Laudon traver ec11-tif_ch10

E-commerce 2015, 11e (Laudon/Traver)
Chapter 10 Online Content and Media
1) The publishing and entertainment industries make up the largest share of the commercial
content marketplace, both online and offline
Answer: TRUE
Page Ref: 633
Difficulty: Moderate
AACSB: Application of knowledge
2) The average American adult spends more time watching television than using the Internet.
Answer: FALSE
Page Ref: 635
3) The proliferation of mobile devices appears to be decreasing the total amount of time spent
consuming various types of media.
Answer: FALSE
Page Ref: 635
4) Online television and movies is the largest and fastest growing form of online entertainment.
Answer: TRUE
Page Ref: 638
5) In 2014, the time spent on mobile devices exceeded the time spent on desktops.
Answer: TRUE
Page Ref: 634
Difficulty: Difficult
6) The a la carte revenue model allows users to pay only for what they use.
Answer: TRUE
Page Ref: 637
7) A higher percentage of Internet users read newspapers online than listen to radio online.
Answer: TRUE
Page Ref: 638
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8) The overall size of the online video audience is about the same size as the traditional
television audience.
Answer: TRUE
Page Ref: 639
Difficulty: Easy
9) Smartphones are an example of technological convergence.
Answer: TRUE
Page Ref: 643
Difficulty: Easy
10) Online readership of newspapers is declining by more than 10% a year.
Answer: FALSE
Page Ref: 652
11) Cannibalization is a major challenge facing book publishers.
Answer: FALSE
Page Ref: 636
12) In the wholesale model of e-book distribution, pricing power is with the retailer.
Answer: TRUE
Page Ref: 670
13) Vox is an example of the Digital First business model.
Answer: FALSE
Page Ref: 651
14) The entertainment industry is generally considered to be composed of five players:
television, Hollywood films, music, radio, and games.
Answer: TRUE
Page Ref: 674
2

15) In 2014, the social gaming market was the fastest growing form of online gaming.
Answer: FALSE
Page Ref: 691
16) Which of the following is not a current trend in online content?
A) Sales of music in digital form produce more revenue than sales of physical units.
B) Readership of newspapers in print form continues to exceed online readership.
C) E-book sales growth slows.
D) Console game sales stagnate in comparison to online gaming.
Answer: B
Page Ref: 634
17) Which of the following streaming movie and TV services is a joint venture between
traditional entertainment producers?
A) Netflix
B) Hulu
C) Zynga
D) VUDU
Answer: B
Page Ref: 630
Difficulty: Easy
18) Which of the following newspaper audience platforms has the higher percentage of readers?
A) print/mobile
B) Web only
C) Web/mobile
D) print
Answer: D
Page Ref: 653
19) Which of the following three forms of media account for over 95% of the hours spent
consuming media?
A) television, radio, and the Internet
B) television, magazines, and the Internet
C) the Internet, radio, and newspapers
D) television, the Internet, and newspapers
Answer: A
Page Ref: 635
3

20) In comparison to hours spent at work, the average American adult spends ________
consuming various media.
A) a quarter as much time
B) a third as much time
C) an equivalent amount of time
D) twice as much time
Answer: D
Page Ref: 635
21) Which of the following generates the largest share of media revenues?
A) video games
B) television
C) newspapers
D) radio
Answer: B
Page Ref: 637
22) Which of the following is the fastest growing segment of media revenues?
A) television
B) home video
C) Internet media
D) newspapers
Answer: C
Page Ref: 637
23) Which of the following was the top online video site in 2014 in terms of unique viewers?
A) Google Sites
B) Facebook
C) AOL
D) Yahoo Sites
Answer: A
Page Ref: 640
Difficulty: Easy
4

24) All of the following are examples of technology convergence except:
A) the iPad.
B) Amazon Books Publishing.
C) Apple TV.
D) smartphones.
Answer: B
Page Ref: 643-646
Difficulty: Easy
25) All of the following are aspects of content convergence except:
A) language.
B) design.
C) production.
D) distribution.
Answer: A
Page Ref: 643-644
Difficulty: Easy
26) Which of the following occurs first in the process of content convergence?
A) media integration
B) media migration
C) media transformation
D) media maturity
Answer: B
Page Ref: 645
27) Which of the following accounts for the second largest amount of paid online content
revenues in the United States in 2014?
A) online video games
B) Internet radio
C) online music
D) online TV and movies
Answer: C
Page Ref: 639
5

28) Which of the following has the highest share of the e-book market?
A) Amazon
B) Apple
C) Google
D) Barnes & Noble
Answer: A
Page Ref: 668
Difficulty: Easy
29) Which of the following happened during the period of time during which newspapers used a
print-centric business model?
A) Google launched its search engine.
B) Apple introduced the iPhone.
C) Facebook opened to the public.
D) The adoption of smartphone and tablets has grown rapidly.
Answer: A
Page Ref: 649-651
30) Which of the following was the most troubled segment of the publishing industry in 2014?
A) books
B) magazines
C) newspapers
D) periodicals
Answer: C
Page Ref: 647
31) Which of the following statements about the newspaper industry is not true?
A) Newspaper management was sluggish to respond to the opportunities on the Internet for
news.
B) Online readership of newspapers is declining.
C) The emergence of search engines such as Google has had a major impact on the newspaper
industry.
D) Newspaper industry revenues have declined by almost 50% from 2000 to 2013.
Answer: B
Page Ref: 647
6

32) Which of the following online newspaper sites or groups attracts the highest number of daily
unique visitors?
A) USA Today
B) Washington Post
C) Wall Street Journal
D) The New York Times
Answer: D
Page Ref: 652
33) Which of the following statements about YouTube is not true?
A) There are now over 1 million YouTube channels worldwide.
B) In 2013, YouTube announced paid-subscription channels.
C) YouTube has not yet shown a profit.
D) The three most popular YouTube videos in terms of total views are music videos.
Answer: C
Page Ref: 630-632
34) Which of the following is not one of the factors required to charge for online content?
A) multiple delivery methods
B) focused market
C) specialized content
D) high perceived net value
Answer: A
Page Ref: 646
35) Which of the following is not a major contributing factor to net value?
A) providing instantaneous, online access to information
B) providing large, searchable historical archives
C) enabling consumers to move online information to other documents easily
D) offering a variety of subscription models
Answer: D
Page Ref: 646
7

36) Approximately ________ of the Internet population in the United States reads magazines
online.
A) one-quarter
B) one-third
C) one-half
D) three-quarters
Answer: B
Page Ref: 663
37) Digital magazine ad revenues were expected to ________ in 2014.
A) remain stable
B) more than double
C) grow over 20%
D) continue to decrease
Answer: C
Page Ref: 663
38) All of the following typically favor the elimination of DRM except:
A) hackers.
B) technology companies.
C) content owners.
D) telecommunications pipeline companies.
Answer: C
Page Ref: 641-642
39) DRM refers to a combination of ________ for protecting digital content.
A) hardware and software methods
B) technical and legal means
C) user and publisher agreements
D) local and remote policies
Answer: B
Page Ref: 641
Difficulty: Easy
8

40) Which of the following is not an example of a start-up digital news site?
A) Huffington Post
B) Buzzfeed
C) Vice
D) USA Today
Answer: D
Page Ref: 657
Difficulty: Easy
41) Which of the following routes to a newspaper Web site generates the most digital ad revenue
for the newspaper?
A) via a search engine
B) via a social media site such as Facebook
C) directly to a newspaper's home page
D) via an online video
Answer: C
Page Ref: 654
42) A metered subscription model is most similar to which of the following revenue models?
A) transaction fee
B) freemium
C) advertising
D) affiliate
Answer: B
Page Ref: 655
43) Which of the following statements about the online newspaper audience is not true?
A) Online newspaper readership is growing at more than 10% a year.
B) The majority of newspaper readers read the news using a combination of the Web, print and
mobile.
C) About 75% of Internet users read newspaper content online.
D) Online newspapers reach over 75% of individuals in households earning more than $100,000
a year.
Answer: B
Page Ref: 652
9

44) Who was the first major fiction writer to create an e-book-only volume of a new work?
A) Hugh Howey
B) Stephen King
C) Dan Brown
D) Amanda Hocking
Answer: B
Page Ref: 664
45) In 2014, Amazon's e-book and media store contained around how many book titles?
A) about 10,000
B) about 100,000
C) about 1 million
D) about 10 million
Answer: C
Page Ref: 669
46) Around what percentage of Amazon's top 100 selling books are now self-published?
A) 10%
B) 25%
C) 33%
D) 50%
Answer: B
Page Ref: 664
47) In 2014, e-book sales constituted about ________% of all consumer book sales.
A) 10
B) 25
C) 32
D) 50
Answer: C
Page Ref: 667
10

48) Which of the following was sued by the Justice Department for violating antitrust laws in
connection with e-books?
A) Amazon
B) Google
C) Apple
D) Barnes & Noble
Answer: C
Page Ref: 671
49) Which of the following is true about book publishing revenues over the past five years?
A) They have decreased by 25%.
B) They have increased by 25%.
C) They have remained stable.
D) They have decreased by 10%.
Answer: C
Page Ref: 667
50) In 2014, Amazon engaged in a trade dispute with which of the following over the pricing of
e-books?
A) Simon & Schuster
B) Penguin Random House
C) Hachette
D) Harper Collins
Answer: C
Page Ref: 672
Difficulty: Easy
51) Which of the following statements about the wholesale and agency models for selling books
is not true?
A) In the wholesale model, the retailer decides at what price to sell a book to the consumer.
B) Amazon surprised traditional publishers by selling e-books for below their wholesale cost.
C) Amazon supports the agency model.
D) A result of the agency model was that Amazon's prices on e-books rose.
Answer: C
Page Ref: 671
11

52) Zinio is an example of which of the following?
A) interactive book developer
B) magazine aggregator
C) e-reader platform
D) vanity press
Answer: B
Page Ref: 664
53) Which of the following is the largest online movie download distributor?
A) Netflix
B) Hulu
C) iTunes
D) Google Play
Answer: C
Page Ref: 677
54) Which of the following statements about the movie industry is not true?
A) Over 100 million Americans were expected to watch movies online in 2014.
B) Online movie distribution is not dominated by a single distributor.
C) Sales of digital movies that can be downloaded increased by almost 50% in 2013.
D) Internet and online distribution now make up the largest share of movie revenues.
Answer: D
Page Ref: 680-681
55) Which of the following is not a leading factor in changing the television industry?
A) increasing broadband penetration
B) development of the mobile platform
C) a willing industry with a library of high-quality content
D) inability to attract customers to traditional products
Answer: D
Page Ref: 677-679
12

56) Which of the following statements about the television and premium video industry is not
true?
A) Apple's iTunes store is the leading distributor of streaming video.
B) The television industry is the major source of premium video on the Internet.
C) Americans spend more time watching television on a computer or mobile device than they do
on a traditional television set.
D) Over-the-top entertainment services are a threat to cable television distributors.
Answer: A
Page Ref: 677-678
57) The New York Times introduced which of the following revenue models in 2011?
A) paywall
B) metered subscription
C) advertising
D) walled garden
Answer: B
Page Ref: 656
58) Which of the following statements about the music industry is not true?
A) Music industry revenues have decreased by 50% since 2000.
B) Digital revenues accounted for less than half of all U.S. music revenues in 2013.
C) In 2013, sales of digital downloads of music declined.
D) Streaming music is the fastest growing segment.
Answer: B
Page Ref: 683-690
59) Which of the following is the largest producer of revenues in the entertainment industry?
A) radio
B) television
C) films
D) video games
Answer: B
Page Ref: 674
13

60) Which of the following start-up digital news sites is owned by AOL?
A) Vox
B) Vice
C) Reddit
D) Huffington Post
Answer: D
Page Ref: 657
61) In 2014, which of the following forms of entertainment produced the least amount of
revenue?
A) radio
B) recorded music
C) video games
D) motion pictures
Answer: B
Page Ref: 674
62) In 2014, which of the following comprised the largest segment of the online gaming
audience?
A) social gamers
B) mobile gamers
C) casual gamers
D) console gamers
Answer: B
Page Ref: 692
63) Which of the following is not a source of illegal file-sharing?
A) Movie2K
B) Megaupload
C) MovieWatch
D) UltraViolet
Answer: D
Page Ref: 683
14

64) Which of the following statements about gaming is not true?
A) The sale of video game hardware and boxed software no longer generates a majority of video
game industry's revenue.
B) Words with Friends is an example of a social game.
C) In 2013, around 50% of smartphone owners played games on their phones.
D) About 50% of all Internet users are online gamers.
Answer: A
Page Ref: 690-692
65) Which of the following is the fastest growing online gaming audience?
A) casual gamers
B) mobile gamers
C) social gamers
D) console gamers
Answer: B
Page Ref: 691
66) Grand Theft Auto is an example of a(n) ________ game.
Answer: console
Page Ref: 690
67) ________ describes the development of hybrid devices that can combine the functionality of
two or more existing media platforms into a single device.
Answer: Technological convergence
Page Ref: 643
Difficulty: Easy
68) Content convergence describes convergence in the design, production, and ________ of
content.
Answer: distribution
Page Ref: 643
69) ________ convergence involves the merger of media enterprises into synergistic
combinations that can create and cross-market content on different platforms.
Answer: Industry
Page Ref: 644
15

70) ________ is the second largest source of Internet music.
Answer: Pandora
Page Ref: 640
71) Amazon's Kindle uses a kind of DRM sometimes referred to as a(n) ________ to restrict the
widespread sharing of content.
Answer: walled garden
Page Ref: 641
AACSB: Information technology
72) A business model that uses advertising revenue to provide some content for free, combined
with an option to obtain additional content for a price is called a(n) ________ model.
Answer: freemium
Page Ref: 646
Difficulty: Easy
73) ________ refers to that portion of perceived customer value that can be attributed to the fact
that content is available on the Internet.
Answer: Net value
Page Ref: 646
74) ________, who come to a news site by following a link from another site, pose a problem for
online newspapers, because they stay for only a few seconds and are not very responsive to ads.
Answer: Link visitors
Page Ref: 659
75) Amazon's ________ is not just an e-book reader but also a media and entertainment portable
device.
Answer: Kindle Fire
Page Ref: 669
76) ________ refers to the use of the Internet to deliver entertainment services to the home.
Answer: Over-the-top (OTT)
Page Ref: 678
16

77) In the ________ model for e-books, prices are set by the publisher.
Answer: agency
Page Ref: 671
78) ________ is the movie industry proof of DVD purchase program that allows playback of
DVDs to any digital device.
Answer: UltraViolet
Page Ref: 683
79) An example of ________ is a song downloaded from Rhapsody that expires, or cannot be
played, if your monthly subscription fee is not paid.
Answer: digital rights management (DRM)
Page Ref: 641
80) Next Issue Media is an example of a(n) ________.
Answer: magazine aggregator
Page Ref: 666
17

81) Explain the concept of media convergence.
Answer: The term media convergence refers to digitally based changes in technology platform,
content, and industry structure. Technological convergence means the integration of previously
separate platform functionality into hybrid devices that can combine the functionality of many
different existing media platforms such as books, newspapers, television, radio, and stereo
equipment.
Content convergence has three dimensions: design, production, and distribution. Content design
convergence occurs as content created in an older media technology is transferred to a new
technology. Historically the initial transference involves little artistic change, but as the artists
and producers learn how to use the new tools and how to deliver content more efficiently in the
new media the new capabilities can be fully exploited and the art becomes measurably different.
Content production convergence occurs when content, which is the most significant cost of
content, is developed only once using technology that can deliver it to multiple different
platforms. Production convergence drives content convergence as new tools are developed for
economically producing content for delivery to multiple platforms. For example, the text
produced in a word processing program can be easily converted to an HTML or PDF file for
Web delivery. Distribution convergence occurs when the distributors and ultimate consumers
have the devices needed to receive, store, and experience the product.
Industry convergence refers to the merger of media enterprises into powerful, synergistic
combinations that can cross-market content on many different platforms and create new works
that use multiple platforms. Traditionally, each type of media — film, text, music, television —
had its own separate industry, typically composed of very large players. However, the Internet
has created forces that make the merger of traditionally separate firms in separate media
industries a plausible — perhaps necessary — business proposition.
Page Ref: 643-644
AACSB: Analytical thinking; Written and oral communication
82) Describe the three basic revenue models for digital content delivery.
Answer: There are three revenue models for delivering content on the Internet. The two "pay"
models are subscription (usually "all you can eat," meaning the amount of content that you can
consume is unlimited) and a la carte (pay only for what you use). The third model uses
advertising revenue to provide content for free, often with a "freemium" option, which makes
additional content available for a cost. In many cases, all three of the models work in tandem and
cooperatively: free content can drive customers to paid content, as music companies have
discovered with services such as Pandora.
Page Ref: 637
18

83) How is the television industry being impacted by the Internet?
Answer: The television industry has become the major source of premium video on the Internet.
It is beginning a transition to a new delivery platform: the Internet and mobile smartphones and
tablet computers. This new platform is not leading to a decline in traditional television viewing.
Instead, it is just changing how, when, and where consumers can watch TV. Cloud computing
has created a shift away from the ownership of content and instead a focus on access to content
anywhere, anytime, from any device. Social networks have enabled a new kind of "social TV"
where consumers share comments while viewing television shows. Expansion of broadband
networks and the growth of cloud servers has also enabled the growth of a whole new class of
television distributors. Whereas the dominant way consumers obtained a TV signal in the past
was from over-the-air broadcasters, cable TV, or satellite distributors, a new "over-the-top"
channel has developed led by powerful technology companies such as Apple, Google, Hulu,
VUDU, Netflix, and others, all of whom offer consumers access to television shows. The
services ride "on top" of other network services like cable TV and telephone service. It's as if
there is a new "Internet Broadcasting System" with many new players, which is obviously a
threat to cable television and the other distributors, who, in turn, have their own on-demand
services for television. In some cases, these new distributors have also begun to get into the
content production business by creating their own TV shows.
While the Internet has not diminished TV viewing, it has transformed how, when, and where TV
shows are watched. While the TV may be the biggest screen in the house, it now has to compete
or share with other digital devices, such as smartphones, tablet computers, and game consoles.
The Internet and new mobile platform are changing the viewing experience, making it more of a
social experience extending beyond family and friends in the same room. The social circle has
expanded to include Facebook and Twitter friends in different locations, changing television
viewing from a "lean back and enjoy" experience into a "lean forward and engage" experience.
Challenges lie ahead for the television industry however. With so much video and television now
available online "for free," many users are thinking about "cutting the cable cord" and just
relying on the Internet for their video entertainment. Other viewers are "cord shavers" who have
reduced their subscriptions to digital channels. So far this phenomenon has been limited, but the
high service fees for cable television service and expanding Internet capabilities suggest that the
future of traditional cable systems may be challenged.
Page Ref: 677-679
19

84) What are the three different online business models that newspapers have employed from
1995-2014?
Answer: Newspapers have developed three distinct business models in an effort to the adapt to
the Internet and the mobile and social platform. The three models are Print-centric, Integrated
Print/Web and the most current model, Digital First (2007-present).
In the Print-centric business model, newspapers created digital copies of their print editions and
posted them online. Readers discovered stories as they did before, by reading the front page
online, following links to stories, and clicking on topic areas or sections. Stories were promoted
by a business department that sought to enlarge the print audience and to attract advertisers based
on readership and online visitors. Digital advertising was very limited, in part because
advertisers did not believe it was effective. Readers were not engaged with journalists except
insofar as they read the stories and could identify with the subjects of stories. The business
process of creating journalism did not change. There was little difference, if any, between the
print and online versions. The technology platform for the digital edition was the desktop or
laptop, and news was consumed at home and work.
In the Integrated Print/Web business model, newspapers adopted multimedia elements such as
video, added more interactive elements like crossword puzzles and contests, and provided more
reader feedback opportunities, especially on opinion and editorial pages. There were
opportunities to personalize the news using RSS feeds and push news to the reader. Nevertheless,
news was discovered by the reader visiting the Web site; promoting content online was limited,
primarily to RSS feeds. Readers were somewhat more engaged. The technology platform
remained the desktop or laptop platform.
20

In the Digital First business model, start-up news sites have spurred newspapers to radically
transform their business — or go out of business. The new platform is not based on personal
computers using a browser, but on mobile devices and apps, with desktops and laptops now just
one pillar of the delivery platform. In this new environment, the news does not stop at 5 PM, but
goes on 24×7. Often amateurs on scene know more about the news in the first hours of a story
than any collection of journalists in their offices. Amateurs provide video feeds, commentary,
and opinion. The Digital First business model inverts previous models: the top priority is
producing the most engaging, continually updated digital edition, and then producing a print
product based on the news developed in the digital edition. In the case of pure digital start-ups,
there is no print edition, and the news is just a continuous stream of updates, blogs, tweets, and
posts, rather than a fixed article. News articles are timestamped, indicating an update is on the
way and the reader should return to follow the story. Instead of waiting for readers to discover
the news, or search for the news on a search engine, the news is pushed to readers on any of a
variety of venues where they happen to be — social media sites, mobile news feeds, Twitter, or
Yahoo or Google News. Journalists remain professionals, but they follow Twitter feeds and
social media sites, and promote their stories and personas on social media sites. Their job is no
longer simply reporting and writing, but promoting and engaging readers on a personal level
through their own efforts. Superior reporting and writing is no longer the sole criterion for hiring
and advancement. More emphasis is put on reporters' abilities to attract audiences on their own
social media pages and Twitter feeds. The Digital First business model is not yet a reality for
traditional newspapers. The largest print newspaper organizations, such as The Wall Street
Journal, The New York Times, Washington Post, and others, have just begun the journey towards
becoming Digital First news organizations.
Page Ref: 647-652
85) What is the book publishing industry's view of the intellectual property protections offered
by Apple and Amazon?
Answer: The book publishing industry has become generally comfortable with the security and
intellectual property protections offered by online distributors. Both Amazon and Apple offer
publishers walled gardens and tight controls over proprietary formats, devices, and files, thus
preventing the large-scale theft of copyrighted book content. This is very different from the
music industry, where the music files can be easily copied and distributed. Apple and Amazon e-
books are difficult to copy and upload to cyberlockers or to distribute on the Internet.
Page Ref: 670
21

86) Discuss the structure of the media content industry.
Answer: The media content industry prior to 1990 was composed of many smaller independent
corporations specializing in content creation and distribution in the separate industries of film,
television, book and magazine publishing, and newspaper publishing. During the 1990s and into
this century, after an extensive period of consolidation, huge entertainment and publishing media
conglomerates emerged. The media industry is still organized largely into three separate vertical
stovepipes: print, movies, and music. Each segment is dominated by a few key players.
Generally, there is very little crossover from one segment to another. Newspapers do not also
produce Hollywood films, and publishing firms do not own newspapers or film production
studios. The purchase of the Washington Post in 2013 by Jeff Bezos, the founder of Amazon,
and an Internet mogul in his own right, was an anomaly. Even within media conglomerates that
span several different media segments, separate divisions control each media segment. The
competition between corporate divisions in mega-sized corporations is often more severe than
with marketplace competitors. While the commercial media industry is highly concentrated
within each segment, the much larger media ecosystem includes literally millions of individuals
and independent entrepreneurs creating content in the form of blogs, videos on YouTube and
Vevo, and music on indie sites.
Page Ref: 642-643
22

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