profits in more subtle, behind-the-scenes sort of ways. (Ask Google how this is done.)
Of course, "free" is nothing new to the media industry: It's how radio, TV, and newspapers have long made their money, providing content for free (or at very low cost) and selling the mass audiences to advertisers to pay for their efforts. But as the Web extends this media business model to a wide range of industries — see Anderson's piece on this — it's a good time to step back and reconsider what these trends mean for the future of media (and media economics). How do these notions fit into previous conceptions of supply, demand, price elasticity, and so on? In what ways do they reinforce traditional economics ... and in what other ways might today's currents cause us to rethink old assumptions? What happens when the Internet is simply a copy machine? (As Kevin Kelly writes: "The digital economy is thus run on a river of copies. Unlike the mass-produced reproductions of the machine age, these copies are not just cheap, they are free.") If scarcity is connected with value, then what is of worth in a sea of free-and-easy copies?
Food for thought. See you tomorrow.
... Oh, and as for useful sites to follow the new media biz, I like some of those mentioned already (especially Wired), but here are a few others of interest:
-- The New York Times' sections on media/advertising, tech, and its Bits blog.
-- IWantMedia.com covers the latest headlines on the business of new media.
-- Jeff Jarvis of BuzzMachine fame is well worth reading. He's a media biz veteran who really understands Webenomics today.
jacie's short response (week 1)
When something gets cheaper, we often take it for granted that the people will buy more or more will be sold. Often times it seems to be the case, but the three chapters illustrate that there are indeed more economic principles behind such a general statement. Even though demand and supply interact with each other in a market and the combination of the two determine the market price, here I find demand to be really interesting since I am interested in audience/users more than media firms.
From the chapters we learned that there is “change in quantity demand” and “change in demand.” Change in quantity demand is affected by the own price of the product while change in demand is affected by other external factors other than the product’s own price (such as change in income per capita). When the authors explain Law of Demand, they also use empirical examples of how often firms ignore Law of Demand, purposefully or not (p.20).
One thing that came to mind was iPhone (bear with me if you hear this word often enough already). iPhone came out in the summer of 2007 and the latest iPhone 3G was launched on July 11th this summer. One significant difference, in term of economics, is there was a significant decrease in the product’s own price: it dropped from $399 to $199 (for 8G storage space model). After the “better and cheaper” 3G iPhone was launched on July 11th, Apple’s press release on July 14th quoted the CEO Steve Jobs saying, “iPhone 3G had a stunning opening weekend. It took 74 days to sell the first one million original iPhones [in 2006], so the new iPhone 3G is clearly off to a great start around the world.” The comparison here is: a million iPhones, 74 days v.s. 3 days.
Demand of iPhone 3G seems to be much higher, but in what way? Is it merely because it is $200 cheaper? In addition to change in quantity demand (affected by the product’s own price), five factors might cause change in demand: price of a demand-related product, income per capita, number of potential buyers, expectations regarding future price, and tastes. The factor that stands out here in the iPhone case is the number of potential buyers. As the original iPhone was only sold in the United States, the new 3G iPhone is available in 21 countries in the world. As in chapter 3 it says that “the population served by a market is a good indicator of the number of potential buyers,” the greater the population in a market, the greater the demand. When Apple made iPhone available in 21 countries, the market is expanded and the demand is higher, other things being equal. It is not the new iPhone is more popular or merely because it is cheaper, but also because the market is now bigger thus the demand is higher.
I think having an understanding in media economics gives us a great tool to explain and predict social phenomena, as well as seeing through the basic principles of these phenomena. I also think the principles of demand and supply can be applied to users’ news demand, but it is still very vague for me at this point since I feel news products are close substitutes to each other.
As for the three tech sites, I do visit the tech section of major news sites often, including NY Times, Washington Post, CNET, etc. Let me include these three here: digg.com's tech section, Search Engine Watch (cause I like google), and Techdirt.
From the chapters we learned that there is “change in quantity demand” and “change in demand.” Change in quantity demand is affected by the own price of the product while change in demand is affected by other external factors other than the product’s own price (such as change in income per capita). When the authors explain Law of Demand, they also use empirical examples of how often firms ignore Law of Demand, purposefully or not (p.20).
One thing that came to mind was iPhone (bear with me if you hear this word often enough already). iPhone came out in the summer of 2007 and the latest iPhone 3G was launched on July 11th this summer. One significant difference, in term of economics, is there was a significant decrease in the product’s own price: it dropped from $399 to $199 (for 8G storage space model). After the “better and cheaper” 3G iPhone was launched on July 11th, Apple’s press release on July 14th quoted the CEO Steve Jobs saying, “iPhone 3G had a stunning opening weekend. It took 74 days to sell the first one million original iPhones [in 2006], so the new iPhone 3G is clearly off to a great start around the world.” The comparison here is: a million iPhones, 74 days v.s. 3 days.
Demand of iPhone 3G seems to be much higher, but in what way? Is it merely because it is $200 cheaper? In addition to change in quantity demand (affected by the product’s own price), five factors might cause change in demand: price of a demand-related product, income per capita, number of potential buyers, expectations regarding future price, and tastes. The factor that stands out here in the iPhone case is the number of potential buyers. As the original iPhone was only sold in the United States, the new 3G iPhone is available in 21 countries in the world. As in chapter 3 it says that “the population served by a market is a good indicator of the number of potential buyers,” the greater the population in a market, the greater the demand. When Apple made iPhone available in 21 countries, the market is expanded and the demand is higher, other things being equal. It is not the new iPhone is more popular or merely because it is cheaper, but also because the market is now bigger thus the demand is higher.
I think having an understanding in media economics gives us a great tool to explain and predict social phenomena, as well as seeing through the basic principles of these phenomena. I also think the principles of demand and supply can be applied to users’ news demand, but it is still very vague for me at this point since I feel news products are close substitutes to each other.
As for the three tech sites, I do visit the tech section of major news sites often, including NY Times, Washington Post, CNET, etc. Let me include these three here: digg.com's tech section, Search Engine Watch (cause I like google), and Techdirt.
Nan's Short Response (week 1)
One interesting point I found in this week's reading is that new media technology can change media production in many ways. For example, online publishing reduces the production cost of print media and also makes the distribution cost less affected by delivery distance. Although the online production can reduce the input prices for print products, it is still unsure if the circulation and advertising revenue will remain the same when one publication moves online. Particularly for the newspaper industry, how national and local newspaper will be affected by the online publication trend differently? Also, many major news organizations (i.e.BBC, Wall Street Journal) have started to provide online content in other languages in order to target geographically remote markets. How those news services may shape the international news flow and whether those services meet the marketing goals may worth to study.
The demand for news in the U.S. has decreased in many years. It may due to the increasing supply of demand-related products—the entertainment media content (It is just one hypothesis to explain the phenomenon). It will also be interesting to calculate the cross elasticity of demand with the price of broadband Internet service and the demand of different type of media content. The number may illustrate which type of media outlet is benefiting or suffering through the increasing adoption of broadband Internet, which may become the mainstream distribution channel for media in the future.
Not only the entertainment content and the news may compete for the audience demand, at times it may also compete for investment. For example, traditional media such as Austin American Statesman builds austin360.com, an infotainment website which generate significant income for the paper while reduces its budget to produce hard news. The concern is when the media firms adjust its financial arrangement to respond to the force of supply and demand, what it will do to the quality of newspapers? Would the market force eventually set a bottom line for the content share between entertainment and news?
My three new media sites:
www.cnet.com
www.slashdot.com
www.wired.com
The demand for news in the U.S. has decreased in many years. It may due to the increasing supply of demand-related products—the entertainment media content (It is just one hypothesis to explain the phenomenon). It will also be interesting to calculate the cross elasticity of demand with the price of broadband Internet service and the demand of different type of media content. The number may illustrate which type of media outlet is benefiting or suffering through the increasing adoption of broadband Internet, which may become the mainstream distribution channel for media in the future.
Not only the entertainment content and the news may compete for the audience demand, at times it may also compete for investment. For example, traditional media such as Austin American Statesman builds austin360.com, an infotainment website which generate significant income for the paper while reduces its budget to produce hard news. The concern is when the media firms adjust its financial arrangement to respond to the force of supply and demand, what it will do to the quality of newspapers? Would the market force eventually set a bottom line for the content share between entertainment and news?
My three new media sites:
www.cnet.com
www.slashdot.com
www.wired.com
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