09 Online Media


Published on

Edited by Monchai Sopitkamon, Ph.D.

Published in: Education, Technology, Business
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

09 Online Media

  1. 1. e-commerce business. technology. society. eighth edition Kenneth C. Laudon Carol Guercio TraverCopyright © 2012 Pearson Education, Inc.Chapter 9Online Media 1
  2. 2. Information Wants to Be Expensive Class Discussion Why did the Wall Street Journal succeed with a subscription model? Would you pay to read a daily newspaper online? Why or why not? Would you pay for access to online archives of newspapers and/or magazines? Do you think newspapers can make the transition from “print on paper” to “news on-screen”? What do you think about the New York Times’ new subscription-based model?Copyright © 2012 Pearson Education Slide 9-3 Learning Objectives Identify the major trends in the consumption of media and online content Discuss the concept of media convergence and the challenges it faces Describe the five basic content revenue models Discuss the key challenges facing content producers and owners Understand the key factors affecting the online publishing industry Understand the key factors affecting the online entertainment industryCopyright © 2012 Pearson Education Slide 9-4 2
  3. 3. Trends in Online Content, 2011–2012 Increased media consumption; Internet time > newspapers & music, but still far lower than TV Smartphones and tables create “fourth screen” to view media while on the move Growth of social and local content User-generated content growing, inverting traditional production/business models Apple, Google, Amazon, Facebook vie for ownership of online content ecosystemCopyright © 2012 Pearson Education Slide 9-5 Trends in Online Content (cont.) Internet advertising revenues expanding rapidly Increased consumer acceptance of paying for premium content Content owners adapt mixture of advertising, subscription, a la carte payment for business model Convergence: video streaming of movies and shows by Hollywood and TV studios; IPTV; Newspapers and magazines adding live video to their online sitesCopyright © 2012 Pearson Education Slide 9-6 3
  4. 4. Content Audience and Market Average American adult spends 4,400 hrs/yr consuming various media (> annual work hours of 2,000 hrs/yr) 2011 US media & entertainment revenues: $580 billion, and growing at 5% rate to 2015 Over 75% of the hours spent consuming TV, radio, Internet 2.5 hrs/day on Internet Internet usage doesn’t reduce TV viewingCopyright © 2012 Pearson Education Slide 9-7 Media ConsumptionFigure 9.1, Page 617 SOURCE: Based on data from U.S. Census Bureau, 2010, authors’ estimatesCopyright © 2012 Pearson Education Slide 9-8 4
  5. 5. Internet and Traditional Media Cannibalization vs. complementarity Time spent on Internet reduces time available for other media Books, newspapers, magazines, phone, radio Conversely, Internet users consume more media of all types than non-Internet users Internet users also often “multitask” with media consumption Multimedia—reduces cannibalization impact for some visual, aural mediaCopyright © 2012 Pearson Education Slide 9-9 Media Revenues by ChannelFigure 9.2, Page 618 SOURCE: Based on data from U.S. Census Bureau, 2011;Copyright © 2012 Pearson Education authors’ estimates. Slide 9-10 5
  6. 6. Relative Size of the Content Market, Based on Per-Person SpendingFigure 9.3 Page 619 SOURCE: Based on data from U.S. Census Bureau, 2011;Copyright © 2012 Pearson Education authors’ estimates. Slide 9-11 Digital Content Delivery Models Three commercial content business models Paid Free with advertiser support Freemium: some content is free but more complete content requires paid subscriptions Free content can drive users to paid content Users increasingly paying for high-quality, unique content Music, games, newspapers, movies Online paid content audience growing rapidlyCopyright © 2012 Pearson Education Slide 9-12 6
  7. 7. Fig. 9.4Copyright © 2012 Pearson Education Slide 9-13 Table 9.2Copyright © 2012 Pearson Education Slide 9-14 7
  8. 8. Free or Fee? Early years: Internet audience expected free content but willing to accept advertising Early content was low quality With advent of high-quality content, fee models successful iTunes 29 million buy from legal music sites Newspapers charging for premium content YouTube cooperating with Hollywood production studiosCopyright © 2012 Pearson Education Slide 9-15 Media Industry Structure Three separate segments, each dominated by few key players Publishing, Newspapers Entertainment Larger media ecosystem Includes millions of individuals, entrepreneurs (blogs, YouTube, independent music bands)Copyright © 2012 Pearson Education Slide 9-16 8
  9. 9. Media Convergence Technological convergence: Hybrid devices combining functionality of existing media platforms, e.g., books, newspapers, TV, radio, into a single device, e.g., smartphones Content convergence: Three aspects: Design, production, distribution New tools for digital editing and processing, e.g., GarageBand Distributions: music store CD, physical books e-books, films going trucks satellite or fiber optic cable Industry convergence: Merger of media enterprises into firms that create and cross- market content on different platforms E.g., AOL & Time Warner, News Corp & MySpace, Google & YoutubeCopyright © 2012 Pearson Education Slide 9-17 Convergence and the Transformation of Content: BooksFigure 9.5, Page 625Copyright © 2012 Pearson Education Slide 9-18 9
  10. 10. Online Content Revenue Models and Business Processes Marketing Free content drives offline revenues Advertising Fee content paid for by advertising Pay-per-view/pay-for-download Charge for premium content Subscription Monthly charges for services MixedCopyright © 2012 Pearson Education Slide 9-19 Table 9.3Copyright © 2012 Pearson Education Slide 9-20 10
  11. 11. Table 9.4Copyright © 2012 Pearson Education Slide 9-21 Making a Profit with Online Content 25% users will pay for some content Four factors required to charge for online content 1. Focused market 2. Specialized content 3. Sole source monopoly 4. High perceived net value Portion of perceived customer value that can be attributed to fact that content is available on the InternetCopyright © 2012 Pearson Education Slide 9-22 11
  12. 12. Revenue and Content CharacteristicsFigure 9.6, Page 630Copyright © 2012 Pearson Education Slide 9-23 Key Challenges Facing Content Producers and Owners Technology Bandwidth issues for HD video, CD-quality music Cost Internet distribution more costly than anticipated, for migrating, repackaging, and redesigning content Distribution channels and cannibalization Apple’s iTunes Store, YouTube, Hulu.com (NBC+Fox+ABC) top 10 online video & movie distributors Digital rights management (DRM) Use of technology to circumvent DRM Interests of content creators vs. technology companies that profit from illegal downloadsCopyright © 2012 Pearson Education Slide 9-24 12
  13. 13. Insight on Business: Class Discussion Who Owns Your Files? Why does digital content need any more protection than analog content stored on records and tapes? What is DRM software? Have you ever encountered digital content that is protected with DRM? Why did Apple abandon its DRM software? Is DRM working for Amazon’s Kindle? Does it matter to the consumer whether content purchased is “owned” or “licensed”? How does DRM potentially interfere with “fair use” of copyrighted material?Copyright © 2012 Pearson Education Slide 9-25 Online Newspapers Most troubled segment of publishing industry 60% of newspapers have reduced staff in last 3 years Failure to protect news content from free distribution by aggregators like Yahoo, MSN, Google However: Online readership growing at 16% Mobiles, tablets provide new avenues More users willing to pay for premium content Aggregators are recognizing need for high-quality content to distribute and use for advertisementsCopyright © 2012 Pearson Education Slide 9-26 13
  14. 14. Monthly Unique Visitors at Online NewspapersFigure 9.7, Page 637 SOURCES: Based on data from comScore, 2011a;Copyright © 2012 Pearson Education Compete.com, 2011. Slide 9-27 Newspaper Business Models Initially fee-based, then free, and now beginning a return to fee-based Newspaper headlines are primary content on Google News, Yahoo News New York Times now charging for premium access Newspaper efforts to ally with Internet titans New reader devices with reader appsCopyright © 2012 Pearson Education Slide 9-28 14
  15. 15. Convergence in Newspaper Industry Technology: Slow move to Internet; beginning to incorporate video, RSS, user feedback Content: Four content changes Premium archived content Fine-grained searching Videos reporting RSS feeds See next Fig. Timeliness allows competition with TV/radio Industry structure: Has not seen much convergence due to limited returnsCopyright © 2012 Pearson Education Slide 9-29 Fig. 9.8Copyright © 2012 Pearson Education Slide 9-30 15
  16. 16. Challenges: Disruptive Technologies Newspapers: a classic case of disruptive technology? Industry still in flux Newspapers have significant assets: Content Readership Local advertising Audience (wealthier, older, better educated) Online audience will continue to grow in numbers and sophisticationCopyright © 2012 Pearson Education Slide 9-31 E-books Some predicted that Internet would mean dwindling of books Today, book publishing generates $24 billion Publishing industry concerns: How much to charge for e-books What content enhancements encourage purchasing of e-books Best business relationship with online distributors like Apple, Google, AmazonCopyright © 2012 Pearson Education Slide 9-32 16
  17. 17. E-books Evolution Project Gutenberg (1970s) putting Declaration of Independence and 2,00 classic books online Voyager’s putting Jurassic Park and Alice in Wonderland books on CDs (1990s) Adobe’s PDF format Types of commercial e-books Web-accessed e-book, e.g., Encyclopedia Britannica, Wikipedia.com, CourseSmart Web-downloadable e-book, e.g., Google Books Project, Google Book Library Project, NetLibrary, Questia Dedicated e-book reader Amazon Kindle, Sony Reader, Barnes & Noble Nook General purpose reader, e.g., iPhones, iPads, BBs, Androids Print-on-demand booksCopyright © 2012 Pearson Education Slide 9-33 Table 9.5Copyright © 2012 Pearson Education Slide 9-34 17
  18. 18. Book Audience Size and Growth Americans read about 10 books per year per person Americans spend $95/year on trade books, more than video games ($72), and in-theater movies ($41) Book readership is flat, anchored in the 40+ population Professional and educational titles publication growing 2 times as fast as US economyCopyright © 2012 Pearson Education Slide 9-35 Growth of E-book Revenues 2009–2015Figure 9.9, Page 646 SOURCES: Based on data from Assoc. of American Publishers, 2011; eMarketer, 2011b; authors’ estimates.Copyright © 2012 Pearson Education Slide 9-36 18
  19. 19. E-book Industry Revenue Models Wholesale model As with traditional publishing, retailer pays wholesale price and marks price up With lowered prices of e-books, profits to publisher are also lower Agency model Publishers set retail price and designate an agent who receives 30% commission Leads to higher, fixed prices for e-books Google, Amazon, Apple benefit primarily by selling e-book readersCopyright © 2012 Pearson Education Slide 9-37 Table 9.6Copyright © 2012 Pearson Education Slide 9-38 19
  20. 20. Copyright © 2012 Pearson Education Slide 9-39 Convergence in Publishing Industry Technological convergence slowed by: DRM concerns Competing standards (Kindle, Nook, iPad) Content convergence User experiences is still turning pages of text and graphics Industry structure Print publishing industry in flux Non-physical books Authors bypassing traditional publishing and distributionCopyright © 2012 Pearson Education Slide 9-40 20
  21. 21. Insight on Society: Class Discussion The Future of Books What technologies are changing the concept of what a book is? Do you consider Wikipedia a “book,” and if so, what type of book? What qualities makes Unigo a threat to traditionally published college references? Are some types of traditional books more threatened by Internet technologies than others?Copyright © 2012 Pearson Education Slide 9-41 Online Entertainment Industry Major players: Television, radio, Hollywood films, music, video games Internet is transforming industry, along with: Smartphones, tablets as video, music platform Online streaming, Netflix Social network platforms Viable business models in music subscription services, e.g., Pandora, Spotify, Rhapsody Widespread growth of broadband Business models (music & video streaming subscription services) that eliminate need for DRMCopyright © 2012 Pearson Education Slide 9-42 21
  22. 22. The Five Major Players in the Entertainment Industry Figure 9.10, Page 652 SOURCE: Based on data from U.S. Census Bureau, 2011; NPD Group, 2011, authors’ estimates. Copyright © 2012 Pearson Education Slide 9-43 Online Entertainment Audience Size Online “traditional” entertainment Online video has largest audiences, followed by music, games (see next Fig.) User-generated content: Substitutes for and complements traditional commercial entertainment Two dimensions: User focus User control Sites that offer high levels of both will grow Copyright © 2012 Pearson Education Slide 9-44 22
  23. 23. ProjectedGrowth inTraditionalOnlineEntertainment(in Millions)Figure 9.11, Page 654SOURCES: Based on datafrom industry sources;authors’ estimates. Copyright © 2012 Pearson Education Slide 9-45 User Role in Entertainment Figure 9.12, Page 655 Copyright © 2012 Pearson Education Slide 9-46 23
  24. 24. Content Internet has greatly changed packaging, distribution, marketing, sales of traditional entertainment Greatest impact: Music From CD of 12–15 songs to single-song downloads Groups can bypass traditional marketing and sales organization by creating their own Web distribution network Revenue Models: Marketing, advertising, pay-per-view, subscription, value- added, mixedCopyright © 2012 Pearson Education Slide 9-47 Convergence in Entertainment Industry Technology convergence: Smartphones, tablets become music listening devices, video players, game stations Game stations connect to Internet, stream movies Movies and television Move toward Internet distribution iTunes Store selling music, movies, TV shows Netflix streaming movies to PCs and set-top boxes Hulu streaming TV shows, trailer, and older movies for free using advertiser-supported modelCopyright © 2012 Pearson Education Slide 9-48 24
  25. 25. Convergence in Entertainment Industry (cont.) Content convergence Significant progress toward digital tools for content creation and production Digital cameras, workstations generating animations and digital effects in movie scenes Music recording and production highly digitized; some distribution direct to Internet, bypassing CD production stageCopyright © 2012 Pearson Education Slide 9-49 Convergence in Entertainment Industry (cont.) Industry structure Fractured: Many players and forces shape industry Reorganization of value chain needed for aggressive move to Web Possible alternative models Content owner direct model Internet aggregator model Internet innovator modelCopyright © 2012 Pearson Education Slide 9-50 25
  26. 26. Entertainment Industry Value ChainsFigure 9.13, Page 659Copyright © 2012 Pearson Education Slide 9-51 Insight on TechnologyHollywood Meets the Internet: Round 3 Class Discussion What strategies has Hollywood pursued to combat movie piracy? Are there legitimate ways that videos can be distributed on the Web? How can the differentiation of DVD products help in combating piracy? Do you think Hollywood is doing a better job of protecting its content than the music industry?Copyright © 2012 Pearson Education Slide 9-52 26
  27. 27. Copyright © 2012 Pearson Education Slide 9-53 27