From Blog to Book.
1 2011 1.1 September . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . This will be the website for online class... (2011-09-06 08:12) . . . . . . . . . . . . . . . . . Video introducing the course (2011-09-06 08:37) . . . . . . . . . . . . . . . . . . . . . . . . Demonstrations (2011-09-06 19:43) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Links (2011-09-06 19:48) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Extra Readings (2011-09-06 19:49) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . About (2011-09-08 08:30) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Slides (2011-09-09 13:26) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 5 5 7 7 7 11 16 17 18 23 25 30 37 43 44 46 46 50 50 54 55 57 63 68 71 73 3
”iPhones are for Old People” (2011-09-14 10:01) . . . . . . . . . . . . . . . . . . . . . . . . . iPhones should be for old people (2011-09-16 09:49) . . . . . . . . . . . . . . . . . . . . . . Monday morning critique: iPads and Grades (2011-09-19 08:11) . . . . . . . . . . . . . . . . The Random House Response to the Kindle (2011-09-21 17:00) . . . . . . . . . . . . . . . . Netﬂix and Amazon (2011-09-26 11:01) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Re: Fortune and Kindle ebooks (2011-09-28 09:54) . . . . . . . . . . . . . . . . . . . . . . . Pricing options for scholarly publication (2011-09-28 10:32) . . . . . . . . . . . . . . . . . . New Blog: Digitopoly (2011-09-28 12:48) . . . . . . . . . . . . . . . . . . . . . . . . . . . . Harry Potter and the Question no one Asked (2011-09-28 16:03) . . . . . . . . . . . . . . . 1.2 October . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday morning critique: App Revenue (2011-10-03 05:55) . . . . . . . . . . . . . . . . . . Buy a friend a digital copy (2011-10-04 18:28) . . . . . . . . . . . . . . . . . . . . . . . . . . The Long Tail (2011-10-05 11:00) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iPad competitor (2011-10-06 09:15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday morning re-evaluation (2011-10-10 07:47) . . . . . . . . . . . . . . . . . . . . . . . OK maybe this is ’too free’ (2011-10-13 10:03) . . . . . . . . . . . . . . . . . . . . . . . . . Does Google get platforms? (2011-10-14 17:42) . . . . . . . . . . . . . . . . . . . . . . . . . Monday Morning discussion: backward integration (2011-10-17 06:33) . . . . . . . . . . . .
Mid-week discussion: Characterising Google+ (2011-10-19 09:21) . . . . . . . . . . . . . . . How lucky is MC Hammer feeling? (2011-10-21 13:36) . . . . . . . . . . . . . . . . . . . . . eBay Item Watch (2011-10-23 15:30) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3 November . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Has the NYT paywall worked? (2011-11-02 11:15) . . . . . . . . . . . . . . . . . . . . . . . Amazon introduces Netﬂix for books (2011-11-03 11:51) . . . . . . . . . . . . . . . . . . . . Adobe abandoning mobile ﬂash (2011-11-10 14:57) . . . . . . . . . . . . . . . . . . . . . . . How Steve Jobs priced the New York Times (2011-11-11 22:16) . . . . . . . . . . . . . . . . Slice (2011-11-15 09:48) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Summarise today’s lecture (2011-11-16 10:23) . . . . . . . . . . . . . . . . . . . . . . . . . . Penguin oﬀers self-publishing (2011-11-18 09:00) . . . . . . . . . . . . . . . . . . . . . . . . No longer free (2011-11-19 09:00) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Monday morning strategy watch: Amazon Prime (2011-11-21 08:02) . . . . . . . . . . . . . Edit Wikipedia (2011-11-23 16:00) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Sharing and Google+ (2011-11-28 18:29) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Last Day (Thurs 2nd) (2011-11-30 10:18) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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This will be the website for online class... (2011-09-06 08:12)
This will be the website for online class participation for the Rotman School of Management’s Network and Digital Market Strategy course. You’ll have to be a registered class participant to contribute to comments.
niramayn (2011-09-06 10:13:45) Testing reply! sbarbosu (2011-09-09 14:18:06) Testing! eoulman (2011-09-10 13:53:38) testing garyyip1985 (2011-09-11 01:11:35) Gary Yip, reporting in! maxish (2011-09-11 19:20:51) What credentials should we use to log into HBS to get the cases? Nothing seems to work. maxish (2011-09-11 19:25:08) Nevermind - missed the Register link Karen Leung (2011-09-12 00:50:44) Test Reply elaineeniale (2011-09-12 17:46:12) It is not easy to register using a common name like mine - had to be creative vbork (2011-09-13 11:01:24) test
ricardogrinberg (2011-09-13 12:08:59) test voncs (2011-09-13 14:22:59) test test test Iwona checking in. voncs (a.k.a Iwona Gwozdz) (2011-09-13 14:32:02) test test change in display name karanmehta12 (2011-09-13 21:03:26) Testing reply avitania (2011-09-14 07:59:56) Howdy. fredzhu (2011-09-14 08:23:19) This is a great way of engaging students living in 21 century. I like it. Martin W. (2011-09-14 10:20:59) hello Karen Leung (2011-09-14 11:59:25) Test kumarsidhartha (2011-09-14 20:13:09) test alexsemine (2011-09-16 15:33:17) this is an insightful comment Alex Semine (2011-09-16 15:44:57) Name changgeee digitalworldme (2011-09-19 00:58:56) test Martin W. (2011-09-26 23:36:11) I wrote a comment for Netﬂix and Amazon that is awaiting moderation. This is a test to see if this comment needs moderation as well. If not, then the comment awaiting moderation is likely too long. Testing. leonardoluo (2011-09-27 22:34:27) test leonardoluo (2011-09-27 22:35:49) test my icon anchenyi (2011-09-28 01:06:47) test my avatar
Video introducing the course (2011-09-06 08:37)
jackyzee (2011-09-15 17:02:06) My name is Jianan (Jack) Zhou, this is my wordpress id =) jytsao (2011-09-23 01:37:50) Test test. This is Yu-Tin (Jennifer) Tsao. hank008 (2011-09-24 23:14:44) Search is another way of learning.
Demonstrations (2011-09-06 19:43)
Here you will ﬁnd some demonstrations of key economic concepts covered in class (some require ﬂash). Selling Information
• Group Pricing • Two-Part Tariﬀs • Bundling • Unsuccessful Bundling • Versioning by Delay [youtube http://www.youtube.com/watch?v=5Ov-oHzoJaY]
1. http://www.mbs.edu/home/jgans/mecon/value/media%20%20files/animations/Segment%204/4_4_group_pricing.swf 2. http://www.mbs.edu/home/jgans/mecon/value/media%20%20files/animations/Segment%204/620_4_4.swf 3. http://www.mbs.edu/home/jgans/mecon/value/media%20%20files/animations/Segment%204/620_4_4_anim.swf 4. http://www.mbs.edu/home/jgans/mecon/value/media%20%20files/animations/Segment%204/620_4_4_Unsuccessful.swf 5. http://youtu.be/5Ov-oHzoJaY
Links (2011-09-06 19:48)
Here you will ﬁnd links to non-academic materials discussed in class. This page will updated on a regular basis. Introduction
• Carlson, Nicholas (2009), ”Printing the NYT Costs Twice as Much as Sending Every Subscriber a Free Kindle,” Business Insider, Jan 30. 7
• A 1966 video making surprisingly accurate predictions about the future. • Wu, Tim (2010), ”How Ma Bell Shelved the Future for 60 Years,” Gizmodo. • StatCounter’s Global Stat calculator for IT • A fan video about the life of Joseph Schumpeter Selling Information (i) Pricing
• ClariNet loses Dave Barry Columns after letter from Knight-Ridder • Dave Barry’s website (where you can now read his columns for free; with registration). • Clay Shirky on ”Newspapers and Thinking the Unthinkable” • Commerce Times: Amazon.com’s pricing experiment and blunder • Dilbert on price confusion • Dilbert on price discrimination of the rich • Joshua Gans ”Netﬂix and the Perils of Disruptive Platforms” • A comic take on Netﬂix. (ii) Pooling and Piracy
• Jakob Nielsen (1998) ”The Case for Micropayments” • Clay Shirky (2000) on Micropayments • Clay Shirky (2003) on Micropayments • Scott McCloud (2003) ”Misunderstanding Micropayments” • Andrew Odlyzko (2003), ”The case against Micropayments” • Joshua Gans, ”The Folly of Replicating the Physical World,” HBR Blogs, 2010. • Albanesius, Chloe. ”If Sirius-XM Can Oﬀer A La Carte Programs, Why Can’t Cable?” PC Magazine, July 30, 2008. • Joshua Gans, ”Pay what you want experiments, from Stephen King to Kickstarter,” HBR Blogs, 2011. • Joshua Gans, ”Stephen King’s Game of Horror,” The Manager, 2000. • Stephen Dubner, ”What is Stephen King trying to prove,” NYT, 2000. (ii) Search and Disclosure 8
• Varian, Hal R. ”Reading Between the Lines of Used Book Sales.” New York Times, July 28, 2005. • Garrity, Brian. ”DMG Bets on ’Long Tail’.” Billboard, February 18, 2006. • Chris Anderson’s 2004 TED Talk on the Long Tail. • William Neuman (2010), ”A Man with Muﬃn Secrets, but no job with them,” New York Times. • Allison Hope Weiner, ”Lawyer Battles Idea Theft in Hollywood,” New York Times, July 27 Market Design (i) Pricing
• Chris Anderson talks about Free! • Anderson, Chris. ”Free! Why $0.00 Is the Future of Business.” Wired Magazine, February 25, 2008. • Gladwell, Malcolm. ”Priced to Sell: Is Free the Future?” The New Yorker, July 6, 2009. • Pulley, Brett, and Andy Fixmer. ”Diller Calls Free Web Content a ’Myth, Joins Refrain.”Bloomberg News, July 24, 2009. • Randal Picker (2010), ”The Razors and Blades Myth” • Video on The Economics of Abundance • Joshua Gans and Stephen King, ”Where to next on credit card reforms?” Melbourne Review, Vol.4, No.1, May 2008, pp.42-48. • Joshua Gans, ”Price Signals in Two-Sided Markets” Competition Policy International, July 2010. • Joshua Gans, ”The Case for Credit Card Reform: A Primer for Students,” Ecodate, July 2003. (ii) Network Eﬀects (iii) Platforms
• Rich, Motoko. ”With Kindle, the Best Sellers Don’t Need to Sell.” New York Times, January 22, 2010. (iv) Advertising and News Media
• Levy, Steven. ”Secret of Googlenomics: Data-Fueled Recipe Brews Proﬁtability.” Wired Magazine, May 22, 2009. • Hal Varian explains Google’s ad auctions. (v) Regulation and IP 9
• Nathan Myhrvold interview • This American Life: ”When Patents Attack” • Malcolm Gladwell on Nathan Myhrvold Social
• Hal Varian talks about crowdsourcing at Google. • Steve Levy, ”Inside Google+, How the search giant plans to go social,” Wired, 2011. • Clay Shirky on ”Institutions vs Collaboration,” TED 2005. • Eli Pariser: Beware of ”Filter Bubbles” • David Segal, ”A Bully ﬁnds a Pulpit on the Web,” New York Times, 2010. • Wikipedia’s Lamest Edit Wars • Joshua Gans, A Wikipedia Story • Another Wikipedia Story. Conclusion
• Ian Ayres and Barry Nalebuﬀ, Book Excerpt: ”What Would Croesus do?”, Darwin (November 2003) • Ian Ayres and Barry Nalebuﬀ, Book Excerpt: ”Ideas Waiting to Happen”, Forbes 127 (October 27, 2003)
1. 2. http://www.youtube.com/watch?v=EC5sbdvnvQM&feature=player_embedded 3. http://gizmodo.com/5691604/how-ma-bell-shelved-the-future-for-60-years 4. http://gs.statcounter.com/#mobile_os-ww-monthly-200909-201106 5. http://www.youtube.com/watch?v=jpv1PuXnPd0 6. http://users.soe.ucsc.edu/~davis/projects/database/knightridder.txt 7. http://www.davebarry.com/ 8. http://www.miamiherald.com/dave_barry/ 9. http://www.shirky.com/weblog/2009/03/newspapers-and-thinking-the-unthinkable/ 10. http://www.ecommercetimes.com/story/4411.html?wlc=1314880339 11. http://ichris.ws/files/media_httpdilbertcomd_oqbJf.gif 12. http://dilbert.com/strips/comic/2003-11-07/ 13. http://blogs.hbr.org/cs/2011/09/the_perils_of_disruptive_platf.html 14. http://theoatmeal.com/comics/netflix 15. http://www.useit.com/alertbox/980125.html 16. http://openp2p.com/pub/a/p2p/2000/12/19/micropayments.html 17. http://www.shirky.com/writings/fame_vs_fortune.html 18. http://www.scottmccloud.com/3-home/essays/2003-09-micros/micros.html http://www.businessinsider.com/2009/1/
19. http://www.dtc.umn.edu/~odlyzko/doc/case.against.micropayments.pdf 20. http://blogs.hbr.org/cs/2010/11/a_few_years_ago_when.html 21. http://www.pcmag.com/article2/0,2817,2326817,00.asp 22. http://blogs.hbr.org/cs/2011/05/pay_what_you_want_experiments.html 23. http://www.scribd.com/doc/61020533/2000-Aug-1-Stephen-King-Novel 24. http://partners.nytimes.com/library/magazine/home/20000813mag-king.html 25. http://www.nytimes.com/2005/07/28/technology/28scene.html 26. http://www.allbusiness.com/retail-trade/miscellaneous-retail-retail-stores-not/4574435-1.html 27. http://www.ted.com/talks/chris_anderson_of_wired_on_tech_s_long_tail.html 28. http://www.nytimes.com/2010/08/07/business/07muffin.html 29. http://query.nytimes.com/gst/fullpage.html?res=9B03EED9153FF934A15754C0A9609C8B63&sec=&spon=&pagewanted=1 30. http://www.youtube.com/watch?v=rPJuoziJaE4 31. http://www.wired.com/techbiz/it/magazine/16-03/ff_free 32. http://www.newyorker.com/arts/critics/books/2009/07/06/090706crbo_books_gladwell 33. http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aZeenjkAYFIE 34. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1676444 35. http://youtu.be/VuxMJ8lnYA4 36. http://www.scribd.com/doc/25123069 37. http://www.scribd.com/doc/36009552/Price-Signals-in-Two-Sided-Markets 38. http://www.scribd.com/doc/61020544 39. http://www.nytimes.com/2010/01/23/books/23kindle.html 40. http://www.wired.com/culture/culturereviews/magazine/17-06/nep_googlenomics?currentPage=all 41. http://youtu.be/qwuUe5kq_O8 42. http://www.charlierose.com/view/interview/11022 43. http://www.thisamericanlife.org/radio-archives/episode/441/when-patents-attack 44. http://www.newyorker.com/reporting/2008/05/12/080512fa_fact_gladwell 45. http://www.theaustralian.com.au/news/features/varians-analysis/story-e6frgabx-1226138793835 46. http://www.wired.com/epicenter/2011/06/inside-google-plus-social/all/1 47. http://www.youtube.com/watch?v=sPQViNNOAkw 48. http://www.ted.com/talks/eli_pariser_beware_online_filter_bubbles.html 49. http://www.nytimes.com/2010/11/28/business/28borker.html?pagewanted=all 50. http://www.informationisbeautiful.net/visualizations/wikipedia-lamest-edit-wars/ 51. http://www.digitopoly.org/2011/11/24/a-wikipedia-story/ 52. http://jonudell.net/udell/gems/umlaut/umlaut.html 53. http://www.whynot.net/main/croesus.htm 54. http://www.whynot.net/main/Forbes_Ideas_Waiting.htm
Extra Readings (2011-09-06 19:49)
STUDENTS PLEASE NOTE: These are extra readings. All required readings (with a * here) will be on the oﬃcial class websites. Introduction
• Arrow, Kenneth J. (1956), ”Economic welfare and the allocation of resources for invention,” in The Rate and Direction of Incentive Activity, NBER. 11
• *Rosenberg, Nathan (1995),  Innovation s Uncertain Terrain, McKinsey Quarterly, Issue 3, pp.170185. • *Ward, Logan (2010),  Shooting for the Sun, The Atlantic, Nov. • Andrew Odlyzko, ”The History of Communications and its Implications for the Internet” Selling Information (i) Pricing
• *”Pricing Information.” Chapter 2 in [S &V]. • Ian Ayres and Peter Siegelman, ”Race and Gender Discrimination in Bargaining for a New Car,” American Economic Review 1995. • *”Versioning Information.” Chapter 3 in [S &V]. • Hal Varian, ”Versioning Information Goods” (ii) Pooling and Piracy
• K. Strumpf and F. Oberholzer-Gee (2007) The Eﬀect of File Sharing on Record Sales: An Empirical Analysis Journal of Political Economy. 2007. 115(1):1-42. • K. Strumpf and F. Oberholzer-Gee (2009) File-Sharing and Copyright (with F. Oberholzer-Gee). NBER’s Innovation Policy and the Economy series, volume 10. ed. Joshua Lerner and Scott Stern. MIT Press. 2009. • Joel Waldfogel (2009), Music File Sharing and Sales Displacement in the iTunes Era • Joel Waldfogel (2011), ”Bye, Bye, Miss American Pie? The Supply of New Recorded Music since Napster” • Ben Shiler and Joel Waldfogel, ”Music for a Song: An Empirical Look at Uniform Song Pricing and its Alternatives” (see also short essay in VOX EU and The Economist) • Yochai Benkler, ”Voluntary Payment Models,” Harvard Business School. • J-Y. Kim, M. Natter & M. Spann (2009), ”Pay What You Want: A New Participative Pricing Mechanism,” Journal of Marketing, 73, 44-58. • Varian, Hal. ”Buying, Sharing, and Renting Information Goods.” The Journal of Industrial Economics 48, no. 4 (2000): 473-88. • Brynjolfsson, Erik and Zhang, Xiaoquan (Michael), Innovation Incentives for Information Goods (December 7, 2009). MIT Sloan Research Paper No. 4780-10. • Tirole, Jean. The Theory of Industrial Organization. Cambridge, MA: MIT Press, 1988, chapter 3, pp. 133-152. ISBN: 9780262200714. • Shiller, Ben, and Joel Waldfogel. ”Music for a Song: An Empirical Look at Uniform Song Pricing and its Alternatives.” 2009. 12
• Bakos, Yannis, and Erik Brynjolfsson. ”Aggregation and Disaggregation of Information Goods: Implications for Bundling, Site Licensing and Micropayment Systems.” In Internet Publishing and Beyond: The Economics of Digital Information and Intellectual Property. Edited by Hal Varian, and Brian Kahin. Cambridge, MA: MIT Press, 2000. ISBN: 9780262611596. • Bakos, Yannis, and Erik Brynjolfsson. ”Bundling and Competition on the Internet.” Marketing Science 19, no. 1 (2000): 63-82. • Bakos, Yannis, and Erik Brynjolfsson. ”Bundling Information Goods: Pricing, Proﬁts and Eﬃciency.” Management Science, 45, no. 12 (1999): 1613-1630. (ii) Search and Disclosure
• Smith, Bailey, and Erik Brynjolfsson. ”Understanding Digital Markets.” In Understanding the Digital Economy. Edited by Erik Brynjolfsson, and Brian Kahin. Cambridge, MA: MIT Press, 2000. ISBN: 9780262024747. • *Anderson, Chris. ”The Long Tail.” Wired Magazine, October 2004. • Brynjolfsson, Erik, and Michael D. Smith. ”Frictionless Commerce? A Comparison of Internet and Conventional Retailers.” Management Science 46, no. 4 (2000): 563-585. • Brynjolfsson, Erik, Yu (Jeﬀrey) Hu, and Michael D. Smith. ”Consumer Surplus in the Digital Economy: Estimating the Value of Increased Product Variety at Online Booksellers,”Management Science 49, no. 11 (2003): 1580-1596. • Brynjolfsson, Erik, Hu, Yu Jeﬀrey and Smith, Michael D., The Longer Tail: The Changing Shape of Amazon s Sales Distribution Curve (September 20, 2010). Available at SSRN: • Michael Luca (2010), ”Reviews, Reputation and Revenue: The Case of Yelp.com,” Boston University. • *Seabrook, John (1994). Flash of Genius, New Yorker or rent the movie on YouTube for $3.99. • *Gans, J. and S. Stern (2003).  The Product Market and the Market for Ideas: Commercialization Strategies for Technology Entrepreneurs, Research Policy Market Design (i) Pricing
• ”Networks and Positive Feedback.” Chapter 7 in [S &V], pp. 175-225. • Ben Edelman, ”Priced and Unpriced Online Markets,” Journal of Economic Perspectives, 2009. • Dennis Carlton, Joshua Gans and Michael Waldman, ”Why Tie a Product Consumers do not Need?” American Economic Journal: Microeconomics, 2010. • Rochet, J-C. and J. Tirole (2006), ”Two Sided Markets: A Progress Report,” RJE. (ii) Network Eﬀects 13
• Gawer, A. and M. Cusumano (2008), How Companies Become Platform Leaders, Sloan Management Review, Reprint SMR268-ENG-PDF. • Hagiu, A., and T. Eisenmann (2007). HBS Reprint F0711B-PDF-ENG Staged Solutions to the Catch-22 Harvard Business Review,
• Greenstein, S. (1998) Industrial Economics & Strategy: Computing Platforms, IEEE Micro: Chips, Systems and Applications • Economides, Nicholas. ”The Economics of Networks.” International Journal of Industrial Organization 16, no. 4 (1996): 673-99. • Leibowitz, Steven, and Steve Margolis. ”Network Externalities (Eﬀects).” The New Palgraves Dictionary of Economics and the Law. New York, NY: Macmillan, 1998. ISBN: 9781561592159. • Eisenmann, Thomas, Geoﬀrey Parker, and Marshall W. Van Alstyne. ”Strategies for Two-Sided Markets.” Harvard Business Review Magazine, October 2006. • Corts, K. and M. Lederman (2009), ”Software Exclusivity and Indirect Network Eﬀects in the US Home Video Game Industry,” International Journal of Industrial Organization, March, Vol. 27(2), 121-36 • Chapters 5 and 6 in [S &V]. • Chapters 2 and 7 in [B &S]. • Some notes on Network Eﬀects. (iii) Platforms
• Parker, Geoﬀrey, and Marshall W. Van Alstyne. ”Two-Sided Network Eﬀects: A Theory of Information Product Design.” Management Science 51, no. 10 (2005): 1494-1504. • Bajari, Patrick and Ali Hortacsu. 2004. ”Economic Insights from Internet Auctions.” Journal of Economic Literature, 42, 457-486. • Bajari, Patrick and Ali Hortacsu. 2002. ”Cyberspace Auctions and Pricing Issues: A Survey of Empirical Findings.” Published in The New Economy Handbook. Derek C. Jones, ed. 2003. • Bajari, Patrick and Ali Hortacsu. 2003. ”TheWinner’s Curse, Reserve Prices, and Endogenous Entry: Empirical Insights from eBay Auctions.” RAND Journal of Economics, 34(2), 329-355. • Budish, E. (2007), Sequencing and Information Revelation in Auctions for Imperfect Substitutes: Understanding eBays Market Design, working paper. • Ely, J. and T. Hossain, 2009, Sniping and Squatting in eBay Auctions, American Economic Journals: Microeconomics. • Hortacsu, Ali, Asis Martinez-Jerez and Jason Douglas. 2009. ”The Geography Trade on eBay and MercadoLibre.” American Economic Journals: Microeconomics. • Lewis, G. (2009), Asymmetric Information, Adverse Selection and Seller Disclosure: The Case of eBay Motors, working paper, Harvard 14
• Peters, M. and S. Severinov, Internet auctions with many traders, Journal of Economic Theory, 2006. • Roth, Alvin E. and Axel Ockenfels. 2002. ”Last-Minute Bidding and the Rules for Ending SecondPrice Auctions: Evidence from eBay and Amazon Auctions on the Internet.” American Economic Review, 92(4), 1093-1103. (See Hal Varian’s NY Times column on this work here). (iv) Advertising
• Varian, Hal. ”The Economics of Internet Search.” Anglo Costa lecture. Rome, Italy, February 2007. (PDF) # (v) Regulation
• Gans, J., and S. Stern (2010).  Is there a Market for Ideas? Industrial and Corporate Change • Andrei Hagiu and David Yoﬃe, ”Intermediaries in IP Markets” HBS 2011. Social
• boyd, danah and Nicole Ellison. (2007). Social Network Sites: Deﬁnition, History, and Scholarship. Journal of Computer-Mediated Communication, 13 (1). http://jcmc.indiana.edu/vol13/issue1/boyd.ellison.h tml
1. http://www.nber.org/chapters/c2144.pdf 2. http://mkqpreview1.qdweb.net/PDFDownload.aspx?ar=103 3. http://www.theatlantic.com/magazine/archive/2010/11/shooting-for-the-sun/8268/ 4. http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.23.6709&rep=rep1&type=pdf 5. http://islandia.law.yale.edu/ayers/Ayres%20Siegelman%20Race%20and%20Gender%20Discrimination%20In% 20Bargaining%20%20for%20a%20New%20Car.pdf 6. http://people.ischool.berkeley.edu/~hal/Papers/version.pdf 7. http://www.unc.edu/~cigar/papers/JPE%2031618%20FileSharing%202006-12-12.pdf 8. http://www.unc.edu/~cigar/papers/File-Sharing_and_Copyright_2009-05-16.pdf 9. http://bpp.wharton.upenn.edu/waldfogj/pdfs/iTunes%20Era.pdf 10. http://www.tc.umn.edu/~jwaldfog/pdfs/w16882.pdf 11. http://www.tc.umn.edu/~jwaldfog/pdfs/song.pdf 12. http://www.voxeu.org/index.php?q=node/4271 13. http://www.economist.com/node/14699573?story_id=14699573 14. http://cyber.law.harvard.edu/sites/cyber.law.harvard.edu/files/Rethinking_Music_Voluntary_Payment_Models. pdf 15. http://www.ecm.bwl.uni-muenchen.de/publikationen/pdf/pwyw_jm.pdf 16. https://sites.google.com/a/joshuagans.com/digital/goog_963369498 17. http://people.ischool.berkeley.edu/~hal/Papers/sharing.pdf 18. http://ssrn.com/abstract=1519899 19. http://mitpress.mit.edu/catalog/item/default.asp?ttype=2&tid=8224 20. http://www.tc.umn.edu/~jwaldfog/pdfs/song.pdf 21. http://mitpress.mit.edu/catalog/item/default.asp?ttype=2&tid=3832
22. http://ebusiness.mit.edu/erik/Bundling%20Competition685305.pdf 23. http://www.stern.nyu.edu/~bakos/big.pdf 24. http://ebusiness.mit.edu/research/papers/140%20erikb,%20digital%20markets.pdf 25. http://mitpress.mit.edu/catalog/item/default.asp?ttype=2&tid=3935 26. http://www.wired.com/wired/archive/12.10/tail.html 27. http://ebusiness.mit.edu/erik/frictionless.pdf 28. http://ebusiness.mit.edu/erik/ConsumerSurplus.pdf 29. http://ssrn.com/abstract=1679991 30. http://www.nber.org/conf_papers/f5990/f5990.pdf 31. http://www.youtube.com/watch?v=Rvue0_R5SCc 32. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=317219 33. http://people.hbs.edu/bedelman/papers/priced-and-unpriced-online-markets-jep2009.pdf 34. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1008831 35. http://www.tse-fr.eu/images/doc/by/rochet/rochet_tirole.pdf 36. http://www.rotman.utoronto.ca/mara.lederman/papers/video_games_aug08_final.pdf 37. http://www.mbs.edu/home/jgans/mecon/value/Segment%205_7.htm 38. 39. http://home.uchicago.edu/~hortacsu/hbook.pdf 40. http://www.elsevier.com/homepage/sae/neh/index.htm 41. http://www.rje.org/abstracts/abstracts/2003/rje.sum03.Bajari.pdf 42. http://www.people.fas.harvard.edu/~ebudish/Papers/Budish_Seq_Info_Aucs_Imp_Subs_Sept2008.pdf 43. http://faculty.wcas.northwestern.edu/~jel292/squat.pdf 44. http://home.uchicago.edu/~hortacsu/AEJMicro-2007-0011_manuscript_combined.pdf 45. http://www.gsb.stanford.edu/facseminars/events/applied_microecon/documents/ame_11_07_lewis.pdf 46. http://ideas.repec.org/a/eee/jetheo/v130y2006i1p220-245.html 47. http://www.jstor.org.ezp1.harvard.edu/view/00028282/sp030005/03x0068p/0 48. http://www.nytimes.com/2000/11/16/technology/16SCEN.html?printpage=yes 49. http://people.ischool.berkeley.edu/~hal/Papers/2007/costa-lecture.pdf 50. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1334882 51. http://www.hbs.edu/research/pdf/12-023.pdf 52. http://jcmc.indiana.edu/vol13/issue1/boyd.ellison.html 53. http://jcmc.indiana.edu/vol13/issue1/boyd.ellison.html http://ezp1.harvard.edu/login?url=http: //search.ebscohost.com/login.aspx?direct=true&db=bth&AN=13959123&site=ehost-live&scope=site
About (2011-09-08 08:30)
This site is dedicated to the Network & Digital Market Strategy course at the Rotman School of Management, University of Toronto. It is a forum for online participation by students (both MBA and Commerce) in that class. Students are graded on their activity here. The site is public.
The course is taught by Professor Joshua Gans. Please email queries here.
1. http://joshuagans.com/ 2. mailto://email@example.com/
Slides (2011-09-09 13:26)
Here you will ﬁnd links to the slides for the class. These will be posted after each class. The slides can be viewed online (best done with Safari but it is iWork Beta so there can be issues). If you wish to download them in PDF format, they will be available after each class on RWorld (MBA) or BlackBoard (Commerce). MBA (RSM2018) 1. Introduction (14 Sept) 2. Selling Information I: Pricing (21 Sept) 3. Selling Information II: Pooling and Piracy (28 Sept) 4. Selling Information III: Search and Disclosure (5 Oct) 5. Market Design I: Pricing (12 Oct) 6. Market Design II: Network Eﬀects (19 Oct) 7. Market Design III: Platform Competition (26 Oct) 8. Market Design IV: Advertising (2 Nov) 9. Market Design V: Intellectual Property (9 Nov) 10. Social I: Sharing Information (16 Nov) 11. Social II: Producing Information (23 Nov) Commerce (RSM314H1F) 1. Introduction (14 Sept) 2. Selling Information I: Pricing (21 Sept) 3. Selling Information II: Pooling and Piracy (28 Sept) 4. Selling Information III: Search and Disclosure (5 Oct) 5. Market Design I: Pricing (12 Oct) 6. Market Design II: Network Eﬀects (19 Oct) 7. Market Design III: Platform Competition (26 Oct) 8. Market Design IV: Advertising (2 Nov) 9. Market Design V: Intellectual Property (9 Nov) 10. Social I: Sharing Information (16 Nov) 11. Social II: Producing Information (23 Nov) 17
1. http://public.iwork.com/document/?a=p1177679774&d=1-Introduction.key 2. http://public.iwork.com/document/?d=2-Selling_Information-I-Pricing-MBA.key&a=p1177679774 3. http://public.iwork.com/document/?d=2-Selling_Information-Piracy.key&a=p1177679774 4. http://public.iwork.com/document/?d=2-Selling_Information-Disclosure.key&a=p1177679774 5. http://public.iwork.com/document/?d=3-Market_Design-Pricing-MBA.key&a=p1177679774 6. http://public.iwork.com/document/?d=3-Market_Design-Networks-MBA.key&a=p193753208 7. http://public.iwork.com/document/?d=3-market_design_iii_-_platform_competition.key&a=p1177679774 8. http://public.iwork.com/document/?d=3-Market_Design-Advertising-web.key&a=p1177679774 9. http://public.iwork.com/document/?d=3-Market_Design-IV-MBA.key&a=p1177679774 10. http://public.iwork.com/document/?d=4-Social-I-Sharing_Information.key&a=p1177679774 11. http://public.iwork.com/document/?a=p1177679774&d=4-Social_II-Producing_Information.key 12. http://public.iwork.com/document/?a=p1177679774&d=1-Introduction.key 13. http://public.iwork.com/document/?d=2-Selling_Information-I-Pricing-MBA.key&a=p1177679774 14. http://public.iwork.com/document/?d=2-Selling_Information-Piracy.key&a=p1177679774 15. http://public.iwork.com/document/?d=2-Selling_Information-Disclosure.key&a=p1177679774 16. http://public.iwork.com/document/?d=3-Market_Design-Pricing-MBA.key&a=p1177679774 17. http://public.iwork.com/document/?d=3-Market_Design-Networks-MBA.key&a=p193753208 18. http://public.iwork.com/document/?d=3-market_design_iii_-_platform_competition.key&a=p1177679774 19. http://public.iwork.com/document/?d=3-Market_Design-Advertising-web.key&a=p1177679774 20. http://public.iwork.com/document/?d=3-Market_Design-IV-MBA.key&a=p1177679774 21. http://public.iwork.com/document/?d=4-Social-I-Sharing_Information.key&a=p1177679774 22. http://public.iwork.com/document/?a=p1177679774&d=4-Social_II-Producing_Information.key
Online class participation | Digitopoly (2011-09-29 11:51:29) [...] in following what the course is about, there are plenty of links to readings and also to the class slides. Share this: [...]
”iPhones are for Old People” (2011-09-14 10:01)
 Following up from the case discussion in class this week, what do we know about the demographic and other mix of iPhone, Android and other phone users and how might it be relevant. 18
Here are the comments from HTC CEO Martin Fitcher:
”iPhones are not that cool anymore. We here are using iPhones, but our kids don t ﬁnd them that cool anymore.” OK class, let’s gather some evidence. Can we believe Fitcher? What can you ﬁnd out? What other information can you gather on demographics? He used an anecdote. Let me throw one in too. My 12 year old daughter is now attending a tech-saavy private school in Toronto. She has an iPhone as per family religious beliefs (see the picture to the left for what we travel with as a family). But everyone else has Blackberries. Yes, Blackberries. What is going on there?
1. http://rotmandigital.files.wordpress.com/2011/09/286916_10150405799729196_746759195_10433923_4612402_o.jpg 2. http://news.yahoo.com/iphones-old-people-says-htc-chief-204510039.html
Karen Leung (2011-09-14 10:38:22) I believe the iPhone will be perceived as ”cool” again as soon as the iPhone 5 launches. When too many people are using the same phone it’s no longer ”cool” - it’s too common and average. When there is only a few lucky ones who can get their hands on the soon-to-be-launched iPhone 5, I think it will quickly become the ”coolest” thing again. Dan Velan (2011-09-14 11:32:22) Here is a map breaking down state-by-state popularity of iOS, BlackBerry and Android: http://read.bi/okrBil. Android seems to be most popular in red states, as well as technology-focused CA and WA. BlackBerry seems to still be holding onto NY and the Washington DC area (presumably due to popularity in ﬁnancial services and government). iOS is strongest in the remaining blue states. Canada is not included in the map, but I think it’s a safe bet that BlackBerry is still dominant here in Ontario. fredzhu (2011-09-14 12:35:54) Here is a June 2010 blog posting about the demographic of iphone & android based on data collected by Nielsen. http://blog.nielsen.com/nielsenwire/online mobile/iphone-vs-android/ At the time, it appeared that iphone users were wealthier and better educated. Not sure if this has changed. wachoon (2011-09-14 17:17:12) Iphone 1, 2, 3, 4, 5... they’re all cool, as long as Apple eﬀectively guides the direction of its brand image. CEO Martin Fitcher can say whatever he likes about Apple, like how howard stern says he’s the king of media, michael jackson the king of pop. Isn’t he convincing the ﬁckle crowd that the new thing is the Android, given that a lot of Apple’s reputation rested on the career of Steve Jobs? shunichirotago (2011-09-14 17:45:52) We have to think about the deﬁnition of ”cool”. For example, think about Mac and other Windows PC we have been looked and owned. If we pass over for the market share, I think Mac has been always the ”coolest” computer device in the world. The same thing can be said to this smart phone case . Even it’s almost one and a half year past from iPhone4 launch, it still shows enough performance to compete with the latest android devices especially in terms of comfortable touch screen response and battery run time. And now the iPhone5 is coming soon. Apple knows what to
do for making us feel ”cool” against their products. jovanatanackovic (2011-09-14 18:57:26) The iPhone has already been out for a long enough time and it’s beginning to lose its ”cool” factor. Unfortunately, in today’s society, after a certain technology has been out for a certain period of time, it becomes obsolete and people start looking for new fun. Blackberry and Android are still relatively new to the younger generation (many kids have probably played with an iPod before, and besides the 3G, the iPhone is almost the exact same as the iPod Touch) and it’s not surprising that they are looking for something else to amuse themselves with. I don’t think Apple has to worry too much though, because they’ve already established a huge fan base and the i5 will be undoubtedly be sold out during its ﬁrst few months of release, just as the i4 was. The blackberry is popular right now because they recently released their new phone, the 9900, but as soon as Apple releases the i5, they’ll be back on top of the market. karanmehta12 (2011-09-14 19:26:47) It’s hard to believe Fitcher’s claims, especially without any valid quantitative evidence. There is lots of evidence online to suggest iPhone demographics - 1. This study, from 2007, shows the average iPhone user to be 31 years old (http://www.srgnet.com/pdf/iPhoneBuyersAnalysisJune07.pdf). 2. These studies, from 2009, shows that 47 % of iPhone users are between the ages of 18-34, and a staggering 78 % between the ages of 18-49 (http://blog.admob.com/2009/06/16/new-research-on-the-demographics -and-behavioral-characteristics-ofiphone-and-ipod-touch-users-fro m-admob-and-comscore/ ..... and ...... http://bitbriefs.amplify.com/2009/09/20/smartphone-and-iphone-demogr aphics-from-nielsen/). 3. This study, from 2010, shows that 54 % of iPhone users are between the ages of 18-44 (http://www.wholeapple.com/2010/showcase-3/). The ratios have not changed much in years, and have deﬁnitely not moved a great deal into the older population. 4. Across all mobile platforms (iOS, Android, BlackBerry, Windows, Palm, Symbian), a late 2010-early 2011 study depicted that 43 % of all users are between the ages of 18-34.(http://blog.nielsen.com/nielsenwire/wp-content/uploads/2011 /03/OS-smartphone-age.png). paulsmerchanski (2011-09-14 21:04:05) An August 2011 study from Hunch.com showed that Android users are more likely to be men between ages 18-34 with an annual household income between $50,000 and $100,000, while iPhone/iOS users are more likely to be women over the age of 35 and are 67 percent more likely to have an annual household of $200,000 or more. I’ll leave it up to you to decide who is ’cooler’. http://www.businessnewsdaily.com/mobile-phone-operating-system-stere otypes-1684/ jamiepalooza (2011-09-14 21:46:53) Regardless of what the stats actually say, his intentions are embarrassingly obvious–Bash Apple. As far as I’m concerned, the last time I heard any buzz about a HTC phone was the Evo 4G, and it was exclusive to one carrier (Sprint) in one country (U.S.). In fact, HTC’s at a point where they’re not even sure of their own OS anymore–There’s unavoidable tension with Android in the Google-Motorola deal, Apple’s obviously keeping their iOS proprietary, HP’s webOS hasn’t shown any promise, and the Windows Phone is a joke. Seems to me that they’re getting insecure in an increasingly cut-throat market. Apple’s iPhone is like the Lady Gaga of music, while HTC is that underground indie band. Of course, HTC wouldn’t think the iPhone is cool. But everyone else does. jackyzee (2011-09-15 02:02:44) Deﬁnitely agree with Jamie, I feel that Fitcher motive is quite simple. Show that HTC is the next trend of phone and present Apple as the ”old” Guys. I still think the apples’ crowd are still younger crowd. I’ve been checking out Apple core message. And how it has always been trying to communicate the customers. Every advertisement they have always try to let their audience know that Apple’s experience is about self expression and being unique. Those are the two trait that deﬁnitely attract younger crowd. http://www.youtube.com/watch?v=jULUGHJCCj4 -I like that!
jackyzee (2011-09-15 02:05:28) http://www.youtube.com/watch?v=GLbFH9rXkWE I ﬁnd that ironic and funny! Note its a parody from Ellen DeGeneres about apple easy to use Iphone 4. avitania (2011-09-15 13:34:57) My answer is probably quite biased, because I’m an Apple fangirl through and through. I’m one of the nerds that camps out overnight in line before each iPhone launch day (every year since the ﬁrst gen iPhone); the only way I’m getting rid of my precious iPhone is if it’s pried out of my cold, dead hands. ;) With that said, Fitcher’s claim that iPhones not being ”that cool” just doesn’t ring true for me. First, Fitcher’s sample – a group consisting of his daughter’s school chums – is pretty limited. If I were to survey my own friends (admittedly, a group that skews a number of years older than your typical college freshman, but generally not old enough to have children that are 17+ years old), the result would deﬁnitely swing toward iPhone owners. Furthermore, the numbers for the entire population probably aren’t nearly as disparate as Fitcher thinks: in January 2010, AdMob’s Mobile Metrics Report (http://metrics.admob.com/wp-content/uploads/2010/02/AdMob-Mobile- Metrics-Jan-10.pdf) indicates that 25 % of iPhone users are under 25, while 24 % of Android users are in the same age range. Joshua Gans (2011-09-15 13:58:26) My tales from the queue: http://economics.com.au/?p=5832 And a blog post about it: http://blogs.hbr.org/cs/2011/03/in june 2010 i queued.html myraelbayoumi (2011-09-15 21:32:08) After having spent the summer in marketing research and managing RIM as my only client, I am thrilled to be able to unload some of my insights! Let’s examine why RIM started oﬀ kicking butt with the BlackBerry. The obvious ﬁrst mover advantage played a big part in it’s early success, especially with the corporate consumer and getting BlackBerry devices into the hands of business people. BUT, the unprecendented success came from the young sons and daughters of those business people - the teenage girl who saw Daddy’s super cool phone and wanted it. Why? BBM! BBM was originally designed with the purpose of business people communicating easily in real time and today, it remains BlackBerry’s key oﬀering, it’s main purchase driver, and certainly the reason adolescent boys and girls are all over BlackBerry! Check out http://www2.macleans.ca/2011/03/29/rim %E2 %80 %99s-secret-weapon/ I hate to say it Professor Gans... but your 12 year old daughter and her classmates are starting to grow up and BBM is a convenient way to start mingling with the opposite sex! It should also be mentioned that most ﬁnd the button keyboard easier to use than the touch screen keyboard - and when teenage girls are sending 4,050 texts per month, easy is key! jessicaanania (2011-09-15 22:56:44) What do most teenagers use their phone for ? Texting, some pictures, and social media, once those requirements are met it seems other elements might be lost on the younger generations. BBM provides an aﬀordable method for parents to give their children unlimited text. In addition with experience with my own teenage cousin, most parents like BBM as a way to keep in touch with their children. Then as the story goes for all teenagers, it’s about having what other people have; in particular to BBM and your teenage daughter, in order to keep in touch with her friends she needs BBM, because that is what the kids at school are using and they might not have a text messaging package big enough to send her regular SMS . I believe a lot of it has to do with the packaging of phone plans. Perhaps in Europe where the price plans are a bit diﬀerent your daughter might be asking for an android based phone http://www.comscore.com/Press Events/Press Releases/2011/9/Android Captures number 2 Ranking Among Smartphone Platforms in EU5 Joshua Gans (2011-09-16 06:20:47) The other hypothesis is that their parents have dumped their BBs and the 13 year olds have what’s left.
Joshua Gans (2011-09-16 06:22:17) You think 13 year olds are paying for their own phones? More likely a low marginal cost on a family plan. That’s our case plus the fact that she had no choice and had to use my old iPhone. Joshua Gans (2011-09-16 06:22:51) There is no way they are growing up. I deny that! iPhones should be for old people « Network & Digital Market Strategy (2011-09-16 09:49:56) [...] iPhones are for Old People [...] elyte18 (2011-09-16 10:32:32) If you look at the structure of student plans that come with unlimited texting and social networking, they tend to also come with an Android device. Are teenagers buying Android phones/ HTC devices because they want to, or because to get the features they want, this is what is oﬀered to them by our friends at Rogers and Bell. (http://www.bell.ca/shopping/PrsShpWls SuperphoneBTS.page?int=mob shophmpg ban LTO 230811 ca roc, http://www.rogers.com/web/content/unlimited student plan?cm sp=Consumer- -Wireless Q3 Student 0811 Eng- -student HOM PRE slot1). Furthermore, since the iPhone is the most expensive phone option - in terms of plans and handset price - I could imagine many parents not being terribly eager to hand such a delicate device to their clumsy young children. To the note that iPhone’s are no longer cool, a recent article on mashable.com reveals that interest and intent to purchase the iPhone 5 is greater than the buzz that surrounded the release of the iPhone 4. People are clearly still looking to Apple and the iPhone to know what the latest advances and innovations are. If that’s not the deﬁnition of a cool product, then I’m not sure what is. http://mashable.com/2011/09/13/iphone-5-demand/ I have a large family with many young children running around, and as would be expected, when we get together there are many diﬀerent phones on the table - iPhones, Androids and Blackberries. Without fail, the kids always gravitate to the iPhones. vbork (2011-09-17 11:45:32) Fitcher’s claim is not backed up by any statistical evidence other than his daughter’s dorm. The statement appeared to be nothing but a desperate claim to bash Apple and its’ products. The iPhone is a pricey option and some students might want to avoid that, especially in a university setting where phones, keys and wallets get lost on a daily basis. Regardless the iPhone oﬀers unique features and has built up enormous hype with every version released. Apple will continue to post great sales numbers on the iPhone and it’s popularity among teenagers will not decline solely on the fact that their parents have one. garyyip1985 (2011-09-17 16:01:29) 12 year old boys and girls might have to ﬁnd a new way to mingle with the opposite sex, because RIM looks like it is in serious trouble! Not sure if the teenage segment is a big enough market to keep this once proud CDN company aﬂoat. Truly a shame. BlackBerry 7 devices will be steamrolled by Apple s iPhone 5 in October it is only a matter of time before the iPhone and iPad challenge RIMM s enterprise dominance RIM s net income drop nearly 60 % from the year ago quarter http://www.forbes.com/sites/briancaulﬁeld/2011/09/16/apple-to-steam roll-rim-grab-enterprise-marketanalyst-says/ avitania (2011-09-17 16:41:50) Great posts, and deﬁnitely agreed on many points – though in my experience, the local Apple stores or mall security tend to put the kibbosh on any opportunity for vendors trying to sell stuﬀ to people in line (luckily, each time I’ve waited in line, Apple employees often come down the line giving out coﬀee, bottled water, snacks, and pizza!). Does this mean I’ll see you in line next month when the iPhone 5 comes out? :)
shengchen0321 (2011-09-18 18:04:58) The example Fitcher gave can not prove his claim is true. For those kids who are not using iphone, they may ﬁnd it uncool only because they can not aﬀord the price or they think there are so many people using it. To prove the iphone is cool or not, the evidence should come from those who are currently using an iphone. For me, it is pretty cool since it provides diﬀerent kinds of apps. I can play games for entertainment and use dictionary while study. So as long as apple continues launching new versions and providing new functions, iphone will remain cool among diﬀerent ages. elainezhang12 (2011-09-25 23:07:26) Fitcher’s statement is very subjective and seems a personal attack to me. Fitcher neglected the purchasing power in this situation. Most young kids do not have to ﬁnancial resources to purchase a phone, even a discounted price with a 3-year contact on the phone. Thus, parents make the decision and have the purchasing power in this situation. In many cases, parents are price sensitive and may be included to choose a cheaper phone. I think it is cool for a teenager to have any smartphone nowadays, because they don’t have to pay for it - their parents pay for the bills.
iPhones should be for old people (2011-09-16 09:49)
So the post from Wednesday started a little discussion but I wanted to highlight this comment from Jacky Zee in an attempt to kick oﬀ some more. The assumption in the HTC discussion was that Apple and HTC should be targeting a younger, ’hipper’ crowd. And the evidence suggests that there is no real basis to HTC’s claim that Apple is doing otherwise. But that leads to the question: is it really obvious that the iPhone should try to be ’cool’ and to be cool via association with who its customers are? One of my favourite games, that I have done ever since I got an iPhone back in 2007, is to hand the iPhone for an elderly person and, without instructions, say ”call me.” Now you have to realise that normal mobile phones are a big pain to use. This trick of mine has always succeeded. The largest reaction comes when they phone keypad comes up and it is remarked how big the buttons are (hence, the salience of the previous comment). My current record is someone aged 95. Can you think of reasons why Apple might target customers outside the observationally ’cool’ set (for example, the very elderly or the very young)? Should it? What are the trade-oﬀs? [An initial ’like’ from me for the ﬁrst person to reference Abercrombie and Fitch]
1. http://rotmandigital.wordpress.com/2011/09/14/iphones-are-for-old-people/ 2. http://rotmandigital.wordpress.com/2011/09/14/iphones-are-for-old-people/#comment-31 3. http://jiananz.wordpress.com/
jongsukjosephshin (2011-09-17 20:55:58) Perhaps a reason is that, like IBM did with its computers, Apple may want to be the next platform in the phone industry. Basically, mass usage. But it compromises its successes as a slick phone that was only used by the cool generation. For example, starbucks lost a great deal of reputation when it expanded its stores faster than a formula one race car. It lost its core mission value, of which a major part is to not only serve coﬀee but sell the experience of coﬀee. Can Apple keep to its mission values with mass expansion? Higher proﬁts, more usage, giving up the cool factor. Thumbs up?
shunichirotago (2011-09-18 12:02:48) I think it’s not so easy to apply existing marketing framework to the iPhone. The actual value of iPhone is not the product itself but the service, experience and performance it gives to us when we use them. That sounds very similar to the Starbucks’s way of value creation but it’s diﬀerent. iPhone is a single ”product” that we all can have while Starbucks is a ”place”. Lets think about the Nintendo’s success in ”Nintendo DS”. Their vision was to make the game control more simpler and intuitive so that anyone(from the young to elderly, including women) can enjoy DS with out any problem. This worked well. Now Nintendo have sold147million DS and about the half of the users are women especially around the age of 30 40. This is amazing.Here, we shouldn’t forget that it still attracts so called ”Heavy users or heavy gamers”. Yes, they are doing ”mass customization” but their targets are really wide and in diversity. However, Nintendo have done ”versioning” for several times to clarify the target of each DS products so this might be an implication to the iPhone’s next marketing strategy. Martin W. (2011-09-18 13:52:19) I think iPhones aren’t really trying to be cool, but rather they ARE cool. What the iPhone is designed for is people on the go and not afraid to embrace new technology. That doesn’t really sound like most elderly people to me so I don’t know how much success Apple would have trying to target that audience. I do agree with how easy it is to make a call with the large buttons but only once the phone application is opened. My dad, for example, doesn’t know how to make a call on my Nexus One (Android). He needs the app opened and the dial pad on the screen before he understands. But anything beyond that such as text messaging and he is lost. I don’t necessarily think he is outside of the ordinary in this case, but I could be wrong. I’ve heard worse and I’ve heard better but I don’t think its unreasonable to say the older generation is less tech savvy than we are. Next is the very young generation. They can’t aﬀord iPhones. Their parents can, but even if they did purchase the iPhone to stop the nagging children I wouldn’t be surprised if they resented Apple for targeting their kids. So, although you may generate some sales from upset parents you may lose them as repeat or future customers. Not a good idea, imo. adriennefriesen (2011-09-18 21:56:05) First, in response to jongsukjosephshin- I don’t think that Apple needs to fear gaining mass market appeal and acceptance any more. Those fears may have been valid in the 1980’s when it was positioning itself as starting a movement against IBM (see the classic ”1984” commercial), but Apple has already essentially become mainstream due to its user-friendliness and its proﬁts continue to climb (taking over Exxon at one point even). I do not think it is compromising its mission as Starbucks may have, since it continues to drive innovation and has not lost many of its original adopters. Second- in regards to targeting younger consumers- I think the trend of children receiving cell phones at younger and younger ages should not be ignored. Tech-savvy parents who love Apple themselves may not feel hassled when buying an iPhone for their child. Should Apple directly market to children? I think this may be where the Abercrombie & Fitch mentality comes in, since A &F now draws in young teens by appearing to target young adults in their ads and styles. The younger teens want that older image and buy into the brand. Perhaps Apple could target that same age group as A &F and draw young consumers simply by creating a ”cool factor”? garyyip1985 (2011-09-18 22:54:19) Great post and I like the comments posted by everyone so far. There are strong merits to diﬀerent market segments: acceptance into the cool crowd gives the brand a halo eﬀect, but conversely neglects the consumers looking for a more practical and ”down to earth” solution. I think this debate can carry on for months. But I can’t help but ask why is there such inﬂexibility? Why is Apply not targeting more market segments with multiple products? We are progressing into the 5th generation of the iPhone, why is there only one oﬀering of the device? Is this ﬁnancially motivated or is it arrogance displayed by the now proud Apple corp? The iPod had the nano to complement its ”standard” product. Where is the iPhone lite, or the iPhone for business professionals? Joshua Gans (2011-09-19 06:08:27) I thought the Abercrombie
month’s news. http://www.forbes.com/sites/deancrutchﬁeld/2011/08/18/abercrombie-f itch-pick-a-fight/ I.e., they would pay to exclude certain customers. Joshua Gans (2011-09-19 06:47:27) Another data point for you to think about. http://techcrunch.com/2011/09/18/steve-jobs-stevie-wonder/?utm source=feedburner &utm medium=feed &utm campaign=Feed %3A+Techcrunch+ %28TechCrunch %29
Monday morning critique: iPads and Grades (2011-09-19 08:11)
For a Monday morning, how about an opportunity to critique some academic research? Here is a good one today about a study about a positive association between iPads and learning:
Abilene Christian University has been conducting extensive studies on the eﬀects of mobile devices on student learning for more than three years. Prior to the launch of the iPad, the university undertook an initiative to hand out iPhones and iPod touches to incoming freshmen. The university’s iPad-speciﬁc research results are ”uniformly positive,” as noted by TUAW after a preview of the data. One study found that ”students who annotated text on their iPads scored 25 % higher on questions regarding information transfer than their paper-based peers.” Do you believe it? Why or why not? Best to read the study itself (at least quickly) before commenting.
1. http://www.appleinsider.com/articles/11/09/19/university_study_finds_students_with_apples_ipad_perform_ better.html 2. http://www.tuaw.com/2011/09/18/ipad-enabled-students-get-performance-boost-says-acu-study/
ricardogrinberg (2011-09-19 09:27:34) I like the idea of the study because I’ve always have thought that education need to keep improving and evolving as technology does. So if introducing new technologies are seamed to help, then great; however, I’d like to see more research on that matter just to make sure that the results are consistent over and over and it’s not just another marketing campaign. Moreover, I don’t agree that schools should get rid of conventional textbooks and just replace them with IPad as Georgia legislators are planning to do it. I think that the introduction of new technologies into schools should integrate with the current ways we are teaching because every people has diﬀerent learning styles and we don’t know the impacts these changes might have. For instance, if we are introducing IPads and getting rid of textbooks this might have the same eﬀect as just leaving books and not introducing IPas. karanmehta12 (2011-09-19 09:32:42) It’s hard to argue against the study results. Sure, students are going to be more motivated to study and be productive on the iPad with information transfer. Sure, as a result they get higher grades. But I couldn’t tell in the study whether iPads make kids smart, or smart kids like using iPads? Also overall, the focus on children (now I am referring to younger kids who are in their teens and even younger) is frightening. My hunch is that kids born in this era will have serious mental problems in the near future. By using an iPad at age 5 when their brain mass is still under development, not only are the wireless waves damaging, but more importantly they will never get the hands-on experience of playing with real toys, learning how to play a real piano, holding and reading a book, and etc etc. From Apple’s perspective, it’s a great thing - they just covered pretty much every segment of the population with one device that wasn’t really
”needed” until recently, but who is looking at it from a health perspective? (http://en.wikipedia.org/wiki/Mobile phone radiation and health) Karen Leung (2011-09-19 12:20:27) The results of this study are believable, however I’d like to see more details on how the experiments were actually conducted before I can make a fair judgement. It is understandable that if students spend more time learning, they’d do better on tests - and students tend to spend more time and eﬀort on something they think is fun - like using an iPad. As per Ricardogrinberg’s point on whether schools should replace textbooks with iPads, I think they should, especially for older students (highschool & college). It’s more environmentally friendly, and students won’t have to carry heavy textbooks around. I don’t believe replacing textbooks with digital copies on iPads will have the same eﬀect as just leaving textbooks and not introducing iPads. In fact, I think students are more likely to read the books when they have a free moment if the books are already loaded on their iPads (as oppose to carrying those heavy textbooks around). However, I think Karanmehta raised a good point on health concerns with radiation from wireless devices. Also, what kind of eﬀects does it have on children if they spend extended amount of time on looking at and focusing on a digital screen? More studies are deﬁnitely needed on this subject. bharatbhardwaj (2011-09-19 13:32:31) Great Idea! Apple is doing what it does best, creating a market for something we never thought we would need. What I would like to see is the ROI on the Ipads.Does the 25 % increase justify the money spent on an Ipad? Moreover how do you calculate the ROI in this case? What I would really like to see is a low cost version of the Ipad/ andriod tablet which could be used in the developing world where such initiatives could have a huge impact. Telecom is booming in the developing world and connectivity is much better today. 3G tablets could easilly bridge the gap in education which exists today in the developing world. junhyokhan (2011-09-19 16:35:38) I agree with you about the necessity of more detail on the experiment. Being slightly cynical, students who were given Ipads may have felt that they must use the device for academics instead of playing around with it (since it was provided by the school) – the temptation to play angry birds is therefore reduced. Of course, one of the major issues with using Ipads is that there are so many applications people can play around with that are much more fun than academics. In this particular experiment, these temptations that go against improving students’ grade must have been signiﬁcantly reduced due to the nature of the context. Just my thought :P (i had to reply to one of the comments because i had no idea how to make my own comment) Taylor O (2011-09-19 22:36:13) I think we have to look at what the iPad enables or encourages that an ordinary book or set of paper work sheets does not. The only clue in the article was that those students who annotated text. So if they’re doing a fair comparison then they either were more likely to annotate within the iPad app than highlight or take notes from the book (which may not even be allowed depending on school rules) or somehow the process of annotating and/or reviewing annotations allowed the memory to stick better. I think it’s likely both. Beyond this the iPad has great potential to facilitate even better learning using our understanding of memory. One application of the idea that memory has a half-life and to remind someone of concepts at set intervals until it’s solid is incorporated in software that helps learn languages, Super Memo. Wired magazine wrote an article about this powerful method awhile back: http://www.wired.com/medtech/health/magazine/16-05/ﬀ wozniak?currentPage=all Another amazing application of enhancing learning is through interactive visualization of concepts far beyond a simple 2D graph. One ex-Apple designer has plans to revolution the understanding of math using an iPad: http://www.fastcodesign.com/1664508/could-this-ipad-interface-help-k ill-math He thinks that the overly symbolic language of math is obscuring the ideas it actually represents and that the iPad could more directly show us the same concepts.
connietai (2011-09-19 23:32:36) I agree with Karen Leung. I think the iPad can provide some extremely valuable tools to help students learn by delivering information through various mediums such as text, video, audio or even 3D simulated diagrams. I have also always loved the idea of not carrying around heavy textbooks and to have everything on one device. However, like Karen mentioned, I think it would be interesting to see how the experiment was conducted and whether the experiment is representative of real life situations. For example, do students have access to other non-educational types of applications on the iPad? I would assume so. If this is the case, how often are students actually distracted from their studies because they are playing games or socializing? Is there some way for Apple to lock this functionality for speciﬁc iPads intended for educational purposes? While I understand that students may still need Internet for learning, perhaps games and social media applications should be blocked? From Apple’s standpoint, it’s a fantastic strategy. Showcasing iPad’s value in educational purposes may help them reach an even larger demographic, thereby continuing to grow their market share. Joshua Gans (2011-09-20 07:53:04) Folks, let me kick you on a little. You have all basically said ”yes, well that study supports what I thought.” Basically, it is consistent with your theory. But is it conclusive. Think about what they did. They gave a whole class an iPad and then noted that those who used it more did better. However, do you think those people who used it more may be the very same people who would have done well anyway? So the study may be believable but is it conclusive? vbork (2011-09-20 10:35:00) The article does not explain the speciﬁcs of the study conducted. It seems that with the implementation of the iPads in classrooms will make things more eﬃcient, as kids don’t have to switch between numerous textbooks and have a wider range of resources available to them. The diagrams and explanations can be a lot more engaging to the kids, helping them understand the material better. There have to be more scientiﬁc studies conducted to prove the legitimacy of Apple’s claims, but they seem to be on the right track. jovanatanackovic (2011-09-20 12:51:57) You must take into account that not all classes are the same size, each class is unique in the number of smarter students it has, and their preferences on studying and using technology may be diﬀerent. One study found that 25 % scored higher, but were no further studied conducted? And if they were, why don t they report those results? It s clearly in Apple s interest to report the single best result. Personally, I dislike studying oﬀ the computer and would rather print oﬀ articles to read. That s obviously not the case with everyone. The one study that showed the 25 % increase in results could be because there were a higher number of tech-savvy students who would rather study oﬀ iPads. It all comes down to what the students feel comfortable with. If they don t like studying in the library, they probably won t. If they prefer reading paper book to e-books, then they ll probably continue reading paper books. I can t fully agree with the study because the size of the experimental group was not speciﬁed, and Apple could have taken the best result and reported only that one. However, an increasing number of students cannot live without technology today and are getting more accustomed to studying oﬀ the computer (http://world.edu/worldedu posts/college-studentstechnology/). It wouldn t be surprising to ﬁnd that some students feel more comfortable studying oﬀ the iPad and for that reason, study more eﬃciently and perform better on their tests. jongsukjosephshin (2011-09-20 15:13:35) In this article, it outlines some features of the Ipad which cannot be mimicked by paper and text. http://blog.laptopmag.com/ipads-hitting- the-classroom-will-it-improve-grades Recently, schools have been conducting tests on students, replacing texts with Ipads. Abilene’s not alone. However, the core of the studies is whether interactive learning can induce students to improve in performance. Responding to Professor Gans’ comment, it is reasonable to conclude that the test is inconclusive. How can you distinguish between who studied ”more or less”? Has the test eﬀectively transformed the underachievers to perform on par with those who have consistently done well in other courses? Does the Ipad help all users invest more time in education?
jongsukjosephshin (2011-09-20 16:07:38) http://www.nytimes.com/2011/01/05/education/05tablets.html?pagewante d=all jamiepalooza (2011-09-20 17:45:07) Hold on a second. I recall that ”correlation does not imply causation” was taught as early as high school science class. Echoing karenmehta12’s question–Do iPads make kids smart, or are smart kids using iPads? Let’s say the iPads weren’t given out and everyone were back to ”paper students”, wouldn’t it be reasonable to suspect that the same students who annotated text on their iPads probably took more notes on paper than their counterparts anyways? A 25 % increase in academic performance is an ambitious number to throw out without giving out more information. What exactly are questions regarding information transfer anyways? Did Apple pay or subsidize for any of this? How exactly does the Chicago public school system measure science and math reading? How do you even read math? Unless you’re a biologist (ouch, sorry), learning is more than just memorizing and regurgitating. It is a far more complex series of interactions and thought processes that is not easy to quantify. Don’t get me wrong, I think the iPad is a fantastic tool for academic life. Easier access to information, interactive learning, and the sheer convenience of not having to carry textbooks around anymore would make any student life much easier. However, it is only a tool–Having a new expensive hockey stick doesn’t necessarily make you a better hockey player. Anyways, the headings to both articles were incredibly misleading, IMO. ”University study ﬁnds students with Apple’s iPad perform better than peers” ”iPad-enabled students get performance boost, says ACU study” Are we forgetting that everyone got iPads, but only the students who actually took notes with it got the better grades? All it seems to say is that better students get better grades. fredzhu (2011-09-20 19:54:57) You are exactly right. The study is not conclusive. They are comparing Ipad owners with those who don’t own (or don’t want to own) IPads. These are two diﬀerent group of students and they likely have diﬀerent characteristics. @voncs (a.k.a Iwona Gwozdz) (2011-09-20 21:45:04) Karan, I agree. The ipad certainly has it’s beneﬁts but we can’t ignore the fact that all technology can be used for good and bad. On the one hand, the ipod is engaging. It has the ability to make subjects such as math fun for kids. However, we also have to ask, will math continue to be engaging for children on the ipad once the nuance wears oﬀ? Also, the ipad may enable children to perform certain tasks, but how does it limit them? Will children be taught only one perspective? For instance, there many be multiple ways to solve an equation, but will the application only recognize one or two? Will the ipad and other technologies engage users to such an extent that they will become socially deﬁcient. Karan has a point. There are a number of social and health repercussions. There does not seem to be much info on ipad radiation. However, you can look into SAR exposure via the product guide: http://manuals.info.apple.com/en US/iPad Important Product Information Guide.pdf Taylor O (2011-09-20 23:21:52) The study probably has little value as presented but it’s consistent with the possibility of enhanced learning. However, the tablet is not magic– How can it enhance learning by its form and features? Is it just a scanned 800 page Algebra text? Say we take a particular enhancement in visualization or understanding of how memory works and apply that. Then we could measure the diﬀerence with a properly designed study. alicesisili (2011-09-20 23:26:22) We cannot simply conclude that the students with higher marks did better because they used ipad more. It might be true that ipad improves student learning experience in some degree. We should also consider the possibly of one who is more motivated to study uses every method there is to study. On the other hand, students that have ipad can also be distracted because there are plenty of games available for them to download for free.
Alex Semine (2011-09-21 02:29:57) Since everyone has pretty much peeled away all of the obvious ﬂaws of the study and conclusions (of which there are none), I would like to bring my basic interpretation of this study; There was a class of freshmen. Some probably skipped class (would be considered altogether in a group not using iPads - thus skewing the sample), and some were there. Out of the students there, some were enthusiastic about the course, and some were super bored and sleepy. You cannot use an iPad if you are not awake (at least not yet.. (Matrix anyone?)). I think the only thing CONCLUSIVE about this study is that iPads are not as distracting as some might have thought previously - thus could be used as a tool rather than a toy or gimmick, as described by some when it ﬁrst came out (’giant iPod’ etc.) P.S: This study and article is posted on AppleInsider, and with heavy Apple inﬂuence. Aka: If they found that learning was hindered by anything of Apple’s, then you would never see the study in the ﬁrst place. Oh and I ﬁnd this part funny: ”Prior to the launch of the iPad, the university undertook an initiative to hand out iPhones and iPod touches to incoming freshmen. The university’s iPad-speciﬁc research results are ” ..What about the iPhone and iPod Touches? The students were probably worse oﬀ. Quote mine ftw. hank008 (2011-09-25 00:28:21) Ipad can lead you better oﬀ in most cases. As mentioned in the video, it allows the students to be involved or engaged. Users can focus on the study and touch or tap the screen to ﬁnd the related materials(words, graphs, tables or videos) that they want. Ipad is very portable, so they almost can learn anything at anytime, anywhere. Learning can be an interesting experience for the childeren, if they get the help from good devices which help them to think and to study. Chen Sheng (2011-09-25 12:15:55) I don’t think the experiment is very conclusive. It is true that iPad could provide student better resources for classes, but this only applies to those who know how to use it and are willing to use it. Students who are already studing hard will ﬁnd iPad useful and achieve better grades by using it. However, students who are not hard-working may not get higher marks only because they have iPad now. They may even use iPad to surf the internet or play games during classes. So the usefulness of iPad really depends on students themselves. Thus the experiment does not actually prove any relationship between using iPad and achieving higer marks. robertomassa (2011-09-25 15:04:48) The experiment is certainly not conclusive, as there are many things not clear that need to be clariﬁed and tested in a larger scale. In my view two main trends are important. The ﬁrst one is that students are generally more willing to spend time on Ipad than on paper books. This is going to revoluzionize education in the next years and this trend cannot be stopped. It can also be true that students see their Ipads as a ”cool” thing that capture their attention but, if everyone has it, it become as a commodity not as interesting as it was before ( for example, it can be cool to do maths on their Ipads now, but in the future it won’t be the same). What will really make a diﬀerence is the quality and quantity of Apps that will be available to students in order to make them willing to learn from their devices (Ipads but e-readers in general). The second trend is that the quantity of information available is overwhelming. In the past students could study only from their paper books and this didn’t give them the chance to make a comparison between diﬀerent sources etc.. Now the time to analyze information is the limited resource and I think this is a great learning advantage for the current students. elainezhang12 (2011-09-25 23:25:45) Something learnt in ITP class, correlation does not mean causation. The results considered ”iPad increasing eﬃciency of learning” causes the higher grades, but is that a real cause? As many of you have discussed, I don’t think this study result is conclusive. I think they need to disclose their methodology of this study, such as how they select the sample, the sample size, the demographics/characteristics of the sample, the detail measurement they used, etc... No doubt that good technology can facilitate learning experience. But it also depends on students themselves, the IQ level, motivation, studying methods all have a big eﬀects on students’ grades. Some students are smarter or more motivated to learn regardless of the technology they used.
digitalworldme (2011-09-26 23:08:43) Ipad is a good resource for students to learn knowledge, as its fast access to material and easy to carry feature, makes study a lot more convenient. It’s a good thing that school takes initiative to encourage students to use high technology. However there is not enough evidence to show that by using ipad for study the grade of students can improve that much, because signal test result can have many other factors, such as students’ motivation, test condition, mood and so on. Also students use ipad in class may also spend big amount of time browsing the Internet, online social networking, and playing games, which are big distractions for them to better focus on class. So the study is not believable as it still needs more tests to prove it. robertomassa (2011-09-27 02:12:37) This article, which appears on Apple’s homepage points out many interesting points. http://ﬁnance.yahoo.com/news/Many-US-schools-adding-iPads-apf-12458 85050.html?x=0 &.v=2
The Random House Response to the Kindle (2011-09-21 17:00)
Your major online participation opportunity this week is to read the case in your HBS casepack on the ”The Random House Response to the Kindle.” We won’t discuss this case in class – directly at least – but I did think it was worth reading and thinking about. Hence, we are going to have that discussion take place online. Here are the questions I’d like you to consider: (i) should Random House take a role in the price that consumers for its books see on the Kindle? (ii) what dangers does Random House face from dealing with Amazon? (iii) can Random House ’hold out’ from going on the Kindle? (iv) Should it? and (v) what roles do publishers have in the electronic world. In all of this, think about using logical argument and backing it up with links to relevant facts.
Ivan Yuen (2011-09-21 21:58:11) Earlier this year, Random House changed their pricing model from a wholesale model (described in the case) to an agency model Random House now sets the prices consumers see for their ebooks (http://arstechnica.com/media/news/2011/03/random-house-caves-on-a gency-e-book-pricing-mayjoin-ibooks-soon.ars) Amazon eﬀective won the battle because Amazon enjoys fatter margin on sales under this new model (30 % vs 5 %). Amazon’s bargaining power also requires Random House to give it preferential price (e.g. if it sells its books on B &N for less, they are obligated to lower their price on Amazon) What should Random House do? They need to change their cost structure dramatically to match up with the new ebook economics - dump high ﬁxed costs like editors and start pricing ebooks aggressively (closer to marginal cost) even if it cannibalizes their print book sales. Joshua Gans (2011-09-22 08:18:07) Wait! You don’t think editors form a useful function. I’ll hold you to that when I look at your term paper! Ivan Yuen (2011-09-22 10:48:10) I think editors perform a useful function, but it can be performed in a more cost eﬀective way such as crowd sourcing.
Joshua Gans (2011-09-22 13:49:19) Crowdsourcing? Go on ... how would that work? And then how will that save costs? Ivan Yuen (2011-09-22 22:20:46) One example is Open Feedback Publishing from O’Reilly http://ofps.oreilly.com their technical books are available for preview in its early state for people to critique and provide feedback. This is necessary because they don’t have editors with suﬃcient technical expertise. For works of ﬁction, Wattpad (yes, a shameless plug) get readers involved with the editorial process, the book becomes a continuously evolving piece of work. elyte18 (2011-09-23 11:48:36) Random House should take a role in the pricing of e-books, since the books are ultimately their intellectual property, as they act as the agent for the author. However, since at the time of the case Amazon was the big player, they held much of the bargaining power. At the time, Amazon s strategy was to gain market share, and as such they were actually LOSING money on every e-book purchase. Seems like a silly strategy to me, and the publishing houses recognized that this could be catastrophic to both Amazon and the publishing industry as a whole. Random House faces the immediate danger of seeing their already-thin margins from shrinking further, which could spell disaster for the houses. Random House should NOT hold out from the Kindle, as it is making reading slightly more popular, and can increase Random House s overall reader base. It also makes books that are no longer being promoted much easier to ﬁnd. The Kindle also can save publishers the costs associated with the physical act of publishing the books - ink and paper costs, etc. However, they should (and at this point, likely have) take the stance that MacMillan did, in that they demanded an Agency pricing model - similar to Apple s App Store model in which Apple gets a commission for selling a product direct to consumers. (http://www.newyorker.com/reporting/2010/04/26/100426fa fact auletta). Ultimately, as more competition entered the e-reader world this did happen, with Apple s iBooks app and store. Random House was the ﬁnal publisher to accept this proposition with Apple, since it didn t care to see a 30 % commission be given to the Apple platform. (http://allthingsd.com/20110301/apple-lines-up-random-house-its-la st-ibook-holdout/). Under the agency model, the publishers ultimately become the book seller, and can treat the end user as the customer, instead of the traditional view of treating the bookstore as the customer. Martin W. (2011-09-23 14:36:38) This kind of reminds me of the music industry when mp3s became disruptive and the music industry freaked out. The music industry made the mistake of asking the wrong questions and forgetting what business they were in. They thought they were in the business of selling CDs and asked how digital music distribution would threaten their ”core” cd selling business. So the answers they got back were all wrong and they tried to block. We all know how that worked out for them. Blocking is almost never the correct strategy. If that is the strat you are going with then you are probably asking the wrong questions. Random House needs to ask themselves what business they are in. If they think their job as publishers is to ﬁnd and manage writing talent, then facilitate the printing and distribution of books, they are going to get smoked. Because if its not Amazon it will be someone else (just like if not Napster, then iTunes) who threatens their ”core”. It almost sounds like Random House is a middle man, and these days middle men are becoming obsolete. Amazon, on the other hand, is integrating every which way, including publishing (http://www.thedominoproject.com), distributing to retailers, mechanical turking, and stuﬀ we didn’t even know we need/will need. The Kindle isn’t even a device any more, it’s an experience that is only going to expand. Random House needs to get out of the middle man business and back into the book (paper, lcd screen, e-ink, magic holographs, 3D virtual reality or otherwise) business. Joshua Gans (2011-09-23 21:48:26) I think perhaps you are underestimating the amount of coordination required to edit a book. Anyone else here care to chime in?
myraelbayoumi (2011-09-24 15:12:49) I also drew similarity from this situation to a past disruptive technology. When digital hit the photography world and threatened to reshape the industry, Kodak sat back and thought it’s high standard and deﬁnition of ﬁlm photography would withstand the movement. We all know how that story ended and I’m sure Kodak would have jumped on the digital bandwagon much sooner if they could go back in time and redo it. Like Martin said about the music industry above, blocking was an unsuccessful strategy in Kodak’s case as well. Random House now ﬁnds itself in the same position - new, disruptive technology is already restructuring the landscape of the industry and they can choose to put defenses up, ignore the modernization of reading, or get on board and try to ride the wave instead of get crushed by it. Not to mention, Amazon is kicking butt and it seems like just about anyone would be lucky to get a piece of that pie. Random House should deﬁnitely not try to stay oﬀ the kindle - this is the new way to read just like digital was the new way to take pictures. If that alone isn’t compelling enough of a reason, there are a slew of more tangible reasons like increased readership, reduction of costs, etc. that Random House should not ignore. The issue then becomes pricing. The last to join Apple’s digital e-book platform, Random House held out until the deal included an agency-pricing model where the publisher sets the price and an ’agent’ who sells the product makes commission. http://www.tgdaily.com/business-and-law-brief/54421-random-house-sig ns-ibooks-deal For more on the agency model, http://www.idealog.com/blog/apples-disruption-of-the-ebook-market-ha s-nothing-to-do-with-the-tablet connietai (2011-09-24 19:15:07) I do agree with Ivan that Random House must price ebooks much more aggressively. Customers are demanding digital versions of books and Random House cannot aﬀord to hold out from going on the Kindle. Amazon is a big player and holds more of the bargaining power. Even if Random House refuses to deal with Amazon, Amazon can easily deal with other publishers instead. However, like Joshua, I also have questions regarding crowdsourcing the editing process. I assume that by crowdsourcing, anyone can edit? And if so, how would Random House ensure the quality of the edits? What happens when diﬀerent editors have diﬀerent opinions on how to edit a certain piece? How is that resolved? paulsmerchanski (2011-09-24 21:02:01) I agree with Professor Gans that editors and publishers will continue to play an integral role in this business. In the emerging business model, it’s the printers and the wholesalers who will become obsolete. Random House needs to vertically integrate, getting rid of the real ”middle man” (in this case Amazon) and going direct to the consumer. Eventually, e-Readers and tablets will become as common as cell phones are today and Random House needs to recognize this in its strategy moving forward. Creating a channel to allow customers to access the books they publish through an app or other type of online presence would be one way to take advantage of this shift. If Random House can get its books directly to consumers, it can retain its status as the largest publisher and gain signiﬁcant bargaining power over both authors and retailers such as Amazon. If not, Amazon will win this one and Random House will become the next Blockbuster. bharatbhardwaj (2011-09-24 21:16:21) The case mentions that ’editors’ not only help in ﬁnishing the manuscripts but also push for sales and marketing resources. When the marginal cost of distribution nears zero (in the case of e books), marketing becomes very important. Moreover with ebooks, people have the option of searching thru thousands of books, thus promoting books becomes an even more critical task. One advantage for the publisher would be that they would be able to to push lesser known authors and older books with less risk. As they would not need to invest in actualy printing the book before getting it to the market. Publishers could possibly make a better margin on such books. hank008 (2011-09-24 22:54:02) Not only Random house has confronted with the ﬁrst question, but also many other publishers, for example, Macmillian. It claimed the retail price for the new e-books should exceed the price set by Amazon. Soon Amazon pulled almost all Macmillan’s books (no matter electronic or printed version) from its online store. However later, Amazon
made the compromises which allowed the publisher to set the price and receive 30 % as underwriting fee. I think Random house can draw lesson from Macmillian. Another question that Random house should think about is: how should it treat with Amazon or Apple, be nice or be mean? In the case above, Macmillian seemed to win the price war, but potentially, Amazon may choose other publishers in the days to come. Last March, Random House decided to sell ebooks In Apple’s iBookstore, and it took long time for them to make that decision. —That is a two-way selection. They need cooperation rather than competition. To be honest, once the internet comes into our life, it changes our lifestyles dramatically, and it is deﬁnitely a disaster to the publishers. Today some young people pay excessive attention to the social networks or games and it is almost impossible to expect them to read stuﬀs, not to mention in paperback formats. Thus, the ﬁrst step also the bottomline is to let them read e-books and develop their interests, (although in most cases they are cheaper than hardcopies or even free) instead of over protecting the printed version simply by parallel pricing . Ivan Yuen (2011-09-25 04:14:41) Publisher contribute limited eﬀort into marketing, it is really only limited to a handful of titles a year, those they have already committed substantial investments. Most books rely on the authors to promote it. Perhaps the professor can share his insight one this, based on his experience? Ivan Yuen (2011-09-25 04:18:31) Publishers going directly to consumers does not make sense to me. They have no connection with the consumers, from a brand perspective or from a sales channel perspective. When consumers buy a book, they don’t think about the publishers (do you know who published Twilight or Harry Potter?) They also cannot compete on scale with the number of titles they carry. There is no eﬀective way for any publisher to compete with mass market merchandisers like Walmart or Amazon, online or oﬄine. Ivan Yuen (2011-09-25 08:40:15) I’m not underestimating the amount of work to edit a book; it is a lot of work no doubt. But I do think the publishers overvalue what consumers are willing to pay for this. People today are reading more than ever, but increasingly from alternate sources like blogs and online forums like this. Readers are readily accepting this timely, unedited material, the value proposition is very attractive. This is what publishers must compete with. adriennefriesen (2011-09-25 16:04:46) First, I agree with Ivan in the sense that the print book industry does need to become more streamlined, although I do not think cutting out editors would be the way to go. Ease of distribution is the core of the ebook model, and I believe that the lower distribution should be reﬂected in a lower cost to consumers for the books. However, the typical Kindle price of $9.99 may be a bit drastic. I think it would be good for Random House to take a more active role in negotiating price terms with Amazon, but in a cooperative manner, since they both stand to beneﬁt from increased sales. Second, this article: http://www.pcmag.com/article2/0,2817,2384785,00.asp #fbid=gtqsv2 0776 shows an interesting idea on the price structuring of ebooks. The author suggests that chapters be released one at a time and then both the full print and ebook versions be released after for readers who have not yet read the book or want a full physical copy. I don’t think this would work for all books, but it could be a good idea to boost proﬁts for some types that would draw readers who either want to read the book ASAP (publishing Twilight/Harry Potter in sections would draw huge sales) or who just want a taste of the book (select recipes from cook books). adriennefriesen (2011-09-25 16:05:28) Also, did anyone have trouble printing page 4 of the case? That speciﬁc page comes out all garbled every time. Joshua Gans (2011-09-25 16:54:13) Actually, it all depends. Good publishers can do a good job promoting but you are right that for the vast majority, authors have to do it themselves. Editorial costs are a very small part of the costs of a book but they have to be done.
Chen Sheng (2011-09-25 19:34:52) First of all, I think Random House should take a role in pricing its e-books. By pricing the books properly, Random House can assure certain amount of proﬁts while remaining the competitive edge in the industry. In fact, as showed in the article http://latimesblogs.latimes.com/jacketcopy/2011/02/random-house-will -adopt-agency-ebookpricing-model.html, Random House has already adopted the agency-pricing model on February 28, 2011. This model requires that publishers set the price for their prices with the bookseller getting a 30 percent cut of each sale. This is exactly the opposite of what Amazon has done in the past selling every book at $9.99. However, this could create a barrier between Random House cooperating with Amazon since they may have argues about the pricing of e-books. Now the very likely possibility is that Random House will join iBookstore since Apple encouraged the agency pricing model for e-books sold through iBookstore for the iPad. This is actually good because Random House will have larger market by cooperating with Apple and needs not to worry about compromising prices. For publishers, whether they like or not, digital is on its way. So the best solution is to adapt to the transformation. Maybe it s time to start reducing the amount of those middleman like printers and distributors and putting more weight on promoting e-books. fredzhu (2011-09-25 22:08:20) yes perhaps Random House needs to launch its own e-book device to get more bargaining power! eoulman (2011-09-25 22:12:49) I would agree with Paul to most degree. Seems that publishers (such as Random House) fulﬁll an important mission of ﬁnding and bringing the content to life. Without content, Amazon would not have much to sell. Amazon does add value through its rating system and the innovations such as Kindle device, but ultimately, publishers should not be limited to Amazon. With the proliﬁration of the Ipads, iphones and other devices, publishers should explore for way of markting and selling their content directly to the end consumer. The beneﬁts is greater control over the marketing, pricing strategies, as well as diversiﬁcation of its distribution channels. eoulman (2011-09-25 22:37:25) It will be interesting to see the industry in 7-10 year time frame. Just like the Netﬂix case, where the original innovation of direct mail distribution was getting replaced by on-demand online video, such that Netﬂix no longer possessed some of the unique advantages it had developed under the previous model (scale, inventory, etc), Amazon may soon ﬁnd itself competing with many other online retailers on e-books. Kindle device itself may become obsolete in light of some recent innovations of the Ipads and other portable tablets ... However, in light of all changes and uncertainity, it does seem that Random House has to rethink its business model in light of new reality. the model has to reﬂect the fact that there will be aggressive price competition among retailers (resulting in lower margins for msot players in the value chain) and so aggressive cost management is essential. Alex Semine (2011-09-26 01:19:56) I think we can ﬁnd some common ground here. First of all, editors ARE expensive, and I think it is clear that the traditional editing approach is costly and time consuming. Because the medium IS moving online/digital distribution (and there’s no denying it), I believe a ’crowd’ of anyone working on content, including editors or marketers, artists, etc., would beneﬁt the end product. The more hands that touch something DIGITAL, the more each can add value in their own way. A lot of traditional processes like making the table of contents, chapters, formatting, etc., can probably be automated even easier for an online publish. Heck, it’s only a matter of time before books and magazines will be able to be ’patched’ or even ’live updated’ to add in expansions (never-ending book about lustful vampires or something like that), ﬁx typos (and possibly glitches lol!), and of course, add new and trending ads! What I’m trying to say is when you have ’parts’ or ’segments’, you can innovate on the entire ’process’, giving you much more room to play with creating your ’competitive edge’. Next thing you know you’ve remastered everything you’ve ever made, regardless of genre. Just like this! http://i.playboy.com/index2.html
Alex Semine (2011-09-26 01:28:05) I completely disagree on launching a new advice from Random House at this point. Although theoretically a good long-term strategy, they can’t aﬀord all the R &D costs (and everything else) that would be involved in developing and manufacturing a reader. That is, unless they’ve already secretly started.. but I doubt it. They’d be ﬂoating in debt and stranded on an island with no one but monkeys (who can’t read anyway) while Amazon cruises away. Alex Semine (2011-09-26 01:40:27) Only a matter of time before ”The Angry Birds - Black and White and Red All Over” the book comes out for $0.99 and after 13.5 billion hours of reading by Americans who spend too long on the toilet, it revolutionizes the way books are published. At that point every newborn comes with ADD, so it probably won’t be a creative/talent/writing issue! P.S: Wow I was just joking when I wrote about the angry birds book, but check this out! http://moconews.net/article/419angry-birds-is-prepping-its-ﬁrst-bo ok-a-cookbook-about-eggs/ Sri Donepudi (2011-09-26 02:50:42) I agree with Martin on how this is similar to the story of MP3 which changed the way we think of music business. I don t think launching a new e-reader now is a good idea. I believe Random House can ﬁnd its core competency in marketing e-books. Sri Donepudi (2011-09-26 02:55:04) I too think Random House can ﬁnd its core competency in marketing. With the advent of e-readers, authors can easily publish their books but the important thing would be will readers ﬁnd it among so many e-books. I think it would be even more diﬃcult for non-popular authors. Sri Donepudi (2011-09-26 03:02:06) I think crowd sourcing can work only in some cases. It could easily work in the case of books which are heavily based on providing information. But I don’t think it is going to work in the case of some other genres of books which rely on how the story is presented to the reader, for example novels. jessicaanania (2011-09-26 16:59:31) I think the industry will change quite quickly. Random House will deﬁnitely need to rethink its core competency; which it appears might be production (ex. 1editing) and marketing. To not allow access to books produced by Random House seems like the absolute destruction of Random House, as agents will no longer have their clients produced from there. With various versions of e-readers out there, it is still very diﬃcult to stay which one if any will become the dominant player. Random House may want to look into licensing agreements with various E-book providers such as Amazon. Perhaps Random House can extend its marketing eﬀorts into sales through creating online marketing, for example online book clubs/readings. digitalworldme (2011-09-26 22:52:28) I think Random House should take a role of the pricing of e-books as the e-books market grows rapidly, and Random House should change its strategy to stay in the competition. It already has faced the threats from Amazon, which Amazon has the rapid growth of retailer market share, and low return rate(under 5 %), while Random House has return rate range 25 %-30 %. Random House should not try to hold out from going on kindle, as the market does not have the dominant company yet, and nowadays e-book gains more popularity in the market. In the future, publishers should change their roles by taking less printers and distributors, reducing the print and production cost, and be more focus on the E-reading industry, Karan Mehta (2011-09-26 22:59:08) I agree with the marketing aspect - anything that can reduce the search cost/time for readers. However, at the same time, I don’t think they should compete head-to-head with Amazon. Before they realize it, others will join the party
or probably already have (most notable Google). So I think some sort of cooperative strategy in this case would beneﬁt Random House. Working together with Amazon, with each focusing on particular core competencies, taking advantage of scale and scope to ”control” the game. Karan Mehta (2011-09-26 23:08:10) Interesting analogy to mp3 - I think that’s a great way to sum up the situation. Random House could choose to play in the game, but competing on the same strategy would be less than ideal. Random House needs to ﬁnd a new spark of innovation, or maybe vertically integrate along the publishing value chain. I disagree with playing the price war game. jovanatanackovic (2011-09-27 19:19:37) Random House needs to change its pricing structure. If I could compare Random House s situation to another company, it would probably be Blockbuster. Before movies were available online and on-demand, there really wasn t much competition for Blockbuster (and now they re bankrupt). Technology is advancing so quickly and intensely that Random House will soon be unable to compete with e-Readers. One reason is that people are realizing it s easier for them to click a few buttons than to travel to Indigo or Chapters every time they want to read a new book. It s also easier than ordering online and waiting for delivery. The paper book industry is losing demand just like Blockbuster did, and while I don t believe they ll go bankrupt, some changes must be made so that they don t lose all of their customers. Someone mentioned that Random House should develop their own e-Reader, which is a bad idea given that Random House is going to have to spend a lot of money on research and development and in all honesty, when you hear about a Sony Reader, an Amazon Reader, a Barnes & Noble Reader, an Apple iReader, or a Bertelsmann Reader, which one are you more likely to buy? Maybe it s just me, but I haven t heard of Bertelsmann as much as the others (in North America, it s not too surprising). Random House should get more involved with the electronic book industry, and whether it s through lowering their prices or a possible future merger with one of the e-Reader companies, they need to start soon so that they don t end up suﬀering like Blockbuster did. ricardogrinberg (2011-09-27 22:21:19) I loved how Amazon rose their prices! They knew they had a pretty loyal consumer base and a huge diﬀerentiator to disrupt the industry. I think Amazon should backward integrate the publishers (if they haven’t done so as the case stated). Random House has to look for strategic partnerships in order to compete with Amazon but keep supplying to Amazon. Moreover, they should try to continue to add value to the supply chain, which they are not doing it right now, maybe by creating authors such as professional soccer teams create soccer celebrities (Beckham and Cristiano Ronaldo) and owning all the rights of them since the beginning.... ricardogrinberg (2011-09-27 22:24:11) They can always outsource the editors to India, which by the way speak the same language and cost a fraction Taylor O (2011-09-27 23:09:55) Martin makes a great point about groups like the Domino Project. Established authors (and their group of colleagues that have a strong reputation by association) are the ﬁrst movers in this space to supplant publishers (not editors, just publishers). For these authors, self-publishing direct to Amazon may already yield higher royalties: http://www.fourhourworkweek.com/blog/2010/08/23/seth-godin-and-print -publishing/ The music industry was very similar in progression such that recording artists have launched and made it big in the previous arrangement and then have gone on to self-publish, now new artists have launched via Myspace ﬁrst then YouTube and been able to publish on their own, only picking up record companies as a means to distribute to Best Buy and Walmart. They still have producers (like editors) but the power is more in their favor for contract discussions. For books, the time is slowly arriving. Amazon becomes publisher/distributor, editor for hire like Rentacoder and other communities (like the crowdsourcing mentioned above) ﬁll in until Amazon integrates the same idea using their Mechanical Turk platform in 2016.
vbork (2011-09-27 23:21:21) If Random House continues to deal with Amazon and if the Kindle E-book industry advances further, Random House becomes a middle man in the chain. Why wouldn’t the authors who know they are going to get most of the sales from E-books go straight to Amazon? Random House did the right thing by announcing and ﬁghting for all of the book rights, including electronic to anything they’ve published. The book industry is heading in the E-book direction and Random House needs to lock down a long term deal with Amazon, where they continue publishing paper versions of books with price discrimination to continue selling to the dedicated ”paper” readers while also tapping into the growing e-book industry. If people are switching to e-books due to price and convenience, Random House has nothing to stop them, which is why they need to pursue the long term deal or else risk going bankrupt. *Cough* Blockbuster *cough*.
Netﬂix and Amazon (2011-09-26 11:01)
According to Engadget, Amazon is considering ’all you can eat’ pricing for its Kindle; just like Netﬂix.
Details are still sketchy here, but the Wall Street Journal is reporting that Amazon’s looking to launch a Netﬂix-like subscription service for digital books, much to the chagrin of some publishers. According to unnamed sources familiar with the matter, Amazon is currently ”in talks” with several publishers about the program, which would provide access to an online library in exchange for an unspeciﬁed annual fee. The insiders also claim that the service would be available for Amazon Prime subscribers (who currently pay $79 per year for free shipping and access to shows and movies) and that the proposed library would feature primarily older works, with monthly restrictions on the number of books a subscriber could read for free. Publishers would reportedly pocket a ”substantial fee” for signing on to the program, though some are reluctant to participate, for fear that doing so would ”downgrade the value of the book business,” according to one publishing exec. In fact, it remains unclear whether any publishers have thrown their hats in the ring, but we’ll certainly be on the lookout for any developments. What do you think? Describe how you might model the appropriate subscription price and the data that would be required to set that price?
1. http://www.engadget.com/2011/09/12/amazon-to-launch-netflix-style-service-for-digital-books/ 2. http://www.engadget.com/tag/amazon 3. http://www.engadget.com/2011/02/22/amazon-prime-instant-videos-hands-on/
luipuichun (2011-09-26 15:43:24) Personally I do not think Amazon’s strategy will work out. First of all, in the ”all you can read” pricing, the subscriber is only paying a amount of ﬁxed cost. The marginal cost for downloading (buying) an addition book will be zero. Subscribers can simply download as much as they like if Amazon does not set a time limit (max. time that the subscriber can keep the book) for the book. In the other hand, if Amazon is setting the time limit, it might not be attractive and may not work well as the Netﬂix strategy. This is because the average time for watching a movie is signiﬁcantly less than reading a book, thus Amazon may have to set a long time limit for its subscribers. If they are setting a long time limit, there are risks of ”abusing” the ”all you can read system”. Last but not least, if they are setting a time limit, this will be highly subjective. Diﬀerent people have diﬀerent reading habit and diﬀerent reading speed, which make it very diﬃcult to set a fair time limit. In conclusion, I believe the ”all you can eat” strategy may not work well in the ebook industry as it works in the DVD rental industry.
Alex Semine (2011-09-26 16:33:11) ˆThis. In addition, piracy! This would probably be ﬁxed (unlike other things like tethering a non-smart phone to get unlimited free internet for $10/month *cough* Fido (love you)), but if you can just grant access to as many books as they want you’ll be able to feed that into a system to then create your own pirate database. The technology is there. http://torrentfreak.com/pirate-service-makes-textbook-rentals-last-f orever-110923/ jessicaanania (2011-09-26 17:08:10) As long as the publishers agree to it, this is in reality an online version of a Library( in the traditional, bric-and mortar sense). I think people who are avid readers would appreciate such a service. While I might be aging myself with this comment, but physical libraries also have time limits and book limits, sometimes I signed out the same book twice just so that I could ﬁnish reading it .Perhaps the strategy will be number of books out at the same time. markbelcarz (2011-09-26 17:26:56) I think that it’s important to note that the service seems to be geared towards older books, on which publishers would have hopefully already made the bulk of their revenue. The point of contention between publishers and Amazon might be what deﬁnes an ”older book”, perhaps it might be interesting to have the publishers reach a certain revenue point on a new title before Amazon can make it part of their library. Since the introduction of this topic suggests that only a ﬁxed number of titles can be read with the ﬁxed subscription price, I think publishers would want a piece of any marginal revenue associated with reading any number of books beyond the stated limit. jessicaanania (2011-09-26 18:03:52) The publishers could charge something similar to royalty fees for every book loaned out, and Amazon could create version pricing based on intensity of use, creating 3 tiers of use. This would ensure that Amazon and the publisher both get paid. In addition I like the idea that the books would only become part of the library after a pre-determined time, to ensure that the publisher will make the bulk of its money up front. hank008 (2011-09-26 21:24:10) The all you can read plan is undoubtedly designed for those avid readers, and it is especially good for people who read very fast (extensive reading). From my point of view, The subscription prices can vary from this group of customers to the other, and Amazon should set speciﬁc conditions to diﬀerent target customers in order to meet their diﬀerent needs (customer segmentation). For example, for readers that pay high subscription fees can have unlimited read on new arrivals , and the others can only read few. Amazon can divide the amount of money that they pay to publishers into two parts. One is ﬁxed, which is according to publishers historial performance (e.g.best-seller). And one is ﬂoating, based on the popularity of the books. The more clicks and downloads, the more the corresponding publisher get paid. Ivan Yuen (2011-09-26 21:41:49) ebook piracy will be around with or without a Kindle subscription service. Amazon and book publishers need to improve the experience of buying, managing and reading books such that readers are willing to pay for the overall experience and not bother with the hassle of piracy. kumarsidhartha (2011-09-26 22:32:28) The success of such a strategy would ultimately depend on the fact if Amazon has the power and inﬂuence to sign up all/most of the publishing houses to be able to provide enough meaningful content for it’s subscriber. Also, I think making the subscription free for its Amazon prime subscribers is a great idea and is a good example of bundling. It provides more value for existing customers who might churn for the fact that they are not ordering so many items from Amazon (and feel like they are paying the fee for no reason) and also attracts new customers to sign up for the service who will then be exposed to other services that Amazon has to oﬀer.
Martin W. (2011-09-26 22:57:02) Really great comments and insights on this thread. I am very interested in this service because I love my kindle dearly and read a ton. As a customer, I’d be interested to know the selection of books and the price point. A reason I don’t subscribe to Netﬂix in Canada is because their selection sucks. Give me the US version of Netﬂix and I’ll sign up the next day. Some other interesting things about the Kindle to perhaps sway your opinion on this subject: Did you know that soon you’ll be able to rent Kindle books from more than 11000 public libraries in the US? It’s true, and very awesome! (http://perezhilton.com/2011-09-21-amazon-to-begin-e-book-rental-s ervice-for-kindles <– I swear I don’t normally read perez hilton) Did you know that Amazon Kindle runs a daily deal promotion on their ebooks? They sell them for like 80 % oﬀ their ebook price. Today’s deal, ”Brain Rules” sold for $1.49 when I paid full price over the summer for the same book. So sad :( You can follow them here at http://twitter.com/ #!/AmazonKindle Did you know that you can lend out your Kindle books to others? The loan period is 14 days in which it gets disabled on your Kindle while your friend borrows it. How awesome is that? Not all books can be lent, as per publisher agreements. Did you know that, piracy aside, you can access thousands of free kindle books oﬀ of their website here http://www.amazon.com/s/?node=2245146011 and if you want more you can have a look at this article here http://mashable.com/2010/12/25/free-kindle-books/ Did you know that Amazon is planning on releasing their tablet very soon, rumoured to be called Kindle Fire, possibly unveiled this coming Wednesday, and shipping as early as November? (http://www.engadget.com/2011/09/26/kindle-ﬁre-tablet-purportedly -on-tap-for-wednesdayset-to-ship/) It ain’t no iPad, but it doesn’t need to be. According to Amazon Video on Twitter, http://twitter.com/ #!/AmazonVideo, Amazon just signed a huge deal with Fox to start adding a huge selection of TV and Videos starting this fall. A direct competitor to Netﬂix? I think so. Viewable on their rumoured upcoming tablet? It would be stupid not to. So yes, I think Jeﬀ Bezos is brilliant. And no, I don’t think everything Amazon touches is gold and will succeed. But while Amazon is experimenting with new business models to complement their amazing technology and services (some will succeed, others will fail), publishers are becoming less relevant and struggling to ﬁgure out their role in this whole ordeal. Eugene Oulman (2011-09-26 23:09:45) Agree with Ivan below ... you cannot eﬀectively block priracy, other than making it unnecessary and undesired ... Eugene Oulman (2011-09-26 23:14:52) In terms of pricing models, I would probably approach this as a recurring service for both Amazon and its publishers. Standardize the release/editing/devleopment process as much as possible to reduce costs and estimate the the number of books you will produce each month to be available to Amazon. Tabulate the costs and add a 35 % margin ... this will become the fee that the publisher will charge to Amazon for its content. Amazon will then add its own marign requirements before selling the service to the ﬁnal consumer. The model would be driven by cost and have signiﬁcant scope limits in terms of contents quality (and perhaps volume). garyyip1985 (2011-09-26 23:26:17) This is a brilliant idea. But I’m not sure if the key product should be 300 page novel stories. Like Ivan said earlier, they just take too long to read and digest. Very few people would want to pay a ﬁx fee to get access to 5 books a month when at most they know they only go through 1 or 2. What about a product focus on instruction books (cook books, mechanic guides) and comic books (X-men, Spiderman)? Now wouldn’t that be something...captures a bit of the ”impulse utility” that netﬂix delivers. Price? As a benchmark, Marvel charges 9.99 a month for unlimited access (http://marvel.com/digital comics/unlimited) elainezhang12 (2011-09-26 23:28:45) Reading books regardless of electronic or paper copies need more time than what is needed to ﬁnished a movie. So, Amazon needs a market comprises of customers who read multiple books per month to make the subscription model appealing to the market. To set the subscription fee, I think there are two major areas Amazon needs to look at: 1) Customer’s willingness to pay. Such data should be easier to get - Amazon has a database of their customers with
respect to who are buying, what customers are buying, number of transactions during certain period of time, and average sales per transaction. Based on those data, Amazon should be able to extract insights of customers’ willingness to pay. 2) Costs plus certain mark-up. It can determine the overall proﬁt margin level and set the price at cost + proﬁt margin. If cost plus certain markups < customer’s willingness to pay, Amazon could employs a price discrimination strategy in setting the subscription fee: charge diﬀerently for diﬀerent groups of customers. Some other things may aﬀect the model include (not a MECE list) 1) The accessibility of the books in the library: whether those books are easily assessable for the potential readers from other channels, e.g. illegal online download (free), or actual library or other database. 2) The availability of the books: whether those books in this library represents a good varieties that would be appealing to the readers? This could aﬀect customers’ willingness to pay. 3) Set the appropriate restriction on the number of books readers can read per month. This could aﬀect its proﬁt margin. bharatbhardwaj (2011-09-26 23:57:20) The amount of time given for the loan should not be an issue. For example if subscribers are allowed to loan 3 books a month and the subscriber doesnt ﬁnish the 3rd book that month then it can simply be reissued the next month. Amazon could also have a diﬀerentiated price scheme for how many books do you want to rent a month. ex: $ X for 3 books and $1.5X for 6 books. Amazon will be able to suggest books to subscribers ( as it will have historical data of purchases) which will save the subscriber a lot of time as the oppurtunity cost to search for a book reduces drastically. Moreover, publishers save the time in money required to publish and distribute old titles. bharatbhardwaj (2011-09-27 00:00:45) Free subscription to prime subscribers will also increase the number of early adopters. These customers trust amazon and may want to try out new services. This will help in reaching the critical mass needed for a technology to become a necessity. Subscribers could rate the books and make recommendations to each other, creating a social network of ebook readers!!! Alex Semine (2011-09-27 03:06:32) Unlimited access to an entire medium (and a massive amount of content) NEEDS to be set up in a complex and speciﬁc way so that an individual cannot ’use’ multiple books continuously. If not, then think about it, it will be a massive piracy honeypot, unlike anything we’ve ever seen before. There’s no ’all you can eat games’ or ’movies’ services that are implemented without very unique protection measures (I’m thinking OnLive and Netﬂix, and neither system would make sense to mirror with eBooks) jytsao (2011-09-27 03:38:27) I know they got in trouble for tracking customers’ willingness to pay before, but it’d be very interesting (and profitable!) if Amazon could pull oﬀ ﬁrst-degree price discrimination with this online library scheme. Yes I agree with others above, that piracy will probably be one of the largest problems - if not the largest- with this plan for Amazon; however, on the ﬂip side, as a person on the consumer side of this ebook business, when I read the post my ﬁrst thought was ”Awesome, now I’ll have a wider range of ebooks that I can just google to ﬁnd for free.” I hope Amazon does try this. I want to see what happens! Alex Semine (2011-09-27 04:03:51) Just a really quick reference post: I found some great stats on the Kindle, e-books, reading, iPad, etc: http://www.christopherpnmaselli.com/2010/10/ebooks-amazon-kindle-and -apple-ipad-statistics/ I think it’s about time for sleeping for me, but hope this helps the rest of you trying to come up with their own guesstimates :) mccarthycaroline (2011-09-27 13:13:22) I agree with the diﬀerent selection of books available. I ﬁnd I use Amazon the most to ﬁnd books that aren’t easy to ﬁnd other places and often they are books that I want info out of quickly instead of having to wait a week for them to be ﬁnally devlivered. The internet is great for ﬁnding information, but sometimes you still need or want to read a real
book for some more information. Usually a day or two with the books is plenty to get the info needed. I would think it would be a great opportunity for publishers to make some extra money oﬀ these books as they become outdated by the internet as an immdiate info source. As a society we are becoming more impatient and want info immediately so to be able to ﬁnd a recipe or an answer to a business problem right away would be very worthwhile. vbork (2011-09-27 13:54:29) Unless Amazon can somehow miraculously restrict the amount of piracy this will bring, it will not work out well for the publishers. People will create their own databases and within a couple of months all of these ”older” works will be online and as easy to ﬁnd as typing ”book name pdf” into google. Alex Semine (2011-09-27 14:45:03) Just like current ebooks! :) There’s actually a growing secondary market for ebooks, with diﬀerent ”illegal” sites all competing for the higher Google PageRank. Still, it’s not a make-or-break case here, a lot of people have no idea you can get everything on your computer for free (or they just don’t want to (and good for them!)), and thus they swam to pay for things on diﬀerent websites or retail, so the question here is not whether the strategy will be successful (or why not), but what should the pricing be if it is, and how you would execute it. jytsao (2011-09-27 16:07:02) personally I don’t like paying for books, but I love reading them. From a couple of experiences, the ebooks I found on google were transcribed by very-dedicated fans somewhere in the world who just wanted to share the joy of that particular novel; however, because it was ’fan-made’, it wasn’t unusual to see typos once every few pages. that really irks me, even if the book was ahem ”free.:” I think if Amazon actually comes up with cheap pricing, I’d might just stick with them for my ebooks. And speaking of execution... perhaps they could start a virtual library card? Instead of having to pull out your credit card number or paypal account everytime you wanted to buy a 4.95 $ ebook, I think Amazon could develop their own system to speed up the process...Like, how we store $20 into our t-cards to pay for printing for a month? And lol if people don’t ”return their library book” (not sure how this will work, since like others have mentioned, netﬂix’s model can’t really be applied to ebooks due to piracy) amazon could take money directly from this virtual library card with money stored inside...? jovanatanackovic (2011-09-27 16:22:41) Advances in technology, along with an increased number of competitors, are changing industries more quickly than ever nowadays. Kodak used to be on top of the photography industry, but times changed. VCRs and DVDs are becoming less and less popular because people have been given the option to stream ﬁlms from home or simply order it from the TV. Kindle was on top for a short time, but now people are looking at other alternatives to paper books because it s been made available to them. Kindle obviously has to make changes, and the subscription process seems like a necessary one. It happened with TV (Netﬂix), and the number of competitors is forcing Amazon to make this change as well. When you enter the electronic industry, you have to keep on making innovative changes because there s too much competition and people eventually get bored of the product. Facebook is changing its layout every few months because it has to. People always complain, but they would complain more if Facebook stuck to one layout, and they d say that Facebook is lazy. The home movie industry has suﬀered in my opinion, because it simply oﬀers an excuse to lazy people. But that s what technology is doing to us. In terms of the e-Book industry, if Amazon doesn t begin the subscription process, someone else will because there s too much competition and people are already getting bored and want something new. It s a necessary step in the e-Book industry and it ll happen sooner or later. Since the main oﬀerings will be older books, I don t think the price needs to be set too high. According to http://www.washingtonpost.com/wp-dyn/content/article/2007/08/21/AR20 07082101045.html, in 2007, the average reader read about 7 books each year, and people are even lazier nowadays. However, according to http://gigaom.com/2010/01/20/guess-what-e-reader-owners-buy-more-boo ks/, people tend to read more books if they own an e-Reader. I think Amazon should estimate that the average person will buy 10-15 books each year on the Kindle, and with an average price of $6- $8 for these older books, they should be charging at least $90 per year
on the subscription, which is going to be incredibly low for those who read many books. However, Amazon is looking to maximize proﬁts and if they set too high of a price, they won t get as many subscriptions, especially from those who read less than 10 books a year. Amazon should set their annual subscription price based on the average price of one of the books they ll be oﬀering and the average number of e-Books a Kindle user purchases annually. They don t want to lose those who buy fewer books, so they can t set their price too high. Who knows? Maybe it ll get some people to start reading more books than they used to. @voncs (a.k.a Iwona Gwozdz) (2011-09-27 16:56:14) To build on this, we could also look at the type of content consumers have access to not just how frequently they read. This could help us segment our customers. I like the idea of publishers being oﬀered both a ﬁxed fee and a variable rate based on popularity. I’m not sure about the annual fee. Every customer has a diﬀerent willingness to pay depending on how frequently they will be using the service and the type of content they can access. If we charge one price, then I’d be worried we may be overcharging or undercharging, which in both cases we would be loosing potential revenues. The time limit issue can be eliminated if we have subscription fees, since users most likely would have access to the content on any given month. There is an issue of whether the content can be shared amongst others, but if Apple could ﬁnd a solution then I am sure Amazon can as well. kelvinchunkileung (2011-09-27 18:03:04) I believe the ”all-you-can-eat” pricing strategy would be not working on Amazon. The primary reason is because of the piracy technology. Having seen from Netﬂix, despite people can download unlimited movies from the site after paying a certain fee; in reality, i only need a guy paying for that subscription and he can share all his downloads to everyone of us via our lovely internet. The piracy technology nowadays is just so great and Netﬂix will have a big loss in revenue because of that. If Amazon follows the same strategy as Netﬂix does, it is going to suﬀer the same problem. Its digital copies will be ﬂowing around the internet in a day or two after somebody has paid and share them online. Additionally, people nowadays read less books and it might also be a potential problem for amazon. With these unforeseeable threats, it is not wise for Amazon to do such thing and it should seek for another alternative on expanding its digital book business. jongsukjosephshin (2011-09-27 22:02:34) The days of paper are gone. If Amazon passes on this opportunity, Apple and others will get a head start. Kindle has excellent reviews. Amazon has long been known as a book merchant. Leverage the brand image, oﬀer products on the market, and at least see what happens. It seems there is virtually no marginal cost for providing one more book to a consumer. So essentially MC= MR. Fixed cost is spread over greater revenue. Proﬁt is maximized. Amazon can shut down its warehouses once paper book sales are cannibalized, and save on property costs. Also, since everything has become electronic, why not, similar to the magazine publishers, work out a system to advertise in between chapters of books. Taylor O (2011-09-27 22:55:01) I think this point (older book focus) is well taken, a super strong similarity to Netﬂix’s strategy of focusing on how to drive interest in to the long tail of movie interests. Popular books like Harry Botter, the Davinci Code and various books about girls with dragon tattoos are going to be impossible to negotiate favorable terms for inclusion alone but the publishers have huge back catalogs with potential for recommendation linkage. Overall, net I think it could increase how many people read and how much they read. This subscription model on a device where it can be remotely wiped away after the rental part *should* be a publisher’s dream. Before this a physical book that people can and did loan to anyone, then sell at garage sales was the norm, now most of the control is at Amazon and the contract level with the publisher. I know the textbook manufacturer’s like it– they weren’t in on the re-sale market and now they’ll get the sale from everyone that rents it even at a discount it’s very much in their favor.
ur1dataman (2011-09-28 01:01:57) I just want to oﬀer a solution to the piracy issues some of you guys addressed before. What do you think if Amazon builds a ”library cloud” and gives access to customers who subscribed to their ”all you can read” service? With everything in the cloud, Amazon could disable downloading function. As long as users have access to the internet, they get unlimited access to all the books. I think the technology is feasible and shouldn’t cost much money. Some of you might say, it will cost a lot of money to set that cloud service up? I think all major publishers wouldn’t mind chipping in a little since the service is built to prevent piracy. To oﬀer them incentives, Amazon could adapt Good Ads business model. Every time a user logs in and access a book in the cloud, the publisher gets a royalty fee. In the long run, publishers will essentially get all their money back + extra income from royalty fees, not a bad deal at all. anchenyi (2011-09-28 01:28:57) I think the major publishers are too arrogant these days. As I know, the amazon digital reader–Kindle only allows its users to read Mobi and PDF format ﬁles. However, there is another way to save you some money. Amazon has a system that allows you to download TXT, DOC, HTML ﬁles from internet via wispernet, which is a set-up for users email account that is able to convert all the ﬁles to Mobi. Therefore, if Amazon is going to bundle the e-books on a monthly basis, they’d better set no constrains such as this plan is only for some old books and ﬁxed number of them are allowed to use every month. As matter of fact, there are tons of free TXT format books and articles available online. You just need to be patient to ﬁnd them! If I tell you the monthly fee is $50 and the wispernet only costs you like two bucks, you do the math and you will know your choice. So, it is the time for those publishers to lower their heads and consider how to compete with the piracy. But obviously people are going to choose the oﬃcial copy if the diﬀerence is not so large. anchenyi (2011-09-28 01:38:28) Additionally, I don’t think the publishing market has ever been ” downgraded”. Actually, I think they are over upgraded. Everybody need to learn, and books are the critical resource for them to learn. Now if you set the bar too high, or overpriced your copyright, you are not going to keep them away from your masterpiece but let them ﬁnd their way to get it. Just like the what happened in U of T, not everybody purchase the textbook through bookstore or second hand market, but ﬁnally, everybody has the book to read. Guess how they do that? jamiepalooza (2011-09-28 06:08:19) It’s like going to the library again. Except you have to pay for a Kindle. And the books. Irony aside, I think this idea could work–If the price is right. The biz model is makes sense economically, and it has worked for Netﬂix before. I could see where skeptics would be... skeptical about issues like piracy, diﬀerent consumption patterns, etc., but as long as there are book-lovers out there, this can be done at the right price point. Not every book consumer out there is looking for the lowest price, or reducing to piracy. I just bought a book yesterday, hardcover, full price, because it was just released and signed by the author. Also, at least there won’t be any late fees. Eugene Oulman (2011-09-28 07:02:34) They would still be limited to downloading them on Kindle, and in the Kindle format, so perhaps the riks of priracy is somewhat reduced.
Re: Fortune and Kindle ebooks (2011-09-28 09:54)
Given our discussion of the terriﬁc Kindle single on Apple (Inside Apple – From Steve Jobs down to the janitor: How America’s most successful-and most secretive-big company really works), you might be interested in an eBook launched today collecting all Fortune’s articles on Steve Jobs: All About Steve: The Story of Steve Jobs and Apple from the Pages of Fortune . 43
maryammoshiri (2011-09-28 10:27:22) It will be interesting to see how well this eBook does as it probably has a signiﬁcant overlap with Fortune’s other book, Inside Apple. As a collection of articles, I think it would have been more proﬁtable to allow customers the option to purchase customized bundles. If Fortune allowed customers to pick articles from this book at a higher rate per article, I think it would have been more proﬁtable. shunichirotago (2011-09-28 10:38:42) The idea of bundling articles is interesting. These kind of bundles which featured the great names could be proﬁtable for both customers and eBook publisher. Customers do not need to buy a whole magazine too read particular article which they are interested in. They can just buy a bundle of article instead of buying every single magazines which include the article about the person they are interested in for relatively low price. alicesisili (2011-09-28 12:28:36) I think allowing customers to pick which articles they want to have in the bundle might be a better idea. Comparing the prices of these two e-books, I would make the assumption that All About Steve will be more attractive to the readers who have read Fortune magazines before and these readers may already read many of the articles included in this e-book. However, if the All About Steve does not only include the past articles Fortune published on Apple but also more insights on what Apple’s next step is and other analysis, consumers may be more willing to buy the whole e-book even if they read the articles before. jongsukjosephshin (2011-09-28 21:06:01) If you like Steve Jobs, clearly the ﬁrst book, All about Steve, may be suﬃcient for your satisfaction. Say You prefer knowing more. You search Kindle, there it is: an alternative form of biography of Jobs written by people who love and hate him. Of course, it’s in the form of a bunch of articles. It chronicles his illustrious and tumultuous career, articles criticizing him on one page, then crediting him for the success of Apple on the very next. The book, $0.99, is very attractive. Keep in mind, though, the article collection, $8.99, is something you cannot read again unless Fortune has a collection of old articles, in which case you need to search the online archive yourself. It is a readily available ”special edition” from Fortune. You read what people thought of his decisions back then, rather than of reading a book that is written using hindsight. This is a ”new version” of ”Inside Apple” for another segment of the market. Martin W. (2011-09-28 23:55:56) Love your idea, Maryam. I’d deﬁnitely be interested in selecting my own set of articles I’d want to purchase as a bundle.
Pricing options for scholarly publication (2011-09-28 10:32)
Take a look at this video. [youtube http://www.youtube.com/watch?v=GMIY 4t-DR0] It discusses the murky world of academic publication. Clearly, there is a tension here in that academics do not get paid by publishers yet publishers take rights and also charge libraries and others high prices to access that research. Increasingly, academics are bypassing traditional publishers. There was also this interesting case about one MIT student’s attempt to free up scholarly publication. 44
So how can we resolve this tension? What pricing model is appropriate? How do we think about shared information in this environment?
kumarsidhartha (2011-10-01 12:07:48) I think we should have look at the value chain to see what value the publisher is really adding here. I would argue that getting the journal peer reviewed and ensuring that it lives it lives up to proper standards of academic research is all that is being added. But, in the academic community this often counts for a lot and work that is published in no name journals even does not get noticed at most times . In such a context many of these journals are monopolies and are acting as such. I think the ﬁrst way thing to do is exactly what Princeton has done - to refuse to handover copyrights. If many established universities make such a decision than the power of such journals is bound to go down as they rely on academics from these top class institutions. This might increase competition and decrease prices. Eventually a system might emerge where researches and universities get paid royalties for work by journals who choose to publish and make money oﬀ them. And copyright transfers will make sense in such an environment - not for merely being a facilitator of peer review and publishing scholarly work. roger678 (2011-09-28 11:47:45) The publisher in this video clip seems so ridiculous. In opinions there are two alternatives to solve this problem. The ﬁrst for the author to put her article or research on the Internet and make it freely download to everyone. The author may not get too much from doing so, but it helps spread the knowledge and increase the social welfare. The other alternative is for the publisher to pay the author and her co-worker or even the university in order to have the copyright. Joshua Gans (2011-09-28 13:38:59) Update: Princeton has banned academics from handing over copyright to academic publishers. http://theconversation.edu.au/princeton-bans-academics-from-handing- all-copyright-to-journal-publishers-3596 calvincylam (2011-09-28 14:28:28) I believe a viable pricing model could be a variation of the hybrid open access model. The publisher can oﬀer an open access option which publishes the articles online for free, but only for members who are subscribed for a small annual fee. Hence, the author can gain visibility and a higher opportunity for their work to be cited, and the publisher can also earn a steady stream of subscription fees from its members. An example of an academic publisher is the American Society of Plant Biologiest. http://www.aspb.org/ Member pays a fee of $130 and are oﬀered free Open Access Publishing in Plant Physiology. jongsukjosephshin (2011-09-28 21:17:18) ”Wiley s mission is to be a valued and respected provider of content products and services, in print and digitally, that help our customers achieve their personal and professional objectives while making important advances in knowledge and understanding around the world.” If so, they should version the articles. Those who need it most, charge them. Those who don’t need it, don’t charge them. But diﬀerentiate the product. avitania (2011-09-29 18:08:57) It seems that the publisher in this video clip wants everything for nothing! Perhaps a better solution would be for the publisher to pay a licensing fee to the researcher/academic institution to publish the paper. This way, the researcher/institution gets some compensation while the publisher makes money from journal subscription fees (from libraries and other academic institutions, where access to the journals are generally restricted to students/other aca-
demics). Additionally, the researcher could make a diﬀerent version of the paper that can be purchased by the general public (non-academics) – for example, this version may not include raw data or other advanced information that people outside the academic community would not be interested in. This would give the researcher an additional way to monetize his research without taking away from the publisher’s ability to proﬁt from the academic journal. In any case, the rights to the paper should stay with the researcher (and/or the academic institution which funded the research). It doesn’t seem right for the researcher to give up those rights to a publisher that can make proﬁts from selling access to that paper in perpetuity. jackyzee (2011-10-02 21:35:07) would it be reasonable for the government control academic publishing speciﬁcally? Can Canadian universities get together and start up their own publishing group purchasing academic pieces at a reasonable price to help mediate the market pricing of academic articles?
New Blog: Digitopoly (2011-09-28 12:48)
You may be interested in a new blog on the digital economy: www.digitopoly.org. It is a joint project between myself, Erik Brynjolfsson and Shane Greenstein. Lots of relevant stuﬀ for class.
sharadsharma12 (2011-09-30 13:13:38) The article on bias to user reviews/ratings is an interesting one. It touches upon a very interesting hypothesis about reviews. Apart from the ratings, I feel that the brand image of the hotel or the resturant that is being reviewed also plays a very important role in traﬃc. Even if the ratings are not good, hotel adverstisement (be it digital or media) also eﬀects the overall traﬃc for that hotel. However, if a big group of customers collude and start posting bad reviews for a hotel, its image is surely going to take a hit. But the possibility of customers colluding together is very rare. So I dont think one oﬀ reviews will have any major eﬀect on the organization. Karan Mehta (2011-10-02 23:36:20) Awesome blog! I love the logo. Question - How do you have time in your day to manage all this?! Alex Semine (2011-10-05 04:06:29) Here’s an interesting article where Miramax CEO Mike Lang and Netﬂix chief content oﬃcer Ted Sarandos gave a keynote talk at the MIPCOM conference. The two discussed the challenges they face in the continuously changing digital world. Both agreed that piracy is not much of an issue as long as you give consumers what they want. Digital monopolies, such as Apple s dominance in the music industry, are a far bigger threat. http://torrentfreak.com/digitalmonopolies-a-bigger-threat-than-pira cy-says-miramax-ceo-111004
Harry Potter and the Question no one Asked (2011-09-28 16:03)
OK so I understand why you bought two copies of Harry Potter and the Deathly Hallows in 2007. Why do you still have both copies today? [For those who missed class, here is the context]
sharadsharma12 (2011-09-30 13:16:48) I agree with Martin as well. I also have all the Harry Potter books with me. I guess more than the content it is the emotions thats attached with that book that stops me from selling it in seconds market. I feel that emotion aspect will always be missing with digital books. People have emotions attached with their books which they can’t associate with ebooks. This might be one of the reason why ebooks are not as popular as other digital contents avialable in the market. jovanatanackovic (2011-09-30 12:32:54) My family used to buy movies all the time. The only movie I’ve bought in the past 5 years was probably The Dark Knight. I doubt this applies to everyone, but demand is deﬁnitely spiraling downward, and it will for books as well as the e-Book industry continues to expand. shunichirotago (2011-10-01 17:26:27) I’ve done almost the same thing with Mr.Joshua. I’ve two copies of Harry Potter and the Deathly Hallows too. One is hard covered and the other is paperback. I bought the paperback when I wanted to re-read the story even though I already had a copy of hard cover version. The reason why I did so is quite simple. Since I was thinking of reading it little by little, portable one seemed to be more convenient.(It was reluctant to carry around a heavy, hard-covered book) Although, I know I was a kind of fool to have paid another $50 just for ”convenience”, people sometimes do a thing like this. However, in my case, a better solution might be to purchase an e-book instead of buying another copy. Probably I wouldn’t have done such a silly purchase if I had known more about ebooks, but soppose new Harry Potter were to release. Even though ebooks are both convenient and re-readable, I’m sure still a lot of people would purchase hardcovers to enjoy the physical feeling of turning over the leaves and this is what we’d never experience with ebooks. jovanatanackovic (2011-09-28 17:45:47) Why wouldn’t you still have both copies? You’ll probably get nothing for the book if you try and sell it since everyone has already read it, and it’ll also be a used copy. So you might as well keep it or just throw it away. Or you can give it away, if you can ﬁnd someone who hasn’t yet read it. Taylor O (2011-09-28 17:58:00) Half.com is selling ”Good” or ”Very Good” condition for as little as 75 cents (USD). It’s a stretch but ”Like New” is going for $5 to $5.22. Probably not worth the time of a *prominent* professor to spend time at the post oﬃce or writing witty descriptions. It also makes a great class prop well worth the potential $5. vbork (2011-09-28 18:01:32) By the time you were done reading them, the return policy probably expired(if you had one), and the books couldn’t be resold for too much money, so the time you invest into trying to sell these would not be worth the small amount of money. jongsukjosephshin (2011-09-28 20:35:43) Maybe because JK Rowling isn’t too keen on ”digitizing” her books? And Harry Potter has become an icon of a generation. There is deﬁnitely emotion attached there. You still have two due to the failure of the e-book industry to 1. convince JK to digitize her content and 2. work out a viable plan that allows everyone to read whatever, wherever, however with others. Ivan Yuen (2011-09-28 21:34:37) This relates to my biggest issue with ebooks. Unlike pbooks, you can’t resell your ebook. That’s because you never really ”own” it. When you ”buy” an ebook, you are really just buying the rights to access it the way they have restricted you to (reading on certain devices, lend to a friend if they are so inclined) If the company (Amazon, Kobo, Apple)
ever goes out of business or chooses to exit that business, say good-bye to your library of books. With pbooks, you don’t have that worry, and of course you can sell it on the secondary market and recoup your initial cost. Alex Semine (2011-09-28 22:38:00) Did you read the comments above? I think we’ve established that even that physical copy is worth next to nothing if you include the hassle. Alex Semine (2011-09-28 22:38:40) Because you haven’t gone camping yet or it hasn’t gotten cold in your house so you’re saving it for ﬁrewood? asadkhandigital (2011-09-28 23:45:17) It’s not necessarily about reselling the book or not. Many people pride themselves on having an extensive, physical library of print books. What Ivan is saying is that with ebooks, that library can be stomped on and destroyed by a big foot in the sky (ie. exit of issuing business from the marketplace, copyright issues, technical issues). With print books, nobody can break into your house and burn your library. You truly own your Harry Potter hardcover; you own the rights to read your Harry Potter e-book, and will always be governed by the rules, such as ”2 week lending”, that a company like Amazon puts in place. There’s a magical moment when grandpa passes down a book that inspired him in his life journey to his grandchild. An e-book would get lost, corrupted or deleted well before grandpa has that chance. While ebooks are convenient and valuable in their own right, it will be a sad day in human history when the last print book is replaced by an ebook. Martin W. (2011-09-28 23:53:57) My guess is your family loves Harry Potter so much you plan on re-reading the entire series together again! avitania (2011-09-29 18:20:15) I’d have to agree with Martin. Or asadkhandigital. Perhaps you’re like me and enjoy having bookcases full of nicelooking print books (even when most of my reading these days is done digitally). My only other guess is that you’re a hoarder? ;) patrickchoy (2011-09-29 20:14:37) It also isn’t limited to books. Lots of people enjoy collecting movies, and items that may be interesting to them. That way, they are able to re-read or re-watch it in the future. ricardogrinberg (2011-09-30 15:26:28) Collectors also keep their books as assets to sell them in case there is an increase of the value of the book over time. Also my mother always told me not to trow away books because it was bad education!!!! connietai (2011-09-30 19:26:55) While it does seem redundant to have two copies of the same book, Harry Potter is such a classic and I think it’s somewhat justiﬁed. Perhaps you can use one to ’decorate’ your bookshelf and the other one to read again, lend out, let your kids read it, etc. I don’t know about you, but nothing bugs me more than having a beautiful book dog-eared by the person I lend it to! :) fredzhu (2011-09-30 22:28:34) Clearly Joshua is not going to get rid of these two copies any time soon. He has had them for 4 years and brought them all the way from Australia to Canada. My guess is that he is going to keep them until an apple e-version releases. He reads on his iPad.
fredzhu (2011-09-30 22:33:26) The value of the physical copies could be signiﬁcant to Joshua as there is a nice story behind these two copies. They can be shown to us to demonstrate the value of e-books. So from this perspective, the copies are worth keeping. fredzhu (2011-09-30 22:38:39) Clearly with so many copies sold there might be little value of the Harry Potter books in the future. jackyzee (2011-10-02 21:15:05) Unless absolutely need some quick cash say professor Gans lost a poker or something hehe.. I’m guessing two reason why people don’t sell their books. 1. Used copy is worth less than 10 $. Is it really worth it to ship it out and sell it. 2. For referencing (I love to collect books. Personal library at home always impresses people) Books have been around for over 5000 years. I propose to ask a question! Would people be interested in keeping an electronic copy on their computer? Is it still a tradition to keep the books that you have read on your book shelf so that you can: 1. display it to your friends that you know your stuﬀ. 2. a way to keep track of personal library Eugene Oulman (2011-10-02 21:23:12) Used phsical copies can still be valueable by having been signed/autographed ... ur1dataman (2011-10-02 21:24:54) I think there are 2 reasons. 1. Gans might feel the time needed (posting, negotiating, shipping, etc) is not worth the money he’s getting. He would rather spend that time working on his blogs. :p 2. like many have said, he might value this edition of Harry Potter so much that he wants to keep both copies just in case he loses one in the future. Eugene Oulman (2011-10-02 21:32:26) Perhaps they are part of some special edition, either limited release or exclusive in some other way, making it valuable to hold on to? paulsmerchanski (2011-10-02 21:36:20) They make great paperweights! alicesisili (2011-10-02 22:35:58) Seems to me that the reason I don’t sell my books is that they make up part of my memories and I can recall how I used to feel when I read the books again. Unlike textbooks that become out of the date, novels, especially the ones I love, are worth more than the money I can get from reselling them. Karan Mehta (2011-10-02 23:30:10) It’s all about the prestige of owning the book! There are some things in life that are too precious to dispose of, and this probably falls into that category given the emotional weight that it carries. Also, given the fact that Joshua has written about this on HBR, relates it to economic theory and the value of information, and uses it to communicate concepts in class, there is really no added beneﬁt of selling it. myraelbayoumi (2011-10-03 09:51:21) Why get rid of it now when it could potentially be gifted to someone as a collector’s item later?? ha! Chen Sheng (2011-10-03 13:36:11) This makes me recall my high school experiences. I had this novel written by my favorite writer and my friends kept borrowing it. But apparently they don’t care much when they read the book. By the time they gave it back, the book was dirty, crumpled and old. And I ended up buying another copy because I can not stand my book being ruined. So I guess it might be a good decision to keep two copies and lend one to others while having the other one on your shelf
and become one of your collections. digitalworldme (2011-10-03 16:11:39) I guess the value of keeping these two books is much higher than just selling them as used books. As you mentioned that these two books represent a memory of you and your wife, which is something intangible can not be measure by money. Also maybe that edition of the book does not exist nowadays, so you want to keep them as long as possible. kamaljeetsingh (2011-10-04 20:38:59) I kind of agree with Sharad here. I have been a keen book collector and I have almost all my books that I attach emotional value with. I also collect books because many times I want to re-read them and e-reading isn’t half as much fun for me as ”real reading” mccarthycaroline (2011-10-04 22:50:40) I agree with this, I have great memories of reading some books and feel like it would be a crime to get rid of them. Even if you ”lend” them to someone else and they aren’t returned, its hard not to get a little upset even if you never plan on reading them again. They are almost like keeping a photo around on display, when you look at a favorite book you remember how much you enjoyed reading it. I think this especially goes for books that are gifts, our family always exchanges books at Christmas. I can’t imagine an ebook ever having quite the same eﬀect when given at Christmas. anchenyi (2011-10-10 23:43:38) I am just not a big fan of Harry Potter. I have never seen the movie series and the only book I ever bought is the 1st volume and I clearly remember I did not ﬁnished it! Anyway, everybody have their favorite. For me I only purchase and keep the ones I think it is valuable or useful for me. Otherwise I will just try to borrow from others or read it on-line.( Sometimes I do download pirate copies to my ebook reader, sorry..) Karen Leung (2011-10-11 20:56:01) My guess is that the books aren’t worth that much and it’s too much work to sell - might as well keep them... and bring them to class to show them oﬀ... Will we get an oﬃcial answer to this question any time soon?...
Monday morning critique: App Revenue (2011-10-03 05:55)
Here is a recent survey of how game developers make money on the iTunes app store. What do you learn here that could help in game development and commercialisation?
hank008 (2011-10-03 10:18:32) Here is what I see and learn from this survey: The situation that we face today is that few dominant developers make huge proﬁts while others almost earn nothing and hard for them to survive. It means that developing a brand new game requires your creative ideas. (should be distinctive, outstanding, ”ﬂash of genius”, otherwise you won’t make money) In general, professionals(game companies or full-time developers) earn more money than others, and on average more people involved in the research and development, more earning they could receive. Additionally, if developers continuously launch new games, they will have substantial improvements.
ricardogrinberg (2011-10-03 10:35:58) I think that there is strength in numbers and groups of developers really makes the diﬀerence compared with single developers. For instance, the initial Angry Birds idea was created by Jaakko Lisalo where he only presented a sketch of the characters, but after the team liked the characters they altogether designed a game around that. So I would say that the probability of success, and the higher revenues that comes with it, gets higher if a team is involved in the development. Also, a fact that I found very interesting was that having complementary activities around the game such as ads and aﬃliate links can bring additional revenue. This gets me thinking about potential business models that developers can make without focusing 100 % in the game itself but rather in the chain reactions that the games could have. Who knows maybe mobile games development can be paid through sponsorships of brands that resonate with that game and can reach consumers in more creative ways. adriennefriesen (2011-10-03 11:33:23) I liked the author’s conclusion that the more games a developer makes, the better they will do per game. It’s a risky business though since you could continue making games but never really see a signiﬁcant proﬁt... maybe developers would be better oﬀ working in larger teams? I was surprised to see that the teams were usually 5 people or less while traditional video game development teams are much larger. More people = more creative ideas = better chance of ﬁnding a solid point of diﬀerentiation = more sales? Chen Sheng (2011-10-03 13:06:27) The article generates the idea that the more people you have and the more game you make, the more money you can earn. This is quite true because ﬁrst, by having more people, you are able to get more creative thoughts and ideas. There is also a clear division of each people’s work. Everyone could concentrate on the part which they are good at. More people means more eﬃciency and maybe higher quality of games. The other factor is the number of games you made. This is not only a numerical number but also the brand value and reputation you have created by developing those games. People tend to ﬁnd other games you developed after they ﬁnd one of your games interesting. My personal experience is that after I became addicted to the iphone game fruit ninja, I bought another game, monster dash, which is developed by the same company. The reason I bought that game is because I believe that if one company could create such a wonderful game like fruit ninja, its other games could not be that terrible. And this might explain the conclusion showed in the research that more games usually means more money. patrickchoy (2011-10-03 15:28:16) Interesting article. I was surprised by how the top 20 % of the developers are making 97 % of the total revenue, as well as how the the game companies is dominating in revenue. While this is to be expected, I didn’t think it was by such a large margin. One question though. I wonder what the prices of the more successful games were, and if there were free-to-play version of them? is there a connection there? and was this tactic better applied by some of the developer types than others? philduong (2011-10-03 16:55:24) Very well summarized article. I feel that the success depends not only gameplay itself, but the marketing and packaging of the game. Large teams of developers with funding can attract talent that will promote the games much better than a single developer. For example, the premise of angry bird has been recycled multiple times, but why is angry birds the most successful? It is because they were able to market and package the game in a diﬀerent way to appeal to a greater audience. kumarsidhartha (2011-10-03 17:16:10) What I found particularly interesting was that the Median Revenue by Number of Developers and the Median PerGame, Per-Month, Rev by Number of Developers is highest for the shops that have 10-19 developers. Since, the next bucket is just 20+ and not stratiﬁed any further it is hard to draw ﬁrm conclusions but the data does seem to suggest that there could be a size eﬀect i.e. Small studios (10-19 developers) that are niche companies for developing games
hit the sweet spot in terms of maximizing revenue/game and also revenue/developer. If this were true it would mean that the successful ﬁrms are ones that are big enough for getting a reﬁned and polished product into the market but small enough to ensure that the creative juices are still ﬂowing. Thoughts? calvincylam (2011-10-03 18:12:24) One aspect that I found particularly interesting is the non-sales revenue from ads and aﬃliated links. If you look at the console or computer games, the main source of revenue are mainly from the purchases. This creates a new channel to market your game towards companies that are interested in the target audience. For example, a soccer game can incorporate ads for sports wear companies like Nike. This new revenue source adds a new dimension to the business model of game development. John DiGiacomo (2011-10-03 19:10:22) I was intrigued by the same graph. According to the data, a 10-19 person team earns about 33 % more per month per game than a 20+ person team. This suggests that there is a ’sweet spot’ for the number of developers working on a game. Granted, the study is not perfect, but this appears to be a signiﬁcant drop oﬀ. On one level this seems to make sense as the slightly smaller team may beneﬁt from fewer roadblocks to creativity. On the other hand though, a larger team should be able to produce more games and increase their chances at a ’jackpot’ like Angry Birds. Alex Semine (2011-10-03 21:07:53) I think this is probably the easiest to enter the market. I was thinking more along the lines of actually having the company name or logo’s or items IN the game, say a running game where every athlete is wearing adidas. The only thing is the company will have to choose you (among a growing number of developers) to actually allow their brand to be in your game, and then actually like your game so much to give you money for it. That’s the best way, the only caveat is if the game revolves around the company (especially if it’s called something like ”Adidas Soccer Tournament”, then the sponsor will want a share of all proﬁts most likely, otherwise there’s nothing in it for them). The second best way is the traditional ad approach based on ’hits’. bharatbhardwaj (2011-10-04 01:20:54) The data does make sense. It follows the similar pattern of consulting ﬁrms. Larger consulting ﬁrms are able to generate more revenue as they have access to talent and better resources whereas individual consultants are not able to. Bigger development houses have access to better resources than small ones. Another thing which may play a big factor is the freemium model. Large ﬁrms would be able to make a free version of the app which lets people sample the app and purchase the full version. Angry birds has the same model. Smaller ﬁrms may not have the resources to come up with the free version bharatbhardwaj (2011-10-04 01:23:19) economies of scope. larger teams are able to promote more apps and generate more revenue. jamiepalooza (2011-10-04 11:47:36) I’m not an expert on the consulting industry, but something tells me that comparing mobile game-makers to consultants is a bit of a stretch. I agree with the freemium model though. Not only making teasers, but integrating ad-supported free versions of apps requires time and manpower that only a larger mobile game-maker could aﬀord. One thing I also wonder is if these game-makers are accounting for the fact that Apple and Android takes a 30 % cut on their revenue? That is a signiﬁcant number. jovanatanackovic (2011-10-04 13:56:21) On the topic of the freemium model, I’ve noticed that on most consoles, the demos that are usually available are for the more well-known and popular games, which usually have a greater number of developers since they have a reputation to live up to.
Dan Velan (2011-10-04 14:25:34) I believe ngmoco, an iPhone game developer that was sold last year for $400m, oﬀers all of its games for free and then relies on in-app commerce for revenues. I haven’t seen publicly disclosed ﬁgures for its revenues, but I saw an estimate that put them in the $30m ballpark at time of sale. In general, I think this is the most successful business model we’ve seen for mobile games, but it takes developers with scale to pull it oﬀ. I wonder how it’s accounted for in the report’s revenue ﬁgures? elyte18 (2011-10-04 19:13:10) I think its really interesting to see how wide spread the distribution is when it comes to revenue earned oﬀ of games. It almost seems equivalent to people starting out bands hoping to make it big and be that success story - its the newest interpretation on the American dream. It’s mind boggling that 20 % of the developers are earning 97 % of the revenues to be gained from app developing. As the author wrote, the more you try, the higher your chances are, but with such a small window for proﬁts it leads me to wonder why people are even trying at all, especially when Apple takes a 30 % cut. I came across an article online that iPhone app developers earn, on average, 9 times more than people who are developing apps for Android, which leads me to wonder how much the Android developers are making on average. As we discussed in class, Apple iOS is the industry standard and has become the ”Hollywood” of the mobile world with developers ﬂocking to the platform in the hopes of making it big. http://www.gomonews.com/iphone-app-developers-earn-9x-more-than-andr oid-writers/ kamaljeetsingh (2011-10-04 20:29:25) While the graph is quite interesting, I really don’t think 20+ teams would be getting a hard time getting their creativity ﬂowing. I guess there is only that much developers can get out of an app/game before the frenzy ﬁzzles out. kelvinchunkileung (2011-10-04 21:32:05) It is clear that the more IOS games you’ve made, the better quality of the games are, and hence developers make better proﬁt. Surely, iPhone/, iPod touches, and iPads are the noms of the technology nowadays and games on these devices are a must! Despite some of the games are really stupid (in my own opinion), i do the believe that the general quality of the IOS games are improving overtime. Well so this will also gives us some economic intuitive: as the game’s market is proﬁtable, more talented developers will join into the industry. This developers will therefore make better games since they may afraid of being kicked out by the other competitors; moreover, the price of the games will go down. (good games on the app store is usually $9.99) Ultimately, consumers will get beneﬁts from here as they will enjoy better games with a much lower price than what we are experiencing nowadays, which is great! sangwaic (2011-10-04 21:47:28) It is quite fascinating to ﬁnd that a large %, about 50 %, of game developers are independent, individual developers though it is clear that they do not make much money working alone. Clearly the median per game revenue is much higher for developers who released more games, however it would be interesting to compare their revenues across the games they developed over the years vbork (2011-10-05 01:38:26) Most of the data is based on revenue and not proﬁts. Obviously a team of professional iOS developers will have a higher chance of making a successful game than a computer science student trying to make some money on the side. Along with a larger team of developers come bigger expenses. A team of developers will collectively have higher resources, skills and creativity to make a successful game. jennachou11 (2011-10-10 09:02:05) Good News everyone who loves cratoons! Netﬂix is negotiating n exclusive license to feature Dreamworks producctin. I was searching for Madagascar but no luck ﬁnding the ﬁlm.
Buy a friend a digital copy (2011-10-04 18:28)
Following up from the discussion last week about buying a digital copy for a friend, this popped up on Steam
(the video game app store) today.
Martin W. (2011-10-04 21:12:12) I hear Portal 2 has a great co-op mode. This is a nice way to get friends to split the cost so they can play it together. So tempted... calvincylam (2011-10-04 22:09:41) My friends and I actually bought a game called ”Left 4 Dead” from steam before. It was bundled as a package of 4 licenses (because there were 4 characters in the game) and then received a digital copy through the steam client. It was a great way to market the game and attract a group of customers. leonardoluo (2011-10-04 23:44:59) It s about product bundling. It is trying to capture the proﬁt from all the customers. Option 1: $14.99/each Portal 2 copy Option 2: $13.75/each Portal 2 copy Option 3: $14.99/Portal 2 + $2.5/Portal bharatbhardwaj (2011-10-05 00:22:04) Its a good way to reach the ’tipping point’. Get enough gamers to spread the buzz so that the product become a hit!!! vbork (2011-10-05 01:25:04) Co-op games like Portal 2 and Left 4 Dead are a lot more fun if you’re playing with somebody you know, rather than a random on the internet. Even if some games aren’t that fun, the sheer fact that you’re playing it with a close friend makes it that much more enjoyable. Alex Semine (2011-10-05 02:32:56) It’s awesome how you brought this up! Steam is one of the most amazing (and successful) examples of bundling at work. Check out anything by paradox entertainment on Steam (such as Magicka), and the way they bundle like 10DLC’s and the game for $25, versus buying them all separately for $50+. Having said that, Portal 1 &2 are one of my favourite games of all time. My friend actually got the pre-order special of Portal 2 which was I *think* $60, and came with an extra copy for a friend, which he gave to me for my bday in April. Leonardo already pointed it out; it’s just about securing the largest proﬁt from all segments. Some people who may not have played Portal 1 will look into option 3, or even those that have played it and beat it, but may want to replay (or own a copy for themselves) for the cheap $2.5 extra! TL;DR: The punchline here is you have to know not only the price point(s), but also WHAT
to bundle, how and when (think: ”Oh it’s Christmas, I wonder what deals Steam has on right now!”). luipuichun (2011-10-05 15:34:59) I think this strategy will only work on the online games, because this strategy can attract you friend to play with you online which may possibly increase ”the utility of playing” haha jongsukjosephshin (2011-10-07 16:41:50) Maybe Blizzard should go into the App business, sell it as role playing games, make some money and entertain the customers. Then several people can play online. A cheaper way to spend time waiting for D3. roger678 (2011-10-08 10:56:17) It gives the customer another option, that is buy one more game for his friend so that they can play together. It’s a very smart way of marketing since the buyer himself helps in marketing the game when he asks friend to join. jennachou11 (2011-10-09 09:59:25) While I was purchasing the textbooks for this course I have to be honest and say that I tried searching for book torrents. Just like the gaming bundling priing strategy, suggestions of other books that might be of interest can be downloaded at a discount. THe more you purchase the more you save. I am not a gamer and I have never heard of these games (what is it again? srolling up... ”Portal 2”), but the bundling strategy is used by many diﬀerent industries online. Another example would be online clothing (I am too lazy to go walk around Eaton Center). I am sure everyone can think of an instance where ”buy one get 2nd 50 %” or the likes.... On that note, BOGO takes it all the way with bundling (or can you really deﬁne it as bundling in this case? i hope someone can reply to my question) Speaking of the devil... Armani Exchange are having lots of bundling examples right now... for those A/X lovers....;) Here i post my question again: Does BOGO count as bundling? it’s permanent and the 2nd is a giveaway.... in a way it’s bundling because the 2nd item has to be cheaper than the ﬁrst to be BOGO applicable, but the free give away part is like extreme form of bundling... I hope prof Gans can enlighten me with his opinion. Thank you
The Long Tail (2011-10-05 11:00)
What is your most obscure ”long tail” item? Extra like if you actually bought one.
tanvishetty (2011-10-07 09:29:13) the schematic of the USS enterprise-D , from Star Trek - the next generation Taylor O (2011-10-05 11:21:32) Paradoxically, though I realize most of my music, reading and consumer purchases are not in the best seller aisle, the internet makes it feel like they’re popular so I hesitate in answering. That said, a wooden watch from WeWood, an inﬂatable AirZone tent and a Lomography camera are sitting next to me and I’m listening to recently released actual records. Walmart/Target probably won’t have these on their shelves anytime soon. jytsao (2011-10-05 11:40:20) I bought the limited edition of an album (I believe they capped it a 300000 copies in Japan), even though I had access ﬁles to the songs an electronic source already. I seldom buy physical copies of music CDs, but it was the fact that there were only 300000 physical copies ﬂoating around in the world that convinced me to buy it. I don’t think this is an example of something obscure, but it certainly was an impulse buy. The CD’s been left on my shelf untouched for about a year now. What was I thinking...
shunichirotago (2011-10-05 12:04:28) My Japanese Anime DVDs are kind of ”long tail” items since now I can ﬁnd them only in ”Amazon market place” or ”yahoo auction” oﬀering relatively high price. Most them used to broadcasted for a year but they did not become popular as I expected so there are only limited numbers of DVD copies in Japan (or world). Thanks to Amazon marketplace and yahoo auction, I managed to get all DVDs I wanted. (In exchange for most of my savings...) Karen Leung (2011-10-05 16:47:54) I used to collect tarot cards, and some of the ones I bought were highly limited editions only available in Italy and some other European countries. Before the times of Internet shopping, I used to have to travel to specialty stores in downtown to try to ﬁnd these items - most of the time they were not in stock and I had to place special orders, and pay premium prices for them. Since Internet shopping became more popular, I was able to ﬁnd some very rare tarot cards (limited to production of 1000 or less) through certain online stores and prices are really not that bad compared to what I used to have to pay. Avi (2011-10-06 12:07:44) Bought Bend It Like Beckham soundtrack over two years after the ﬁlm’s release :) Nilay Goyal (2011-10-06 12:59:01) For me, sharing old songs on Napster were perhaps the ﬁrst of the obscure ’long tail’ items. But I really cherish accessing some old comics online. I know a drummer friend of mine who actually purchased some unique African traditional percussion instruments from eBay. We never had an access to such ’obscure’ items before the internet. jovanatanackovic (2011-10-06 13:54:55) Harry Potter trading cards. I don’t know why I have them, because they actually suck, although they do look nicer visually than my Magic cards. Iris Zhou (2011-10-06 19:28:22) I bought a pair of Nine West running shoes from its online store four years ago when people would not expect or want to buy running shoes from Nine West. Today, running shoes are still rare to be found in Nine West s BM stores; however, the company has been making money from this obscure long tail product from its online store since long ago. jongsukjosephshin (2011-10-07 16:44:24) diablo 2, the original. This was about six years after its initial release and three years ago from today. Took me a good three days to ﬁnd it at a physical store. garyyip1985 (2011-10-08 02:10:26) My best friend likes to collect coke items. So for his birthday this year in June, I went on ebay and bought 4 bottles of the discontinued coke ”blaks” for $60 bucks. Obscure item, obscure price. Pic: http://1.bp.blogspot.com/ ns651J5r6eQ/TQ3mLyfFS4I/AAAAAAAAD4I/Ms3- G2kfokE/s1600/coke blak.jpg adriennefriesen (2011-10-08 13:36:48) Cookbooks. If you are looking for a very speciﬁc one (by a particular chef), it’s unlikely that Barnes and Noble carries it in stores and their online prices are higher than Amazon’s. jennachou11 (2011-10-09 12:09:52) Winnie the Pooh ”Peek-A-Pooh” collections. THey are the ones that you can get with a toonie, llsturn the knob, and a plastic ball falls out (like the gum balls). I am sure a lot of you know what i am talking about. Well, after spending around $200 collecting them via the ”vending machine”. Usually i am really lucky and were able to get diﬀerent Poohs
and complete th new series, but I ran out of luck with the horoscope set, and essentially wasted $20+ getting the same one over and over again. Now, the problem I had was that Disney continues moving on with new series, and the old ones would no longer be seen in any of the vending machines. But what if i am missing one to complete the set?!!!!!! NOOOOO!!!! The previous series are actually categorized as ”collectibles” because Disney takes them oﬀ public circulation when a new series is out. The only way to obtain the older series would be from other people. That;s where eBay comes in... I never purchased any collectibles from eBay, usually it’s after-market car parts such as exhaust system and short shifters and etc etc.... but after purchasing the missed items in my series collection, i realize it is so much more aﬀordable, a set of 8 Poohs would be around $20+ shipping, which is deﬁnitely more economical and certain the series would be a complete set. For the ones who like to gamble, I believe more money would be spent on trying to complete a set of 8 in a seeries thru the vending machine than if you purchase from eBay. Well at least that is my case.... (I would attach aa photo of a cute Pooh but What’s interesting is that these Pooh’s have similar characteristics as antiques, the older the series, the more expensive it is. As crazy as it seems, i have seen the set for series #1 with 8 Pooh ﬁgures going for $80+, and a set of 8 series costing $200+ (I didn’t buy it) anchenyi (2011-10-10 23:27:42) I collect the whole collection of a japanese comics— Doraemon when I was a child in CHINA. They are obviously ”long-tail” items since you cannot possibly ﬁnd them in normal bookstore in my home country. However, as I know, a lot of people like this comics and start to buy it online, but the version is no longer the one i get. Maybe mine now becomes limited edition....... Karan Mehta (2011-10-11 20:17:11) A handmade, customized ring plate for our wedding from www.etsy.com :) I have a picture but not sure how to share it. jennachou11 (2011-10-14 01:19:12) Dude... North America is sooooo behind!!!! I have been collecting Hello Kitty’s everytime the family goes to Japan (it’s more special when it’s from Japan in a litte kid’s mind). That was like wayyy back before 1990s. It’s funny how N.A caught on like 20 years later. but only Hello kitty, no kerope or other characters btw I do collect comics too... an animes... my fav is Ranma.. and that is sooooooooo the deﬁnition of LONG TAIL! It’s from way back in the early 80\s, just like Totoro and The Castle in the Sky you can actually watch the movie in 6-8 broken episodes on you tube... but Ranma is super har to ﬁnd....
iPad competitor (2011-10-06 09:15)
This Montreal company has launched a tablet for just $48. Tanvi Shetty wonders whether you think it will be an iPad competitor or not. Your thoughts?
jovanatanackovic (2011-10-06 10:35:36) A lot of people have enough money today to buy iPads. I know there is still a large popular of poorer citizens, and this tablet might appeal to them. But you’re not going to get loyal Apple customers to switch because of the cheaper price. Apple has never been known for cheap prices and won’t have a problem with this new tablet. The majority of the people this tablet will attract will be those who are not willing to spend a huge sum on money on apple products.
maryammoshiri (2011-10-06 10:54:21) I agree that Apple consumers are not concerned with price point, as there have been other tablets on the market with similar capabilities that have been no match. Apple sells a lifestyle and an experience through their machines that this tablet does not have. I do believe that it will be a competitor for electronic reading devices though, such as the kindle. I agree that schools would be more interested in adopting this than just a reading device. It has more options. John DiGiacomo (2011-10-06 10:54:35) I feel this will do very well with consumers who are skeptical about the whole tablet thing. I personally have avoided the iPad until now because I can’t decide whether I would actually have enough use for it to justify the price tag. At $65 for the commercial version, this is a great opportunity for consumers to ’test the water’. maryammoshiri (2011-10-06 10:57:31) John, I think skeptical consumers would be a new target market. They would not be the the segment of the market that wants a tablet, so I don’t think this would touch Apple’s market share. Martin W. (2011-10-06 10:57:38) Agreed mostly, except about ”poorer” citizens. I prefer the term ”cost conscious” :) The new tablet lacks brand recognition, distribution channels, advertising budget, etc etc... There are tons of other tablets out on the market. This is a race to the bottom that Apple isn’t interested in. Might succeed in India where they have had government backing, and the model could succeed if they do decide to target governments. jackyzee (2011-10-06 11:13:00) http://www.youtube.com/watch?v=JoSBpafIQQE jackyzee (2011-10-06 11:17:36) They say here that this product is for educational purposes. University students can use it as a tool. I ﬁnd that this is really smart because they oﬀer it to student for a subsidy and grab market share. Students can also test this product like a beta before it roles out to everyone else. I would buy it :). John DiGiacomo (2011-10-06 11:20:25) Yes, that’s precisely what I’m saying. I don’t think Apple’s share will be aﬀected by this. If anything, it may make people realize that they want to upgrade to an iPad. Avi (2011-10-06 12:00:13) It will be a RIM Playbook, Samsung Androids, HP Tablet etc. competitor. Not an iPad competitor...at-least not for now. paulsmerchanski (2011-10-06 12:05:52) Apple plays in the premium end of the market so this new product should have little to no eﬀect on iPad sales just as low cost laptops haven’t cut into MacBook sales. nikhilmahendra (2011-10-06 12:32:49) The new tablet ”Akash” has been launched for a very diﬀerent consumer segment than what is currently being targeted by ipads, playbooks etc. The targeted consumer base for this tablet is not only students in universities but also rural and backward areas in India, where the government wants to help increase the reach of technological developments so that more people can beneﬁt from it. I am talking about the people who cannot aﬀord even workstation and laptops , so it is not being promoted as an accessory (not for now atleast) in the Indian market. Although , I don t see this tablet to be threat to the Apple ipad or other playbooks in this segment, the launch at this price will help us realize the premium one pays for the Apple brand.
tanvishetty (2011-10-06 13:48:37) I agree with Nikhil. Although this is unlikely to be a serious competitor for the ipad, i do think it will be useful for people who want something practical like the ipad, but without the high costs and all the excessive applications that come with it. I think it will be particularly useful for school and college students, since it provides them with the basic applications. I know that my high school is planning on buying all its students an ipad.Perhaps in this context Akash would be a competitor for the ipad, because it’s cheaper and provides all the necessary features that a student would need. irisxinzhou (2011-10-06 15:40:07) Agreed with Nikhil. Initially targeting almost 85 million of students from grade 9 to university in India, Aakash meets the local demand for an inexpensive mobile device for mass use. With a $23/unit subsidy (resell to students at $25) from the Indian government, it deﬁnitely has humongous potential in the local market. However, iPad has never tried to compete in the same segment. As the company will launch a commercial version of the tablet called UbiSlate in the US and the UK market by December, it will be interesting to see how will they position the product. With a 7 screen, a battery life of 3 hours, and design to perform standard tasks such as streaming HD video and reading Ebooks. UbiSlate will be priced at $189 including a two-year data bundle. Compared with a much sharper looking iPad with a 9.7 screen, a battery life of 10 hours, over 200 features and 140,000 applications available, will the consumers be willing to pay $189 for UbiSlate? Nilay Goyal (2011-10-06 18:40:59) I guess everyone agrees to the fact that Apple iPad is not aﬀected by this tablet. I am surprised to know that the tablet does not have an access to the Android app store! I believe this is because of the tablet’s hardware limitations, most of the Android apps might not be able to function well for this tablet. However, this tablet unleashes a huge potential market. Just to recall, much of the telecom boom in India was due to the availability of dirt-cheap cellphones in the market. Now, we see most Indian users of cheap cellphones moving to better cellphones and smart-phones. I totally agree with John DiGiacomo that this tablet might actually be a good sign for iPad. shunichirotago (2011-10-06 20:26:10) Apple iPad is a product which was launched to ﬁll the blank between mobile phone and laptop. Mobile phone, tablet and laptop are being in a state of proper equilibrium in terms of its capacity, size and price. (Someone might say iPad is too expensive or whatever) Although it has kind of ”standard capacity” to be a tablet PC, I don’t recognize ”Akash” as a real tablet like iPad. I know it’s cheap, but may be it doesn’t have enough power to be ﬁtted between mobile phone and laptop. For me, ”Akash” seems to be a product which is ”dangling in the air”. bharatbhardwaj (2011-10-07 00:38:24) I believe only govt’s will be the main customers for such a product. No matter how cheap you make a product, customers want the world. With no access to the andriod app market and only a 3 hour battery life, i dont see this product being a huge success. Every home in India does not have internet; forget Wi Fi. With only 2GB to store videos, it will be a tough sell even for educational purposes. Alex Semine (2011-10-07 03:19:09) ˆ Lol so you’re saying that this tablet will either have 0 eﬀect or even a POSITIVE eﬀect on the iPad? xP Alex Semine (2011-10-07 03:36:13) Echoing what others have said, I see the world in 10 years with no laptops - just tablets. And, just like current laptops and laptop companies, we will have tablets instead. Everything will be portable, smaller, larger screen etc. - perhaps slide-out keyboards for those that want the physical feel of one. DataWind is the Indian Acer right here. They will grow, they will make money, and no, they will not compete (or even bother targeting) in each others’ markets.
Notably, I have a strong belief that Hewlett-Packard will have a hard time maintaining its current position (if any) in any consumer markets once everything goes tablet and they realise that maybe they should have continued trying to develop a tablet (though, maybe diﬀerently), instead of dropping out entirely. Their restructuring will probably be comparable to Cisco’s currently, and I think they’ll probably retreat back into their corporate IT and printer segment(s). TL;DR: Tablets will replace laptops. kumarsidhartha (2011-10-07 12:02:37) As many have posted in this thread - I don’t believe it will be a target to the iPad or even other tablets out there such as Playbook, Samsung Galaxy Tab. Even the CEO of data wind say’s it himself in an interview with Bloomberg today. Another thing of note that he says is about how they are keeping costs so low and still keeping some room for a healthy margin, and also about other value add services they hope to monetize (albeit not necessarily in the Indian market). http://www.bloomberg.com/video/77113120/ jongsukjosephshin (2011-10-07 16:29:35) I don’t think the product is dangling in the air. First, it’s target market is vastly diﬀerent from what Ipads are targeting for now. Second, this is a prototype. It has potential to make leaps in technological advances. Like the cell phone boom mentioned above, this product is great for those who simply cannot aﬀord an Ipad, never had an apple experience, or prefer less expensive alternatives to the Ipad. Give it ﬁve years and see where it is. Apple had to ﬁght other Android based tablet companies in order to block their entries in Europe. Apple is a carefully managed brand, but in terms of the product itself several others can catch up and outperform. Conclusion: indirect competition to the Ipad. Something to be cautious about if it gains momentum within the mass market in the next few years. hank008 (2011-10-07 21:24:33) The price has been so low that almost everyone can aﬀord to buy one. The function of this tablet can meet the basic requirements (do some basic standard tasks) Their key target consumers will be students, people with low incomes, and some retired people. (If the student want to follow teacher’s lecture, do some simple research, check the e-mails, that will be more than enough!) But to be honest, ”everyone can aﬀord to buy one” does not mean ”everyone will buy one”, the products with low price usually have some ﬂaws or limitations. Thus, a lot of people will not choose to buy that. (the expected mass use may not happen) From my own perspective, I think some tablets with optimized functions, high technologys, reasonable prices can compete with ipad. garyyip1985 (2011-10-08 01:49:14) THIS IS A LEGITIMATE COMPETITOR TO THE IPAD. Re: ”People want the world” - I want my apps! All I can say is if there is a 10million user base - as mentioned in the article - developers will be working around the clock to port all of their apps to this tablet. Re: Snob value - lower price ruins the brand. If tablets ever enter the mainstream and replaces PCs, price-to-value will be a crucial metric. ie. nobody buys the Sony VAIO anymore. This $49 tablet will help the ﬁrm generate $, and the $ will be used to improve the tablet. Over the long run, this is deﬁnitely a threat to apple. Re: The Akash targets students and Apple’s high end clients will never convert History - ”The iphone targets retail customers and RIMM’s corporate clients will not be aﬀected.” Actual Sept 16 2011: ”RIMM misses on lower sales due to competition from Apple’s iphone” (http://www.dailymarkets.com/stock/2011/09/16/rimm-misseson-lower -sales/) The glory days for Apple is over. roger678 (2011-10-08 10:32:36) It will not be an competitor of Ipad since they are targeting diﬀerent groups of people. According to the article, the Ubislate only have very basic functions of playing stream of video, running basic oﬃcial software. The resolution of the screen, the RAM and so on are not as good as Ipad’s. Ubislate is more like a tool to help no income student access the Internet, do some basic jobs.
adriennefriesen (2011-10-08 13:34:34) I can deﬁnitely see where John is coming from. I’ve always been skeptical that I would actually use an iPad enough for it to be worth the cost. $48 is not a lot to risk to try it out and if I found I was using it, I would probably upgrade. I don’t think this eﬀect would happen with the Playbook/Galaxy tablets because their price point is already high enough to be direct competitors with Apple. connietai (2011-10-08 14:11:26) I agree. I think there’s room in the market for two completely diﬀerent segments. iPad is really targeting the premium market - hence emphasis on marketing, design, experience, state-of-the-art technology, etc. The Aakash tablets are great for the segment who cannot aﬀord the iPad, but still want to beneﬁt from basic functions from a tablet such as reading ebooks, watching videos online, etc. I see it analagous to the cell phone market in a way. Although many customers are now switching over to smartphones, there will always be the customers (like my Mom :)), who just want the basic functionality of a phone. I think the Aakash positioning is a really good one because it is clearly distinct from the iPad!! jennachou11 (2011-10-08 23:55:45) I can’t live withot my iphone, but since I had a tablet HP before i don’t ﬁnd the ipad that amazing to be honest. it’s totally over-priced, and if apple can put 160GB on a tiny ipod, it can do the same for the ipad. 64GB for the price I would rather purchase Samsung Galaxy (there is a new one out). Snice i can pretty much do everythingo on my iphone, I dont feel the need to have a ipad on top of that to do the same things that i can do on my phone. Now my opinion with the new $46 tablet, I beleive the market will be for younger kids who doen’st have much money but wants to show oﬀ etc. I don’t believe the gov’t will cheap out and use the $46 tablet (sorry for the one who made that comment). The market eventually will be limited to kids age 5-13 in my opinion Have a great thanksgiving weekend everyone! Chen Sheng (2011-10-09 13:24:41) Just like many posts above have mentioned, the new tablet will not be a competitor for iPad since they target at diﬀerent segments of customers. The existing customers of iPad will not consider switching to Askash tablet because it can not provide as many fuctions as iPad do. Also, those customers who can aﬀord iPad are really not concerning about the price but care about user experiences. On the contrary, those who prefer the Askash tablet are sensitive about prices and may really need the Askash to satisfy their basic needs. Therefore the launch of the Askash tablet will not aﬀect the sales of iPad but may inﬂuence other low-price tablets. ur1dataman (2011-10-10 00:51:38) I think this tablet will become a strong competitor for iPad in southeast Asia market. As mentioned by my fellow classmates, buyers of iPad care more about user experience than the price. However, keep in mind, this tablet is developed to penetrate Indian market (or the tablet market in that region) What’s so special about India? It has the 2nd largest population in the world. What does that mean to apple? Indian market has huge potential. Also, it will hurt if they lose that piece of pie I read an article on businessinsider.com about blackberry and iPhone in India. The sale of blackberry is way ahead of iPhone in India. Besides the price diﬀerence, another important reason is 3G network is not fully developed in India therefore lots of apps on iPhone cannot be used by Indian users. Same problem could face iPad users. Without a great 3G network, the advantage of having an iPad over an Aakash tablet is greatly reduced. In this case, consumers are much more likely to turn to a cheap tablet. Last point, when deciding whether Aakash tablet is a competitor for iPad, we need to look at how much money Apple will lose if Aakash tablet takes its market share, NOT how much money Aakash tablet makes on each device. Eugene Oulman (2011-10-10 19:43:13) I doubt this product will pick up beyond what national governments in India and other places, might be willing to acquire. It is lacking on basic hardware features, like limited amount of memory, disk and battery. I would also be
suspicious about the ability of their proprietary browser ... very compromised version in my opinion. anchenyi (2011-10-10 22:57:30) People who are going to get Ipad these days probably don’t need one. It is more about the concept they are living with. Frankly, tablets are not going to replace PCs unless there is a huge technical progress in the industry. A net book which costs you only 250 can do anything but Ipad cannot even let you watch ﬂash on web. Therefore, it is more about the way young people want to live: creative, great looking, and the culture of fashion. The 49 dollars one doesn’t seem like it has single one trait I have mentioned, so it could take some share of the market, but the share it is going to take may not be Apple’s target originally. digitalworldme (2011-10-11 01:56:34) The $48 price is very attractive to consumers who really want to use tablets for online searching, eBooks, video,etc, they can pay much less money for the similar functions and the expensive ipad does. So the new low price tablet is target for people who do not care too much about the design, fashion, brand, but for the high value of the product. Obviously it is hard to get the market share from Apple royal fans, the ipad price is not a issue for them, they are more prefer the brand, good design and popularity of the Apple product. vbork (2011-10-11 10:05:15) Loyal Apple consumers will not even consider switching to something like this, as most apple ”loyalists” are pretty well oﬀ and aren’t that price sensitive. Students and governments who prefer to go for cheaper product with similar function will deﬁnitely consider this as it has the basic tablet functions. One thing I’m not sure of is the quality of this machine; if it only costs $25 for a student either the prices will eventually rise or these tablets will show their poorer quality very quickly. Karan Mehta (2011-10-11 20:06:43) Agree 100 % with roger678 and connietai. It will not create any visible dent in Apple’s market share (maybe dilute slightly because of increased market size), but this tablet device opens up to a whole new segment of the population that will be able to aﬀord it. $48 (and $25) is dramatically cheaper than even a desktop or laptop in India, so this will gain good traction as long as it meets the functional needs. Government backing is huge and adding this to the education experience in India is a great idea. Karen Leung (2011-10-11 20:31:51) People who are considering iPads are people who are willing to spend hundreds of dollars for the advanced features, the looks, and the ”cool” factor. Something like Samsung Galaxy Pad would be one of iPad’s direct competitors. In my opinion the Aakash tablet will not be an iPad competitor, but rather it will capture consumers who are unwilling to spend hundreds of dollars on a tablet (these are people who will not buy an iPad regardless - either they can’t aﬀord it or don’t want to aﬀord it). alicesisili (2011-10-11 23:05:42) I would say that this tablet will not be ipad’s direct competitor. Like the $38 tablet produced in India, this tablet’s functions may be quite rudimentary and its quality should be low. For ipad users, this tablet cannot achieve the same level of satisfaction an ipad can provide. hank008 (2011-11-07 12:15:56) I cannot make comments on the latest blog. Here just a try to comment on others, please ignore. Thanks.
Monday morning re-evaluation (2011-10-10 07:47)
From a 2004 article in Billboard with Steve Jobs:
How do you view the subscription model vs. the iTunes à la carte download model? Steve Jobs: We have more discussions with the content owners than anyone else. This is something we’ve pursued right from day one. If for $10 a month you could put 10,000 songs on your iPod, we’d like to know about it. But you can’t, because there’s no business model that makes sense for the labels, or the subscription fees you would have to pay are ridiculous. It doesn’t matter what kind of technology we develop or Microsoft develops for something like that if there’s no content to be licensed with acceptable terms to use it. One of the failures of technology companies is that they build technologies thinking everything else will work out. Look at Microsoft’s tablet PC. It’s a terrible failure. Just because you build it doesn’t mean they will come. 7 years later was Steve Jobs still right about subscription models for iTunes?
1. http://www.billboard.biz/bbbiz/industry/digital-and-mobile/ read-steve-jobs-billboard-2004-cover-story-1005392462.story
myraelbayoumi (2011-10-10 11:02:27) I think Jobs was right - though there is a demand for an ’all you can listen’ subscription service, the core issue remains how to satisfy all parties involved. In doing a bit of quick research, it seemed like there were rumours that Apple might launch a subscription service in 2008 (see http://www.wired.com/listening post/2008/08/details-rumored/ ) but it never came to be because again, an arrangement couldn’t be made that would work for the labels (see http://www.tuaw.com/2008/03/19/rumor-apple-to-oﬀer-itunes-subscript ion-model/ ). Without the labels on board, there is no music and it doesn’t matter how little the subscription fee is, there are no songs in the music library! The à la carte model still sees such success not only because it’s basically the only way, but because the per song fee is so small that it is almost dismissed. We talked in class about the keeping fees low enough that people do not put much thought into that incremental charge - this is a prime example of that working! paulsmerchanski (2011-10-10 12:07:09) I’d say so. Recently Best Buy practically gave away subscription based Napster to Rhapsody after paying $122M for it in ’08 (http://www.usatoday.com/tech/news/story/2011-10-03/best-buy-napst er-rhapsody/50647596/1) and Spotify, another subscription based music service, released some pretty dismal results today (http://www.hollywoodreporter.com/news/spotify-boasts-458-year-yea r-246079) showing they are burning through huge amounts of cash. All the while iTunes is still rolling along racking in sales with 70 % market share in the U.S. music industry last year. Martin W. (2011-10-10 14:18:37) This is a well thought out article on the subject. http://www.musicthinktank.com/blog/spotiwhy-are-subscriptionmusic-s ervices-a-sustainable-busin.html Steve Jobs might have been right in 2004, but times do change. It would have been nice to get a more recent opinion from him. Zuckerberg himself is a huge fan of Spotify and Google is even trying to get in there with Google Music. garyyip1985 (2011-10-10 14:53:10) A subscription model could work if the content is not stored permanently on the device. A country wide Wi-Fi zone will be required for this to work. This way everyone is paid based on an annuity which could help stabilize the music
industry and give them incentive to produce good music instead of club bangers. kumarsidhartha (2011-10-10 15:24:25) I believe there is a room out there for subscription models as well. There is a new model that has been launched by RIM which involves subscription music service with a social element to it - it’s called BBM Music and is targeted speciﬁcally towards BlackBerry Messenger users. The model basically involves creating a 50 song proﬁle on BBM Music of which of 25 songs can be swapped out for new songs every month. What’s more you can listen to all of the songs that your friends have in their 50 song proﬁles. Everyone pays a subscription fee/month. I think it’s a very interesting model as it rewards people who have more friends who are subscribed to the model. RIM must beneﬁt from a small slice of the subscription fee but what s more important to the them (especially in terms of recent events) is that they can attract more users to the platform or at least give one more reason for users not to leave the platform. While the jury is still out on the model that RIM has introduced - but it shows that à la carte is not the only model out there and there is a lot of room for innovation out there. jovanatanackovic (2011-10-10 15:39:52) Well, if he wasn’t right, then today there would be a subscription model. I think it’s similar to that of the e-Book industry, where they’re also talking about a subscription model. Just like there are a lot of authors and publishers, there are so many artists and labels that it’s diﬃcult to agree on a deal that would make the subscription model happen. Plus, in the e-Book industry, people will be willing to rent books, while I doubt people will want to rent songs. And as paulsmerchanski said, iTunes has a pretty high market share so I don’t believe there’s a need to make any changes now. garyyip1985 (2011-10-10 17:09:01) Re: iTunes has a pretty high market share so I don t believe there s a need to make any changes now. Complacency brings down empires. Eugene Oulman (2011-10-10 19:49:24) Given the results, I woudl say that Steve Jobs was in fact right about picking the winning model. However, that’s not to say that the subscription based pricing would never work. The music content is not homogeneously licensed and priced, and so a subscription based pricing could potentially work with a limited library of songs. But given the current state of iTunes, with low cost per song and ease of use, this switch seems unlikely. Eugene Oulman (2011-10-10 19:50:22) Fixing something that aint broken can bring them down as well ... shunichirotago (2011-10-10 21:52:41) I agree. And also, services like iTunes enabled customers to know more about music (as Steve Jobs pointed out in the article) so that the customer value might have been more diversiﬁed these days. Now,there are wide variety of demands and customers want to choose their own favorites from an abundant music library. iTunes à la carte download model meets their demand and moreover, customers may be satisﬁed with its experiential value by searching and ﬁnding new music they like. In this way, searching process is no longer recognized as cost. anchenyi (2011-10-10 23:15:35) I think there deﬁnitely is room for subscription model. Apple always respects copyright and always supports the authentic music or software, but the reality is that they don’t want to use technical method to block those piracy download music because they will lose big market share! People do want authentic stuﬀ but the only thing that seems to block this is the price. If there is a yearly based subscription fee and providing you better sound quality and more complete collection of album, I don’t see why i have to google for the piracy one. Therefore, what I mean this there is deﬁnitely a future for subscription model but how to negotiate with diﬀerent publisher is the main trouble here.
bharatbhardwaj (2011-10-11 00:19:37) Samsung’s music hub which will be available on the Galaxy sII is trying to change the game. (http://www.smh.com.au/digital-life/mp3s /online-music-war-samsung-v-apple-20111011-1lij4.html) For $9.99 a month you get access to over three million songs and you can also cache upto 500 songs so even if you dont have internet access you still get the music. For $ 14.99 you get access to audio and music videos on pretty much all you devices (phone/ tablet/ PC and TV) The success of iTunes is because of the ecosystem it exists in. iPhone, iPods and iPads rule the market right now but with andriod becoming a big threat, things could change. As more and more people move to android, iTunes will take a hit. hank008 (2011-10-11 00:49:14) First I would like to say, the person who downloads the music does not really own the music, but can enjoy the music anytime. So to some entent, the songs that being downloaded have no big diﬀerence with those in CDs. (The books are diﬀerent. They can be printed out, in general hardcopies are better than E-versions) Thus, I think there are great demands for the downloads. There are several models could be set for customers: Pay as it goes, All you can eat (subscription), Combos and packages, Free download with ads. Pay as it goes is the most basic and easiest way to charge money; All you can eat can allow the customers to have unlimited download, and allow the companies to have stable earnings; Combos and packages would be suitable for most of customers, they will have some discounts and they will not over-download the music. Free download with ads is the best way for customers, where money is paid by the advertisers. (Of course, advertisers can do the promotion, it can be thought as a model which beneﬁts everyone) I think All you can eat model has some problems. For the person who likes music but not the fan for pop musics, incentively he/she can just subscribe the songs for one month and download all he/she wants. (songs are easy and fast to be downloaded, instead of books) Moreover, this model is the hardest way among four to settle the disputes when we consider the matter of copyrights . garyyip1985 (2011-10-11 01:08:04) I think that line is used by people who do not like change of any kind. Basically if it s working then leave it alone. BUT what if minor changes could improve the process? Do we still leave it alone? If your car is still working do you not still take it in for an oil change? True if something is not broke we don’t ﬁx it, but the line is not used in the true sense. It is used against change by those who dislike change and the line is meant to make those who do attempt improvement look foolish, when they really are not. I am glad we have indoor toilets and running water in the house, granted outhouses worked ﬁne and so did getting water from the well with a bucket, but I am glad we improved on those things. Joshua Gans (2011-10-11 08:42:12) Anyone care to comment how Spotify, Pandora and iTunes Match ﬁt into all this? Joshua Gans (2011-10-11 09:08:00) Also you may want to discuss HMV’s plans in Canada. http://www.thestar.com/business/companies/article/1067404– hmv-canad a-cuts-prices-considers-streaming-music-rental-videos sharadsharma12 (2011-10-11 10:11:58) Well the RIM model that you talked about sounds interesting but the biggest issue here again will be the content avialable to users. Content holders do not have an incentive to follow this model and they will be the key for the success of this model. In case of I tunes, owning to the mass appeal the platform has, any content holder that is not on that platform is missing a number of customers. The jury is still out for RIM’s model and it will be interesting to see how it performs.
vbork (2011-10-11 10:14:12) It would be extremely diﬃcult for Apple to get all of the artists under this one subscription. People would obviously love this kind of subscription service, but there are currently so many labels and artists that it would be nearly impossible to strike a deal. This kind of service could potentially work with books as most people only read them once, but songs people listen over and over to and take pride in their music collection. jovanatanackovic (2011-10-11 11:34:44) Relax with your comparisons. This isn’t a minor change, nor does this have anything to do with living improvements, like fetching water from a well... Sure, apple can continue working on a future model, but since the e-Book industry seems to be closer to such a deal, I suggest they wait and see how it plays out. There’s no need to rush into it right now because iTunes is doing extremely well. jamiepalooza (2011-10-11 16:37:03) Here’s one way to think about this, using the publishing industry as a comparison. Let’s say you can subscribe to an ”all-you-can-eat” plan for $10 a month for both books and music. While the average customer wouldn’t consume more than 5 books a month (even that’s pushing it, I think), I think it would be reasonable to assume that the average customer could listen to upwards of 500 songs per month. In that scenario, a fraction of the $10 subscription for books will eventually be distributed as royalties between 5 authors, whereas an equal fraction of the music subscription will be distributed between 500 artists, not to mention that most of them could be multi-member bands. This is obviously taking into many assumptions (e.g. people never repeat the same song), but what I’m trying to say is that perhaps the challenge with a subscription model is not whether the customers will adopt it (I think they will), but whether it could be a sustainable business model (i.e. source of income) for musicians. And quite frankly, it’s hard to discuss about Spotify and Pandora–I hear lots of fantastic things about it but as Canadians we’ve never had the opportunity to try it. Personally, the business side of the music industry has always seemed to be notoriously slow and stubborn when it comes to innovation. kamaljeetsingh (2011-10-11 19:15:22) Either country-wide wi-ﬁ zone or u got to cloud the data. How about that?? kamaljeetsingh (2011-10-11 19:28:01) I don’t completely resonate with Sharad’s comments here. It all boils down to the existence of ecosystem that can make or break this model. We have seen how ecosystem transformed itunes, ipods, iphones, etc. in to what they have become today. If RIM is able to provide the content providers such an environment then I don’t see a reason why they won’t embrace this model. Karan Mehta (2011-10-11 19:55:03) Deﬁnitely agree that at the time Steve Jobs was right about the a la carte model because it was innovative and provided people with a sense of ”ownership”. Splitting up albums was also brilliant. What’s critical, and I think it’s been mentioned already, is how they integrated and simpliﬁed everything to ﬁt with all their devices. To the user, even though they might not realize that they are paying more, continue to increasingly use iTunes today for their music because of the overall simplicity and reliability. The subscription model is being attempted by everyone now, and whoever can ﬁgure out another way to innovate during this herd mentality, will succeed. iCloud will generate signiﬁcantly more revenue for iTunes as well. Karen Leung (2011-10-11 20:46:57) I’ve never tried Spotify but was lucky enough to get a taste of Pandora before Canadians got blocked from it. From what I can remember, it was great and it was free. What it was back then for me was more like a free Internet radio with ads than a subscription all-you-can-play model with a monthly fee. To be honest I never looked into whether it oﬀered paid subscriptions (when it was still available to Canadians) - the ads really weren’t distracting enough for me
to bother to pay for an ad-free service. philduong (2011-10-11 21:00:02) I still think there’s a possibility for a subscription based model. Most people listen to a certain genre and subscriptions can be genre based or even artist based; essentially anything that will lower the costs and make it easier to strike a deal with artists. Also with subscriptions based model, the subscriptions isn’t the only source of revenue, there’s possibilities for ads. Nonetheless, dont ﬁx what’s not broken, it is pointless for apply to pursue this model, but that doesn’t disqualify a new entrant from considering this model to diﬀerentiate itself. Taylor O (2011-10-11 22:52:33) I’ve ﬁrst tried emusic.com’s subscription years ago, then Microsoft Zune’s subscription on a family member’s mp3 player a few years later, and I’m a long time user of Pandora and Last.FM which I continue to use along with Amazon Cloud Music Player, Google Music, Pandora and Spotify. All these services have much more dynamic social and music discovery features along with applications more suited to mobile in addition to most having subscription options of some kind. The idea of a non cloud MP3 purchase I’ve always found unacceptable before it was even referred to as such. iTunes lack of a digital locker has discouraged me entirely from purchasing and stuck with physical CDs for ownership until the cloud services matured.– I’ve had too many hard drives crash. What is the average revenue per user and number of users for subscription and what is it for subscription now and in 5 years? I think subscription options or those with that as a component probably encourage higher monthly spend for most types of users except for the super heavy few and this should be tested. Both models will exist just like renting movies or buying them. The trend seems to be less reliance on ownership with constant connectivity as time goes on. mccarthycaroline (2011-10-12 00:08:28) I listen to music all the time and hate commercials. For that reason I quickly switched to Sirius in my car years ago. While I brieﬂy moved to iTunes, as soon as I got a smartphone I changed to Pandora or Slacker when in Canada. I barely ever use my iPod anymore as I like having a constant inﬂow of new music which the ”stations” provide on Pandora/Slacker and ﬁnd the lack of thinking to pick out music to be a plus. I can listen to a large variety by switching stations and the ability to skip/mark as a favorite gives quite a bit of control. So for me I think subscription based music has already replaced iTunes. While having internet/data coverage is necessary, I have rarely found myself in a position where one or the other isn’t available. This appears to be an acceptable ”subscription” model to labels and consumers alike, allowing the consumers to self select on if they want to listen to commercials or pay the monthly fee to get rid of them. robertomassa (2011-10-12 00:30:02) I think itunes is not going to survive for many years... the music industry is changing so fast that what appears to be successful is not going to work in the future. The subscription model may work but I think it can work better with emergent artists than with famous ones so that users can listen to their songs without being charged for each of them (In fact users wouldn’t buy the album or the single songs because they probably don’t know the artist and the songs). This is an example of what is happening in the music industry http://www.soundaymusic.com/ Alex Semine (2011-10-12 01:08:32) Hey what’s wrong with Club Bangers? I dislike how you contrast ’good music’ vs ’club bangers’ lol.. I’m not the biggest fan of it, but I appreciate certain tracks, and they exist (and are popular) for a reason! :) Also, why countrywide Wiﬁ? What about what ACTUALLY happened (and works) - country-wide network reception (3G, 4G, etc)... no need to put up those little routers anymore nikhilmahendra (2011-10-12 12:17:03) Although I agree with Roberto that the subscription model could appeal to a certain customer base by giving me them a wider exposure to songlists including those from emergent artists, I dont see this as a major threat to the
sustenance of the iTunes model. I think a large customer-segment uses ITunes for building a ”personal selection” of music rather than for getting a wider variety of unheard songs. I dont see the subscription model meeting the utility of this customer segment. jennachou11 (2011-10-13 22:46:51) Ha i was actually the ﬁrst one to reply since I was just going to sleep when this was posted... something went wrong with my account... AGAIN,....my response is still travelling in the ”cloud” somewhere.... Now... after reading everyone’s response: 1) Spotify is innovative, but i doubt the sustainability 2) Pandora is banned in Canada.. ”We are deeply, deeply sorry to say that due to licensing constraints, we can no longer allow access to Pandora for listeners located outside of the U.S. We will continue to work diligently to realize the vision of a truly global Pandora, but for the time being we are required to restrict its use. We are very sad to have to do this, but there is no other alternative. We believe that you are in Canada (your IP address appears to be 184.108.40.206). If you believe we have made a mistake, we apologize and ask that you please email us.” 3) I am super surprised that everyone only has their mind around subscription service... from everyone’s reply... IT WON”T WORK or SUSTAIN! But the shock for me was no one mentioned SHOUTCAST free Internet Radio. It partners with Winamp so you can access it directly from Winamp and not have to go to the browser... I don’t remember the last time I downloaded music. and for artists like Eminem,Snoop/213, and the miraculous ”LIfe after Death” Notorious.... I BUY THE CD’s. As for Shoutcast, there is now an iphone app for it, as well as for androids. The vast diversity in the diﬀerent genre choices will keep you so busy discovering that you forget to pay the $10 subscription fee per month. You can also listen to diﬀerent genres according to your mood... my favs are: (1) Digitally Imported ( - Trance, vocal trance, Chillout Mix etc. Plays a lot of European Trance) (2) Reggaeton (3) Some African music channels - connection isn’t that great for some channels though (4) Jazz and Latin genres... It’s a wonderful world to keep discovering... you won’t be disappointed www.Shoutcast.com
OK maybe this is ’too free’ (2011-10-13 10:03)
Discount airline Ryanair continues to wage war on dignity and comfort with a plan to remove all but one of the toilets from its aircraft, leaving 200+ people to share one bog: The prospect of only one toilet being shared by 195 passengers and six crew caused alarmed in the travel industry. A spokesman for Abta, the travel association, said We all know how inconvenient it can be if a toilet on a plane is out of order or the annoyance of queuing if someone has air sickness in one of the cubicles. This move could be a step too far in Ryanair s on-going mission to provide a totally no-frills service. But the aviation consultant John Strickland said the soaring cost of oil could accelerate the process: High fuel prices are making it diﬃcult for even Ryanair to keep fares low, so anything which helps them to reduce costs is essential. Having six more seats on the aircraft would not require more cabin crew and would reduce cost per seat. I’m not surprised – after all, this is the airline that once threatened to have me arrested for getting up for a pee after we’d been sitting on the tarmac for 45 minutes and were still 20 minutes away from takeoﬀ. Clearly this is an airline that wants to master the process of elimination, by eliminating it. 68
Martin W. (2011-10-13 13:36:12) grrrrrroooossssssss! They better remind passengers to use the washroom at the airport prior to boarding! And bring diapers to sell to passengers.... tanvishetty (2011-10-13 13:47:37) i ﬁnd Ryanair’s plans to be quite comical.I’m not quite sure who RyanAir’s target consumer base is. Because there are plenty of budget airlines that oﬀer cheap prices and a comfortable experience.Even if Ryanair does provide a cheaper price than these budget airlines, the prices can’t be drastically cheaper. But the experiences that it provides is much less comfortable. And i don’t think there will be many people who would opt for for little cheaper, and a whole lot less uncomfortable. I’ve traveled by budget airlines before and was quite satisﬁed with the service. I traveled by AirAsia which provides really cheap international ﬂights, but ensures that the comfort of the passengers remain. Sure, there is no inﬂight entertainment and you have to pay for food, but there is a sense of comfort nonetheless. AirAsia has also built it’s own terminal in Kuala Lumpur, Malaysia so passengers don’t have to pay high airport tax. That’s how budget airlines are meant to keep costs low, and not by cutting down on the number of toilets in an airplane. RyanAir is just hurting its reputation and its customer base. vbork (2011-10-13 19:58:31) Why don’t they remove all washrooms and get even more seats. Force the passengers to use water containers and paper bags. The lines to use the washroom on the planes are already long during peak times(after meals) so I don’t know how they plan to get any positive reviews about their airline after a blatant cost cutting move like that. jovanatanackovic (2011-10-13 20:32:07) If they do end up doing what you suggest, buy a ticket and go to the bathroom in one of those containers or bags. You deﬁnitely won’t want to. This is a ridiculous decision by Ryanair. They should shut down operations before they are forced too because of losing too many customers. It’s one thing to oﬀer lower prices, but if it comes at this price, expect them to lose a lot more customers. No one wants to sit through a ﬂight in an airplane that smells like doodoo. Alex Semine (2011-10-14 00:19:28) Did anyone else imagine the smell inside a RyanAir aircraft? Imagine waiting at a terminal, and you see the poor, smelly passengers get oﬀ, knowing you have to get back on that plane! Oh also, you guys are all forgetting the prices are VERY cheap (nearly ’free’), when you look at a $200 ﬂight to somewhere round-trip; ’Economy Class’ even.. and then you see another one that’s like $10 (BUT has one washroom on the plane, and no food, bad seating etc).. Hell, I would go for the $10, even if I had to stand the whole ﬂight. Approaching it another way, if the ﬂight is 4 hours long, then it’s as if someone is paying you $50 an hour to stand and/or be uncomfortable. I work at the army and we ’stand in one place sometimes and be uncomfortable pretty much always’ for a lot less than $50 an hour. jennachou11 (2011-10-14 02:53:11) I believe this is a consumer segmentation issue. The ”standard of living” (if i am using the right term here) in Europe is diﬀerent than North America. Personally I have never ﬂew with Ryan Air but have checked out the prices before for a planned trip to visit my friend in England. Actually, i have never seen a $10 ﬂight that Alex said... i found the price to be quite standard for the distance. Maybe I was searching prices during high season and i don’t ﬁnd them THAT cheap, but if I ever come across a $10 ﬂight of course i will choose it over $200 for a 45-min ﬂight. Imagine $10 to go from Toronto to Montreal on a plane? I would do it every week just to feel the take oﬀ :) Personally I found the toilet issue to be not that much of a concern consider the short distances that Ryan Air routes. I am sure holding your horse for 45 minutes won’t kill you. And if you are a guy, get a water bottle and go to the back of the plane to do the job.. it’s so much easier than for girls... ok Wow i just conﬁrmed Alex’s $10 ﬂight claim... that’s insane...
Cost-Beneﬁt Analysis people! I would hold my pee to trade for $190 diﬀerence! On the other hand, if the line for the toilet is too long, make up some complicated medical term and say that if you will defecate yourself if you don’t go like NOW! I am sure no passengers on the plane wants to smell poop for the whole trip.... you win However, Ryan Air’s rudeness to passengers is not unknown to me, but for the price, just try to shut up the whole trip and get the ”most” out of what you paid for. Going back to what i mentioned in the beginning about the diﬀerent standard of living between Europe and N.A., as a traveller you might want the luxury of travelling. As a backpacker, you probably don’t mind as long as it’s cheap. And for constant european business travellers ﬂying between short distances, i am sure they are so use to it that most has an emergency water bottle in their briefcase! you pay for what you get... and you can make the best out of the experience, or you can try to get arrested for ﬁghting your way to the LOOOOOOO! jongsukjosephshin (2011-10-14 13:00:14) Drastic measure, more money. It works. This is even worse than what TWA did with their leg rooms and price jacking. You know, a serious problem with one toilet on a plane is potential health complications. It’s serious, ha. Karan Mehta (2011-10-14 17:58:50) Wow, talk about missing the bigger picture! What’s next? Eliminate the one remaining toilet, and replace the aisle room with additional seats? jessicaanania (2011-10-14 20:56:50) It would appear that Ryanair is ﬁnding it extremely diﬃcult to re-invent the traditional means of earning a proﬁt in the airline industry. robertomassa (2011-10-14 21:43:22) I don’t understand why Ryanair has the plan to remove one toilet but I don’t think they want to take this decision without considering the pros and cons.I think many people in Europe are happy about Rayanair for its cheapest ﬂights (even more than Easyjet) and the quality of its service. I can tell that not only Ryanair is the most proﬁtable airline company at least in Europe but it also does the best maintenance on its airplanes compare to all the other big companies such as AirFrance, Lufhtansa and Alitalia. Not only their planes are the newest in average but Ryanair ﬂights are always on time. Anyway I think europeans are very happy about Ryanair and even if they reduce the number of toilets they will continue to ﬂight with it. elyte18 (2011-10-15 14:01:42) At least their ﬂights are mainly short-haul. Could you imagine a trans-Atlantic like this? I’m sure they ﬁgure that many for the duration of the ﬂights oﬀered, that people could hold-it-in unless there is an emergency, similar to bus trips of comparable durations - with the major diﬀerence of that if someone gets sick on a bus, the driver can pull over... garyyip1985 (2011-10-15 14:59:47) But apparently he is doing us all a favor!! The move would fundamentally lower air fares by about 5 percent for all passengers, cutting £2 (US $3) from a typical £40 (US $63) ticket. What a steal!!! Read more: Ryanair s 5 ’cheapest’ money-saving schemes | CNNGo.com http://www.cnngo.com/explorations/life/ryanair-money-savingschemes- 757187 #ixzz1asWpT1KI markbelcarz (2011-10-15 17:43:31) Well you beat me to this analysis...how much of a diﬀerence would those extra seats actually make? Personally, the extra £2 to have the availability of multiple toilets seems reasonable to me. The CNN article seems to claim that Ryanair plans on removing two or three toilets in order to leave only one, but why not leave two for now and see how that goes before cutting it all the way down to one. I would hate to see what would happen if there is an outbreak of some sort of food poisoning at the airport prior to the Ryanair ﬂight’s departure.
hank008 (2011-10-15 19:25:02) The company like Ryanair competes with other competitors by lowering the cost as well as the quality. Usually, the company tends to provide better service in order to attract the customers. However, Ryanair just does the opposite. To allow the price to be as low as possible, the company wipes out anything that is not important or necessary. Moreover, their service is usually worse than others, there is usually no food included during the ﬂight; the space between the rows is small and the passengers squeeze uncomfortably. Chen Sheng (2011-10-16 16:20:27) Although it may seem very inconsiderate for Ryanair airline to cut the amount of toilets, it might be an essential step for the company to cut costs. For companies like Ryanair, rather than consider about services provided, they are more concerned about costs. Frankly speaing, they might do anything they can to cut costs without considering customers’ feelings. And still, some people will buy the tickets because they want to save money. So I guess you can not blame them because this is the way they are doing business. jackyzee (2011-10-16 19:36:37) That really sucks. I don’t think its worth paying less to travel from point A to B while enduring the risk of bladder explosion. Question: I wondering if people with bladder problem can sue Ryanair for not accommodating enough restrooms? =p bharatbhardwaj (2011-10-17 00:52:17) What they need is a Rotman grad doing some ’Integrative Thinking’. How to keep air fares low without reducing the quality of service!!! anchenyi (2011-11-01 16:32:39) I think as long as they remind the customers before they buy the tickets, they have got nothing to blame for. we all know that there will be several aviation companies ﬂying on single route, some of them are high-end, which provides you great service, meanwhile charge you incredibly high price. We have to understand the trade-oﬀ between the service and the price. As a consumer, you can’t always ask for both. Once you become the boss, you will understand what I am saying.
Does Google get platforms? (2011-10-14 17:42)
A surprising thesis put forward by a current Google employee. What does it tell you about what the essential ingredients of a platform are?
robertomassa (2011-10-14 20:51:19) In my view the most important ingredients of a platform are the user-friendliness and the interoperability with other services (as Facebook does with games for example). As the article describes ”The Golden Rule of Platforms, ”Eat Your Own Dogfood”, can be rephrased as ”Start with a Platform, and Then Use it for Everything.”, Google has certainly done that because through its search engine you have access to everything is on the web plus all the services that are already available in Google, that are really a lot. connietai (2011-10-15 12:56:33) I agree - user-friendliness and interoperability are key. Whether something like Facebook, Twitter, Google Plus, etc. becomes ’sticky’ or not is highly contingent upon its degree of user-friendliness and also whether it oﬀers the breadth
of functions that would appeal to users. However, because Google does not allow for third party developers to build upon things like Google +, they are missing out on potentially extremely valuable apps that can address speciﬁc needs/wants that Google may not necessarily be able to foresee. Like Steve’s post pointed out, Facebook allows for various external third party apps (i.e. games like Farmville), for which many users spend an enormous amount of time playing. I was really excited when Google + ﬁrst launched, but the limited activity on the platform is making me question its success going forward... Nilay Goyal (2011-10-15 21:54:18) I think the biggest ingredients of a platform are accessibility, simplicity and security Having more accessibility automatically brings in interoperability, fexibility to make great applications for the platform and therefore propels innovation from developers. Unix might be a good historic example. Simplicity of a platform is important for user friendliness and market adaptability. Security brings trust and therefore restores conﬁdence. jongsukjosephshin (2011-10-15 22:15:14) Agree with everything above. If I can add something to it, social trendiness can be a great factor too. There was an article on Fortune detailing the dilemma that the Google employee has mentioned. It basically stated that people can start searching using other search tools on other platforms, and they didn’t mean other search sites, but other search methods. Their point was that Google was losing its ability to grow past its initial use, which was searching and generating revenue with ads. I wish I had the link, but it was a physical copy of the issue. Google is very simple, easy to use, quite sophisticated on its own terms, and its initiative to launch its own platform is a step forward. But if social trends indicate that people are gravitating towards sharing information with peers on Facebook or searching via some other method that transcends the technology of Google’s (a hypothetical example) then no matter how good Google’s platform may be, it will be a platform without users. Why? Because Google, according to the article, is becoming an outdated technology. How can Google become an outdated technology? Outrageous! But if someone develops something similar on their platform and people gravitate towards it (part of a social trend) then, well, Google may well become the past. elyte18 (2011-10-16 11:13:17) Not to echo the above posts, I feel that a web-platform must be simple - with the complexity residing in its easiness to use and understand by people of all knowledge and comfort levels. This will increase its adoption rate, by ensuring that the largest pool of users will want to use it. Most importantly though, the platform must deliver the most reliable and comprehensively complete results - minimizing user search costs. I agree that Google has caught on due to its simplicity and user-friendliness. In investigating this post, I ventured over to bing.com to see what they oﬀered. I was shocked to ﬁnd a results page that was almost identical to Google’s. Clearly Google has stumbled onto a formula that works - even though Bing seems to be gaining ground through various partnerships and initiatives http://www.nmk.co.uk/article/2011/9/17/microsoft %E2 %80 %99s-bing-is-gaining-ground-on-google-in-ﬁve-key-ways. That being said, there may be something to having these partnerships to make the user experience more complete, and improving on the user experience to create a successful platform, further reducing user search costs. Chen Sheng (2011-10-16 15:55:47) I think the most essential ingredients of a platform is the allowance of third-party developers and a ”killer app”. As the author mentions in the article, one of the reasons why Facebook is so successful is that it provides an entire constellation of products and everyone can ﬁnd diﬀerent things to do. And Facebook did not develop all those products, the third-party developers did. Therefore it is very important to enable third-party developers in the platform to provide the right products for everyone: interfaces and workﬂows that they liked and felt at ease with. Another important factor is the ”killer app” in the platform. It is not like that containing everthing in the platform will lead to success. The platform needs to have one killer app that attracts lots of people. It could be the search engine provided by Google, the walls and friends provided by Facebook, the msn software provided by Microsoft etc. The thing is, only
by combining the platform with the killer app, the company could achieve accessibility and therefore instant success. jackyzee (2011-10-16 19:22:26) I agree. Having 3rd party developers to be involved in the making of google+ would deﬁnitely be beneﬁcial. This was a long rant and it is amazing how much he had to say. Something I really like that he touched based on was the fact that people can use facebook in many diﬀerent ways, and it is because of that I believe facebook is very dominant. jackyzee (2011-10-16 19:27:04) Simplicity for a platform is deﬁnitely important! When I hear accessibility I feel that it always contradicts with security. I’m not sure if I got the two term properly understood but how can a platform be both extremely accessible and high in security? Is there a ﬁne balance between the two or are the two terms plainly two diﬀerent concepts. bharatbhardwaj (2011-10-17 00:47:43) Lets look at Android...its a great platform and has its own app store where 3rd party developers can upload apps. So I believe that Google does get it but all platforms take time to evolve. It took Facebook sometime to let 3rd party developers to come up with apps. Platforms need a user base and the 3rd party developers will ﬁgure out ways to come up with great apps. Nilay Goyal (2011-10-17 17:04:49) They could mean diﬀerent things. In the context of this post, accessibility to the developers is a key thing behind the success of a platform. But the security for the content users is as important too. They are two diﬀerent things and have diﬀerent importance for diﬀerent stakeholders. Think about UNIX, accessible by all developers, and very secure too. There could be a trade-oﬀ between accessibility and security. In that case, having the right balance between them deﬁnitely aﬀects the success of a platform. Think about the accessibility to facebook apps and spamming on facebook, vs. the same thing for google+ kumarsidhartha (2011-10-18 09:59:42) I agree completely - developer relations and an open, easy to build for platform is key is this day and age. Look at what is going on with RIM (asides from the 3 day outages). It is losing developer support as the platform is not rich and tough to build for - and that is having a bad impact on the bottom line. jennachou11 (2011-10-19 23:45:01) Having worked with SAP ERP systems for most of my career, i believe that i understand how important platforms are. Correction, how important a good platform needs to be. I agree with few of the colleagues above, interoperability is by far the most important when it comes to building a platform. There are two sides to the story: platform from the user end needs to be user-friendly, and the platform from the technological perspective needs to be able to function transparently and able to interface with other platforms within the company. I realize that the topic is more focused on the ”web” aspect of platforms, however, many ERP systems are now also made available online (ie. mySAP, ESS, MSS etc. In a way the ERP systems are much like the ones online... a website that interoperates with the added functinoalities and able to oﬀer customers a seamless and user-freindly website
Monday Morning discussion: backward integration (2011-10-17 06:33)
Backward integration is where a downstream ﬁrm (e.g., a retailer) starts doing the things that an upstream ﬁrm (e.g., a supplier) does. Take a look at this latest move by Amazon. What are the advantages and disadvantages of this move? 73
shunichirotago (2011-10-17 11:10:00) May be the book industry is gradually changing its form. Amazon is encouraging authors to publish their books directly in the market. In this way, authors are able to get much higher loyalties on their book. Amazon should not overlook the importance of editing, what publishers are used to do. Allowing too many books to publish, care should be more taken on quality and reliability of the information contained in books. Avi (2011-10-17 12:26:22) Less number of intermediaries between only really necessary people: writer and reader make both writer and reader beneﬁt. However, this could also mean less number of distribution channels and less publicity. Though the publicity could pick up with word of mouth (again the reader gains). And ofcourse more proﬁt to Amazon. avitania (2011-10-17 14:30:22) Moving backwards into publishing seems like a pretty natural move for Amazon. On the upside, both Amazon and writers get to keep more of the money from the distribution chain. Furthermore, Amazon gets the opportunity to provide a wider range of content by giving a chance to writers that may have been overlooked by the larger publishing houses. On the other hand, writers may lose out on the services such as marketing/PR that publishers provide. The article doesn’t mention where these costs get shifted to, or how promotions will be done. If the onus is on writers to promote their own books, they may not have the resources or expertise to do it eﬀectively. Second, if Amazon decides to open up publishing to nearly anyone without much thought to curating the selection or editing the content, Amazon’s catalog could be diluted with low-quality books. I recently pre-ordered the Kindle Fire as a birthday gift for my husband. I can’t wait to see it in action. jongsukjosephshin (2011-10-17 16:05:41) Remember Netﬂix? They are merely a platform. What are they doing? Producing their own content. Same story here. Amazon is also a middleman seller of books published by authors who sell their content to publishers, who then make deals with Amazon. But what if Amazon also acted as a publisher? Owned the rights to the content they were selling? They secure up their content, and more $ as well. If the model works out, authors ﬂock to Amazon. Especially given the nature of traditional publishers and how they are ripping oﬀ authors, this is a perfect counterpart to the publishers. The downfall is that if big name authors are under contract, it will be diﬃcult to get out easily. To add to this, some big big name authors like JK Rowling prefer the traditional means of selling books. Amazon still can’t get the rights to sell Harry Potter. And plus, this is an untested approach. What if publishers decide to collaborate against Amazon, somehow, and there’s war? In terms of PR and promotions, book tours have lost their traditional appeal. Amazon is changing the aspect of book marketing, where you market directly to your clients and soon to be clients via the web and other means. So, overall, I give this move an A. It should work out. hank008 (2011-10-17 17:55:03) This time, Amzaon wants to contact to the authors directly and get rid of the publishers. (these publishers used to be the supplier to the Amazon) It can be seen as another reform done by amazon. Before that, Amazon urged people to read online (instead of looking for the books in the bookstores) We can realize that there are only two roles which cannot be replaced forever, authors and readers. So, Amazon tends to take advantage of that. It can save the cost ( distribution, commission, transaction cost and so on), but it may bring a bunch of problems. Why the authors have to coorperate with Amazon? (some competitive advantages over traditional publishers? ) Yes, Amazon tries to sweep the deck, but the management should know it’s not that easy.
Karan Mehta (2011-10-17 19:42:08) Given that Amazon has established a massive retail presence online, and have managed to capitalize on the highly successful Kindle launch, this seems to be a logical and natural next step for them. Advantages are that they cut out a player in the supply chain, thereby capturing more margin and possibly even reducing the ﬁnal retail price to consumers. You could also see faster time to market for books, and essentially they are taking advantage of economies of scale/scope to own another piece of the supply chain. Downside is that of course, they take on the additional risks that publishers traditionally take on, such as the cost of printing/developing/marketing, etc as well as paying royalties to authors. Karan Mehta (2011-10-17 19:44:05) Agree with your comments. As for marketing/PR, I assume Amazon will allow their existing algorithms online to facilitate the distribution and placement of these books. I would assume that Amazon will take on these costs, but given their established presence I don’t think the costs will be that substantial at all. Nilay Goyal (2011-10-17 21:41:25) I believe this is a stupid move by Amazon. I think its just the result of shareholder pressure on an internet business. I relate this with Roger Martin’s view about the LinkedIn IPO: http://www.washingtonpost.com/business/linkedina-blockbuster-ipo-bu t-a-big-payoff-is-not-a-lock/2011/05/31/AGbQh0IH story.html There are many reasons why I say this. This does not ﬁt with Amazon’s overall strategy. Publishing is perhaps not their core-competence. Amazon is a sales channel for books. Their core competence is their supply chain model allowing their customers to have access to a wide variety of content. Publishing is a diﬀerent ball game. Promotions and marketing of books is very diﬀerent then selling them. You cannot build a good publishing business overnight or even in few years. This one of the big reasons why there are not many new entrants in this business. It is possible that publishing might be a great business to be in. Maybe it make some sense for Amazon to enter that space. But I dont think Amazon shall do it by themselves? Rather, Amazon could have tried to acquire some publishing house. Going all out by themselves and building that capability means taking on a huge risk. natalka81 (2011-10-17 22:20:25) I agree with Grandinetti that a move like this was inevitable. Moving content from author to reader is a logical and evolutionary next step for the industry. More frequently we re seeing content delivered direct to the consumer and can survive without a middleman. This move slightly echo s what youtube has done for new and emerging musicians a platform that provides exposure for new talent that would otherwise have gone unnoticed. Not only that, but consumers are also better able to choose what they believe to be popular vs. a professional reviewer telling them what s hot. With this move Amazon can bring more options to the consumer while opening opportunities and exposure for new and talented writers, not only locally but globally. On the downside, in an eﬀort to increase quantity and decrease time to market, overall quality could be compromised. Also, with less Marketing/PR exposure there’s the potential to lose sales volume. kumarsidhartha (2011-10-18 09:42:47) Although the impact of Amazon’s move remain to seen, I think acquiring a publishing house would not be a great strategy for Amazon as they are trying to change the current model. Amazon is essentially a technology company and has a diﬀerent set of competencies which it is trying to apply to this market. For example, Amazon does not promote its books by traditional book signings and newspaper reviews by critics. Instead, it provides users with an online forum to do the book reviews themselves. It also has a great recommendation engine that it can use to market books to users whose interest it can gauge based on browsing trends. The books market is up for a big change. Purchase activity is rapidly moving online from stores. Consumption is done electronically as opposed to paper editions. It makes sense to go further back down the value chain and remove ineﬃciencies to provide better customer value as Amazon is doing. Whether they can change the model or make a meaningful impact is to be seen.
John DiGiacomo (2011-10-18 11:33:08) Agree. I think Amazon will spend whatever it needs to on marketing/PR to ensure that these authors and books succeed.. especially considering this is the ﬁrst batch of authors. Other authors, like Laurel Saville in the article, will notice success and ﬂock to Amazon rather than deal with a publishing house. On another note, I think it’s important to point out that these publishing houses that Amazon is now competing with are STILL Amazon’s main suppliers. If Amazon succeeds with this venture it could turn around and hurt them by crippling their main suppliers. jamiepalooza (2011-10-18 12:52:34) This might work, but I’m skeptical. Amazon is not the only place in the world people buy books, physically or digitally. If authors decide to leave traditional publishers for Amazon, they risk losing that promotional, PR, and support that traditional publishers specialize in. Also, if everyone could just simply sell their books on Amazon, without going through the traditional route of being discovered by a publisher ﬁrst, it’ll be harder to earn credibility with readers. It’s like music, there’s more music around these days, but it’s harder and harder to ﬁnd good music. Eugene Oulman (2011-10-18 21:31:27) Higher royalties if book is a hit. No royablties if it is a ﬂop with limited distribution. The article mentioned that big publishers will often provide a signing bonus, whereas Amazon acts more as a partner. Eugene Oulman (2011-10-18 21:34:47) The advantages are that Amazon will now have direct access to consumers, it can implement certain economies of scale, and perhaps reduce some costs (making publishing even cheaper), it can engage its distribution and online marketing tools to promote the content. The obvious beneﬁts is greater proﬁts and market share. The disadvantages are potentail competitive response from publishers, removal of QA layer that publishers used to provide (poor quality content making its way up and cluttering the system), potential regulatory issues if Amazon becomes a near monopoly in book retail. Sri Donepudi (2011-10-19 02:25:01) I think Amazon’s move is natural in terms of reducing the distance between writers and readers. I think smaller/new writers would beneﬁt from this move but it might not be the same in case of popular writers. Marketing and quality control is an important aspect that is held closely by traditional publishing houses, I am not sure if Amazon can do the same job well. Sri Donepudi (2011-10-19 02:31:51) I slightly disagree with your point. Organization’s strategy changes over a period of time and this is true for Amazon too. Even though it would be diﬃcult for Amazon to replace publishing houses completely for the same reasons you have mentioned (promotions and marketing), there is still a value add that Amazon can bring to smaller writers by this backward integration. fredzhu (2011-10-19 06:58:49) Amazon’s large customer based and its rating/ranking system would function as marketing/PR. Good books will have high rankings and big # of downloads. elainezhang12 (2011-10-19 07:16:26) Backward integration will allow Amazon to have more control over the supply chain. With Amazon acts just like a distribution centre, it might have less bargaining power compared to publishers. Even Amazon has been increasingly popular, they still need to content provided by the publishers. Such backward integration allows Amazon to gain more control, and enjoy higher proﬁt margin. I will work for bother small/new or popular writers. Popular writers will create more demand, but Amazon’s bargaining power is low and requires less marketing expenses to promote the book. Small/new writers will give Amazon higher power but require higher marketing expenses to promote.
avitania (2011-10-19 09:44:23) Agreed for the most part, but I think we’re underestimating how much it costs (in terms of both temporal and ﬁnancial resources) to get books on rankings. Books don’t get on the NYT bestseller list just because they’re good; there’s a lot of legwork done in terms of publicity and promotion – book signings, speaking events, online promo (blogs, SEO, social media), bribing Oprah ;) just to name a few. I think Amazon would foot the bill for some of that, especially for more prominent writers, but in this case the less-recognized author with fewer resources is less likely to be successful. There are exceptions to the rule, of course – Tim Ferriss and the WOM methods used to promote his ”4 Hour Work Week” is one such example. Regardless, I’m interested in seeing how this will all shake out. Maybe it’s time for me to start working on that Great American Novel I’ve been thinking of writing. ;) topetra (2011-10-20 00:04:22) I think the advantage of backward integration will be Amazon can expand its marketing segment from a distributor to publisher, as Amazon realizes that its industry is a bit narrow and saturated. Like the article said, they are trying to conquer the publishing industry .Amazon is asking writers to set up partnership with them and promotes that it can do even better than a traditional publisher. But the down side of this move will be upsetting some of the top writers who are used to partner with a regular/traditional publisher which deteriorate the book industry. bharatbhardwaj (2011-10-20 00:48:24) The trick would be how fast can Amazon ramp up this new model. If it takes long then publishers may go with other ebook service providers and this could eat up Amazon’s market share as it wont have the right products to sell Alex Semine (2011-10-20 01:30:39) This is an easy moral hazard example. Amazon knows something we don’t, and they’re acting upon it. The decisions, especially larger/more impactful ones like these are made by people who know their industry, their business, and what works (and what doesn’t). This isn’t some random experiment, I think that it’s a good move, and without over-analyzing it, I will say it is a good move just ’because I trust Amazon to make right decisions.’ Similarly, whatever Apple does may be silly or weird at ﬁrst, but chances are, they’re made for some good reasons (*cough* 4S for example). Also, Google. And to all the contrarians, you have to realise that although your reasons may be valid, really think about it before you step in front of a moving train (this is more of a market sentiment tip). This is exactly why the short interest is so low on stocks like AAPL, AMZN, WMT, etc (most blue chips in fact). TL;DR: Sometimes, you just let the big ball roll, and try to take advantage if you ﬁnd yourself in a bubble. roger678 (2011-10-25 15:35:56) Amazon’s move has both of advantage and disadvantage. By skipping publisher and publish books of some of its best authors by itself, Amazon is able to generate more revenue. Amazon is not only trying sell books published by others publishers. It’s trying make a closer connection between writers and readers. However, in my opinion, Amazon can do publishing by itself only to a limited extent. The most advantage that Amazon has now is the eﬃcient system to connect readers to publisher. Publishing is not there core business. It takes a long time to make a good publisher. Amazon will have more risk by expand too much.
Mid-week discussion: Characterising Google+ (2011-10-19 09:21)
Does Google+ have no, one-sided, two-sided or multi-sided network eﬀects? Is it in a winner-take-all environment or part of an open eco-system? Discuss.
fredzhu (2011-10-19 10:54:29) Google + is a social platform with internet users on the one side and potential advertisers/marketers on the other. Google + will also bring search & social together. I would argue it is just part of an open eco-system as it oﬀers something diﬀerent than Facebook. Users are free to choose diﬀerent platforms as they like or they can be on both. adriennefriesen (2011-10-19 11:10:31) I agree with fred. I’d like to add that the open eco-system vs winner-take-all depends on the target market and Google+’s ability to diﬀerentiate itself. Many people will see it as a winner-take-all situation and question why they need to join Google+ when they already use Facebook. However, there is a segment of social media-loving people who want to use both platforms. The more Google+ is able to oﬀer something that Facebook doesn’t, the more it will be able to create an open eco-system for itself and attract more users. Taylor O (2011-10-19 11:34:05) As a pure play social platform it would be winner take all and Facebook takes the cake given the annoyance of the necessity to double post (even though some work arounds exist). However, the integration with Google’s other services, could enable it to bypass this, where what you’re doing already is incorporated. We’ve seen a little bit of this with it’s integration into Android and the automatic photo upload which is predominantly the only thing I share right now b/c well a couple clicks and why not? If we continue to use Google search and G-mail a great deal it may be easy to facilitate sharing to an extent where content increases and network eﬀects increase enough to drive adoption. I think this is likely enough to allow for both players, with their diﬀerent models. That said, increasingly users are consuming media from within social media applications and I think if Google doesn’t accelerate the jump above, it’ll be a Facebook world with less emphasis on search and Google will be left without a horse in the race if Plus fails to reach critical mass. fredzhu (2011-10-19 12:38:41) I am not very much into social media but I do have accounts on both Facebook & Google+ because I want to be kept in loop with family & friends, whichever social networking platform they choose to use. One of the great advantages of Google+ is its ability to control information - to whom the information will be distributed. Google also has a great opportunity to integrate social media with its very popular email, docsharing and search functions. In my view, it is just a matter of time for Google+ to reach critical mass. Facebook, on the other hand, can maintain its competitive advantage and focus on their existing customer base who want to get their messages across and may not be as sensitive to information security. asadkhandigital (2011-10-19 13:18:50) Google + success will depend upon whether it can diﬀerentiate itself enough from Facebook to add enough value to social media users to adopt. Take Twitter for example - their social media model is similar to Facebook, but also very diﬀerent regarding the way that information is shared and with whom. Google + will really need that diﬀerentiating factor if it wants an accepted and established spot in this industry like Twitter and Facebook. The social media industry isn’t a winner-take-all environment - their are a few winners, and they share the pie. If Google + wants a piece, it has to establish itself, through diﬀerentiation, as a compliment to the existing social networks, as opposed to competition. For example, Facebook allows Twitter users to post news/comments on both Twitter AND Facebook. Facebook could easily not allow Twitter users to post via Twitter on to their Facebook accounts. Instead, they have embraced Twitter and realized its complimentary components, as opposed to focusing on its competitive components. Google + needs to ﬁnd its ”ﬁt” in this complicated market place, a marketplace where its formula’s and brainiac employees have no expertise in. calvincylam (2011-10-19 13:41:05) I agree with the points above that Google+ is a two-sided market with its users on one side, and marketers and social applications developer on the other. As more users are active in Google+, it attracts the other side to join the
network. I think the main issue is that there are just too many platforms for users to communicate in their social networks. As mention above, in order to stay in the competition, each platform needs to oﬀer a unique feature that attracts its users. The established network eﬀects within Facebook has built a community that cannot be migrated to Google+ easily. fredzhu (2011-10-19 13:57:10) On the other hand though, Google has a huge installed base under other services (e.g. Gmail) and they can easily become Google + users. luipuichun (2011-10-19 15:16:31) I agree that Google+ must diﬀerentiate itself from other social network. Moreover, I really doubt that the ”circle” function oﬀered by Google+ can give them a edge when competing with Facebook. Facebook has alot more users than Google+, and as a user prospective, I have no incentive to switch to Google since all my friends are using Facebook. What google+ may do is to invite celebrities, athletes or other famous people creating an account at Google+ (similar to what the chinese weibo did), creating incentive for users to join. jennachou11 (2011-10-19 23:16:49) I partly agree some of the comments above. I see Google as a multi-sided network. Google not only provides servies for us regular users just searching and browing the net, it also deals with advertisers, academic community, etc and ” itself acts as a advertiser/merchant, since Google sells/contracts its search engine capability to other websites that needs accurate search engine. But whats funny is that the ﬁrst encounter i had where McGill had been the leader in adopting google for its search capabilities... it raelly did not go well, and i am not sure if it’s implmented wrong or not, but the search engine would give you somehting completely diﬀernt than what you are searching for... so once again we end up with no value added through google’s search engine implemented at McGill. However, i have also had great experiences with other sites that the search engines are powered by Google. Indeed, just like many colleagues have mentioned on top, that google adds valuee-added or innovative services for its customers, whether it’s advertisers or the end users. The added functionality alllows google to diﬀerntiate and the innovativeness is hard for competitors to copy, thus achieving the ”VIRN test” - Valuable, Rare, Inimitable, and Non-Substitutable! I also agree that Google is an ”OPEN ECO-SYSTEM”, and not trying to be the ”winner take all” type of ”internet assholes”. ;) However, in my opinion, Google will never succeed as a social networking space, even though they oﬀer Okrut. Unless Google thinks of something outrageous (disruptive technology?), Facebook will always dominate in the social networking domain. The company’s mission statement from the outset was ”to organize the world’s information and make it universally accessible and useful”, and the company’s unoﬃcial slogan coined by Google engineer Amit Patel and supported by Paul Buchheit is ”Don’t be evil”.(source: Wikipedia) The above mission statement from Google conﬁrms the open-eco-system concept and that they are not trying to be the winner in anything... but instead, createe innovative solutions that includes all types of users or merechants. hence... DON”T BE EVIL! bharatbhardwaj (2011-10-20 00:41:15) The integration of Google+ with its other services will be critical to transfer the current user base to Google+. It will be interesting to see how people react to multiple platforms as reposting on facebook and Google+ is double the work... Alex Semine (2011-10-20 01:42:27) I’m in your position as well, though I actually disagree with your long-term outlook. I agree that Google+ has search and control built into it’s core infrastructure, but Facebook has been working towards organizing and giving more control of information to the users as well. This could minimize the diﬀerentiation between the 2 for some. Next, the ability to share docs or integrate information is great, but it seems almost too messy. Could you see a need for yourself to ever post an Excel ﬁle to your wall? However, I do think that feature is great for ’groups’ you may want to form (say, RSM330), and then want to collaborate data. But then chances are, you’re already on DropBox! Finally,
’information security’ is easy to claim, and nearly impossible to master. I don’t think I need to explain this further. Fun example: Have you ever tried to use the free Wiﬁ at Starbucks? They want you to give some access to them via your Facebook when you do. Alex Semine (2011-10-20 01:49:01) I bet statistically people who use gmail and other google products are well aware of what is on the internet, and are already on Facebook. Also, there are many of these on teh internets probably, but I found this one if anyone is wondering about social media demographics: http://www.digitalbuzzblog.com/infographic-facebook-vs-twitter-demog raphics-2010-2011/ hank008 (2011-10-20 21:35:23) SNS? Google tends to get into this ﬁeld, and share the cakes with other competitiors (open eco-system). SNS has been well known and widely used for long long times, and Google is ﬁnally waken from the dream, and purposes to catch up. What network does Google build up–Two-sides, same as other SNS, allows more customers to use the systems and collects the advertising fees. Undoubtedly, Google+ needs to have something new or special to attract the customers. However, these functions done by Google+ have already existed, probably Google+ just does the combination. That’s it. New concepts can be the competitive advantage for the company, if some company blindly tries to imitate without blazing new trails, it is hard to be successful, even your called Google. What probably Google can do is to get help from its enormous searching function to enhance the inﬂuence of Google+. At the end of the day, we cannot expect Google too much. It has brought us a lot, search engine, Gmail, blogger,chrome, Google map and so forth. bharatbhardwaj (2011-10-21 00:02:14) The main advantage for Google+ will be that once you have logged into gmail, its just a click away. Moreover everytime you log into gmail its right there on the top left of the browser. I am not saying that this will push people to use it but it is a bit more convenient than logging into facebook for social networking and gmail for mails... jovanatanackovic (2011-10-21 11:21:54) It deﬁnitely wouldn’t be in Google’s beneﬁt for Facebook to minimize the diﬀerentiation between them since Google+ is still relatively new and hasn’t generated as much traﬃc yet. The +1 and ”Like” buttons are a similar feature, but with obvious advantages the +1 over the ”Like” button, I wouldn’t be surprised to see Facebook trying to make a change soon. Facebook does keep reorganizing its site, and it always begins with complaints, which is why some people may not be looking forward to future changes. Google will have to make changes as well, because if you leave a site the way it is, people will get bored. I’m already getting bored of the new Facebook design, and it’ll probably be changed again soon. jovanatanackovic (2011-10-21 11:28:53) Facebook developed the ”status” bar when Twitter came out to try and ﬁght it oﬀ. Twitter still managed to prosper because it concentrated so heavily on that one area. This is what Google+ needs to do. They should concentrate on something that neither Twitter nor Facebook have, and make themselves known for that. It worked for Twitter. Facebook may try to copy, but it’s already known for being the social networking site for friends (Twitter - news). Karan Mehta (2011-10-21 14:01:12) I agree with both these comments. I don’t believe this to be a winner-take-all industry. Google+ needs to ﬁgure out a way to diﬀerentiate itself and provide better incentives for their vast Gmail clientele to adopt their social platform. Better integration, as has been pointed out already, is one way to go about it. It is part of an open eco-system. Karan Mehta (2011-10-21 14:06:14) Yes, but what’s the reason for people to click on that button? There’s no real incentive/interest right now. Sure, you can organize stuﬀ better and have video chats, but they need some huge new feature that will ’wow’ people. Adoption
will not be an issue if that were to happen. There are many sites that depict the huge take-oﬀ that Google+ had, but it’s falling dramatically now. skolahi (2011-10-21 17:21:07) Google+, or I would say any social networking platform by its own has a strong one-sided network eﬀect. There are two points here though: Whether its one-sided or two (or more) depends on how Google+ leaves it open to third party application development, services, and ads. Currently it’s closed to Third-party apps, services and even Ads. So it cant be a two-sided network eﬀect. But if it opens it to those, as Facebook did after its initial successful launch, it would work more like a double sided network eﬀect. For social networking, network eﬀects are, I would call it, a double edged sward. It can tip the market both favorably and negatively. (Positive and negative feedback I guess its called). The reason I am saying is too big and uncontrolled of a network might kill the feeling and comfort of socializing under of closed community that social networks oﬀers. Examples of negative feedback on such platforms are Yahoo Messenger, ICQ and Orkut. By their initial phases, they were well received by users and enjoyed positive network eﬀect. But as it growed into abusers and interrupters, they lost their social feeling and trust, and the rest is history about them. I am trying to say that its not only the more users is better in social networking. The quality of the users matters too. The lesson that Facebook learnt very well at its initial launch. vbork (2011-10-23 16:58:07) As a purely social networking site it’s a winner take all against Facebook and.....MySpace, Twitter as people will not be double posting photos/updates. It does have a chance if it can specialize in something that Facebook doesn’t oﬀer or oﬀers ineﬃciently. Twitter was successful in implementing the short status update identity for itself, and Google+ can be too if it can ﬁnd a niche. roger678 (2011-10-24 17:15:06) Google+ has a two-sided network eﬀect since it connects its users with other companies, for example,online game companies. The environment of Google+ is a winner take all environment. Google+ has very similar features and functions compared to Facebook, what’s more, the Facebook has far more users than Google+. These two reasons make people chose Facebook instead of Google+. However, Google can add some features to Google+, for example, make it more convenient for users to upload and share photos on mobile phones. Extending the ways of using social network will help Google+ to survive. Eugene Oulman (2011-10-24 23:04:25) Deﬁnitely two-sided. There is a strong connection of users and advertisers. ur1dataman (2011-10-26 03:59:34) I think Google should abandon google+ ASAP. They are making the same mistake RIM did when it pushed its playbook to the market soon after the takeoﬀ of iPad. Save some money and try to come up with something unique! philduong (2011-10-27 23:33:19) i agree to a certain extent. just because i feel its very diﬃcult to monetize because when i dont look for ads when i go through google +. Plus gmail does a good enuf job going through my email to target ads. sangwaic (2011-11-05 18:17:11) I strongly believe that Google+ competes in a winner take all environment, which is currently owned by Facebook. Only if google manages to alter the environment itself in a way wherein email, web albums (picasa), blogger, search engines and other services that google provides become integral and essential to the social media experience, it may be able to capture this environment.
How lucky is MC Hammer feeling? (2011-10-21 13:36)
Apparently not very much according to this article brought to my attention by Elyte Barzilay. MC Hammer is launching a search engine called WireDoo.
The element that distinguishes it from Google? As Mashable explains, it generates results based on relationships between subjects that run deeper than keywords. So, to put this in an M.C. Hammer context, if I searched on WireDoo for U Can t Touch This, I might ﬁnd links to the song, M.C. Hammer s bio, where to buy parachute-style Hammer pants and information about a U Can t Touch This dance party that s happening in my neighborhood. What do you think his chances are? And, if you are feeling lucky, make the case that his chances are good.
10/20/gIQA3ciH0L_blog.html 2. http://mashable.com/2011/10/19/wiredoo/
avitania (2011-10-21 13:52:11) First, the name is awful. WireDoo? Seriously? The concept of contextual search is interesting, but the application of it in the example above is a bit ﬂawed. If I search for something, I have a speciﬁc aspect of that search already in mind. I only want to know what I want to know. For example, I’d search ”U Can’t Touch This lyrics” or ”U Can’t Touch This dance-oﬀ video Peoria.” I wouldn’t want to see everything else about ”U Can’t Touch This” that I’m likely not interested in; outside of the exact thing I want to ﬁnd, everything else is just noise. With that said, I think contextual search technology is better applied in diﬀerent ways – for example, related/ancillary products on retail websites. WireDoo might have a chance if they (1) come up with a great algorithm for ﬁnding related content, and (2) apply it in a more targeted way than just on general web searches. Karan Mehta (2011-10-21 14:10:48) Sounds like a pretty niche area. I’m sure if this were to take oﬀ, Google would improve it’s algorithm to incorporate some of the beneﬁts that WireDoo provides. What’s the unmet customer need here? jongsukjosephshin (2011-10-21 15:15:37) Deﬁnitely feeling lucky today. TGIF too. And MC Hammer has no chance whatsoever. He might/might not have initial success in the beginning. And he is providing a higher-value-added service than comparable search engines. But what about the ad dollars that are posted beside every search on Google? He’s destroying the business model by relating the consumers to the potential ads that could be monetized. Of course, if he didn’t do this, how the heck is he supposed to distinguish ”wiredoo”? Not feeling that lucky to give this initiative a thumbs up. However, check out Outkube.com. That thing is sensational, supposedly. MC Hammer should invest in Outkube!! Can’t touch an established search engine business model, just can’t touch this. Don’t create another search engine. Revolutionize the industry. Much Much easier said than done. jongsukjosephshin (2011-10-21 15:26:15) http://www.youtube.com/watch?v=oHomLHv4vpA Interview with MC.
jovanatanackovic (2011-10-21 16:23:37) No. And what’s the point? Not only do we have google and bing, but when people see it was created by a one-hitwonder artist, they’ll think of it more as a joke than anything else. ”U Can’t Touch This” - I won’t want to touch this. Google sorts its searches by website popularity, which is the best way IMO, and its built such a strong reputation, as has bing, that there’s no chance this will succeed. It’s not a very original idea. Excellent search engines exist and there’s no need to try and create a better one. ”Because the people who are crazy enough to think they can change the world, are the ones who do.” -Steve Jobs Even though MC Hammer is not changing the world here, I still think the craziness part applies to him. Alex Semine (2011-10-21 16:35:48) Bad name. uneducated ’founder’ who can’t even spell properly - should have been called WireDO if anything not WireDOO like doo-doo, like the poopy garbage it will be, gawd such simple mistakes, makes me angry that we have economic dollars wasted like this. Even the interviewer hinted at it in the video above, ”What’s diﬀerent, what does it DO?” I changed my mind, this isn’t even worth commenting on. I hope they go public so I can buy some put options at strike 0.00. skolahi (2011-10-21 16:51:40) I wont comment on the success of MC Hammer’s idea. He tends to push toward what he ’wants’ himself to do, rather than what he is suited for to do. Entrepreneurship and technical innovation at this magnitude, to challenge Google, Bing and stuﬀ, is not something he is well suited to do I believe. But I also tend to strongly disagree about some of the comments I see here. ”Excellent search engines exist and there s no need to try and create a better one.” not sure what that means but it makes no sense in the innovation driven world of tech business. If such statement were true, we wont have Google today, as by the time, Yahoo and AOL were oﬀering ’best-in-class’ search engines. There are many things that Google (ok and Bing ;)) do at its best. But there are many other things that they dont do, things that even exists in theory and has never been implemented/commercialized properly. Context search idea might not be new, or even this initiative might not be a proper implementation. But there are many rooms for innovation and improvements, event at very business of search engines. hank008 (2011-10-21 19:30:14) At least he points out some problems that currently exists about the searching systems. We want the searching engine can be ”intellegent”, which can pop up the materials/contents that we are really looking for. (deep search and relational search as he proposed) How can search engine be smart and read your minds? It’s hard. it requires the programmers(developers) to take more time to work on that. (Fortunately, siri has taken the ﬁrst step) jytsao (2011-10-21 19:53:32) I’m still a bit unclear as to what this ’contextual searching’ means, but my initial impression was that the engine would generate results that come in ﬁlter bubbles (http://en.wikipedia.org/wiki/Filter bubble). From CBC news (http://www.cbsnews.com/8301-501465 162-20123692-501465/mc-hammer-plans-to-launch-search-enginewiredo o-to-rival-google-and-bing/): ”Hammer told O’Reilly Media’s Alex Howard in an interview that WireDoo’s goal is to improve search by providing ”relationship-driven searches” and ”go beyond the generalities that give you more relative information in a consistent way in a new environment.” It sounds useful to have wiredoo extend its search to provide relationships between the information you’re searching for, but if only certain (more relevant?) relationships are generated and the other (less relevant?) ones are left out, then the user risks missing what could be the information they were looking for for the sake of convenience. If my inference is correct about how wiredoo may pose this problem, then I’d much rather stick with google’s general search results. I’d rather sieve out unwanted information myself than have an algorithm do it. Plus, I don’t think MC Hammer can go up against a search engine that’s achieved the status of a verb :P And as Karen has said, I’m sure that if this special feature that wiredoo oﬀers takes oﬀ, google could always bring some of the beneﬁcial features into its own engine. The online search engine seems to be a ”winner take most of it” (not quite a winner-take-all) business. I don’t think wiredoo possesses enough additional features that’ll
give it enough power to penetrate deep into the market, so I think it’ll eventually be wiped out. jessicaanania (2011-10-21 21:56:26) Let’s for a second ignore the fact that most people don’t associate technology advances with once famous musicians Bing has tried to create a search engine which was created from a technology based company, and yet they still struggle. What Google has is high switching costs. Google is much more than a search engine, its email, its picasa pictures, its google reader, its google calender, goggle docs. etc etc. So for anyone who has a gmail account or a picasa account, all those features are located in one area and google becomes your home page. Secondly the way he describes the amount of information that would show up once you enter a search is hard to believe and understand. Firstly how is all that information going to be displayed on 1 page. Reality is most people never make it past the ﬁrst page of a search engine, so if what your speciﬁcally looking for isn’t on the ﬁrst page, I ﬁnd it hard that you would use WireDoo markbelcarz (2011-10-22 00:11:04) I agree that taking has-been musicians seriously when it comes to technology is not that easy, especially when he is proposing to take on the legions of PhD researchers and other engineers that currently work at Google. It also deﬁnitely does seem diﬃcult to imagine how all that related information information will be displayed in a manner that is clean and simple to understand. Google has attempted a similar idea, in a toolbar approach, although I have yet to try it: http://blog.hubspot.com/blog/tabid/6307/bid/22841/Google-Launches-Go ogle-Related-to-Oﬀer-ContextualSearch-Results.aspx maryammoshiri (2011-10-22 01:59:40) I agree with Tania. When I am looking for something speciﬁc, I make sure to include it in my google search. Also, google has maintained his strong position in search engines because it continues to improve with reduced search times, exactness to what you are looking for, etc. Customers are used to this level of service. If this engine is not able to compete on this level, it won’t succeed. Also, the fact that MC Hammer is launching this site, does not invoke conﬁdence in the venture. His previous work has been in the music industry with side ventures in racehorses. His other side, dancejam.com, leveraged his star power as he was noted as a great dancer. I don’t see the strength that he brings to this venture. John DiGiacomo (2011-10-22 12:51:08) Exactly. What added value is this giving the consumer?? I can’t ﬁgure it out. I watched the entire video below and every example he gave I would have no trouble accessing on Google on my very ﬁrst search. And if by some miracle they did add ANY value whatsoever, Google would simply build the same function into their search. paulsmerchanski (2011-10-22 13:24:58) Agreed. Hammer time should stick to music or ﬁnd some other business idea to endorse because this one ﬂat out sucks. You don’t go head to head with Google at their own game. Martin W. (2011-10-22 13:44:28) I agree. Deﬁnitely can see this useful for product/retail websites. I am interested in seeing what Hammer and his team come up with. It does sound useful, for example like the article explains, when searching for a home the results also return things like the neighbourhood, community, etc. I know I can search ”home neighourhood” and then ”home community” but if the engine is smart enough to oﬀer up all the suggestions in 1 search instead of multiple I am all for it. Google is a great 1st choice general search engine, but there are certain things it still doesn’t do well, which is why I will use Wikipedia search or Wolfram Alpha for certain things. There is still room for innovation in the search space and I like what products like Blekko, Greplin, etc. are doing. In terms of ”success”, that’s a tougher one to tackle. I always like to see the little start ups succeed, but the search engine space is pretty well dominated at this point. You never know though, if the product is super useful it could get acquired or carve themselves a nice little niche.
Taylor O (2011-10-22 13:49:14) I agree with @skolahi, let’s be a little receptive to the possibility that the dominant players today aren’t going to the dominant players forever. Ask Altavista, Lycos, AOL, Yahoo... Google was once a niche application. Semantic search combined with other new tech like image, video and voice is just beginning and the beneﬁts are accessing not only information you want, but information you didn’t know you want. This ultimately could help us to learn and coordinate better. I’ll play along and say he’s got a chance but if an only if they focus on a more niche application and expand. The similar precedent is either AskJeeves which is a more natural language search or Wolfram Alpha (As @Martin mentions) which semantically tries to understand your query and answer math questions or questions that can be answered from demographic or encyclopedia type data. These have persisted and added value and competition to the search marketplace that have pushed Google, etc. to improve and made some money. Another player @Martin W. mentions is Greplin and social search. The internet is shifting to social media sites containing a lot of the internet and without its inclusion search is not very valuable, which I think is at the top of Google’s concerns right now, hence their frantic push for Google+. I’ll give Hammer a shot, but he’s got to be open to pursuing social and eﬀective niche applications. It’s 2 Legit to Quit. myraelbayoumi (2011-10-22 13:53:01) I agree with both of my classmates above. Google has not and very likely will not be beat - especially in the search engine business. Even it’s biggest competitor, Microsoft, admits that it can’t ”out-Google Google” (http://www.zdnet.com/blog/btl/microsofts-search-chief-heres-how-w ell-beat-google/58083) The chance from success comes from diﬀerentiation - also addressed in that article - but diﬀerentiation on concrete and speciﬁc things. Microsoft proposes diﬀerentiating itself on a number of items, like apps & services, geospatial, compatability with social networks, etc. What is WireDoo diﬀerentiating on? I’m willing to bet that if I entered the same search in Google and there was a ”Can’t Touch This” dance party happening on my street, it would show up. So that brings me back to my initial thought - what’s the point? Not to mention, how will he monetize this? garyyip1985 (2011-10-22 16:28:13) Hey, at least its not Vanilla Ice. I think he could do ok if the search engine is made solely to serve people interested in the music industry and its artists. Wouldn’t it be sort of neat if I typed in a song name and I get a link to the lyrics, the wikipedia bio, the youtuve MTV and some ebay merchandise all on one website? and at least this way MC Hammer can get some leverage oﬀ his ”stardom”. Isn’t this what Dr.Dre and Eminem are trying to accomplish with their new MTVs? I’m getting excited - HAMMER TIME! nikhilmahendra (2011-10-23 09:34:42) I do not see this search engine being able to diﬀerentiate itself to an extent that would motivate people to actually use this website over the well-positioned Google, Bing etc. (The name WireDoo is a sure deterrent as well!). I don t foresee a huge client-segment that would actually see additional value in getting search results that are relationshipbased - this would consequently lead to lower activity as well as lower advertising revenue for the website. Moreover the established search-engines can easily provide a similar additional feature on their existing platforms to appeal to such user preferences and they are also better positioned both in size and existing user base to take advantage. vbork (2011-10-23 16:50:20) Why exactly would I use this over Google? I am looking for U Can’t Touch This lyrics/song to listen to and an online store selling parachute like MC Hammer pants comes up... WireDoo could be a niche thing for music lovers who are into researching info about artists, but then again why not just use Google or any other major search engine? kumarsidhartha (2011-10-24 09:53:15) I agree with Taylor. Let s give MC Hammer a chance. I also think that if you are to compete in an established market such as search you will need to form alliances. Think Microsoft and Yahoo when it comes to Bing. With a
well-entrenched competitor such as Google new entrants have explore alliances and niche applications to accumulate a user base and monetize there products (no matter how good they are). Think of a partnership with a social networking website to allow internet searches through their interface, or with a cellphone manufacturer to be the default search engine on their phones. Eugene Oulman (2011-10-24 22:50:37) I don’t think MC Hammer is going to disrupt Google, but I wouldn’t rule the idea as not viable. This may pickup and ﬁnd its place in niche market. sharadsharma12 (2011-10-25 09:39:00) I agree that you need to form alliance in order to compete with a well entrenched competitior. But as we saw in case of Bing, competing with a search engine like google is almost impossible today primarily due to its vast reach among the customers and ease of use. I don’t think any new search engine can get the vast customer network like google so I believe MC Hammer should enter as a specialized search engine for a particular product type. This will help them diﬀrenetiate themselves from google in terms of their product speciﬁcation. Once they get customers for that product category they can expand further into search engine market ur1dataman (2011-10-26 03:55:44) ”If I search for something, I have a speciﬁc aspect of that search already in mind. I only want to know what I want to know”. Well put avitania! I would be super annoyed if the search engine comes up with all those random results. Whenever I do a research, I like to specify what I’m looking for. For instance, as avitania mentioned, if I’m looking for a book called ”dawn” (not sure if there is a book that is actually called dawn, haha), I would type in ” book dawn” or ”dawn amazon”. What I would expected is a list of sellers for the book. However, it seems to me that this Diredoo search engine will give me other things, like a pic of the dawn. I doubt I will ever use it again if above scenario happens. I also think pushing this idea to online retail websites is a good idea. Nilay Goyal (2011-10-28 11:12:45) Indeed, this can create a new niche market... However, I look at the motivation behind this venture and it signiﬁcantly lowers the probability of this venture’s success. Is MC Hammer’s motivation to disrupt google or create a great search engine? I doubt it and thus, I dont expect WireDoo to succeed. jennachou11 (2011-10-29 22:51:31) if Arnold can be the mayor, and if Ice T act well, if Kumar can be a suicidal doctoc and work for obama, If Jzy-Z can pimp his way to music proudcer and with the obvious natural talent.... .if if if if.... i would give MC Hammer a round applause and he can be proud that he has the idea and carried it throu gh and put it into action...i just hope it wokrs as well as he claims.. jackyzee (2011-10-30 16:53:47) interesting video! MC Hammer is a pretty techsavvy with social media. jackyzee (2011-10-30 16:55:27) The idea is interesting. If it does work and people are using it. Question is: Would google buy the site and incorporate it onto their site? ricardogrinberg (2011-10-31 10:23:08) I don’t think this is innovative at all. I mean the problem to deal with big data and analytics innovation of unstructured information is huge nowadays but enterprises like EMC, HP, IBM, Microsoft are spending billions of dollars and attracks the best in breed engineers to solve this massive problem. And now MC Hammer with his engineering team has come to save us all? no way... whtch what EMC has is doing (go till the end of the video and you’ll
ﬁnd a search engine with meaning!): http://www.emc.com/campaign/global/oow-2011/index.htm?pid=home-oowke ynote1-092811 Eventually, this technology will be available to the masses, but again this take time and I don’t think EC Hammer with no tech background will be the one to crack this problem. Chen Sheng (2011-10-31 13:26:39) First of all, as many people have mentioned above, this is a niche market. It does not provide added value and only a small amount of people would be interested in this search engine. Also, I really don’t believe that MC Hammer and his team are professional enough to make such an engine to compete with Google. The website’s name is awful and the logo really looks like a child’s painting. Even there is an opportunity in this ”deep searching” market, I don’t think these people have prepared enough for them to success. natalka81 (2011-10-31 23:23:37) I m sceptical that this will take hold or even make the news. I did a simple search on Google for WireDoo and had to scroll through a few stories before I found what I was looking for. I m also curious as to why he chose the name WireDoo , it doesn t say anything about deep search and it doesn t relate to search once and see what s related nor is it a word that s at the top of mind when looking for a search engine. I can see it being catchy, ie I just wiredoo d it but that’s about it. Even though I see how he s trying to diﬀerentiate himself I don t think Google has anything to worry about. BTW, after watching this video, http://www.engadget.com/2011/10/23/wiredoo-searchengine-gets-runnin g-man-stamp-of-approval-video/ it would be interesting to know what other data related projects he s working on. sangwaic (2011-11-05 18:05:04) I believe Wiredoo claims to provide search results for not just the ’search term’ but also about other entities associated/ related to the search term. I am not sure if there is a need for such a search engine, as the existing search engines can be used to get any required information.Further, I believe the user, given a powerful search engine, is intelligent enough to know what he wants to search. Also, I am skeptical about the quality of MC Hammers search engine in terms of how it compares against the googles and yahoos. tanvishetty (2011-11-17 00:04:32) I’m not too sure about the tagline :”Search once and see what s related. People don’t have time to browse through other items that are associated with their search. When i use google, i expect the search results to be accurate, and for it to ﬁnd for what I’m looking for precisely. The longer this takes, the more unhappy i become with the service. Associated searches are useful for services such as Amazon, where you tell users what other users with similar reading preferences have bought. But I don’t think it will work in this context.
eBay Item Watch (2011-10-23 15:30)
In class this week, we will be discussing eBay. Given  that I thought I’d sell something there so you can see how it goes. The auction will end in the Commerce class on Wednesday. Click here to see the item. Let’s run a competition. You have 24 hours (until Monday at 3:30pm to enter). What do you think the item will sell for? Of course, if you want to bid yourself, moral hazard is allowed. Also, I’ll waive the shipping fee.
1. http://rotmandigital.files.wordpress.com/2011/10/img_0989.jpg 2. http://cgi.ebay.ca/ws/eBayISAPI.dll?ViewItem&item=130591447846#ht_500wt_1156
jackyzee (2011-10-30 16:23:24) Good guess! Ebay is really opens up opportunity I should ﬁnd some junk and try to sell it as an experiment =). To me its garbage to someone else it can be treasure! Alex Semine (2011-10-30 16:39:05) This is an awesome post (the ﬁrst part anyway). I found the same information from my contact at Fido. (I guess it makes sense, since Rogers owns them and sometimes gives hand-me-down phones to Fido) I think IN GENERAL iPhones are WAY overpriced, and is in general one of the only items in existence where the perceived value is sometimes even higher than the already massively marked-up price. That’s also the reason why the iPhone ’3’ (which is only 2 years old) is already seen as ’old’ and ’obsolete’. What IS the fair price? Well, it depends how you look at it. Some would say the iPhone is actually cheap (that’s why people overpay for it even at its high price point). Some (including me) would say it’s the intrinsic value of the phone - what it can do, how long it lasts for, and how durable it is. For me, this is exceptionally low for iPhones - they are known to crack easily unless you pay extra for cases (not part of its value package), they’re known for their lack of staying power (and become obsolete when Apple releases the next incremental install), and ﬁnally, they don’t have that much value to oﬀer (except their ’ease of use’). All the points above can be contrasted with, say, the Samsung Galaxy S2. One, if not, the most powerful phone on the market. The one which is physically durable, and fully customizable to how YOU want to use it. It also has staying power because of it’s Android OS, so it’ll go from being an ’epic’ phone now to a ’really good’ phone in a year, unlike the 4s, which will be ’obsolete’ with iPhone 5. I haven’t put money behind my words yet in shorting Apple stock, but Apple recently announced at their 4s launch that they’re pushing development cycle even shorter, and I have a hunch their market base will decline as people lose focus of their current value package and become more realistic. Your second part I actually disagree with because that just comes with aging tech. There are literally no examples I can think of that are tech-related and have maintained a high price point (unless it’s some niche product). Technology
gets cheaper to manufacture as time passes, so there’s no reason for a PS3 to stay at $699, and everyone knows it. People who can’t aﬀord it are forced to wait. It’s like that for everything though, except maybe food. Sorry for the long post, I’m bored at work ;P vbork (2011-10-23 16:53:50) Probably within $500- $600 range as 4S 32 GB are going for about 900 and iPhone 4 16GB for around $400 and 32GB for about 500-550. Karan Mehta (2011-10-23 17:05:26) Given that the 4S is out, people’s WTP will likely drop a bit for the 4. I’d guess between $425- $475. shunichirotago (2011-10-23 19:12:08) Also, since it’s been used, the price could be a little bit more cheaper. I’d guess around $450 as Karan said. jytsao (2011-10-23 19:41:02) $370. Best way to judge current market demand is to look at what other people are paying for comparables. From searching ebay for other used, iphone 4 32G that’s being sold, the one with the shortest auction deadline of only 1 hr and 20 minutes remaining is going for $380. I say 10 $ cheaper for the professor’s because the one going at $380’s only been used for 2 weeks. paulsmerchanski (2011-10-23 20:09:44) I’d say $389 paulsmerchanski (2011-10-23 20:19:15) And this may not help the situation. Apple s Lower Prices Are All Part of The Plan http://nyti.ms/odrsC5 avitania (2011-10-23 20:28:26) Based on the comparables, I’d say $360. The auction has a few things going against it: the phone is used, it’s locked to the Rogers network, there are already a lot of similar auctions, and the ones listed with a Buy It Now price of + $400 don’t seem to be getting much traction. jovanatanackovic (2011-10-23 21:48:12) I’ve purchased enough items oﬀ eBay, and I usually wait until the last few seconds to place my bid. Unfortunately, so does everyone else, so even though most of the comparable iPhones are around $350- $400 near the end of their auction, they’re probably going to sell for about $30- $80 more. It also depends on if someone put a ridiculous max bid amount. I’m going to guess your iPhone will sell for about $450- $500. I’ll go with $460 before the shipping. garyyip1985 (2011-10-24 01:27:26) $310- $330. People are asking for $350 on Craigslist. I’m afraid with some haggling most will get the price to $330ish. And then there is no shipping...but good luck! bharatbhardwaj (2011-10-24 01:58:48) I wouls say 350 CAD... markbelcarz (2011-10-24 08:40:04) I’ll weigh in at a price point of $400 roger678 (2011-10-24 09:30:33) I think the ﬁnal bid price will be around $400. Since it’s only a second hand one, the WTP will be lower than a new
one. People can also choose to by used iphone on somewhere else like craiglist. kumarsidhartha (2011-10-24 09:41:13) Looking at the comparables and the fact that the phone is used and locked to the Rogers network, I would say the phone is going to sell in the price range of $350-375. But deﬁnitely ﬁnd it hard to see how the 400 barrier will be broken given the recent introduction of the iPhone 4S and cheap carrier oﬀers (if you are locked to Rogers why not just get into a contract with $199 as the price for the phone, which also allows for cheap upgrades in 2 years). Martin W. (2011-10-24 10:22:51) $421 Avi (2011-10-24 10:35:12) It doesn’t say unlocked so around $375. connietai (2011-10-24 13:03:04) I would guess around $360. There is deﬁnitely demand for the phone as there are already 17 bids in just 3 days! I’d imagine the number of bids to increase as the auction gets closer to closing time. I do not think it will exceed $400 though because the phone is locked to Rogers. Currently, you can buy the iphone 4 32GB for $269 with a 3 year contract with Rogers, so I think people who are keen on not signing a contract will be willing to pay a bit of a premium for this lightly used phone. jessicaanania (2011-10-24 13:06:29) i think this would go for somewhere between 300- 350 $ maryammoshiri (2011-10-24 13:07:18) It will be above $350, but less than $500. It is the black version as well is older, so I think the demand would be higher if it was white. Karan Mehta (2011-10-24 13:20:30) I don’t think being locked to Rogers will drive the price down much, it’s very easy to unlock the device. jongsukjosephshin (2011-10-24 13:52:40) $390. Alex Semine (2011-10-24 15:35:58) Without doing any previous research, I’d say $400ish. kelvinchunkileung (2011-10-24 15:46:53) I would say in the range of $350-400. Why? It’s because a used sim-free iphone4 is current selling around $400 ish. Moreover, as the devices is upgraded to ios5 (so as the baseband), there’s no way for you to unlock the sim-lock feature until the new ios5 jailbreak tool is released. myraelbayoumi (2011-10-24 17:16:56) $419 elyte18 (2011-10-24 19:28:29) I agree that the phone is slightly less desirable since its locked to Rogers - so around $360-ish.
Martin W. (2011-10-24 20:08:30) i feel like you totally reverse price is righted my bid. :) digitalworldme (2011-10-24 20:59:13) I think the price depends on how many people bid for it, since Iphone 4 is still high quality product, in the last moment the price will go up a lot more as people try to get a good deal. I would say the ﬁnal price is around $420. fredzhu (2011-10-24 22:08:11) Let’s look at comparable (sold without contract) before estimating a price Brand new iPhone 4 (8GB only) on apple.ca: $549 + tax - cheapest brand new iPhone 4 on the market Brand new iPhone 4 (32GB) on Rogers.com: $749 + tax Because the phone in question is lightly used for only 2 months, I suggest that we apply a 20 % discount on original prices. So a fair auction price could be between $ 440 and $ 599, assuming ebay market functions normally My guess is that the phone will be sold at around $550. Eugene Oulman (2011-10-24 22:44:43) $419.50 leonardoluo (2011-10-24 22:56:38) Agree. However, I used advance search for completed listings and found it was sold for $360 USD. The auction was ended on Oct 24, 201122:47:18 EDT Alex Semine (2011-10-25 03:02:55) You guys do realise he said you only had 24 hours to guess right? Otherwise it’s sort of an unfair advantage to those guessing later... Also, raise the word limit please.. 750 is WAY too short for any proper analysis.. I’m at 700 and I still haven’t really covered the other 2 main points blah! kamaljeetsingh (2011-10-25 22:44:56) I’d bid $350 for this one. Being locked in a contract is a deterrent for me. ur1dataman (2011-10-26 03:45:39) between $390 and $400. With new iPhone 4S, I wouldn’t pay more than 400, plus the phone is locked. elainezhang12 (2011-10-26 14:53:06) $379- $399. Given the 4s is out, my WTP is dropped as well. Given that this is not a contracted phone and I can use any sim card, I would bid for the phone less than what I could get in China on a ”black” market. fredzhu (2011-10-26 15:07:46) Guys, the current bid is already $410 and there is still 24 mins left... I still think the ﬁnal bid price will be around $550. Joshua Gans (2011-10-26 16:08:18) Sold! For CA $455 + $20 shipping to someone at the University of Western Ontario. It will cost me $45 in seller fees to eBay. hank008 (2011-10-26 23:12:54) The ﬁnal price was way higher than what we expected above, and sniping boosted the price in the last 1 minute. Interesting! EBay received approximately 10 % from the seller, which was a lot. Also the guy who won that iphone was happy to beat the competitor and own the stuﬀ!
jovanatanackovic (2011-10-27 13:57:34) What are you talking about? I was oﬀ by only $5. I said it would be $460 before shipping. It helps to know eBay bidders. They tend to overbid on all auctions, which is why I typically buy only Buy it Now items. avitania (2011-10-27 13:59:49) Now I’m totally bumming that I sold my factory unlocked iPhone 4 (in box, used for 1 year but with no cosmetic wear/tear) to some weirdo from Craigslist for $470. Should have used eBay! philduong (2011-10-27 23:27:03) I still think $45 is a very high seller fee to pay. Lots of new selling apps popping apps; when will this lower ebays prices? jennachou11 (2011-10-29 22:35:35) a secret source from Rogers told me that to purchase the new one upfront (apparently no contact) are: $299 - 16GB $399 - 32GB $499 - 64GB the ones on ebay are way over-bid then again is it a necissity to always get the newest gadget? there will always be something new, you can’t keep chasing them unless you are rich (which in my case is deﬁnitely NOT). Very often the prive will decrease within the next month or so (maybe not for Apple products). But lets use the example of video game consoles.. PS3 came out around $699 if i am correct (i am not a gamer so please corect me if i am wrong), and if you look at the price for PS3 now it’s like $350 around.... I have been a loyal rogers custmomer for more than 12 years... i get packges better than employees.. so i am not complaining and i still hae the iphone3 and it does the basic things thati need to do.. as long as i can check my email and txt.... jongsukjosephshin (2011-10-30 19:54:19) indeed. This Iphone business has got to stop. It’s so apparent what they’re trying to do, yet they do it eﬀectively. That means consumers are falling for the scheme. A phone’s got to do it’s job. If it does the job, it does the job. On the other hand, everyone’s using it. There is the mass eﬀect, because so many people are using it. Itunes is getting bigger every year, limewire is shut down, and it’s that much easier to get music cheap. listen to music, access email, play good games, and best of all, download all this from one centralized store called itunes. problem with android phones, google updates faster than devices. i might get a phone today running an older version of android.? that makes no sense. and plus, carrying around an ipod and a phone doesn’t seem to make sense these days. why not just get an iphone that does everything? so, in conclusion, ebay makes more money, apple makes more money, and we spend more money. that’s the way it seems to work. ricardogrinberg (2011-10-31 10:01:53) Guys, I was checking the bidding numbers and during the last 8 hrs (26th form 9am to end of bid) the price of the iphone increased by 26 %. If we compare this number with the price increase of the 24 hours before that (from the 25th to 26th of oct) which was 17 % we ﬁnd that the price increase growth rate was 21 % faster in the last 8 hrs that in a whole day of previous biding. Auction dynamics are pretty crazy! anchenyi (2011-11-01 15:51:56) I am wondering that if you sell your gadget at a very low price, lets say, $1, do the sellers still have to pay $45 for fees or it is proportional to your ﬁnal bidding price? anchenyi (2011-11-01 15:52:37) Sorry, posted in wrong place. anchenyi (2011-11-01 15:55:49) I am thinking that what if only few buyers bid on my item, then at the end I have to sell my phone at $1. Can I ask my friend to bid the price up for me? I know it involves moral issue but how could eBay control this? Can they tell
which is the real bid? roger678 (2011-11-01 20:17:04) ni shuo ni, er bu er
Has the NYT paywall worked? (2011-11-02 11:15)
As you know from class, the New York Times has introduced a paywall. The initial data is out and some of it is contained here. So let’s do some analysis. Has it worked? Tell me your reasoning.
jongsukjosephshin (2011-11-02 11:56:34) For a digital subscription Ithat was once free), some consumers will not agree with their ”versioning” method. (why start at $15 when you can start at $10 - referring to ”free” by Anderson). NYT does not allow free access from all your devices as well. (the numbers may be ”excellent”, but they could do better, and it must change in the long term). It seems that they are making a gradual shift to the online news industry. If so, it may be working, since delivering papers cost them well over $600 per person. But in the long term, diﬃcult to see massive growth, as the article stated. A newspaper needs mass circulation to survive, whether online or oﬄine. Why they are restricting this by oﬀering higher price points that repel a good chunk of consumers is anyone’s guess. If the prices seem to be working, well the device limitations are not attractive. http://www.nytimes.com/content/help/account/purchases/subscriptionsand-purchases.html John DiGiacomo (2011-11-02 15:19:38) Yes, I do think it has worked. Adding 424,000 paid or paying customers in half a year is deﬁnitely a success and more than I think many suspected. But unlike the author of the article, I don’t feel it will be successful for every newspaper: First, The New York Times is regarded as one of the premier news sources in the world. It’s a status symbol. Also, unlike many other news sources, the Times has maintained a high level of quality where others have faltered due to cost cutting. In other words, a Times reader tends to remain a Times reader. Other ’lower quality’ papers do not enjoy these beneﬁts. Second, most newspapers (especially in this era) do not have $45M to spend developing such a system. (http://articles.businessinsider.com/2011-03-29/tech/29999230 1 new-york-times-google-database). Sure other papers won’t need to spend quite this much to develop a decent model, but it will undoubtedly still require signiﬁcant investment and research - an investment that many can not aﬀord. Spark Notes: What works for NYT will not necessarily work for everyone. jongsukjosephshin (2011-11-02 16:53:31) G2 disagree. 100,000 subscribers are paid for by Lincoln. That leaves only 324,000. The paywall system is not that old in the newspaper industry, save WSJ. Keep in mind people value accessibility from a wide range of devices. Their prices are also quite high. Competitors begin to undercut them, and we have a new ball game. It’s too early to say if it really works. The news industry is fading quickly. NYT is trying to do what it can to postpone the industry’s demise. Though it is easy to see that this might be a success today, I think it’s a mirage. adriennefriesen (2011-11-02 17:07:09) I agree with John, especially about leveraging the NYT brand image. Their readers are extremely loyal and the content provided is top-notch, as NYT is able to attract and hire the best journalists. Because of this, I don’t think they will see a signiﬁcant drop oﬀ in online readership from this large, loyal core. Those subscribers who are just
trying out the online subscription may opt out when it comes up for renewal, so it would be wise for NYT to look for a way to keep those readers (possibly via discount incentive?). The comment above that ”the news industry is fading quickly” is lacks justiﬁcation. I do believe that the industry is rapidly changing- the digitization of news papers being a huge example- so that people demand more real-time information, but that does not mean that the news industry as a whole will decline. I also saw an interesting comment at the end of the article: ”If I were running the place, I would end the policy of doling out free digital subscriptions to print subscribers through clever marketing in order to coerce/entice paper subscribers to go digital.” ... Thoughts anyone? jovanatanackovic (2011-11-02 18:42:03) It s worked so far, but it s only been a year. You can t just say that other newspapers should copy NYT based on one year of statistics. Besides, NYT is one of the most well-known papers and for that reason attracts readers from all over. It s clearly not the same for all other newspapers. Also, I know I keep on going back to this, but as time goes on, people eventually get bored of virtually everything. Just because NYT was successful, it doesn t mean they ll continue to be successful. They have loyal customers who will stick with them, but the others may go to other sources to get their information if they get bored of reading NYT. This is why websites constantly change their layouts. People want to see change. I know people subscribe in order to read the news, but the customers who aren t loyal may get tired of paying $15 a month (which isn t exactly cheap) for the same thing. Since the paywall has helped them grow, now they ll have to satisfy even more customers, either through eventual changes in their pricing model or changing the layout of their site. Constant changes will be necessary for the paywall to continue to be successful. By the way, NYT is boosted in terms of quality. I ve read enough articles and it doesn t deserve the loyalty it has. jongsukjosephshin (2011-11-02 20:26:55) Hmm... good point, but by ”industry fading”, for clariﬁcation purposes, I meant that it will be very diﬃcult to make as much money as it did before the digitization of news. The ad revenues are just not the same between print and online. This is one of the reasons why the industry is still reluctant to change entirely to a diﬀerent revenue structure; another one being that they don’t know the impacts of long term use of a paywall. NYT can leverage its brand power to the greatest extent. However, unless they can persuade the entire industry and others who provide free news to start charging users, they will never get to where they were two decades ago in terms of revenue and sheer proﬁt. Also, of the millions of visitors that are on their website, they’ve only managed to get 324,000 loyal readers. That means, if they had a million visitors, 67.6 % of readers, whether casual or hardcore, could have left due to their charging scheme. The article seems to be impressed by NYT’s performance, but given their brand image, the numbers are weak. bharatbhardwaj (2011-11-03 01:35:12) I ﬁnd no reason for a paywall to not work in the long run. Newspapers have to diﬀerntiate themselves from other newspapers to make this work. People will pay for a subscription if they know that they are getting qaulity/ type of content which they will not get anywhere else. Moreover brand names will keep loyal customers coming back. Also having a paywall lets newspapers know the exact type of customers and they can start selling ad space to companies who want to target those kind of customers. This targeted advertising will increase revenue from advertising also. As dicsussed in class, its about maintaining the customers attention to the web pages to keep those advertising revenues coming in... roger678 (2011-11-03 10:19:43) Introducing a paywall brings New York Times some beneﬁts. They managed to have 400,000 online subscribers and generates lots of proﬁt. NYT is a newspaper with a very good reputation, and it has many hardcore reader. This large number of readers contributes a lots to NYT’s revenue. These hardcore readers’ willingness to pay are large or equal than $15. However, charging a $15 paywall may also discourage some people from subscribing the online version. For a newspaper to survive, a massive number of subscribers is a must.
paulsmerchanski (2011-11-04 11:36:29) I think it is too early to tell whether or not the paywall has worked and we will only know for certain in 5 years from now, when we will be able to look back and analyze the data. However, it is psychologically diﬃcult for the consumer to start paying for a product that used to be free and this will be a challenge the newspaper companies with paywalls will face. As such, diﬀerent models than the paywall need to be looked at. As Poynter’s Bill Mitchell has pointed out (http://www.editorsweblog.org/analysis/2011/10/bill mitchell on paywalls - how to shape.php ), one success story in the shift to online content has been the Miami Herald. It been able to generate recurring revenue by selling an app containing high quality content focused around the Miami Dolphins to a niche consumer (sportsfans). Instead of trying to make all consumers pay for general content, the Herald has focused in on a special interest group who have a higher willingness to pay for a product catered towards them. This also helps in generating higher ad revenue, since in this medium, advertisers know precisely who is viewing their ads. jennachou11 (2011-11-04 23:47:46) if you think about how much the paper-based newspaper costs for, say students, it’s almost a guarantee that the monthly fee is less than $10 if not less (i.e. Frosh special for $30/yr?). Now that revenue needs to be distributed between traditional expenses such as printing, human editing (as opposed to computer editing which saves time and $). perfect ﬁnal draft (usually a few designated ﬁnal editors as opposed to the possible simple PEER editing if it’s digital), approve ﬁnal draft, send to print shop, distribute to each local distributor, insert ﬂyers, etc etc... so much labor... physical work... for less monthly fee than the digital copy which entails way less work. The trend torwads digitalization of newspapers will continue to emerge, and even though 324,000 loyal customers don’t seem much (Say $15/month = $4.86m/MONTH), the equivalent of the brick-and-motar model’s STUDENT price of $7/MONTH would require 695,285 people to sign up.,which is at least DOUBLE the amount of subscribers. Plus, don’t you wish that instead of running the paper route when you are young, you can just sit infront of the computer with a few clicks and the contents gets perfectly delivered to the right address and right person on the days with always PERFECT WEATHER? sangwaic (2011-11-05 17:40:14) I am not yet entirely convinced that the NYT paywall is a success; the growth in subscriber base has declined drastically (15 % for the 2nd quarter after seeing a 400 % rise in the 1st quarter). It seems to me that at the moment only the hardcore readers are willing to shell out 15 $ a month for this access and most have already become subscribers. further the 100,000 paid for Lincoln subscriptions account for almost 25 % of the subscriber base; even if a minority percentage of those subscribers do not renew subscriptions at the end of the year it will be a big dent in NYT’s online subscriber base; we may see a slight dip in the subscription numbers I see the paywall subscriber base and revenue stagnating unless NYT manages to consistently attract casual readers in addition to its hardcore readers on a regular basis Karan Mehta (2011-11-06 12:38:15) Oﬀering diﬀerent prices for diﬀerent mediums is quite strange. Paid digital content should be accessible universally, not device-speciﬁc. Karan Mehta (2011-11-06 12:44:49) Ad revenue is just one way of making money by oﬀering ”free” digital content. By tapping into any of the other innovative, revenue generating sources (http://howto.wired.com/wiki/Make Money Around Free Content), I believe the NYT could continue oﬀering free access. I agree with the above points about competition and prices eventually hitting rock bottom. It’s not a sustainable business model. kumarsidhartha (2011-11-06 17:37:19) I think that the paywall has worked just by looking at how overall traﬃc is up 2 % and also the user base has swelled to 424,000. But I wonder why does NYT allow in Google users for free. I am one of these users. I am avid reader of
NYT online but merely bypass paying by googling the article and then skipping the paywall as it is not enforced for users who click on Google links. In absence of that I most likely would have been a paid subscriber. Thoughts? hank008 (2011-11-06 21:37:28) Here NYT provides the freemium ( 20 articles) to the readers, and any further readings are costly. I will say it is reasonable. NYT sets its paywall to people who really like or need the contents. The model will work if NYT could bring readers values that thought by readers. In other words, the quality of the materials is the determinant. Needless hank008 (2011-11-06 21:41:02) (sorry, continue) to say, paywall will obstruct some readers ( who used to read frequently because it was useful and free) , but that number is not big. Chen Sheng (2011-11-07 16:42:24) Based on current data, the paywall strategy clearly has worked. 424,000 paying or paid for subscriptions can generate large amount of revenue given the fact that the cost of delivering online version is relatively low. It could be a good start for NYT to shift towards the online news industry. However, as mentioned in the article, the number of subscriptions in the second quarter has dropped dramaticlly compared to the ﬁrst quarter. This raises the question that the paywall strategy may not be a sustainable model. The initial success may only result from the newspaper’s reputation and its customer loyalty. Thus the conclusion can not be drawn easily now and we need to observe for another two or three years to say if paywall is actually working. vbork (2011-11-08 02:06:42) The main reason this has brought such success to NYT is because its considered more than a newspaper for many of its readers. No other newspaper has the global image and brand comparable to the NYT. A lot of people would be satisﬁed reading just a few articles on other newspapers, but then going in depth with the NYT. The same system will not work for other newspapers as they just don’t have the following of readers who go past the free and dig deep into the articles. luipuichun (2011-11-09 16:15:46) One cannot determine whether the paywall is an success or a failure. Because in a short run, readers have loyalty and tend to stick with the newspaper that they used to read. Therefore in a short run, NYT may take proﬁt oﬀ that. However, in a long run, demand tends to be inelastic and readers may start realizing they are paying a premium on reading NYT, they may be switch reading other newspaper and NYT may result in losing out market shares. In a nut shell, i guess it’s too early to conclude. Siamak Kolahi (2011-11-10 14:58:51) The quarterly report which shows some level of success with this model, sounds like a seasoning success. As mentioned in the article, forth quarter is traditionally highest. So it would be too soon to judge for the success of this model. But Its a courageous move toward versioning. But one thing is for sure, and that is someone paid $15 a month would not tolerate NYT generating ad revenue on his reading page :) tanvishetty (2011-11-12 10:01:08) I think that it s a little too early to determine whether the strategy has worked. however,I found an article where Steven Brill, who is the co-founder of the online payments platform press+ predicted that NYT could expect to retain 90 % of its current online audience. Brill is certainly optimistic about NYT’s strategy, and i initially found the 90 % retention a little too high. After all, the market for free is much bigger than the pay market. In our analysis of freemium products we saw that people are simply more willing to use products if they are free. Therefore i was surprised to see that Brill thought even with the high monthly payments, NYT could hold onto 90 % of its online readers. The advantage that NYT has, however, is that it still channels a large amount of traﬃc to its website because
of the limited free articles deal. Therefore it continues to cater to frequent NYT readers without charging for a certain amount of time. After they exceed their limit, NYT almost ”pushes” them to pay. Here s what i mean by pushing them to pay. There are two main types of people who will make use of the 20 limit free articles deal. Infrequent users who just stumble of NYT articles from time to time, and frequent loyal users who are on the fence about paying for the online subscriptions. Now it this second group of people that I m referring to. Because NYT oﬀers the free articles deal it attracts those loyal readers who are undecided about paying for access. NYT banks on the fact that these customers will be more tempted to pay for the online subscription once they read the free articles. This is perhaps why Brill thinks that NYT will only lose 10 % of its original consumer base.
Amazon introduces Netﬂix for books (2011-11-03 11:51)
Well, I guess we had (almost) all wondered whether this was really feasible but today Amazon have introduced a Netﬂix model for books. If you are an Amazon Prime member (something that costs like $80 per year but gets you free shipping on Amazon products and lots of free streaming videos), you can now borrow books on your Kindle. You can do it as frequently as one book per month with no due dates. Thoughts?
Dan Velan (2011-11-03 12:24:01) It will be interesting to see what happens, but I think fundamental diﬀerences between this service model and Netﬂix mean it won’t take oﬀ. Netﬂix is all-you-can-eat; the lending library concept is more of a bulk purchase of up to 12 books. Furthermore, while movies are consumed quickly, in a ﬁxed amount of time, books are read over a longer period of time–if customers don’t ﬁnish each book within a month, they’ll have to hold onto it longer and will lose value on their membership. Unless this is just an initial step towards an unlimited concept (or the prices becomes far more aﬀordable), I think customers won’t buy into the value proposition and the model won’t take-oﬀ. tanvishetty (2011-11-03 12:39:46) I came across something interesting in a related article. If users were to subscribe to the prime membership purely for the sake of free books, then this amounts to about $6.70 per book( $80/12). Now, a lot of these e-books don t cost as much to even buy. The added advantage of buying it from an e-book store is that these books can be read on virtually any electronic device, whilst Amazon restricts its service to Kindle. So i think that the ability to borrow books will be an added incentive for anyone thinking about becoming a prime subscriber, but is unlikely to be the main reason for them to become one. Unless, they decide to remove the restriction of one book per month, in which case users may feel that they re getting a better bargain then buying the book from an ebook store. jongsukjosephshin (2011-11-03 13:36:43) Even if they remove the restriction, the added beneﬁts to consumers is merely the psychological beneﬁts, the reassurance that I can borrow as many books as I want simultaneously. I mean, who reads more than a book a month, assuming that they also live busy lives? Underlying this business model, Amazon is going deeper into a silent war against the publishers and the public libraries, though the original intention would have been going against publishers. They are eﬀectively creating a sophisticated, new platform, one that is unprecendented, to distribute and sell books. The only diﬀerence between Netﬂix and Amazon is that for Netﬂix, they are the middleman. Their survival depends on the contract negotiations with hard bargaining studios. Amazon, meanwhile, is successfully and vertically integrating the book selling business model, from selling them, publishing and selling them, or lending them. They are trying to make the publishing industry the remnants of a past. And Amazon has considerable power to do so (own publishing house, own distribution network) whereas Netﬂix does not (does not have good original content, subject to movie studios’ demands). Conclusion: A step forward in the right direction
Martin W. (2011-11-03 23:09:25) If that is all Prime oﬀered, I probably wouldn’t sign on for $80/yr. But since Prime has a boatload of other beneﬁts including reduced/free shipping rates and a ton of free movies and TV shows with Amazon Instant Video, I’m pretty sold on it. With Fire on the way Amazon is well on their way of creating an ecosystem of their own much like Apple and Google. And to the poster above, I lead a busy life and average about 2-3 books a month, and even more in movies :) So yes there are people out there who really like to read, and a lot of them really dig Amazon. Martin W. (2011-11-03 23:13:16) Oh, I wanted to add a few points. Prime already was successful, even before. They already had people subscribed to it just for the shipping beneﬁts. Then Amazon went all crazy and added free Instant Video for them at no extra charge. And now they are oﬀering the Lending Library at no extra charge as well. So existing Prime members get all that while paying nothing on top. Customer retention? I think so! Enticement of future customers? Likely! jongsukjosephshin (2011-11-04 04:17:31) for consumers like yourself, the limit of one book per month must be a nightmare. Amazon shouldn’t branch out into everyone else’s territory. This move is particularly in the right direction because it’s an attack against the publishing industry. They can’t compete with Netﬂix. They’ll ﬁnd out the hard way through bargaining with studios. What they’re trying to do is lure consumers in, so they purchase more through their site. jongsukjosephshin (2011-11-04 04:26:05) Conclusion: This ecosystem approach is not sustainable in the medium or long term. Customers will be enticed in the beginning. Then they’ll leave. There’s a reason why Netﬂix is Netﬂix, and why Amazon is Amazon. Amazon should stick to what it does best: sell books. alicesisili (2011-11-04 11:15:07) If we look at the beneﬁts of prime membership before this new feature came out, they were free 2 days shipping and streaming videos. If someone wants to become prime because of the shipping feature, I would assume that they prefer actual books instead of e-books, then free borrowing on kindle wouldn’t add much value. On the other hand, if the video feature is more appealing, would a current member buy a kindle just to use the free borrowing feature?As Martin has mentioned above, if someone is only going for this borrowing feature, that’s almost $7 per borrow (for people who already have Kindle), people may as well just buy an e-book. To me it seems that this new feature won’t do much unless Amazon increase the number of books people can borrow per month so the borrowing cost per book is lower, or make the borrowing accessible to all the e-book readers. Alex Semine (2011-11-04 13:32:47) Hmm.. Deja vu. http://www.christopherpnmaselli.com/2010/10/ebooks-amazon-kindle-and -apple-ipad-statistics/ I posted this last time as well, and for your post speciﬁcally, -> 2.6 Average number of books read by e-reader owners in a month. — A (hopefully) enlightening rant incoming!— I think it WILL completely take oﬀ, and I think it’s because most consumers become less rational as you approach inﬁnite provided value for a limited price something I might write a paper on some day. For example, when people go to all-you-can-eat buﬀets or all-inclusive vacations, or subscribe to netﬂix, they’ve already PAID for it, so their goal is to SATISFY themselves, NOT to ’consume optimally’. As long as the value they pay <= their satisfaction or ’utility’ derived from it, they will pay for that all-inclusive ’thing’. This means that if you run a resort with golﬁng, sailing, horseback riding, multiple restaurants, it is easier to sell to people as people will say ’wow yeah that looks great, I will love it there!’ but may not go to more than 1 restaurant, or go sailing, even though they paid for it, just because of human limitations. Another example is those limited-bandwidth internet mobile plans. Once you have unlimited mobile internet, you’re not going to start using your phone to download torrents just to consume as much value as you can to maximize your return, you’re just going to consume up to the point you’re satisﬁed (ie: check e-mails, stocks, facebook, news, etc). I think society in general
is going to continue with these ’pay as you go’ or ’pay for what you need’ schemes as the population increases (at least in 1st world countries). Ie: You want a house? Rent. Car? ZipCar. Transportation? Bixi or Bus. Want movies? Borrow/rent (nﬂx, theatres). Want time to relax? Vacation. Want to watch some videos or news? Stream it somewhere (no one saves videos anymore, and people used to all the time!) Want to read a book? Amazon Kindle/Prime. Want a phone? Sure, here’s a free one, just pay for the usage of it. EVEN GAMES which was like THE THING you could ’COLLECT’ and ’OWN’ and ’TRADE’ is heading towards the omniscient ’cloud’ (ie: OnLive). As people move into smaller living environments, with more time focused on single things (like ’school’ or ’work’), their linear and miserable lives will be embellished by corporations trying to capitalize on what they need to ’succeed’ (ie: the now infamous ’crackberry’). ...The rest of us that take the high road and opt for being more well-rounded and ’volunteer’, ’work’, and go full-time to ’school’ at the same time, while meeting new people every day, traveling at least once a year to somewhere new in the world and seeing what it’s all about, are those that will hopefully keep world still interesting and exciting to be alive in. TL;DR: Yes it will work. Consumers assign value incorrectly to approaching-unlimited services, and (this is a quote from my Halloween costume and character): ”For those who ﬁght for it, life has a ﬂavor the sheltered will never know.” jennachou11 (2011-11-04 19:57:50) in my opinion i guarantee will NOT work! lets take what was already a hot debate between Kindle and a say.... iphone/ipad? whats the diﬀerent? one does WAY more and the other one... well.. not so much... (i mean Kindle that is). I am not saying Kindle is not a great product, however, alreaedy hating reading slides/articles for classes oﬀ the screen.... i am sure Kindle would have put me into those bright orange colored frogs long before i know how to walk (atually lets make that bright neon blue frog) Think about these points below: (1) Consumer Segment –> is the market for movie/TV shows larger than for books (especially when we drill down into a speciﬁc genre of books) (2) Monthly Fee –> $7.99 / month vs. $80/year .... okok ﬁne this is similar (3) Length of Enjoyment –> How long does it take to ﬁnish a novel? how about a movie? I bet i can watch the whole entire season of the OLD Two and Half Men in less than the time you read a book! (4) Entertainment value –> Sharing with others, friends, family, etcc... during holiday season... you can’t read the book all together.. what are we going back to grade 2 (in Candaa that is) where the teacher apparently call each student to read one sentencce?) not likely a fun passtime as compared to watching movies together (5) so ﬁnally.... what are the value added to the consumers? Would tjhe value be more that Netﬂix oﬀers? or would the ”similar” yearly priced kindle subscription be of more value? (4) So... the value it provides to the customers? Taylor O (2011-11-05 12:08:53) Re: #4. All family members on the same Amazon account can sync books to all devices. I currently have this setup and we can all read simultaneously/ myraelbayoumi (2011-11-05 13:49:55) I would tend to agree with Martin. This is deﬁnitely a strong customer retention tool - one book a month is better than no books a month! In terms of new customer acquisition, this is an enticing addition to people who were considering Premium but weren’t 100 % sold. This is a great conversion tool. Agreed that people aren’t going to go Premium just for this feature - the cost per book is too high, but it’s a simple calculation that anyone can do. People aren’t being tricked into that. As far as the Amazon ecosystem possibility, I don’t think it’s too far oﬀ. Amazon is already doing far more than successfully selling books... and Netﬂix has a long way to go to prove that it has a lasting business idea. Netﬂix’s poor performance doesn’t give me any reason to belie that Amazon couldn’t do it better one day very soon... sangwaic (2011-11-05 17:18:14) Like some others here, I believe the concept of borrowing upto 12 books a year on Kindle is not that attractive in itself. But, when taken together with the free shipping and online video streaming, the concept does add value to Amazon Prime. But I do not see AmazonPrime’s subscriber base growing because of this added feature, though it may help them create greater loyalty among existing members. Also, at the moment, members can only borrow one
book a month, which is not very attractive. nikhilmahendra (2011-11-05 18:25:24) I believe a large part of the success of this model will depend on the reaction of the publishers and how they perceive the idea of letting readers subscribing to their books instead of buying them. I feel that the publishers would prefer the readers to buy the digital version of these books over subscription. It would be interesting to see what the pricing strategy of Amazon would be and also to see whether Amazon can get a lot of publishers on-board and use its market power to lure the others. I think the key here is the relationship with the publishers and once this is taken care of I think this initiative working. jongsukjosephshin (2011-11-05 20:34:10) You and Martin both have valid points. I still think Prime is not all it’s hyped to be. It’s going to make loyal consumers more loyal, those consumers who, like you said, were not 100 % convinced, but maybe 80 % convinced switch over to becoming a member, and most casual members will have a hard time ﬁnding value in this. Amazon is doing this to encourage more spending on its website than people would normally spend. They’re in no position to compete in the viral streaming realm against Netﬂix. You could make the argument that a couple studios might be nicer to Amazon just to vamp up the competition against Netﬂix to reduce their power, but other than that, the collection availability is no match, absolutely no match. And movie studios in general are not willing to let platforms get away with good contracts. It’s going to be tough, since Amazon doesn’t own a good portion of its books it sells, to give an all you can eat option, which will for sure entice consumers. Publishers can’t be that naive. Just look at Itunes. We can’t have all the music like a buﬀet. Only a la carte. Again, this is a step toward the right direction. But I just don’t see this, with the current nature of the oﬀerings, converting a good number of casual buyers or even medium buyers to become members. In fact, this might even be a move toward complete digitization of books, allowing Amazon to reduce warehouse space and save on logistics costs within the long term. Karan Mehta (2011-11-06 11:54:36) Agree with you on the customer retention and enticement of future customers. I think they have taken some really good steps towards building the ecosystem that you talk about, and it’s getting there! Karan Mehta (2011-11-06 12:50:56) It’s all about adding on to the package to make it more attractive. They just added a really cool feature for no additional cost to existing Prime subscribers. That’s going to make them more loyal, and they have one more reason to tell their friends and family about it, and maybe even get them a Kindle + a Prime subscription. Amazong is building a great web of connectivity around its products and services. shunichirotago (2011-11-06 16:25:32) As Martin pointed out, this additional service is a customer retention for prime members. I would emphasize that this is only an ”additional” service that helps the other product. Kindle Fire, which is coming soon with remarkably low price, would beneﬁt from this new service. Amazon intends to increase the ratio of Kindle user to Prime member. Furthermore, maybe Amazon is trying to attack both iPad and Netﬂix with Kindle ﬁre and Amazon instant video. However, I don’t think this goes well as jongsukjosephshin said above. Eugene Oulman (2011-11-06 23:02:54) I suspect a crafty content licensing model behind this. One book at a time is not exactly all-you-can-read buﬀet. Also, there is only 100 NY Times Bestsellers available at this time. Eugene Oulman (2011-11-06 23:07:06) Agree with both of you. These tactic steps will serve to extend and reinforce already existing network. Good for Amazon!
@voncs (a.k.a Iwona Gwozdz) (2011-11-06 23:21:54) This is interesting. The ﬁrst thing I wonder is what business is Amazon in? Is it in the business of renting books or selling a Kindle or neither? Probably neither. An article I recently read suggests Amazon is not making high margins oﬀ the Kindle as we may have expected (http://www.bloomberg.com/news/2011-10-17/amazonkindle-ﬁre-sale- in-ipad-challenge-narrows-margins-tech.html). Instead, it appears Amazon is playing a standards game. This is proven by another article which states ”Amazon Kindle Ebooks Now Available in 11,000 Libraries” in (http://mashable.com/2011/09/21/amazons-kindle-libraries/). In essence, Amazon is trying to make its e-book the default e-book readers go to. By making the device aﬀordable and by supporting free e-books, Amazon is building value for the end user. It, unlike Netﬂix, is trying to become the distribution channel to users. Netﬂix relied on third-parties (the internet providers, tablets, etc) to get access to their users. Amazon, interestingly enough, is trying to become the service provider with the Kindle. It’s oﬀering free e-books to become the defacto standard. In the future, content producers will have to go through Amazon to gain access to their pool of users. Amazon 1; Netﬂix 0. bharatbhardwaj (2011-11-07 00:13:18) Amazon should increase it from more than 1 book. The cost of delivering an ebook is minimal and the lending service just creates an incentive for people to get a kindle and amazon’s prime membership... bharatbhardwaj (2011-11-07 00:14:48) completely agree...its about keeping the consumers engaged long enough to sell them other things...the cost of delivering the content is minimal for Amazon... jovanatanackovic (2011-11-07 11:50:07) Technology is forcing many industries to develop and advance very quickly. I don’t see this move as eﬀective at attracting new customers, since people can still purchase books for a relatively cheap price on their kindles. I think the move was done to keep existing customers. Unfortunately, now that they’re involved with their electronic product, there will be even more pressure for Amazon to constantly improve its services. People will soon forget that Amazon Prime members could not rent books before, and Amazon is going to have to meet demands faster and better than ever before. Therefore, it wasn’t such a good move on Amazon’s part. hank008 (2011-11-07 12:17:41) Amazon ensures to improve customers experience by continuously oﬀering a bunch of service or beneﬁts to its prime members. Here is a summary: FREE Two-Day Shipping; Other Fast Shipping Beneﬁts; Eligible Items and Addresses; Using 1-Click as a Prime Member; Shipping Methods and Carriers; Prime Instant Videos; Kindle Owners’ Lending Library; Prime and Kindle Fire. Deﬁnitely, the valuable service can help company obtain high customers satisfactions. Amazon hopes their customers or potential customers to deﬁne/ to be aware of the value of memberships. Here I want to point out: Amazon usually only allows their customers to rent the books. In other words, customers have no ownerships of the books (which is usually seen in bookstores). Technically speaking, there is hardly any diﬀerence between borrow and read books without due dates in this case and buy and own the books. However, Amazon never admits the latter. They may want to take advantages of this people s thinking sets ( owe is cheaper than own , and people often read the books immediately and carefully if they rent them while people may shelve the books and forget them if they buy them) to distinguish themselves from traditional bookstores. Chen Sheng (2011-11-07 14:33:02) I think this new oﬀering for Prime members may attract those potential customers who have already been thinking about purchasing the membership. This one single ”borrow one book per month for free” feature does not seem very attracting. But by combining with free two-day shipping and unlimited streaming of movies and TV shows, the whole membership package certainly becomes more appealing. Also, the existing customers’ loyalty would increase since they now get a new function with no additional fees. So this may actually work for Amazon to expand the number of
Prime members. jackyzee (2011-11-07 20:28:24) It makes sense what your saying Alex, I deﬁnitely see your point. 6.50 $ per month sounds like a great deal especially when its all you can read. This is a great incentive for avid readers to buy a Kwindle and read any book possible. I want to point out that Netﬂix model works for movies but is a novel really the same? What happens if our public library decides to do the same model except it’s free. Libraries might have a lotof potential of having a good revenue model. They can provide free online borrowing books to users in exchange say for advertisers revenue that is if libraries attract a critical mass of users. I’m not saying that our public library would do this because it’s government run and I doubt they will ever have that mindset. Think about it, if our public libraries got smart and decided to focus more online and let users borrow books for free, then doesn’t that mean Netﬂix model would not work here? I think in the short term it will work because our libraries aren’t that tech savvy. In the long term how sustainable is this revenue model? bharatbhardwaj (2011-11-08 01:15:48) looks like Amazon is in for some competition... http://www.barnesandnoble.com/p/nook-tablet-barnesnoble/1104687969 it will be interesting to see how these two tablets go head to head... anchenyi (2011-11-08 01:47:33) Well, I think this is an interesting move by amazon. It is pretty creative to pose such an idea that allows you ”rent” a book on your electric device. However, it really depends on what kind of books are they oﬀering you to borrow. If it is the same collection as they sell on line, this would be a great deal since the popular books are mostly more expensive ones. Plus, the free shipping is useful too if you shop on line a lot. About the free streaming video, if you are a movie fan and pay the 80 dollars only for the video, I don’t think it is worth it because you can ﬁnd any movie online if you try. Ridiculously,some blockbusters are even released earlier than theater. Overall it is a great deal if you are normal reader, that is, you are not the person who ﬁnish one book within two days. vbork (2011-11-08 02:15:16) This seems like it will take oﬀ. Starting oﬀ at just 1 book a month, they can hopefully make the reading material unlimited or version it creating a better deal for some of the customers. Right now e-book readers read 2.6 books a month on average. So if Amazon is able to version the service into say 1 book a month for $80, 3 books a month for $150 and unlimited for $300 they will surely attract a great deal of customers to the service. Right now 1 book a month for $6.70 is not a bad deal, but its not for the avid reader, or even the average e-reader owner. connietai (2011-11-08 15:17:52) I this ’Netﬂix for Books’ idea may work given the fact that Amazon already has so many subscribers on Prime. For Prime members, this is just an additional beneﬁt. However, I do remain skeptical about whether this additional feature will bring on a substantial number of new Prime subscribers. Unless you are an avid reader and have the time to read more than 1 book per month, then I’m not sure whether the value proposition is so compelling. In addition, I also question how eﬀective Amazon was in convincing enough publishers to sign on. If this new ’Netﬂix for Books’ takes oﬀ, it deﬁnitely would incentivize publishers to sign on. But until then, would enough publishers be willing to sign on to ﬁnd out? kamaljeetsingh (2011-11-08 21:26:48) Not only publishers, i see a lack of value proposition for the customers too. It is not an all-you-can-eat buﬀet. There is a cap of 12 books annually and then, as Dan mentioned above, if the customers are not able to read the books in stipulated time their interest will go down.
jamiepalooza (2011-11-08 22:30:06) I echo what a lot of people are saying so far. This is a fringe beneﬁt for existing members, I don’t see how this would be the deciding factor for someone on the fence about a Kindle. One book per month? Really? What if the book sucked? markbelcarz (2011-11-08 23:50:23) Yes! Good points. I was wondering why they imposed a limit of 1 book per month since, as Bharat mentioned, the delivery cost for Amazon is minimal. Instead, now they can wait a year or so before allowing unlimited book rentals, just to improve the Prime oﬀering for existing customers, keeping them happy. luipuichun (2011-11-09 15:53:16) I personally think that not many readers will subscribe to this package. Because seems that many readers like to ”own” a book rather than renting or borrowing. Moreover, borrowing / renting a book from amazon is like a exclusive (rivalry) good. People cannot share their book with their friends or their love ones (similar to Professor’s Harry Potter case). But i guess this may be a good idea on some magazines or books that have a ”expiry date” (news). asadkhandigital (2011-11-09 16:40:34) This is a very smart move from Amazon. The new ”netﬂix-type model” is a value added service to their Prime Membership plan, with zero cost incurred by the internet giant. Also, with their borrowing restrictions (1/month), the company is keeping the ball in their court, and is still highly in control of their e-book distribution channel. Kudos Amazon. Dan Velan (2011-11-09 17:56:35) I’m not sure which previous post you’re referring to... The Kindle Lending Library oﬀers a max of one book/month from a limited selection of titles, so it is deﬁnitely not all you can read. Furthermore, many of these titles can be purchased for less than the $6.60 the $79 averages to on a monthly basis, so the value proposition as a source of books is not too compelling, even among more avid readers. The service, in it’s current form, is predominantly a loss leader (the loss being mostly licensing fees) to get more Amazon Prime subscribers and Kindle owners, with the expectation that they will buy more from Amazon. I agree with you that an unlimited subscription model would be interesting to subscribers. Currently, it appears as though Amazon is compensating publishers as though borrowed were purchased (http://www.publishersweekly.com/pw/by-topic/digital/content-and-e -books/article/49430-could-amazon–slending-library-end-in-court- .html), which makes this program expensive even at 1 book/month. If they could could get this cost closer to the library cost of $10 average book price/26 uses, then they would be able to oﬀer an allyou-can-read model (or at least a more generous subscription) at a price that the average reader would likely ﬁnd attractive... Dan Velan (2011-11-09 18:15:28) The reaction from publishers (and authors) is...not good. This may be why Amazon has apparently bypassed many of them in its initial launch of the service (http://www.publishersweekly.com/pw/by-topic/digital/content-and-e books/article/49430-could-amazon–s-lending-library-end-in-court- .html). They’ll likely ﬁnd a way to turn things around, but it’s a risky way to treat a constituency that it depends on... Siamak Kolahi (2011-11-09 19:32:35) It feels more like its a pork to sweeten the deal for Prime. More of a promotion for the service. It would make current Prime members happy (and more loyal) of course. But I doubt it would attract more people into Prime just as to rent 12 movies per year. More into that it gives you an initial feel of all you can read oﬀer. But after a pause, you realize that its just a marketing tactic that takes a quick pause to ﬁgure out. So although its a smart addition (and wont probably cost Amazon much to oﬀer it), expectations from Amazon was more than that
Siamak Kolahi (2011-11-09 19:34:08) And by a more expectation I meant a closer service to a Netﬂix for books. Amazon has all the infrastructure, connections and penetration to build the business oﬀ such model. a pure all-you-can read service Siamak Kolahi (2011-11-09 19:37:40) Another point is that building all its oﬀering into Prime, Amazon is making it more complex, and as a customer, chances are getting higher for the feeling that you are paying for a service, many part of which you might not use over the course of year. e.g. putting movies, book delivery, book rental and so force into one service, I would argue, would only make it more general. Amazon can build up separate services, and revenue stream from each of these. Same as Netﬂix did with movies, and apparently is not working when he is expanding it into other areas (as Netﬂix is trying to do) Siamak Kolahi (2011-11-09 19:50:19) This is the same inception as when the Netﬂix introduced its model. It was perceived as to destroying the bridge with publishers and distributors. But what they came about was a successful relationship as they try to build upon their share of value Netﬂix is creating for customers. Similar here to Amazon. All parties here trust Amazon and I think a full-ﬂedged Netﬂix type model should all work for him Siamak Kolahi (2011-11-09 19:53:49) Adding to that point, if you think you want to blindly imply such ﬂat model to all content businesses, Amazon technically is capable of doing so. All-you-can watch movies, all-you-can hear music, all-you-can read books and the list goes on. I highly doubt they havent thought about it. Its just interesting that they tend to bundle all such services into one, Prime. Nilay Goyal (2011-11-10 01:46:00) I think, this is a great way for Amazon to retain its customers from going to other ebook sites and bookstores. Hooking people on a net-ﬂix type plan, makes sense as a move to kill competition. Nilay Goyal (2011-11-10 01:49:04) Also, when I try to think of how this combines with the fact that we read about amazon trying to enter the publishing business, I wonder the future market strategy for Amazon. It is deﬁnitely an attempt to establish control over the industry. One next move for Amazon could be allowing academicians and Professors to edit and customize books according to their course requirements. There have been some failed startups who tried to do this, but they could not assimilate the muscle power and create the network eﬀect to make the model successful. This could be a great move by Amazon and can potentially disrupt the academic publishing business in a big way. digitalworldme (2011-11-10 23:41:25) I think for the Amazon prime member, the additional feature for them to read free one free book each month on Netﬂix, it is a good marketing strategy to make the current prime member satisﬁed of its service to attract more prime members. But for the adds on feature does not provide new customers a lot more beneﬁt to become a prime member as they can get free e-books easily somewhere else(ipad, online stroe). Giving about $7 per book for free is obviously not that attractive to customers, Amazon may consider giving the prime members the real all-they-can-read model to gain the market share. philduong (2011-11-11 12:23:25) That’s actually a really idea. Because most people only purchase a textbook for a year and then sell it back. But then there’s uncertainty of whether a new version of the textbook will come out which will reduce my selling price. Amazon can oﬀer this services for academic textbook and I believe it will be a hit with students.
Alex Semine (2011-11-12 01:04:08) I realised after I wrote that that it’s not ’true’ unlimited, they tricked me with their clever marketing page which only has ’1 book a month’ in one spot. So at the current price point, I actually would say it’s not that competitive (because of the average prices pointed out), so if they were to make it unlimited, I think it would be more successful. Books are information. Information wants to be free. People should be allowed to borrow multiple books for multiple periods so they could choose what they want to read (depending on, say, their mood) Unfortunately it will probably never happen. The problem, will in fact, be licensing. It would only work if publishers allow it, but they’re going to want to be reimbursed a portion of everyone’s fees. And if everyone pays one ﬂat fee, you couldn’t possibly split that between ALL publishers. The only way that might work is you track what the person borrows and pay them back based on that, but then that system would implode if someone borrows a tonne of books and never reads them. =\ Too bad. Oh and the library thing; you said it well enough Jacky. It could work if libraries made it more accessible digitally (with a newer/better library of content), but sometimes, the best books you have to buy and aren’t in libraries anyway. Dan Velan (2011-11-16 00:55:24) @Siamak: I don’t agree that all parties trust Amazon. Most publishers and agents (and many authors) are at best anxious about Amazon’s power and the control it is exerting over the entire industry. It took the threat of a new entrant (Apple) for the major publishers to renegotiate their terms with Amazon and win the right to set pricing for their own books via an agency model. Amazon is winning the e-book platform war, but not because of good relationships with the publishing industry... Dan Velan (2011-11-16 09:03:58) Here’s what the authors think: ”boldly breaching its contracts” with publishers as it exercises its ”brute economic power” (http://www.guardian.co.uk/books/2011/nov/16/amazon-kindle-lending -library-contract-authors
Adobe abandoning mobile ﬂash (2011-11-10 14:57)
So after more than a year of public battle between Apple and Adobe, Adobe look set to abandon mobile ﬂash. Flash was a hugely popular programming platform but Apple refused to support it for the iPhone and iPad. Many commentators suggested that Apple were in trouble as a result of this as other mobile phone makers supported Flash. So how was it that Adobe’s installed base and possible network eﬀects didn’t win out this time?
Siamak Kolahi (2011-11-10 15:04:04) I do think that Adobe is in a loosing war, but not with Apple. Adobe is loosing its ground to HTML5 platform. Everybody is seeing HTML5 as the future of programming for mobile computing (and even web desktops). As per platform comparisons, its the competition of an open standard (HTML5), and a closed platform (Flash). As far as Adobe Flash was a dominant player, he could maintain his position on enforcing that. Maybe too soon to judge but seems like, at least in mobile computing, open platforms are taking over with the lead of Android and HTML5 Siamak Kolahi (2011-11-10 15:07:32) Adding to that is that Apple’s (and obviously Steve Job’s) argument against Flash was that it’s design for desktop computers and mobiles are in a limited processing capabilities compared to desktops. So its not a proper ﬁt. Now though we see smartphones and tablets with far more processing power than earlier desktops supporting Flash
jovanatanackovic (2011-11-10 15:43:27) ”Adobe has failed to deliver a consistently stable version of the platform on a smartphone or tablet.” Only Adobe can be blamed for that. Steve Jobs clearly made a knowledgeable decision when he chose not to use ﬂash on Apple products. However, his argument that it was made for PC, and as Siamak noted, the earlier PCs that supported ﬂash were less powerful than today’s tablets. Therefore, even though ﬂash could probably perform modestly on tablets, its past failures has caused them to abandon it. Dan Velan (2011-11-10 16:40:39) Apple and Google have (much) more power in the mobile space than Adobe. Performance was deﬁnitely a big issue aﬀecting Flash’s success on mobile devices, but it was Adobe’s lack of power that let Apple take a hard stance against it. Ultimately, Apple wants control over its platform and doesn’t want to compete with a third-party proprietary technology–especially not one that could potentially act as a substitute for its own applications marketplace. garyyip1985 (2011-11-10 16:50:14) Interestingly enough, RIM issued a statement today about its continued support for Flash. Misery loves company. http://www.computerworld.com/s/article/9221710/RIM stands by Flash mobile as it pursues HTML5 Dan Velan (2011-11-10 16:51:41) This is a signal that Flash’s days are numbered as a viable platform on desktop computers as well. The mobile market that Adobe is abandoning is the fastest growing part of the computing world and it’s hard to see how the platform can remain relevant while ignoring this base. The somewhat new HTML5 standard also oﬀers an open source (and in my opinion, higher performance) alternative, that major players like Apple and Google have been quick to adopt. R.I.P. Flash... Siamak Kolahi (2011-11-10 16:57:51) Its not a misery, but a way to protect developers from fall oﬀ and let them transition to the new approach. At the very same article, it talks about the Android developers and they worry on how Google would deal with this abrupt decision. In my opinion, Adobe’s somewhat radical decision (and more so their abrupt announcement) is not a proper way to treat development community that it has built over time. I think such approach would hurt Adobe brand and its credibility in development community. Here is the main posting on RIM’s blog: http://blogs.blackberry.com/2011/11/rim %E2 %80 %99s-commitment-to-support-a-full-web-and-app-experience-today-and- tomorrow/ natalka81 (2011-11-10 17:46:23) It seems that Adobe still has kinks to work out, as evident in the consistent browser crashes on Playbook. Apple made a wise decision in forgoing Flash for its mobile devices and has managed to thrive without it. There s no reason for it to oﬀer something that s not proven to be reliable or even necessary in the mobile world. On the other hand, I wonder had Adobe been able to oﬀer Flash seamlessly (without it crashing) would Apple have oﬀered it knowing that it would weigh heavily on its already weak battery, or would that require Apple to go back to the drawing board. calvincylam (2011-11-10 19:21:46) I believe there’s still a lot of web content that is developed in ﬂash; especially the ones for video. However, mobile content is less dependent on ﬂash and which, it could not generate the network eﬀects (user vs content developers). On another note, i think its interesting for the smartphone/tablet markets now given the fact that ﬂash was used as a selling point to go against IOs. Avi (2011-11-10 20:10:31) Apart from Adobe s failure to deliver stable version of the platform on a Smartphone or table, it s Apples performance and popularity through open standard such as HTML5 that led to Adobe s loss. Technically superior Betamax was beaten by VHS through slick marketing. However in this case, Apple won on all grounds. Flash being closed platform
doesn t help Adobe either. digitalworldme (2011-11-10 22:57:52) Adobe is originally designed for the desktop and laptop platform, but it may not have that big power in the mobile platform, it still needs supporters to dig into this area. Also Apple didn’t support the Adobe Flash for its iphone and ipad at the ﬁrst place, they want to control over the ﬂash program on the mobile marketplace and didn’t want the big competition from Adobe. Adobe needs time to ﬁnd supporters and improve its design for the mobile platform. bharatbhardwaj (2011-11-11 01:18:10) its not just the case of losing out to HTML 5. Adobe’s ﬁnancial health is not the best right now, with job cuts it will have a diﬃcult time supporting the mobile version of ﬂash and I believe it is just making a strategic move to focus on its core strength. If Adobe had the money it would keep on developing products for mobile platforms... patrickchoy (2011-11-11 11:06:47) I agree. Apple’s dominant presence in the mobile market and its vocal opposition against Flash was deﬁnitely a detriment to Adobe in its attempt to pierce the mobile market. It certainly made the problems concerning Adobe’s inability to deliver stable versions of Flash more public and be under more scrutiny. Siamak Kolahi (2011-11-11 11:26:30) HTML 5 is not from Apple. Its not even Apple’s initiative. Its a W3C standard and Apple is just following it, and so does everyone else in the industry would be forced to do so. It basically questions the very existence of Flash type platforms (and its alike). and its wise that Adobe moved away from it soon enough. I wont be surprised if they move away from even their desktop platform sometime soone Siamak Kolahi (2011-11-11 11:36:36) Agreed. I am imagining if Flash was Apple’s initiative, how would Steve Jobs approach it. Would it still hate it to this level, and ﬁght it back with stone-age and populistic arguments? Apple has a great history of speaking out loud what they do good, hide and dismiss their apparent weaknesses, and devalue other peoples contribution to the industry. This is soo Steve Jobs, and I am eager to see how it goes on from here without him pushing such self-centeric nose up culture Siamak Kolahi (2011-11-11 12:06:47) As for the networking eﬀects discussion, Adobe Flash is certainly a two-sided network eﬀect, in which Adobe attracted consumers with free Flash player plug-ins on their browsers and promote content providers to program on that justiﬁed by large user base. This was partially due to the lack of better alternative technology at the time, which made Flash a revolution for web contents. We know from Positive Feedback discussion in class, that in order to beat this network, a new network and technology should be able to add value, equal or greater to the collective switching cost of the entire network participants of the existing network its trying to challenge. This is particularly hard to achieve if you have a brand new product trying to build-up your network from scratch. In this case, assuming the new emerging network being HTML5 and the incumbent being Flash, HTML5 is based on HTML4.x standards, which by no means a new one. In fact, HTML5 is trying to overcome and address issues and shortcomings that lead way to necessity for technologies such as Flash. So there is actually already a network of users (developers) on this initiative already familiar with majority of the platform. This signiﬁcantly lowers the collective cost of switching for Flash network participants that HTML5 have to deal with. Siamak Kolahi (2011-11-11 12:18:57) The other two dimensions of building up the network are performance vs compatibility and openness vs. control. Performance/compatibility is not a huge trade-oﬀ for HTML5, as technically, its oﬀering a great ’migration path’ to current HTML4.x developers with increased performance (compared to alternative being Flash). In openness/control
argument, HTML5 is a W3C approved standard which makes it an open platform by nature. W3C approval is something Flash is long ﬁghting for, and still missing, partially due to Adobe preferring to maintain control over its speciﬁcation. The closed platform Flash is oﬀering, again as compelling and revolutionary as it was at its time, is not open to debate by increasingly free and open development community. So openness vs. control trade-oﬀ is also working in favor of HTML5. sharadsharma12 (2011-11-11 12:19:57) I agree with Saimak that Flash already had their customer base to tap on. However, I also believe that since the barrier to entry in digital market is so low, there will always be a danger of new technology capturing the market. If we see, the percentage of early adopters in technology spectrum is always higher as compared to other industries. As a result, even though adobe ﬂash player had its strong customer acceptance, html was able to penetrate this market. Users were willing to try something new that was compatible with their daily use. The growth of Apple product also ensured that users who wanted to use ﬂash player in mobile were unable to do so. That also resulted in movement of customers from adobe to html. Siamak Kolahi (2011-11-11 12:26:16) I want to take arguments of this debate, expand it to beyond mobile computing arena, and make a prediction for the future of Flash. And the prediction is that Adobe would make some sort of similar move sometime in future, even for web desktop browsers. And the sooner Adobe make such move, the less costly it would be for them. HTML5 has all the elements of building up a non-linearly increasing network of users and consumers, justifying for each and every developer to switch with minimal cost, and become the future platform for web content providing. Just a forecast, that its! @voncs (a.k.a Iwona Gwozdz) (2011-11-11 13:32:50) Agreed. I read an article in the paper the other day which mentioned ﬂash is very ineﬃcient. Apple is all about eﬃciency and easy of use. By incorporating software that does not function the same way, it could take away from the customer experience and the brands. Thus it is Adobe’s fault for a) delivering a non-consistent, non-stable version, and b) for not make Flash compatible with emerging technologies. @voncs (a.k.a Iwona Gwozdz) (2011-11-11 13:39:08) I wonder how big of a blow this is to Adobe. What percentage of their revenues are actually tied to Flash. The media loves to blow certain things out of proportion. On the upside, Adobe has integrated HTML5 in to their other software like InDesign. We have to consider who their target base is. It is enterprise or mobile phone users? @voncs (a.k.a Iwona Gwozdz) (2011-11-11 13:50:18) You bring up an interesting point. How long will closed-software standards be operational? We’ve seen a shift to open platforms. What does this mean for Adobe and is this a bigger issue than just Flash? vbork (2011-11-12 12:32:59) The support of HTML5 on every mobile browser, meaning Adobe would have to work really hard to get to their level. Also the apps on the smart phones mean that there’s even less use for Flash and app-based games and the costs of developing Flash on many smart phones was just too much. Good move by Adobe IMO. Karan Mehta (2011-11-12 13:10:06) Love the passion, Siamak! But yes, totally agree. New standard will mean that everyone will rush to adopt it in order to stay on an even playing ﬁeld.
hank008 (2011-11-12 13:12:50) The managers provide several reasons, to sum up, they realize(have to admit) they cannot compete with HTML (widely accepted); mobile ﬂash is not that popular among users of mobiles or tablets. Lastly, they need to contact with mobile and PC platforms which is very time-consuming. Karan Mehta (2011-11-12 13:13:13) And somehow, any ”bad” news about Apple products is completely devalued in the marketplace, nobody gives it any importance, and they surge on (e.g. recent iOS5 battery issue). But for anybody else, any piece of bad news has far reaching implications on the stock price, news coverage and etc. Karan Mehta (2011-11-12 13:14:14) Agreed, cutting their losses. alicesisili (2011-11-12 18:17:48) Flash’s problem of being unstable has not been solved after a year may be the reason why they are abandoning it. I’m curious to see what will happen to the mobile platforms that currently use Flash. jackyzee (2011-11-13 16:50:56) http://www.1stwebdesigner.com/design/adobe-ﬂash-future/ http://www.wired.com/gadgetlab/2011/09/no-ﬂash-windows-8-metro/ http://news.cnet.com/8301-13924 3-20006662-64.html I’m not sure about battery draining with Flash my andriod phone seems pretty battery intensive regardless. However I ﬁnd it interesting that both Steve Ballmer and Steve Jobs are against ﬂash. What I wonder is how long will ﬂash become completely obsolete? Other than HTML5 what’s another source that can possibly replace ﬂash? kelvinchunkileung (2011-11-13 20:35:40) Flash doesn’t lose in any aspect currently; but it will in the future. As technology is evolving every minute, we can foreseen a new mobile browser is coming HTML5 and it will eventually get onto every users. What Adobe has to worry about is not whether the abandoning of ﬂash (to Apple) which make a decline in revenue, but it is the potential huge loss of market share when the HTML5 comes out. Adobe has to do something to encounter the existence of the new mobile browser Eugene Oulman (2011-11-13 23:14:07) Agree with you. The world is catching up, and the current network eﬀects may not be strong enough to prevent migrations from existing users. Add to this limited adaptability, namely on iPhones, and Adobe’s decision is justiﬁed. Alex Semine (2011-11-13 23:30:47) @jacky I’m still to this day surprised at Microsoft maintaining their ActiveX and ActiveX Controls haha, I thought they would have done away with it like UAM (or at least reduced it - which, to be fair to myself, they kinda did) – I think in general it’s problematic that Flash is losing it’s mobile ground. I for one, hate mobile-speciﬁc browsing, and always use ’view desktop version’ when I visit websites. Most of those ’versions’ include ﬂash, which my phone runs for now. Having said that, I don’t think Flash is friendly [anymore]. There needs to be a simpler, open format, such as HTML5, which is newer. Flash is just like most of Adobe’s other products; powerful, has lots of features and potential, and requires a large run-time. That’s not the best for things that run on batteries. Dan Velan (2011-11-14 11:39:10) Apparently Flash generated somewhere around 7 % of Adobe’s 2009 revenues (http://articles.businessinsider.com/2010-05-19/tech/29975720 1 adobe-s-ﬂash-adobe-ﬂash-html5). It’s not clear to me whether this estimate incorporates developer software or just platform products, but it appears as though they’ll be able to survive without it... Sales of its creative suites (some of which include Flash professional) to creative professionals and developers account for over
50 % of Adobe’s total sales. I agree that by upgrading its tools for HTML5 development, it can lessen the impact of Flash’s decreasing importance... kumarsidhartha (2011-11-15 14:00:32) I agree - this is a bad move by RIM and many people were shocked by this. RIM is clearly losing the platform war and developers are abandoning RIM’s own platform. At such a time, continuing to support a platform that the manufacturer is abandoning themselves (Flash) while developers continue to pull the plug on RIM is not a smart move. They should focus their time and resources on making eﬀective development tools for third party vendors to build great apps. kumarsidhartha (2011-11-15 14:07:32) Adobe was never fundamentally a good platform to build mobile apps. There is way too much customization required for phone manufacturers to provide Flash support with the SDK that was provided by Adobe. Steve Jobs was merely being vocal about what other mobile phone executives were hesitant to say openly as they hedged their bets. In eﬀect his words started to tip the market towards HTML5 which beyond a doubt is a much superior development platform compared to Flash. hisashihamada (2011-11-16 07:04:50) As a mobile carrier I had a project for mobile ﬂash lite with Adobe a few years ago. It took huge amount of time to tune ﬂash platform with hardware/prosessor manufacturers and content developers in order to maxmize their performance and balance b/w it and buttery consumption. Performance and battery life were just disappointing. If mobile ﬂash were overwhelmingly superior as a platform, I believe even Steve Jobs had chosen it. However, as a platform and product, mobile ﬂash was not good enough to generate network eﬀects, speciﬁcally comparing to HTML 5. sangwaic (2011-11-16 18:02:11) I believe it shows the power/ inﬂuence of Apple in the mobile devices space. Adobe was right to abandon development of the Flash Player for mobile devices because, looking ahead, they believe eventually HTML 5 will have that market. Given Apple’s volumes in the mobile device market, and the fact that they would not support Flash, it is evident that HTML 5 would become the standard, sooner or later. As far as network eﬀects are concerned, I believe this is a contest between the Apple’s network eﬀects with mobile device consumers against Flash’s network eﬀects with developers of mobile applications....Apple wins that battle so Flash has to go.. Chen Sheng (2011-11-22 16:30:56) Apple certainly inﬂuences Adobe’s decision in abandoning mobile ﬂash. But I think the more important reason is that ﬂash is gradually becoming out of date for mobile phones. The technology is progressing and other web application like HTML 5 is likely to dominate the market in the future. Adobe anticipates this coming and realizes that ﬂash is becoming less competitive. This might be the main reason why Adobe is abandoing mobile ﬂash. But no matter what reason it is, Apple wins the game this time... jennachou11 (2011-11-23 14:05:54) having owned an iPhone since the ﬁrst day it came into canada (not the unlocked ones people try t sneak INTO canada from the US), I wouldn’t change anything even if the inability to see ﬂash-supported pages was REALLY pissing me oﬀ since the ﬁrs day. however, I dislike ﬂash on MY Pc already, I do not see any beneﬁt that Flash provides and actually i don’t even see extra value in making documents PDF. I have had one of the ﬁrst tablet laptops by HP, and i still see no beneﬁt to anything Adobe does, other than asking me to upgrade to new version every few days, with each UPGRADE providing MORE REDUCED functionality for editing etc. nevermind what Adobe can support on a smart phone. and yes, Microsoft AND Apple combined would defnitely have more power and more say in setting industry standards (maybe all videos will now be .avi which can be viewed easily by almost all video-viewing applications. adobe abandoning ﬂash doesn’t aﬀect me one single bit, they should at the same time abandon PDF as
How Steve Jobs priced the New York Times (2011-11-11 22:16)
So I have been reading the biography of Steve Jobs. He took it on himself to try and save the New York Times. He argued that we knew how much traﬃc it would get if it was free; basically, what they got when it was free: 20 million regular visitors. He then argued that we knew how much traﬃc it would get if it was expensive. Basically, people pay $300 per year for a paper subscription and they have a million subscribers. Jobs then drew a line between these two options and argued that the optimal price is $5 per month at most. The NYT times ended up charging 4 times as much. Who was right? Try and work out whether what Jobs suggested was consistent with economic theory. Then go to the evidence.
jongsukjosephshin (2011-11-12 00:50:36) Using very simple economics, Steve Jobs was referring to gaining mass exposure and market to make up for charging consumers lower. In other words, Steve Jobs must have known that people have begun viewing news as a commodity for some time due to alternative providers through alternative media and other free websites providing free news (unlike WSJ which is more timely in the information it provides). That means charging a price premium for something whose value is perceived relatively low (as news was freely available on the web, some in great detail while others more like a summary) does not make much sense. Hence, by charging substantially lower for a good that had a high elasticity (very sensitive to price changes in this situation, according to info above), it will generate limited revenue, but the make up will be in the sheer number of subscribers who see $5 per month as a good pricing structure for commodity (news). Here’s where Steve Jobs may have been oﬀ a little bit. Could he have underestimated the power of print advertising and the money it generates? http://www.economist.com/blogs/newsbook/2011/03/grey lady builds paywall explains further how online advertising may not be suﬃcient to make up for the loss in print advertising proﬁts. But Steve Jobs was right in one crucial part. By doing this, he assumed several more subscribers would jump on the deal. This meant that those who were leaving print subscription could move onto the online subscription plan, though this would seem as cannibalization; but these are those who would have left anyway. Others, who have lower WTP, can deﬁnitely join. NYT charges $300 per subscriber, but it costs them $775 to deliver and print per subscriber. For 1 million subscribers, this is a loss of $475 million in total, excluding all other revenues (ads, etc.). If, out of the 20 million unique visitors, the $5 maximum pricing structure can attract well over 1 million subscribers, since the cost of providing them news is virtually 0 over the web, the shift to the online model makes a gain, not a loss as in print circulation. And perhaps, with a good number of subscribers and not merely visitors, online ad revenue can grow suﬃciently enough to be competitive with revenue from print ads, perhaps even covering the loss in print advertising. For this one, Steve Jobs deﬁnitely had a point, but NYT is perhaps unwilling to accept the loss in print advertising revenue. By charging higher, they could make up for some of the loss. They’re trying to hold on to their traditional, successful, and more predictable revenue model which had generated substantially more than what the newer model can generate. hank008 (2011-11-12 12:34:28) Very impressive arguments, strongly agree! For the traditional medias (newspaper, radio, TV), they have to confront with the dilemma, stand and hold their ground, or make compromises with new medias (internets: traditional network platform, like yahoo!news; or social networks, like facebook, twitters where anyone can be the news releaser.) Undoubtedly, traditional medias have been hardly hit by these new emerging medias, and the main problems are that the speeds of news spread by them are way faster than the tradional ones (traditional medias, expecially newspaper,
lag behind new medias at least for few hours). Not to mention people can read the news online for free. (conveniently and not costly at all) Thus, traditional medias have to provide in-depth coverage and analysis in order to attract their readers and audiences. The trend for the medias is to form federated medias (combine traditional and new medias, and take advantage of each one) But media people should consider, what the proportion is for each. Based on the research, traditional printed versions still the dominant element in NYT, and the revenue from internet (online subscriptions and advertising) accounts for around 15 % but this number is and will be still increasing overtime. Some related information about NYT: http://www.huﬃngtonpost.com/2010/10/19/new-york-times-reports-lo n 767810.html (New York Times Reports Loss, Print Continues To Slide ) paulsmerchanski (2011-11-12 13:25:34) Based on Jobs’ simple calculation using a straight line demand curve, we can calculate that at Jobs’ recommended price of $5 per month ( $60 per year), the Times should be getting 16.2M subscribers. Using the same demand curve and looking at the $240 per year (4x $60 per year) price the Times is actually charging, we see it should be getting 4.8M subscribers. Using information from their third quarter earnings release (http://www.nytco.com/pdf/3Q 2011 Earnings.pdf ) we can see it only actually has 324,000 paid digital subscribers . There is clearly a large discrepancy here. This large diﬀerence can be accounted for by the straight line demand assumption Jobs used in calculating the $5 per month price. From Josh Copland’s ’penny gap’ we know that demand for free vs. a penny is exponential vs. linear so Jobs simply drawing a line between the $300 and free options is inaccurate. vbork (2011-11-12 13:56:03) Steve Jobs was correct in theory, as people will not want to pay a premium price for something so widely available online such as the news. $5 is still a premium as you can get most of the same news for free on other websites. What makes NYT better than other newspapers that people subscribe and pay for the service. The users that are currently paying for the subscription are not that price sensitive, if they are paying $5 dollars they will pay $20 to get their ﬁx of the NYT. The biggest drop oﬀ of users doesn’t happen from $5 to $20 but from $0 to $1. The demand curve is not linear and Steve Jobs seems to have overlooked that. bharatbhardwaj (2011-11-12 16:12:26) People payed $300 a year because they did not have cheap access to all newspapers. In todays digital world we get free access to all kinds of news. Thus only loyal customers will be willing to pay for NYT. Thus $20 is as good as $ 5... jongsukjosephshin (2011-11-12 16:35:15) The penny gap theory states the increase from $0.00 to $0.01 is rather substantial in its inﬂuence on consumers, as they must now incur the cost of a mental transaction; that is, they must think, and this alone is a cost. NYT fully understands that its loyal consumers will be the least price sensitive consumers; charging 4 times as much is essentially charging them the same amount as before ( $240, $60 less). Jobs was hinting that they should strive to sign up more consumers. The strategy behind $5 maximum price per month is that it’s a low enough value that consumers will be willing to incur the mental transaction cost (penny gap) and pay up, or subscribe. Though in theory $20 is as good as $5, in practice, consumers do perceive a value diﬀerence between $5 and $20. Although one could make the argument that by charging $20, NYT seems to be sending a signal that its content has high value. But Steve Jobs did have a point. The lower the price point, the better the subscription rate should be, whether the demand curve is exponentially driven or plain linear. adriennefriesen (2011-11-13 00:20:56) I think vbork is right that the current subscribers are the price insensitive ones. I also agree with jongsukjosephshin that many consumers do perceive a massive price diﬀerence between $5 and $20. After all, $5 is a drink at Starbucks that many people buy every day, whereas $20 can seem like a much more substantial purchase- not something that you would buy impulsively. Combining these two arguments, NYT could introduce a versioning model where a cheaper
subscription ( $5 or $10) would get you access to more content than a non-subscriber but not the full version. I do think NYT overshot the correct price point by charging $20 because people don’t see online news as a service, like they perceive a hand-delivered daily newspaper to be. However, congrats to them on being able to attract a signiﬁcant number of subscribers at that price. (Agree with jongsukjosephshin: high price could be working eﬀectively as signalling quality). shunichirotago (2011-11-13 12:14:49) Well, actually NYT is applying versioning model at the same time it started to charge. That is, maximum 20articles per month for free or to pay $15 35 for unlimited access. As many people pointed out above, the demand curve might be not in a straight line. Most people would read free news (such as yahoo news) to get daily information and read NYT for topics only they are particularly interested in. @voncs (a.k.a Iwona Gwozdz) (2011-11-13 12:23:50) You bring up some interesting points. But to really decide whether the $5 or the $20 price point is more accurate we have to look at some fundamentals. I think one of the biggest reasons Jobs would suggest a $5 price point is because he clearly understood the economics of online information. 1) He knew that the ﬁxed costs would be high. The cost to hire writers, pay for data servers, and web hosting costs can add up. However, these are sunk costs. The more readers an online site can attract, the lower the marginal cost per reader and the more advertisers the company can attract. In addition, since the cost of technology continues to decline, it makes more sense to focus on volume as opposed to costs. 2) Jobs also must have consider the psychic of people. Everyone one has a price they are willing to pay for something without thinking. For songs, it was 99¢, for ebooks it was $3.99 and perhaps for e-newspapers it was $5. The fact NYTimes is currently experimenting with a 99¢ promotion could signal that the $20 a month fee isn’t the right price. This pricing assumption can further be supported by a reuters article (http://www.reuters.com/article/2011/04/21/us-newyorktimes-idUSTRE 73K3IK20110421), which mentioned that an online research ﬁrm Experian Hitwise said the number of people visiting NYTimes.com fell between 5 percent and 15 percent during a 12-day period following the launch of its its digital subscription service. Five months following the launch, NYTimes only gained 100,000 new subscribers. All these facts suggest that $20 a month is not the right price. NYTimes is loosing traﬃc to its website while only gaining 0.1 percent of new readers. If information wants to be free and if readers believe that this means they should not be paying for content, the NYTimes pricing model needs to be re-evaluated. Steve Jobs was closer to understanding the needs of readers and the economics of online information. jackyzee (2011-11-13 17:02:28) I would take the 5 $ version. Reason for the 5 $ premium is because of it’s credible brand and source of information. Sure news are free today and people present their ideas on blogs but I think for with NYT’s credibility people are willing to pay a premium. However I think 20 $ is too much. Maybe it is because I’m a student who is very price sensitive. Eugene Oulman (2011-11-13 23:04:54) The paper subscription statisitics may not provide hard evidence as to the projected digital subscription numbers. I read the thestart.com and may be willing to pay a small premium to contiue reading it online but would not consider an online copy. I would rather switch to a diﬀerent provider. The same may apply here as well, in that the paper subscriptions will likely not reﬂect the realities of the online world. In any case, Jobs probably had a gutfeel number in his head when he came up with $5 ... I suspect he was leaning toward a low single digit amount, similar to iTunes and apps pricing in place. Charging $.99 would probably not suﬃce for NYT, but in Job’s opinion going signiﬁcantly higher on price would turn oﬀ a large portion of its readers. bharatbhardwaj (2011-11-14 04:05:09) I guess the only way to see if $20 is better than $5 for NYT is by determining the demand curve. But on the other hand, if you could get more users by charging $5 then would the reduced cost be oﬀset by the sales in advertisements?
All questions which need some math to back them up... nikhilmahendra (2011-11-14 08:46:26) I believe that for NYT its main source of revenue-advertising does not depend on the number of users but on its brand-equity, where people want to advertise in the prestigious NYT so that they can reach out to a selected set of readers. I echo the fact that in today s world where news is available for no cost at all, NYT still has its large loyal consumer base that is deﬁnitely not price-sensitive. By keeping a higher price NYT is able to extract a larger share of the consumers willingness to pay. Hence I think that keeping a higher subscription price does not aﬀect the total revenues earned by NYT that I believe is largely driven by ad-revenue rather than subscriptions. ricardogrinberg (2011-11-14 10:06:49) Interesting point; however, if they were charging $300 with 1M subscribers before launching its digital subscription and $20 after but with a 15 % decrease in traﬁc they’re still are making more money because: $300 Millions of revenue ( $300 * 1M users) w/ high printing cost Vs. $340Millions of revenue ( $20 * 20M -15 % of traﬁc) w/o printing costs. I think the solution to this problem is to ﬁnd the biggest are of the triangle (proﬁt) despite how many users we are loosing. I think that companies that their business model is to become a platform (apple and facebook) then user base becomes the critical issue in order to add network value. Yet, for the TImes the issue is to determine a proﬁt maximization point regardless of the # of users. ricardogrinberg (2011-11-14 10:26:11) I think technology has enable NYT to price discriminate between loyal customers and the rest. My impression in that loyal customers (over 1.2 M subscribers) will be willing to keep paying $300 for a print subscription but clearly the rest of the customer base will not and thus penny gap theory applies indeed. NYT should focus on proﬁt maximization having in mind price discrimination between printed and digital. I would suggest to make an experiment to determine online elasticities by charging the $300 printed, $5 a basic digital edition and $20 for a premium (loyal made) edition and see how it works. mccarthycaroline (2011-11-14 19:19:16) I like the idea of a versioning method. NYT could even expand their current method to include a free version that allowed access to basic articles and then increase up from there. This would allow them to capture all of the demand while also capturing valuable data to use when reconﬁguring their pricing scheme for the future. bharatbhardwaj (2011-11-14 20:34:34) http://www.ted.com/talks/paul lewis crowdsourcing the news.html Interesting video on using crowdsourcing for journalism...maybe NYT could get shift its focus from normal journalists writing articles to crowdsourcing the news!!! calvincylam (2011-11-14 23:27:57) An interesting note is that although there is a 20 article limit on nytimes.com, if you use any of its mobile apps, all the top news are free to read. I’m wondering if nytimes.com its more dependent on the digital subscription revenue vs the mobile app is more focused on the advertisement revenue. philduong (2011-11-15 01:44:00) its a simple dilemma of having a large reader base with less focused advertisement or a smaller reader base with more focused advertisement. Each has its beneﬁts and has a very diﬀerent business model and required content. Given that NYT has a strong brand like many have mentioned i think its better to have a smaller reader base and focused advertisement, although im sure they can experiment with a spinoﬀ. I still strongly believe people give Steve Jobs too much credit (not denying that turned Apple around)
Siamak Kolahi (2011-11-15 15:14:50) People paying for paper subscription is not clearly an indicator on WTP for online digital subscribers. People paying to paper subscriptions compare that to other paper news feeds. There is not much oﬀers in news print industry to oﬀer the paper for free (assuming same content level as NYT). But in digital arena, most of NYT competitors oﬀer their online feeds for free, and that would raise the bar for NYT to charge a high subscription fee. As we know, digital information tends to be free. and you cant claim same people from paper subscription are willing to pay, even for substantially less fees, for digital news. Whether Steve Jobs was right on drawing line, depends on online traﬃc and ad model calculations for CPM and CPC revenues NYT is capable of generating roger678 (2011-11-16 10:35:49) I think the proper price that NYT charges should be higher than $5. Steve Jobs used a simple model of supply and demand of the online version of NYT and made his conclusion that we should charge $5 per month for the subscription fee. However, he did not mentioned the eﬀect the low priced online version would have on the printed version of NYT. NYT generates a lot of revenue from its printed version. Advertising is one of the most important parts of the revenue. The advertiser are willing to pay a huge amount of advertising fee because NYT time has a large circulation. A low priced online version of NYT will have a negative eﬀect on the subscription of the printed version thus aﬀect the revenue. jennachou11 (2011-11-23 13:47:27) I don’t think Steve Jobs actually did that much calculation before coming up with the $5 price. fro my brief visit to new york (coming from taiwan you’d think that i be used to the metropolitan new york), I didn’t like it much at all. and whAT I have also noticed (and conﬁrmed by the numerous novels or articles depicting how hard it is to ’make it’ somewhere in NY. What i noticed was that either you are ﬁlthy rich or you are a struggling artist (writer, musician, painter, entertainer, etc). the price foR NYT reﬂected this phenomenon. the ones paying $300 don’t even know or care about how much it is, it’s the value that NYT provided for them that counts. And quite often, the company subsidizes these kind of subscriptions if it’s of beneﬁt to the employees knowledge and thus beneﬁting the company and the bottom line proﬁts in the end. the rich ones wouldn’t even bother searching around for the lowest-priced deal, they are too busy hanging out at the Trump Tower sipping whiskey and reading the same headline that the struggling ones are also reading for a whopping successful price discrimination diﬀerence of $295 dollars. Just enough to buy me a Tiﬀany dog-tag necklace! To summarize, the $300 consumers perceive other characteristics of NYT way more imrpotatnt to them that they will pay as long as they get the information (newspaper). However, the struggling ones will take steve job’s $5 oﬀer perhaps only for the classiﬁed section to ﬁnd a new job, and will never read through the ﬁnancial section of the newspaper. I think if implemented well, this is probably one of the best examples to describe a successful price discrimination implementation. fredzhu (2011-11-28 15:23:02) I do not completely agree with bharatbhardwaj’s argument. I appreciate that ”information wants to be free” but in reality we also end up with information overﬂow. There is deﬁnitely value in sorting and prioritizing information for a normal person who doesn’t have the time and energy to read through unveriﬁed news from multiple sources. If New York Times just wants to maximize proﬁts from a combination of subscription and ads, its marketing department needs to do a deeper analysis. There isn’t much information here to ﬁgure out whether $5 or $20 dollars make better sense.
Slice (2011-11-15 09:48)
Check out this new web service: Slice. Quick test: if they stay free, how are they going to make money?
connietai (2011-11-15 13:08:45) What a fantastic idea! As a consumer, I completely see the value in Slice. I do think that Slice needs to stay free (at least in the beginning) in order to get users to sign up. My guess is that their main revenue stream is going to come from participating merchants. Perhaps merchants may pay Slice a monthly fee to be a featured merchant. Merchants derive value from Slice because customers who purchase from participating merchants are reminded of the type of items that they purchased there before and if they are satisﬁed, they will more likely purchase from those merchants again. Also, Slice has the opportunity to gather a lot of consumer data (repeat purchases, items bought for diﬀerent occasions, reasons for refunds and returns) which would be hugely valuable to merchants, which is deﬁnitely an avenue worth monetizing. Nilay Goyal (2011-11-15 13:38:40) Information and data of the users can be the key here. They will have the information about what I buy, where do I shop and how much I spend. Imagine the value of this information to online retailers like Amazon. I can imagine slice also giving recommendations in future and it could also act as a place where you can compare prices for a product at all retailers. This way they can also earn by referring to a particular retailer. kumarsidhartha (2011-11-15 14:12:45) Slice can remain free because it can take a slice of the purchase price for each user makes online (provided they become a popular platform). Additionally they can sell user data or even participate in direct online marketing and referral services themselves and charge product companies or merchants. maryammoshiri (2011-11-15 15:01:16) I agree with the above comments. Slice should remain free, as it is based on gaining popularity with users, and get revenue from merchants. The service also works to organize your daily vouchers, so this takes using Groupon and LivingSocial better. These services are free as well, and work on staying free. I think that this service follows the same revenue procedure. This will also evolve, as Brick and mortar locations like Banana Republic, are sending electronic receipts. The service can evolve to possibly manage this as well. Avi (2011-11-15 15:15:00) Slice to trying to be a bank e-statemented(with more info on the purchases ofcourse). It’s even better than bank e-statement because it’s not restricted to a bank. It’s like a personal e-statement of all your expenditures. There are enormous possibilities if Slice can achieve this goal. They can make money on the those possibilities for example one of the possibility is premier services like personal smart spend, which would give the users advise on how to better spend their money. Merchants would be interested because through this service they can push their service/ products to the users. Slice would then get a slice ;) of the proﬁt from the merchant depending on the agreement. Assuming Slice doesn t have restriction on how many years of data it can record, another possibility is it can give free access to view transactions upto 5 years and charge for viewing/downloading transactions beyond 5 years. hank008 (2011-11-15 15:36:41) I realize that many websites connect/binding diﬀerent web apps together. For example, if you like a piece of news from yahoo!ﬁnance, you can linkedin it, tweet it, or send it. Or, you can bind your cellphone with many web apps or online service, say your smartphone will be noticed once you receive an e-mail. I also realize there are many companies(like Slides) start to play roles as ”organizers”. First they bring similar function apps/services together (resource integration). Then they classify them. Meanwhile, they collect data from their users’ online activites and make analysises about their habits, interests, styles. After, they do some guesses and recommend personalized services (connect the classiﬁcation of merchants and clients preferences). Right, they can make money from merchants. The ads(the logos and products) can increase merchant s awareness and the purchase from consumers can increase their real revenues. To sum up, I think it is the all-in-one concept, these companies(like Slides) can been seem as a mall, and the merchants
vbork (2011-11-16 12:35:09) The biggest source of revenue that Slice could have is the selling of its data to corporations. The storage of consumer purchasing behavior can be sold to marketing ﬁrms at a very high price. Advertising could also be a source of minor revenue. jovanatanackovic (2011-11-16 12:46:39) It’s a good idea that’s going to expand quickly given its price. As with most other free sites (search engines, news sites, blogs), advertising can be a signiﬁcant source of revenue, and it’ll be beneﬁcial to everyone if Slice can advertise companies to whom they sell their data. Besides that, any other idea I could think of has already been mentioned. jovanatanackovic (2011-11-16 12:56:32) I think in time Slice can start charging a small fee to its users (once if generates enough popularity), because it’s a fact that no one likes sorting their receipts and adding costs by hand, especially now when it can be digitally. shunichirotago (2011-11-16 14:21:14) Really like the idea. As already mentioned above, Slice may sell their data to companies. The problem is, there will emerge many similar services aggregating consumer’s online purchase data. It is hard to maintain leadership in IT industry. Slice may take an advantage in selling data by providing not only the row data but also insightful analysis on consumer behavior. Again, there are always threats of new entrants who might be better at gathering more user and merchants though Slice possesses kind of ﬁrst movers advantage. sangwaic (2011-11-16 18:31:57) Once they establish a strong enough customer base, they can make money through 1. Advertising (having businesses advertise their products given the amount of time consumers surf their pages keeping track of their online purchases. 2. Generating revenue by leveraging the information about customer buying habits, frequency, volumes to enable more targeted marketing of products / services jongsukjosephshin (2011-11-16 23:24:52) Absolutely agree. Isn’t this rather similar to Airmiles or Credit Card companies? They’re making good proﬁts, and rather than charging customers directly, using the two sided network platform, these companies are charging the transaction costs to those ﬁrms who may be interested. But, this invades privacy, no? Of course, you can say that about everything, like debit card, credit card, any card transaction. But still, is it as good and naive as it sounds? Karan Mehta (2011-11-17 23:50:11) I agree with the additional value required. Great idea, but way more business intelligence potential exists that they can capitalize on! Karan Mehta (2011-11-17 23:52:16) And yes, that’s one way they could make money - by developing and selling their business intelligence to interested parties. robertomassa (2011-11-18 00:28:08) What really surprised me is that they oﬀer only the iOS version and not Android. That is really weird! I agree that the only way to make money is selling consumer data but I would question that since I don’t think those data would add much more to what online retailers already have. Simply the business model is not sustainable in my view... but I like the idea!
robertomassa (2011-11-18 00:31:11) Moreover, the ads revenue model is not sustainable... in average you need about 10M visitors per month to make $100k of ads.. I think startup founders usually overstate the money they can make with ads alicesisili (2011-11-19 16:07:46) If Slice stays free in the future, I think selling data to online shopping site will be its best way to generate revenue. Slice is deﬁnitely the idea venue for collecting users’ information and feedback on products, which are extremely useful for shopping sites that are trying to ﬁgure out what products to recommend ( according to the personal information that Slice has). anchenyi (2011-11-19 21:57:40) I think the companies who value on-line selling would support them to do so. Companies which have online stores always engage in enhancing the shopping experience, now there is such a website doing this for them, they may subsidize this site based on how many customers purchase their goods while using this site manage their orders. If a certain brand is very popular in this site, that brand owner should sponsor more. Chen Sheng (2011-11-22 15:52:01) As mentioned by many people above, one way it makes money is probably by selling user information and data. Also, it could put advertisement to generate revenue. Or maybe it is free now because it is a new website and it wants to attract users. In the long term, it might switch to non-free model or freemium model. But overall, this is a really helpful website for those people who often shop online. patrickchoy (2011-11-22 22:33:45) Once they have attracted enough people, and have tracked enough data, they can perhaps create an algorithm that suggests new items or sale opportunities based on the type of purchases the person makes. From there, they can get revenue from the merchants in order to add their stores/ keep their stores as part of the selection. hisashihamada (2011-11-23 22:15:38) I totally agree with Patrick. In addition to selling data and advertisement, through recommendations based on purchase history like Amazon, Slice can encourage consumers to buy more products related to their preferences. Slice can get revenue from merchants from which consumers buy products through recommendations. fredzhu (2011-11-25 13:11:36) Fees may not be necessary as Slice can sell its data to merchants for a premium! fredzhu (2011-11-25 13:31:52) a news article on New York Times uncovered/conﬁrmed Slice’s revenue model. See http://sliceinthenews.wordpress.com/2011/11/15/new-york-timesslice- aims-to-organize-your-electronic-shopping/ where it says at the end that ”the service is free to users; eventually, Slice aims to make money by selling anonymous sales information to help retailers market their wares. The company s investors include Eric E. Schmidt of Google.”
Summarise today’s lecture (2011-11-16 10:23)
Apparently Columbia Business School want application letters to be just 200 characters. An interesting challenge. 120
Here is another: summarise today’s lecture in a 140 characters. I’m looking for accuracy rather than kindness; that is, I’m happy to be mocked.
Siamak Kolahi (2011-11-16 12:28:50) Digitization have changed the landscape of social interactions, and with that, the economics around it. It is a significant challenge, however, to engineer interfaces to govern social regulations (such as privacy), without compromising economic leverages around such models. Joshua Gans (2011-11-16 12:33:12) Ahem. Please count your characters. You are at double 140! myraelbayoumi (2011-11-16 15:02:53) Patent system is bad. Innovative industries have no IP protection. Defaults,incentives,directionality = success drivers for social networks. vbork (2011-11-16 16:45:48) There is no IP protection in creative industries, too hard to distinguish trend vs copy. Default settings drive social network success. sangwaic (2011-11-16 18:24:18) How IP sharing aﬀects industries. How industry reacts to, proﬁts from and encourages sharing. Implications and challenges because of penetration of social media. Avi (2011-11-16 19:41:57) The best things in life are free!...easy to copy but hard to steal. Avi (2011-11-16 20:03:42) btw can make it exactly 140 characters by adding more dots :D Iwona Gwozdz (@voncs) (2011-11-16 21:06:30) Sharing = Good + Bad. +) Makes us adjust & be creative to standout. -) Blinds us from seeing opportunities. We take but don’t always add. Nilay Goyal (2011-11-16 21:21:17) Sharing information: forces adaptability and creative diﬀerentiation, can be used to generate proﬁts, but is tough to enable and encourage. jytsao (2011-11-16 23:35:35) Diﬀerent industries have varying levels of IP protection. Default setting to share with every friend on Facebook makes all the diﬀerence. tanvishetty (2011-11-16 23:54:30) Found the video clip about fashion and copyright particularly interesting. It was interesting to see the industry from a new perspective. hank008 (2011-11-17 00:59:59) The lecture analyzes the advantage and disadvantage of sharing of information and people’s attitudes and behaviors
to social networks. We should think how to extend and make money from the model of sharing and diﬀerent defaults implies diﬀerent emphasises. A good and brief review (like food, book, music) usually can make the focal points stand out paulsmerchanski (2011-11-17 09:14:57) No CR protection in fashion = high creativity, 2sided mkts need value creation b/w both users for participation, ﬁlters kill info overload adriennefriesen (2011-11-17 10:35:41) People want to share, but only so much. Also don’t want sharing to be complicated. FB & Twitter get it right, Google+ & Ping miss the mark. shunichirotago (2011-11-17 12:12:49) What to share and what to protect is important. Balance between these two may vary depending on each industry or platform. Karan Mehta (2011-11-18 00:13:24) Everything online has an oﬄine context; building a social network is often harder than integrating with an existing platform; execution is more important than IP protection Taylor O (2011-11-18 01:45:32) Share what’s not creative. Don’t share what isn’t. PS Why has no one resorted to Twitter speak? bharatbhardwaj (2011-11-18 03:02:28) We adjust to sharing = do less or more depending on industry and platform. More sharing leads to more creativity elainezhang12 (2011-11-18 11:30:02) Patent might not be a good thing for creative industry, as it might slow down the innovation. Joshua Gans (2011-11-18 12:10:13) Good point. jennachou11 (2011-11-18 23:55:07) Prof Kim and Renee Mauborgne’s Blue Ocean Strategy = 15 years of research of 30+ industries. Anita jumping on top of the lecture room tables while lecturing = Disruptive Technoooooloroom. $1.5Billion + 15-20 years research on a drug = expensive brand name drugs and handsome return proﬁts. Sitting on your ass and waiting to be the ﬁrst generic company to ﬁle right to manufacture and market the patent-expired brand name drugs with ZERO R &D eﬀort (ok ﬁne.. close to zero) = PROFIT-US & PRICELESS maryammoshiri (2011-11-19 14:11:34) Sharing promotes innovation at the cost of copying. IP protection shown to limit innovation and ﬁnancial gain. John DiGiacomo (2011-11-20 13:35:22) The future is in ’social’... but what the heck is ’social’ ? hisashihamada (2011-11-23 23:11:51) Sharing information could generate proﬁts but not easy to establish a platform and make it balance b/w advantages and disadvantages.
Penguin oﬀers self-publishing (2011-11-18 09:00)
OK folks, what do you make of this?
Want to be published by Penguin, the historic press which is home to authors including Roald Dahl, Beatrix Potter and Kathryn Stockett? Now you can be and for as little as $99 (£60), as Penguin’s American arm announced a move into self-publishing. Penguin USA will provide the service through its genre-ﬁction online community, Book Country, which launched in May oﬀering wannabe authors the opportunity to post their work online and receive feedback. With 500 works of romance, science ﬁction, fantasy, mystery and thriller now online from 4,000 members, and ”a small number” of those members having secured literary agents, Penguin has decided to provide ”a direct path to publication for those who choose to go the self-publishing route”. ”A growing number of authors simply want to go directly to readers with their books. We respect that new reality and the changed landscape that technology has brought to book publishing,” said Molly Barton, president of Book Country and Penguin’s global digital director. ”Self publishing is a trend that isn’t going away.” Penguin’s announcement follows the news last week that Amanda Hocking had become the second self-published writer to sell over 1m ebooks on the Amazon Kindle, after John Locke. Costing between $99 and $549, depending on whether the writer wants to format their ebook themselves or plump for a ”professional print and ebook” option, the Book Country self-publishing option will give writers 70 % of the sale price of a book priced above $2.99, and 30 % of a book priced between 99c and $2.95.
1. http://www.guardian.co.uk/books/2011/nov/16/penguin-self-publishing?CMP=twt_fd 2. http://www.guardian.co.uk/books/penguin 3. http://www.guardian.co.uk/books/publishing 4. http://bookcountry.com/ 5. http://phx.corporate-ir.net/phoenix.zhtml?c=176060&p=irol-newsArticle&ID=1628395&highlight= 6. http://bookcountry.com/CMSContent/Templates/Marketing.aspx?pageid=120483
Iwona Gwozdz (@voncs) (2011-11-23 10:22:26) I don’t think we can say this is a bad move. It relates to the innovators dilemma. I’m sure Penguin would love to hold on to its power in the publishing industry and be the ﬁlter for which books get printed and which don’t. But the fact is the landscape is changing and Penguin cannot ignore this. They don’t want to be left behind in the dark. Obviously self-publishing approach has its goods and bads. Personally, I think we need to give it a lot more credit than we have done so above. As models such as Amazon and eBay have shown, user rating can be very eﬀective. If plagiarism occurs, changes are the users can catch it quickly and eﬀectively and the content can be removed. The publishing and movie industry tends to repeat the same kind of storyline but as documentaries have shown, sometime a diﬀerent plot can have unexpected eﬀects. By bringing these books onto their site, Penguin can generate a lot of user data. Can can learn what plots turn users oﬀ and which ones draw them in. They can see where we read (night/day), how fast/frequently we read, and maybe even where we read. These are powerful user statistics. I think there is for sure a lot of potential here.
Nilay Goyal (2011-11-18 10:25:28) I think this is an awesome idea. But it will be interesting to see how they manage 1) Quality and 2) Piracy. I can foresee lot of wannabe writers publishing lot of junk. Also, there is a great risk of piracy. People can easily publish books taking ideas from other writers, or even copying the book entirely. Penguin will deﬁnitely earn with the hope that one among 10000 books is a blockbuster. Also, they can have a good control over content. (I assume penguin will own copyrights). Also I see an opportunity for customizable books. If people can self-publish books, it shall be also possible to modify existing books for their purpose. This will be of great value to professors seeking to add their content to a book. tanvishetty (2011-11-18 10:36:21) I was reading through the comments on the original article, and thought that there was an interesting point. When these books are published with the help of Penguin, the book won t say published by penguin , but will instead say self published by bookcountry . So the books will not be able to ride on the success of Penguin, in the sense that they will not be able to make use of the brand name. So when you have services such as Lulu, that oﬀer the self publishing service for free, why would a writer pay $99 to penguin instead, if you can t make use of the brand worth? The article doesn t specify what sort of added value Penguin will give to these writers that other services can t. And even if this value exists, is it worth $99? sharadsharma12 (2011-11-18 12:38:56) This is an interseting idea. Infact Amazon has been ofering a similar kind of service CreateSpace for quite some time now. Penguins brand name will entice authors to use its services. However, Amazon provides the distribution network that not so well known authors require. I feel that self publishing industry has been growing steadily and with the emergance of e-books, people are more willing to take risk with self publishing. The cost invvolved in publishing a book for kindle is not that high which makes it attractive for self publishing authors. However, Penguin also needs to build a strong distribution network for e-books, before its services become really sucessfull. Siamak Kolahi (2011-11-18 16:33:09) I dont think a self-publisher through this service can call his work been published by Penguin. Stamping Penguin brand on a book would be valuable only if it means that it has been ﬁltered for quality by that publisher (Penguin editors). If you can buy for such branding ( $99 sounds very cheap by the way for such stamp), then the value of ’being published by Penguin” will soon drastically fall. On the ﬂip side, if someone can’t publish his book with Penguin as the publisher, why would he pay $99 for editing/feedback service? In fact, this entire idea is just oﬀering a tool (platform?) for self-publishers, and the value proposition through Penguin brand cann’t sustain, I think. Siamak Kolahi (2011-11-18 16:50:32) Penguin as a brand is valued with editorial excellence of its published books. Such model can succeed only if its oﬀered as platform that can emulate some level of same editorial quality. It should capture a network of writing enthusiasts and high-quality editors/authors, so that it would make comments and feedback more valuable. Only then a book coming from such community would be valued properly by readers. For doing so, Penguin needs to make the platform more attractive for high-end editorial community. The contradiction would remain as how to maintain Penguin editorial standard, and promote expansion of business to mainstream self-publishers jytsao (2011-11-18 17:12:03) What strikes me the most is that this business it is a very close replica of FanFiction.net. It’s an online community where people publish their own written works and get critiques from other writers. The main diﬀerence is that writers on FF.net use characters that other people have invented for movies, TV, or other books, whereas on Book Country, the work must be 100 % original. FF uses the content that its users uploads and earns advertising revenue that way, withouth aving to pay its users any percentage of said revenue. It’ll be interesting to see how BC fares, using a model where writers have to pay a fee to get published, but will earn a percentage of their book’s returns.
jongsukjosephshin (2011-11-18 20:29:51) Personally, I read some Penguin books during childhood. Then, I also bought other books from other publishers. The Penguin brand should not matter as much these days. Books are digitized, and the entire landscape of the publishing industry is changing rapidly. Deﬁnitely, the editorial content is very signiﬁcant, but as a book reader, some consumers, or maybe most, are focused on getting good content from a book. If I buy a book today, say Steve Job’s biography, would I be concerned about where it was published more than how good the book is written? What Penguin is doing is vaguely similar to American Idol of the music industry. Why? Because in both scenarios, the consumer is the judge of the content. In this case, consumers want to judge whether a book is good or not by providing feedback to the authors, who publish directly. In essence, they’re grooming or cultivating the next best author, attempting to develop a relationship between the authors who resonate with a large base of consumers. So content quality could suﬀer, but as long as it’s proﬁtable, Penguin should continue. bharatbhardwaj (2011-11-18 23:57:15) I agree on the quality issue. You dont want too many average or below average books out there. Will have a negative impact on the brand. Regarding piracy, i dont think it will be an issue. Once a book is online, it is pretty much copyrighted (atleast i think so). Overall I think its a good way for publishers to increase their revenue... topetra (2011-11-19 02:10:54) I don’t this will be a good move for Penguin. As for the $99 package,writers only get to use the kits to upload their work onto the website as an Ebook. I don’t understand why writers have to pay such an expensive price just for uploading their work. As the coverage of media is huge nowadays, branding with Penguin will not be as powerful as before to attract readers. Readers will be able to judge and choose the right books for themselves. Being the middlemen, Penguin may attract some new inexperience writers, but will not grab a lot of writers to purchase those packages. Therefore,it may be a good idea for Penguin to make proﬁts. Karan Mehta (2011-11-19 16:18:45) I like the customizable books idea! Sounds like it could add quite a bit of value down the road. vbork (2011-11-20 11:55:27) Penguin is trying to cut agents out of the picture. This also oﬀers opportunities to ﬁnd gems from unheard of writers while at the same time opening the gates for junk writers. I can see a lot of plagiarism claims arising from this type of service as the number of ”published” works skyrockets. hank008 (2011-11-20 19:05:24) By taking this action, Penguim establishes a wide platform for new authors or people who like writing (usually common people, not professional or experienced authors) and makes proﬁt from them. Many writers have good writing skills but they might not be found by publishers in the past; and many of them want others to read but they cannot ﬁnd readers. (search costs, double coincidence) The platform provided by Penguim is an opportunity for these writers to be known by more people, and earn money if their books are popular. Beyond that, if somebody really becomes well known by this way (self-publishing), there is a larger probability that they choose Penguim as their publisher (formal publishing). To sum up, Penguim s this step can achieve all-win situation, to writers, readers and itself. jovanatanackovic (2011-11-20 21:24:02) I cannot say that this is an awesome idea. Once in a while, an author will emerge and become successful, but with the ridiculous library of books we already have, there’s no need to open the doors to publishing lower quality books. People are brainwashed by technology. The newest technology is always (or most of the time) better, but our language is not evolving as quickly as technology, and as mentioned, there is already a massive library of published books written similar enough to our current stage of language. We really don’t need any more books. This will ruin the average
quality of published books and expand an already over-capacity library. Eugene Oulman (2011-11-21 00:46:14) Filtering for quality comes as a challenge to mind. Some form of integrative-thinking type solution is required here. Anyone? patrickchoy (2011-11-22 22:24:32) With regards to the issue of piracy, I would assume that the initial cost of $90 - $549, would be a deterrent to writers that aren’t up to a certain level. Since they will be selling their work, they must have conﬁdence that their work is able to at least break even, and make a proﬁt afterwards. patrickchoy (2011-11-22 22:25:50) When i said piracy in the ﬁrst sentence, i meant ”Quality”. Any way to edit my previous posts? kumarsidhartha (2011-11-23 08:12:27) This is deﬁnitely a great idea and something that Penguin needs to do as its competitor Amazon is integrating upwards in the value chain making self-publishing available to customers. The only worry here is that with pretty much everyone at liberty to publish Penguin should worry that there might be a brand dilution eﬀect that is created and adversely aﬀects Penguins image. jennachou11 (2011-11-23 12:56:03) umm.. interesting... almost similar to one of my half started half ﬁnished venture, which is to help the amateur writers to have a chance to market themselves through their creativity and writing styles to the publisher, and hoping they will get noticed and have a contract deal. another venture of my is also similar to what Penguin is doing, to promote underground musicians and especially for the students coming out of the university music faculty and stranded for cash because they don’t know what job ﬁts them etc. (somewhat like us for the 2 years in MBA0 ;) exactly what Iwona said, USER RATING IS THE KEY! with the amount of entries we will get, use rating is the most reliable tool for discovering new musicians and in this case, writers. The sheer number of inquiries will make the distribution a normalized bell curve. fredzhu (2011-11-25 12:37:33) I don’t necessarily agree with the concern over quality. There are so many 2nd or 3rd tier publishers out there who produce average or below-average contents (even after their due process). Whether a book is published by a reputable publisher has less impact on my purchase decision. Book reviews seem to be more important...
No longer free (2011-11-19 09:00)
AT &T was selling the iPhone 3GS for $0. It just raised the price to $0.99. No according the psychological theory of free that will have a big eﬀect. What do you think?
markbelcarz (2011-11-21 13:08:27) I also agree. I think the psychology of free argument deals a lot with one-time use items, such as articles, or small games that have a limited useful life. In this case, consumers are buying an item worth considerably more than the $0.99 that will be used daily for usually at least a couple of years.
Siamak Kolahi (2011-11-23 10:50:21) Very interesting point Iwona. It feels that iPhone, with all its prides and glory, has reached it’s glass ceiling of innovation in this platform and form factor. And other, more open eco-systems (aka Android) are quickly catching up. Apple, I would argue, is in the same loosing trend in platform battles it had on personal computers with Microsoft back in 90’s. They need the next ground breaking product thats based on a whole new idea, or in Steve Jobs language, the ”next big thing”, if they want to compete.. Sorry to digressing from main discussion here, I should mentioned :) Iwona Gwozdz (@voncs) (2011-11-23 10:37:20) I agree. Because Apple has such great brand value, I don’t think $0 vs $0.99 will make a big diﬀerence in this case. The market for iphones, I would argue, has reach the late adopter stage, which means more people will want to buy, especially at such a low price. What is interesting however is how this price point will aﬀect how consumers perceive the brand. If you can get an iphone at $0.99 will you still perceive it as high quality, premium, cool, etc. There are so many copycats now ﬂooding the market, technology has advanced to much, and I would argue competitors have started to catch up (especially Android). I think its time for iphone to deﬁne what the next wave is in smartphone technology. Iwona Gwozdz (@voncs) (2011-11-23 10:31:35) I have to disagree with you. Giving something away for free can have various psychological eﬀects. It can aﬀect how we perceive a brand, the quantify of a product or service, etc. The iphone in this case could have gone from $0 to $0.99 because Apple felt it was diluting its brand. An iphone used to be considered premium, high quality, rare etc. If all of a sudden companies like AT &T are giving away the product for free and over supplying the market, it aﬀects how people perceive an iPhone. The iphone, I would argue is now reaching the late adopters, in which case the product is at the end of its wave. Apple will have to innovate sooner rather than later before user perceptions begin to crash with the wave. tanvishetty (2011-11-19 10:31:33) nope, don’t think it well. Any product of Apple carries a certain amount of brand worth, and this worth is deﬁnitely more than 99cents. Telephone plans are clearly not cheap in canada,so the people who can aﬀord these high monthly plans, can surely aﬀord $99 cents to purchase a phone. tanvishetty (2011-11-19 10:40:29) I was reading through an article and found it to be somewhat relevant to the discussion:http://ca.ﬁnance.yahoo.com/news/Wind-Mobile-backer-regre ts-cbc-3410332520.html?x=0 It’s an interview with the ﬁnancier of windmobile, which is a foreign initiative in Canada. The defensive foreign investment policies in Canada are perhaps part of the reason as to why Canadian phone rates are so high! maryammoshiri (2011-11-19 13:24:40) The article notes that the change is due to the fact that fraudsters were stealing the phone, which would defeat the purpose of the free phone with a contract to gain more customers. The article mentions that Apple still allows you to get it for free and will link you to the AT &T service, as such the oﬀer is still available. I don’t see this $0.99 charge having a signiﬁcant eﬀect on consumers, as you will have to provide your billing details for your service charge anyway. Minimum charges tend to discourage customers who do not want to provide their personal information to obtain the service/product. In this situation, where you have to provide it anyway for your monthly charges, I don’t see the $0.99 charge having a signiﬁcant impact. Alex Semine (2011-11-19 13:46:23) It obviously will have SOME negative eﬀect: there’s no way you can realistically say ’Nope, $0 and $0.99 are the same’. Mary nailed it here. They’re doing it speciﬁcally to discourage fraudsters, possibly with the fact that they’ll need to account for phones in a diﬀerent way now that they are not free. I think AT &T are looking at pros and cons,
there must be a larger problem than we think with these ’fraudsters’ I actually have a personal experience with this. I once wanted to switch to Virgin from Fido, so I called Virgin and signed up, and with every new sign up you get a free phone (or something like that at the time), so I said I will want my service to begin on the day my contract ends with Fido, and I would preferably want a phone to use by then. So they took my deposit (as Virgin does with every customer for some reason), and sent me my free phone via mail. When the time came to cancel with Fido, a Fido rep gave me this ridiculously cheap deal (which I still have to this day), something like $30 for everything including unlimited, free internet lol. So I decided to stay with Fido. I then called Virgin to explain the situation and cancel my pending plan, and received my Deposit back. In case you didn’t realise; I still had the phone they sent me, and they didn’t ask for it back.. I ended up selling the phone for $150 to a friend. TL;DR: It’s very important to manage internal accounting errors. Karan Mehta (2011-11-19 16:13:33) Interesting point about the fraudsters mentioned in the article. Like already mentioned, I doubt this will have any visible impact to AT &T subscriptions, and it will certainly not make customers switch to Verizon or others. jongsukjosephshin (2011-11-19 17:15:28) Agree, this is to repel fraudsters. It just might work. But, the penny gap theory, referring to ”Free”, states the cost of even thinking is a cost in itself. In other words, there will be two consumers. One will be attracted to the free product. The other will also be attracted to the free phone. Yet, out of these two, there’s a chance that attaching a $0.99 fee to the phone will induce the loss of one of the two. The market for Iphone 3G tells me that the people who are interested in these phones have either had a terrible experience with Android or other smart phones, or they’re just moving from a ﬂip phone to a smart phone. For the latter consumers, if they are just moving from ﬂip to smart phones, and considering there are a few free smart phones oﬀered, any cost to a phone will have a psychological eﬀect on them. anchenyi (2011-11-19 22:03:37) Yes I agree that this is being done to help prevent fraud. You may know or not that the .99 cents cannot be billed to your bill. It must be charged to a credit or bank issued debt card. Some fraudsters are using stolen identities to steal these gadgets ....it’s been an issue since they went free. anchenyi (2011-11-19 22:04:17) sorry I posted wrong place... anchenyi (2011-11-19 22:04:41) Yes I agree that this is being done to help prevent fraud. You may know or not that the .99 cents cannot be billed to your bill. It must be charged to a credit or bank issued debt card. Some fraudsters are using stolen identities to steal these gadgets &.it s been an issue since they went free. vbork (2011-11-20 12:07:59) Psychologically it is a bad move due to the penny gap argument. However, it will repel some fraud and with a $0.99 tag for a big purchase such as the cellphone shouldn’t aﬀect sales too much. Siamak Kolahi (2011-11-20 16:29:58) Well its clearly against the psychological theory of free. Beside psychological eﬀects though, its quite interesting as its the other way around that what companies use this for. Usually companies forgo small gains to avoid going through ”credit card hassles”. This time, they are actually asking for this hassle, even in the cost of losing those aﬀected by psychology of free, in order to prevent fraud. I mean they should have quantiﬁed their potential losses, and still worth for them from the savings they get by reduced amount of frauds. Interesting things you see in this industry
Avi (2011-11-20 18:46:45) It might infact help the sale. From behavioral perspective it could mean customers care less when its 0 dollars so may care more about the contract. 99 cents creates atleast some distraction. From purely price perspective whether 0 or 99 cents, it s negligible relative to the overall investment customer is making. 99 cents also gives a sense of urgency, makes it appear to be on sale. Btw rational that 99 cents help prevent make sense. hank008 (2011-11-20 19:41:06) Some people above say the new price ( $0.99) is a concern about fraud, probably that is the reason, but from my perspective, it is better to stay free. IPhone 3GS has been in the markets for long times and it was announced by Apple to be free with contracts. Additionally, $0.99 can simply be ignored, so why measures that neglectable amount–symbolic? It is meaningless. Right, people are still willing to pay $0.99 for the phone (demand will hardly be aﬀected), but I just cannot ﬁnd the clues and intuitions behind that. topetra (2011-11-20 20:15:57) Consumers usually think free goods have no perceived value, increasing price might be good in some cases. However, since IPhone 3GS has been launched for a while and AT &T is not the only seller in the market, buyers might shift to other sellers who are still selling it free, such as Best Buys. Therefore, AT &T may lose sales due to its inappropriate price adjustment. jovanatanackovic (2011-11-20 21:07:49) No, psychological theory of free doesn’t hold because you cannot apply it to everything. With a phone, your expenses are way more than the original purchase price (probably $50+ per month with data). A dollar will make no diﬀerence. However, if this were applied to an app (from free to $0.99), theory would hold because it is a one time purchase (and a one time expense). Price increases should always be measured relative to the total expected costs, which is why $0.99 does not matter when you’re paying $50/month (I pay $75 by the way). Eugene Oulman (2011-11-21 00:39:27) Very minimal (if any) impact to the consumer attitudes. The reason is that the $0.99 for a handset is still viewed as virtually free. Consumers are making a long-term purchase with a recurring $50/month billing cycle. The additional one-time fee of $0.99 makes very little economic or psycological diﬀerence for the consumer in the evaluation process given its ﬁnancial insigniﬁcance with respect to $50/month amount and the fact that its a one-time fee at the time of the purchase. The consumer will discount 0.99 completely. jessicaanania (2011-11-21 01:19:14) I completely agree.... what would be more interesting is to see whether or not the contracts changed prices, and how that impacts new registrants . jennachou11 (2011-11-22 11:17:19) If crossing the border means i can get the iphone for 0.99 with AT &T, all i can say is that I hope ”Rogers AT &T” are still one company. I have been with Rogers for like 10+ years and even though I enjoy discounts on my bundled service better than employees can get (total monthly credits i get = 10 years of accumulation, which works out to about $40/month for wireless service itself). However, I haven’t had a $0 iphone oﬀered to me and even with Roger’s loaner phone program and if you want to purchase it, iphone 3G will cost you $199 still. Freebees are always welcome.... Now, back to the $0 vs. $0.99. So there are 2 things that pops into my mind: 1) i read a recent articel in the Toronto Star (Noermber 16, 2011 Business section), the article by John Teraudes states that since the launch of Andriod, an huge increase of smartphones from all manufacturers ﬂooded the market. iPhone’s sale plunged due to Android. Here are some interesting statistices... Samsung shipped 25 Million phones vs. Apple 17.3 million iPhones. So maybe AT &T is helping apple by giving $0 to... maybe untapped market which the consumers in this segment has been tempted to try Apple’s innovative and ”WOW” products, but didn’t want to spend money on the newest iPhone
or iPad etc becaiuse they might not be using them enough to justify the investments into the product. I would think maybe the Baby Boomers.. ??? When I walk into the Apple store when the iPad just came out, I was so surprised to see that the majority of the crowd in the store are Baby Boomers, and most of them are being taught how to use the technology on their hands by the Apple employees. There are also ”Learn how to use an iPad” sessions that is taught also by the Apple employee, and these baby boomers are so eager to learn the teaching session seemed to me like they have gone back in time to the kindergarden age, sitting in a circle playing with their ”toys”on their hands with constant ”oooo”, ”ahhh” and ”woooow”s! So essentially, I believe that the $0 giveaway is to lure this baby boomer consumer segment to so that they will perceive the beneﬁt > costs (as compared to say Roger’s $199 iPhone there would be higher chances of costs > beneﬁts for this segment) 2) Why did they raise the price to $0.99? I think it’s a pure psychological deal. I don’t know what triggered the price change but my thinking is this: Usually people think $0 giveaway is of poor quality, and for these iPhones, to oﬀer them at $0 and since they are the older 3G phones, consumers might think that they are either refurbished, used, or has minor defects that the phone will not last that long (2 year contract) before it breaks down before the 2 years and they will have to purchase a new phone before conract expires. However, putting the price at $0.99 makes me think that AT &T is oﬀering a DEAL, a GOOD DEAL for a 2 year contract wireless service, and this small diﬀerence changes the entire psychology of the consumers. Any comments or feedbacks on my post above? fredzhu (2011-11-22 17:25:23) Is it possible that AT &T charges $1 dollar for legal reasons? I think that AT &T needs some sort of evidence (i.e. receipt of 1 dollar) to conﬁrm that the ownership of the iPhone has been transferred and the iPhone owner would be required to fulﬁl his/her responsibilities under the new 2-year service contract. Without such a monetary transition, there would not be evidence of ownership transfer and hence the contact cannot be enforced. patrickchoy (2011-11-22 22:04:48) Like the previous posts have stated, it this is indeed a way to discourage fraudsters then it may work. Other than perhaps being able to track them easier, if they have to provide personal information or some sort or credit card information. As for the regular consumers, it may have a negative impact. This may be just because consumers are used to it being free, that increasing the price now may change some minds or at least make they hesitate. It is much easier for people to agree to something that is free than when there is a price to pay, no matter how little. The cost and eﬀort associated with the price is what may cause a negative impact. jennachou11 (2011-11-23 12:41:10) Legality wise, and this is for canada but for the US it really shouldn’t diﬀer. You raised a good question that touches the legal side of the transaction instead of the marketing aspect. Now, as far as i know, you can have a zero-dollar transaction and still proof ownership. Think about this in terms of automobile transfer of ownership. If your dad gave you a car as a present, he is the ﬁrst owner by law (’cause he has to purchase it), but the actual FIRST transfer of ownership will be stated as zero-dollar GIFT. The car is yours, and you pay nothing for the ownership transfer to be you! Since we are talking about a GIFt transaction, here is a great tip for eBayers! i am sure most of you might know already, the border charges you when you are ”importing’ something you have bought from eBay (and pretty much an online retail company), tell the seller to mark it clearly as a GIFT, and that will reduce the taxes charged at the border when the goods are getting into Canada. sometimes the taxes our great canadian gov’t charges us can be at the premium of the actual cost of the goods.. which is NOT WORTH IT!!! MAKE IT A GIFT FOR THE HOLIDAY SEASON ;) Now i hope i don’t get police knocking on my door for giving out this wonderful tip luipuichun (2011-11-23 16:41:06) I do not think there is a big psychological eﬀect on raising the price from $0 to $0.99. Because unlike other free products, customers have already consider the monthly fee as a form of payment or cost to the phone. Moreover, the ”competitor” of iphone3Gs are all sold at a signiﬁcantly higher price, therefore raise 99cents will not aﬀect the sale of iphone3Gs much.
Karan Mehta (2011-11-23 22:30:51) Are people still buying the iPhone 3GS? Dan Velan (2011-11-24 01:23:09) I agree. The phone was never actually free, but part of a rather expensive bundle... Iris Zhou (2011-11-30 22:47:43) As iPhone 4 is selling for $99, could the $0.99 3GS be a strategic move to compromise sales of iPhone 4? More speciﬁcally, will some of the potential 3GS customers now choose to buy iPhone 4 because 3GS is not Free any more? roger678 (2011-12-01 15:49:53) According to the theory we’ve learned, ”free” does have a obvious psychlogical eﬀect on cumstomrs. However, it’s a diﬀerente senario here. When people make purchase decisions, they will not only think about the price of the Iphone. They will also think about the price of hte two years contract. The deal includes two parts, the Iphone and the contract. It’s not free. So increasing the the price of Iphone by $0.99 will not have a huge psychological eﬀect.
Monday morning strategy watch: Amazon Prime (2011-11-21 08:02)
News today that Amazon is tweaking its ’Prime’ oﬀering.
Starting today, Amazon is rewarding its Prime users by oﬀering free music store credit in exchange for longer shipping times. At the check-out, Prime member just have to select ”FREE No-Rush Shipping.” That give Amazon a full 5-7 days to get your purchases to you. Which seems, like, forever. But, when the items ship you get a $1 credit to spend on music at the Amazon MP3 Store. The credit has to be used up by January 31 2012. Open for comment.
1. http://gizmodo.com/5861337/amazons-giving-away-free-music-in-exchange-for-longer-delivery-times 2. http://www.amazon.com/gp/help/customer/display.html?t=UTF8&nodeId=200788550&pop-up=1&tag=gmgamzn-20
Nilay Goyal (2011-11-23 11:01:33) I know that $1 might not have enough value for people who want fast delivery. But think about the consumer behavior in general. There are a whole bunch of Amazon Prime customers who dont care about delivery times too much, atleast for certain items. However, they still order 1 day delivery just because it is available to them for free. As Sid points out, Amazon does not want to encourage people ordering fast delivery for anything and everything. This promotion will provide them a minor incentive for choosing the ’no-rush’ delivery. For regular Amazon customers, they already have to pay more for fast delivery. There was no way they could ask Amazon Prime customers to pay more to do so. So this seems to be a good move. Nilay Goyal (2011-11-23 11:15:36) Siamak, I disagree with you. The savings on supply chain will be more if they can have a non-committed random delivery day. By with your version of pricing, Amazon still commits to the no. of days for delivery and this kills the
beneﬁts. This makes it ﬁnancially unattractive. As far as consumer behavior goes, the target for this oﬀer is not for customers who understand and want to realize the beneﬁt of fast delivery. Its for the customers who dont care what day the item is delivered. Siamak Kolahi (2011-11-23 11:06:23) I would argue it would have a higher chance to work out, if there was more sophistication into it in terms of what Prime members get back. $1 credit might not worth forgoing the beneﬁt of fast shipping. But if you can get more, 3, 4, 5 ... based on the number of delay days you are willing to accept, I would argue, can be more attractive and pausing people to think at the check-out time. Maybe they intentionally did not do it this way in the favor of simplicity. But ﬁnancial wise, it could be more attractive, I suppose. Nilay Goyal (2011-11-23 11:07:49) In this case, there seems to be a 2 sided advantage to Amazon. First, they save on their supply chain expenses. Second, they attract customers to their music site, with the hope that people will stick to it over competitors. That was the advantage side. On the cost side, the cost to Amazon is less than $1. The conversion rate will most likely be less than 100 % as not all people having music credit will use their credit. So this reduces the average cost even further. These are important factors to consider while making the calculations. adriennefriesen (2011-11-21 14:11:02) Tanvishetty, I completely agree. In today’s age of instant information and instant gratiﬁcation, $1 is not enough to oﬀset a 5 day shipping delay. Additionally, Prime members are likely already loyal to the Amazon brand and are more likely to be using the music service, so Amazon is not winning any customers over by oﬀering them one free download. And on the other hand, if they use iTunes instead, then the $1 download is of no value to them. ricardogrinberg (2011-11-21 11:26:36) I agree with your comment tanvishetty but I think that it is interesting to see how Amazon really masters the pricing and promotion combo to add value to their network. If people are willing to exchange $1 for a longer time shipment, then Amazon is somehow optimizing its supply chaind while get users hooked to their app store (if this hasn’t happened yet, I mean they are PRIME users -the most loyal and frequent customers). tanvishetty (2011-11-21 11:11:40) Don’t think this is a good deal for the prime customers. Sure it helps Amazon with supply management and promotes their music store, but from the customers perspective it isin’t a great bargain. You get $1 worth of free music for 5 more days of waiting?I don’t think $1 is nearly enough for the amount of waiting time. So for prime customers who can aﬀord to pay $79.00 for the prime subscription, $1 worth of music is hardly going to make a diﬀerence but the 5 extra days of waiting will. How many of these people who get the $1 credit will take the time to go to the music store to speciﬁcally make use of this credit?Not a lot of people in my opinion. Unless ofcourse they already use the Amazon music store in which case they may end up using the $1 credit, but again, this is almost an insigniﬁcant amount to make any sort of impact on the prime customers.So I’m a little skeptical about the success of this tactic. Iwona Gwozdz (@voncs) (2011-11-23 10:50:10) I agree. I think seasonality plays a factor in this promotion. This promotion tell me amazon has had supply issues in the past during the holiday. But will people go for the deal? I agree that people do value fast shipping more than $1. But I also think that if people want it fast, $1 will not deter them. And as mentioned, music may not be the right incentive. It really depends who the customer is. It would be interesting to hear how this promotion goes. Taylor O (2011-11-29 11:28:09) I just ordered some Amazon Christmas shopping to pick up in the states and was oﬀered the MP3 option. However for a $180 order the $1 oﬀ is completely lame. It should scale with the order value or it just seems petty. How about
$1 MP3 for every $15 spent? I’m insulted :) I still did it though since I’d actually rather have it arrive closer to my arrival to pick it up. Nilay Goyal (2011-11-21 10:03:09) I think this is a response to managing the regular supply chain problems occurring during the festive season. Giving people an incentive for expecting a delay and by that way promoting its music store kills two birds with one stone! I think this is cool. :-) fredzhu (2011-11-21 10:07:58) I took a quick look at Amazon MP3 Store and it turned out that you can’t buy any of the most items on the main page with $1 or $2-3 dollars. So you need to either buy lot of stuﬀ (other than music) from Amazon to enjoy free music; or you need to top up your Amazon music credit. In any case, the music credit becomes an incentive for Amazon users to buy things. Amazon gives up small proﬁt but attract more people to its MP3 Store. connietai (2011-11-21 16:39:50) I think it’s a smart idea to ask people to self-select and decide whether they really care about shipping times as a way of managing their supply chain issues during this time. By giving consumers the choice to delay shipment, Amazon may be able to still make their promised delivery times to those customers who do care about on-time delivery. I do agree with the comments above, however, that $1 doesn’t buy much on the Amazon MP3 store. It will be interesting to see how many customers end up choosing this option. shunichirotago (2011-11-21 19:47:44) I agree with you. It does not matter whether $1 is big or small. At least it’s not zero so that a certain amount of people would choose to get a credit and this might resolve shipment traﬃc problems to some extent. The opposite eﬀect of penny gap could be anticipated. hank008 (2011-11-21 20:04:35) Many merchants have these kinds of policies, like i remember Walmart has three prices for the delivery, standard (within 10 days) for $1.97, expedited for $5.97, and rush(within 24hrs up to 7 days) for $9.97. But here we shall point out Amazon has a trade-oﬀ with customers, credits in music store for extended shippin times. Amazon speciﬁes music store, which can be a limitation. The credit that he oﬀers is only $1, and the extended time of delivery is 5-7 days. I will say the deal itself is not that fascinating, but to some extent, it beneﬁts some cusomters who are indiﬀerent to the shipping times, and help Amazon release the stress of delivery. nikhilmahendra (2011-11-21 20:12:56) I agree that Amazon s strategy would help them ease down the strain on their supply-chain, especially during the festive season, by targeting the segment of customers who were indiﬀerent towards the number of shipping days. This comes at a really low cost to Amazon but may not be a big incentive for the Prime customers which I believe is not their motive here. Amazon just wants to segregate the customer segments so that they can work towards reaching a higher eﬃciency for time-sensitive customers. Taylor O (2011-11-21 21:37:35) My guess is they’re getting a little pressure from UPS and this will help just a little to smooth out the demand. Many people want to get their holiday shopping completed early but they probably don’t actually need the gifts until just before the leave for holiday. jongsukjosephshin (2011-11-21 22:28:33) I would like to see the results after a few months. My guess: approximately less than 20 % will shift over to this idea. On the bright side, this does oﬀer an incentive. But what can you possibly buy with $1 at their store? Instant
gratiﬁcation is what this should be oﬀering. In other words, consumer waits longer, but here, listen to the latest single available for purchase at Amazon. If I can’t buy a piece of music for $1, or most music, it defeats the purpose of instant gratiﬁcation. Will I have to wait two or three times, each time a week long, just so I could purchase a couple songs? Not likely. fredzhu (2011-11-21 22:52:09) Well said! I am a regular shopper at Amazon.com or Amazon.ca. 99 % of the time I don’t care about shipping time 7 days & 2 days are indiﬀerent to me because their prices are so much better than what their Canadian competitors oﬀer. I agree with your analysis that Amazon would like to separate those like me with others who can’t wait to receive their items. On the other hand, I may go and have a look at Amazon MP3 store because I am given a coupon, albeit a small amount. This seems to be a good strategy for Amazon as it not only improves its overall shipping eﬃciency but also motives certain people to try out its music store. bharatbhardwaj (2011-11-22 00:31:25) But if the prime customers are loyal ones then why does Amazon need to do this? I believe its more to ease out the supply chain issues and who better to help you solve your problems than your most loyal customers!!! jongsukjosephshin (2011-11-22 02:50:32) For consumers, it’s safe to assume there will be two types by majority. First type will be ready during the holiday season. They will have made their purchases for Christmas. To them, this seems to be a minute bonus (assuming they purchase more than once). For the second type, who will be rushing to purchase gifts, they will value time over anything. This oﬀer provides no additional value to these customers. Considering the monetary value involved, $1, it is a little weak, considering Amazon is no Itunes and price diﬀerences are noticeable for music. It is easy to overlook. But consistent purchases will entice some consumers in the long run. And yet, the oﬀer is only valid until January 31, 2012 (Canada is exempt from this deal). Typically, consumers have an ongoing purchasing trend: that is, for seasonal shopping, they tend to purchase several items all at once. I believe the eﬀectiveness of this plan is limited. They should certainly know the behaviors of Christmas shoppers. Are they perhaps encouraging early purchases, like everyone is stating above, to lessen the load during heavy demand season using $1? Isn’t $1 easy to overlook? hank008 (2011-11-22 11:22:15) Looks like this new policy just ﬁts you, and by this policy, Amazon can better serve these customers who really think time as a key concern. Also, someone says that $1 credit is too little (probably it is a disguised form to boost consumption in MP3 store), but it is still the beneﬁts. (I dont know whether the credit can be cummulated and be redeemed for one product) Siamak Kolahi (2011-11-22 12:32:36) This sounds to me very much like ”Versioning” the Prime. At least a short term one. Amazon has a ﬂat rate of $79 for its prime delivery service. But rather, it could have diﬀerent versions of Prime, like $49, $79 and $99 Prime subscriptions with 5 days, 3 days and 1 day deliveries per say, respectively. That would make customers to self-select their needs on delivery (and other Prime oﬀering) and pay accordingly. But rather, Amazon has chosen to make a simple ﬂat rate of $79, which seems to be working on simplicity front. But this sounds a revert of that one ﬂat rate strategy, at least for short term. Siamak Kolahi (2011-11-22 12:38:00) It does help them for managing their fulﬁllment centers at peak times. But I am not sure how calculated such move is. It feels more like a disparate tactical move for short term. I am eager to see if they would expand such oﬀering in future, in some other sorts of ”price discrimination”, or better say ”versioning” of prime service, if responses were warm enough. Something they could have chosen as a pricing strategy for Prime initially.
fredzhu (2011-11-22 13:00:22) $1 dollar coupon will take me to Amazon’s MP3 store for sure. This is a much better incentive than unsolicited promotion emails. From this perspective, I think what Amazon does is great. jovanatanackovic (2011-11-22 15:22:48) You’re deﬁnitely right about demand rising sharply during the holiday season. However, I believe most people value fast shipping more than $1. That only gives you one song anyways. Besides, there are deﬁnitely Amazon Prime members who download music illegally, so the credit will be useless to them. Chen Sheng (2011-11-22 16:10:58) I agree that this strategy could somehow ease Amazon’s supply chain during Christmas. But I don’t think it could add value to the Prime membership. Only a small portion of people would like to wait that long in exchange of $1 credit. Also, $1 can only buy one song in the store. To buy an album, customers have to spend another $4 or shop another four times. To summarize, although it is not some exciting news for customers, it is a good move for Amazon to separate diﬀerent segments of customers. Siamak Kolahi (2011-11-22 17:47:22) This can ’segment’ prime customers at their origin. I would say, the more sophisticated oﬀer could have been that they get 1 dollar worth of Music Store credit, for each extra days that they forgo for their delivery! not sure if logistically Amazon would be able to deliver on such granularity. But in theory, it would version the prime oﬀering and make customers segment themselves on each order. Something that would be diﬃcult for Amazon to achieve pricing wise jamiepalooza (2011-11-22 19:58:14) This is like the opposite of the $0 eﬀect. Just because it’s $1 will entice Amazon’s customers to free up their supply chain, albiet illusive. Love it. kamaljeetsingh (2011-11-22 20:22:04) although it might seem to be a good strategy to attract customers to the music store and then prompt them to spend more. however, this might piss more people oﬀ than incite a purchase. might not be a good way to work around for amazon if this is their line of thought. Avi (2011-11-22 21:01:20) It’s a win-win deal. Amazon Prime is an annual membership. However not every time a prime member needs a FREE Two-Day shipping or $3.99 one-day shipping. In those situations they can opt for a $1 music for free. Amazon gets free publicity for its MP3 Store plus saves on shipping cost. Both sides happy, however more beneﬁt to Amazon. kelvinchunkileung (2011-11-22 21:25:44) Amazon does this because they know their supply-chian will have a lot of pressures during the holiday season. However, as the view of premium customer, i don’t see any beneﬁts for doing so. Despite a dollar or a few more will be given to those premium customers, these so-called ”credits” has zero value because i can get music for free everywhere. Also, if i m looking for some special music, i would rather go to iTunes as it contains thousands kinds of music. The variety of music on amazon is very limited. Last but not least, songs on amazon charge more than 1 dollar, unless you have a lot of purchase, you basically do not have enough ”credits” to get these ”free songs”. Therefore, it’s good for Amazon, but it’s worthless to customers. patrickchoy (2011-11-22 21:55:32) Amazon can’t really lose in this deal. Depending on how eﬀective this deal is, it can help alleviate pressure in their supply chain, get more people to browse their mp3 store, and perhaps make more purchases than the $1 dollar that they get free. It may even entice some people to sign up for their prime membership program. In any case, the cost
to them is minimal, while the beneﬁt can be large. elyte18 (2011-11-23 08:35:24) I think this is a smart move in multiple capacities. Most have been listed above - Amazon is using this ”promotion” to drive sales to its music store and can help smooth out the spikiness of holiday demand. However, I think it may also cause those Amazon Prime members who order lots of small shipments to stop and think about consolidating their orders into a larger one, which would help Amazon’s shipping department more by potentially lowering the total volume of shipments. Also, the word ”FREE” is more powerful than we may give it credit for. People tend to act irrationally even when little things are free. People will likely be willing to make the tradeoﬀ of shipping for something free in the music store. kumarsidhartha (2011-11-23 08:38:30) Amazon Prime is structured in a way such that you have unlimited free shipping over $3.99 orders. I personally know people who are happy to order stuﬀ such as toothbrushes etc. that cost like 5 $ for one day shipping from Amazon. I believe the major reason is to incentivize people not to use the 1-day shipping as I assume Amazon is losing a lot of money because of the shipping charges. Most people who indulge in the consumption pattern described above happen to be youngsters. Give them the option for an MP3 (which probably costs amazon less than 1 $) to not use 1 day shipping and they just might go for it. calvincylam (2011-11-23 11:32:09) I agree that the trade oﬀ for waiting 5 extra days for a dollar of credit in the music store is not worth it for prime members if they are willing to pay $79 for a membership. In addition, the promotion is for a free credit not a free song. it’s pretty hard to ﬁnd a song just for a dollar on Amazon. The prime member probably have to accumulate enough credits just to get a song that they like. This means that they have to wait again for a period of time and the tradeoﬀ is just not enough for the tradeoﬀ. Siamak Kolahi (2011-11-23 12:05:57) Amazon is not trying to avoid making commitment in here, or randomize delivery days commitment. They try to incentify customers to give their fulﬁllment channels a break during peak operation time, if they can. I am not sure if in practice, Amazon is capable of guaranteeing delivery on such granularity. But if we assume such capacity exist, oﬀering a versioned pricing model would in fact make the market cluster itself, accurately, on how much value added they see in the speed of their delivery. It would further help Amazon to conduct analytical studies (speciﬁcally on data of peak Christmas sales season), and optimize its investment on fulﬁllment channels to make them exactly (sure, in theory that is) replicate the real world demand. This can derive eﬃciency in designing their costly fulﬁllment centers and delivery channels, and save Amazon lots of money. I should admit that as exciting as it sounds in theory, I dont anticipate it be feasible in practice, as such assumption is hard to be realized with accuracy. Its delivery business after all :) vbork (2011-11-23 13:41:52) It’s a good option for Amazon users to have. Those who aren’t in a rush to get their products can take the $1 dollar in music, easing the holiday season for Amazon a bit. $1 might be a bit too low to wait an extra 5 days. They might want to introduce 5 $ for 7 day delivery, 3 $ for 5 day and 1 $ for 3 day or something similar to attract more customers to this choice. You can get music online for free anyways! Karan Mehta (2011-11-23 17:01:31) I agree. Regardless though, it further increases loyalty, which is awesome for Amazon!
Karan Mehta (2011-11-23 17:04:12) Exactly - more options makes for a happier customer. It’s a good way to spread the word about the MP3 store oﬀering. hisashihamada (2011-11-23 23:45:16) I also agree with Avi. This will be a good option for consumers who don’t care about the # of shipping days. This might also encourage more consumers to start to buy mp3s through amazon mp3 store instead of using iTunes. roger678 (2011-11-26 02:17:00) Amazon’s strategy is a good way of managing their operation. Customers who used to buy music from Amazon will be attracted by the new strategy. They are likely to choose Free no rush deliver. However, for customers who never buy music online, this strategy will not work well. digitalworldme (2011-11-27 02:26:49) It’s a good move for Amazon to provide the Free no rush choice for its prime customers to reduce the deliver traﬃc issue in holiday season. For the music lovers and customers who have no rush for their orders, this strategy will work as people can get an extra dollar for music download, and Amazon can also get more sales for the music. The problem is that $1for music download is not attractive enough for the new customers and for people who want to get their deliver early, and also the $1 credit has a time limit which is only eﬀective before January 31, 2012, people can only keep the credit for that time period. In the long term, customers may not choose the deliver option as it’s just not attractive enough to them. maryammoshiri (2011-11-28 16:42:45) I agree with Taylor. Amazon may be getting additional charges from UPS and therefore looking for a way to remove those costs, and what better than a small credit towards music purchases which would most likely not cannibalize their christmas sales. Iris Zhou (2011-11-30 23:09:47) Isn’t this a win-win-win situation for Amazon?!! The cost saving from switching customers from express shipments to ground shipments is deﬁnitely more than $1; the increased sales of the MP3 store will increase its stock price; and, other potential sales that may be created when customers come back to Amazon to use the $1 credit. Eugene Oulman (2011-12-01 00:12:21) I bet there is a strong incentive behind this - ie savings of overtime and other costs, like transportation, associated with priority shipping. We may not know full details but i woudl imagine strong economic rationale exists. Something an MBA mind would conceive.
Edit Wikipedia (2011-11-23 16:00)
We are reaching the end of our online class participation portion of the course. I may put up another opportunity to participate over the next week. In any case, here is one opportunity to get ’double points.’ ”What are double points?” you may ask. Those are double whatever counts for a point once I work that out. For this week, I want you to make an appropriate edit to a Wikipedia entry of your choice. In the comments, list the following information: 137
1. The entry title you edited and provide the link to it. 2. Describe the edit you made. 3. Explain why you made it. The edit can be new information or simply inserting a missing citation.
Taylor O (2011-11-29 11:28:56) Nice choice; Nixon rocks ;) fredzhu (2011-11-23 16:35:03) This is my inaugural attempt to change information on Wikipedia and it went rather smoothly. So this is the page http://en.wikipedia.org/wiki/Rotman School of Management It originally stated under the ”Graduate Programs” heading that ”The school also oﬀers a Master of Finance course”. As we know, the the Master of Finance is a program not a course. So I corrected it. jongsukjosephshin (2011-11-23 18:18:12) OK, QUICK! my ﬁrst post, and I ﬁgure I have to post a couple to ”hedge” against the odds of being deleted. This is actually a fact. He was present on my ﬁrst birthday. jongsukjosephshin (2011-11-23 18:32:54) http://en.wikipedia.org/wiki/Shin Joon-Sup ”Before his move to Atlanta, he attended J’s 1st birthday.” jongsukjosephshin (2011-11-23 18:50:56) On a more serious note. Netﬂix’s shares took a tumble. The company is starting to feel the pressure, and doing a Porter’s analysis, this industry does not seem promising in the long run. 1. Under Finance and Revenue, ”On November 22, Netﬂix’s share took a tumble down the hill, as share prices dropped by 5.2 % to $70.57. This was in response to its bleak outlook for 2012. ”. http://en.wikipedia.org/wiki/Netﬂix #Finance and revenue Original Source : http://www.dailytech.com/2012+Not+Looking+So+Hot+for+Netﬂix+Shares+ Drop+to+Lowest+Point+Since+March+2010/article23349.htm 2. Recently, Netﬂix’s shares fell by a considerable margin. In fact, experts say it is doomed to fall lower. 3. This is a prime example of how rapid technological advances in our society can slowly start to destroy a platform that was, approximately four years ago, still on the rise. Consumers have switched from DVD players to online streaming (22 million streaming-only subscribers) in less than four years. DVD renting business was substantially more proﬁtable. In addition, this case illustrates the intellectual property problem, how copyright holders in ”fading” industries (Studios) can still use hold-up to drive a hard bargain, as in Netﬂix’s situation. Netﬂix should have sold their business in 2010. tanvishetty (2011-11-23 20:25:15) I edited the page on my school: The international school of Penang, Uplands :http://en.wikipedia.org/wiki/The International School of Penang %28Uplands %29 #Overview I added the school motto ”respect for self.respect for others” to the page. I thought that this was important because it gave a better sense of what Uplands stood for, especially because the motto plays a signiﬁcant role in our community standards.
Avi (2011-11-23 21:56:15) Increased the number of Postgraduate intake in my design school, National Institute of Design, India from 200 to 245. http://en.wikipedia.org/wiki/National Institute of Design 245 is the accurate reﬂection for Postgraduate intake according school website: http://www.nid.edu Karan Mehta (2011-11-23 22:23:46) TD Bank is not the largest bank in Canada by market capitalization (second to RBC). This can be conﬁrmed on Google Finance, etc. Old wiki page was ”The Toronto-Dominion Bank (French: Banque Toronto-Dominion), is the largest bank in Canada by market capitalization and second-largest based on assets.” This has been modiﬁed to ”The Toronto-Dominion Bank (French: Banque Toronto-Dominion), is the second-largest bank in Canada by market capitalization and based on assets.” Karan Mehta (2011-11-23 22:24:33) Sorry, and the link is http://en.wikipedia.org/wiki/Toronto-Dominion Bank. Karan Mehta (2011-11-23 22:32:29) I covered my short position on Netﬂix too soon!!! hank008 (2011-11-23 23:16:16) I add the information about TTC new subway train: The toronto rocket under the ”rolling stock” part of ”Toronto Subway and RT”. Here is the link. http://en.wikipedia.org/wiki/Toronto subway and RT #Rolling stock It is updated related information but which has not been included. The source that I add is a citation from TTC website. Nilay Goyal (2011-11-24 00:28:09) I added citations to Prof. Josh’s WIkipedia page (http://en.wikipedia.org/wiki/Joshua Gans). The citations no. 1, 2 and 3 are added by me. They include references to the Professor’s Rotman faculty bio page and the links to his two websites Core Economics and Parentonomics. Wikipedia mentions that the page needed citations for veriﬁcation and I added 3 citations. I used to edit Wikipedia pages earlier. Two of my old page edits which still exist on Wikipedia are listed below: Page: http://en.wikipedia.org/wiki/Cadence Design Systems If you click on view history, there is an edit made by me (User: Goyalnilay) on Feb. 7, 2010. This was my company’s page. The change I made was changing the link to ’Cadence Community’ website under ’External Links’ Section. The address was changed and was not updated on Wikipedia. So, I did that! Page: http://en.wikipedia.org/wiki/Specman If you click on view history, there are two edits made by me (User: Goyalnilay) on Feb. 7, 2010. This is a page for a programming language developed by my company. The packaging and licensing policy of this language had changed and I updated that on Wikipedia. The point ”It is now part of the Cadence’s functional veriﬁcation suite, ”Incisive” Enterprise Simulator”, although Specman can still be licensed as a standalone product” was ﬁrst made by me. It still exists on the page, just that it is re-worded now. Nilay Goyal (2011-11-24 00:34:39) Sorry for a digression. But I thought this is cool enough to share. Do you know about a ’Uncyclopedia’, a parody for Wikipedia. The link is http://uncyclopedia.wikia.com/wiki/Main Page The site has all fake articles and provides misinformation to an unimaginable extent. The purpose is creating humor and some articles are funny (check article about Wikipedia on Uncyclopedia: http://uncyclopedia.wikia.com/wiki/Wikipedia). CAUTION: The language could be considered oﬀensive. Access at your own risk. hank008 (2011-11-24 01:07:40) By the way, just say something about Wikipedia in my eye. There are zillions of contents that are included in Wiki, and most of the sources in Wiki is contributed by casual readers who are familiar with/ interested in related materials. The entries can be viewed by all people, so once anyone ﬁnds something wrong/missing under centain entries, he can
make the corrections right away. (anyone can be the inspector to improve the quality of entries better) The mass contributor basis can be wiki s weakness as well. The editors usually are not professionals, so there may exist some problems, and it may not be corrected by late-comers. (what is worse, these readers will be misleaded) And also, there is the chance that the late-comers make the right stuﬀs go wrong. Anyway, we should thank wikipedia provides a mass platform for everyone to contribute, learn, share and beneﬁt. Nilay Goyal (2011-11-24 01:29:00) I added a citation to your fact on this page :-D jongsukjosephshin (2011-11-24 01:30:10) Unbelievable... they deleted my post! (netﬂix).. and they didn’t even leave a note. On November 22, Netﬂix s share took a tumble, as share prices fell by as much as 7 % on November 22.  HA! (this time I quoted Reuters on Globe and Mail) http://en.wikipedia.org/wiki/Netﬂix #2011 under Finance and Revenue jovanatanackovic (2011-11-24 02:10:13) http://en.wikipedia.org/wiki/The Matrix I added ’However, it is never fully explained how Cypher was able to plug himself in and out of the matrix without the help of a crew-member.’ in the plot section. I don’t know if it’ll get deleted or not, but nonetheless, it’s an omission that’s been bugging me for the longest time. How do you plug yourself out of the matrix? bharatbhardwaj (2011-11-24 02:52:04) 1. The entry title you edited and provide the link to it. Edited the wiki page on Claudiu (http://en.wikipedia.org/wiki/Claudius #cite note-75) 2. Describe the edit you made. Added a citation to the BBC mini series which was made on the autobiography of Claudius 3. Explain why you made it. There wasnt an IMDB link to the series on the wiki page. Thought it might be helpful for people who wanted to know more about it... bharatbhardwaj (2011-11-24 02:52:32) Just to be clear, i didnt edit the page but cited Ivan Yuen (2011-11-24 09:53:39) Here is an entry I started back in 2006 (anonymously unfortunately) http://en.wikipedia.org/wiki/Cahal Pech I was inspired to write about it after visiting the site during my travels in central america. I’m happy to see that the entry has been edited numerous times since with interesting photos added! A Wikipedia Story | Digitopoly (2011-11-24 10:33:47) [...] the way, this week my students are engaging in more responsible Wikipedia edits. Here is the result. Share this: [...] Joshua Gans (2011-11-24 10:44:30) For your amusement. http://www.informationisbeautiful.net/visualizations/wikipedia-lames t-edit-wars/ adriennefriesen (2011-11-24 11:39:23) I edited the entry for ”The North Face” at http://en.wikipedia.org/wiki/The North Face #Stores I added ”The ﬁrst corporately owned Canadian store was opened in October 2011 in Toronto, Ontario.” to the ”Stores” section because I work there! The entry previously only mentioned US stores. Dan Velan (2011-11-24 13:04:28) Great site. Thanks!
John DiGiacomo (2011-11-24 13:30:03) Wow.. didn’t think it was that easy to edit a page. I just added content and citations to the GoPro HD HERO2 camera page at http://en.wikipedia.org/wiki/GoPro #HD HERO2 Professional cameras The original entry was one line and didn’t describe the various versions available and didn’t include any sources. I edited this because I just purchased one of these cameras and they are AWESOME. paulsmerchanski (2011-11-24 16:23:26) I added content to the Winnipeg Jets Page. Here’s the link http://en.wikipedia.org/wiki/Winnipeg Jets #cite note18 Under the ’Winnipeg Jets Page (2011-present)’ heading, I added details on ticket prices for the home opener on Oct 9 vs the Montreal Canadiens. I made this addition because I’m from Winnipeg and I think the prices paid for these tickets were outrageous! Siamak Kolahi (2011-11-24 19:05:22) I edited the page for Amazon.com, section about Kindle, and added the introduction of Kindle Fire: http://en.wikipedia.org/wiki/Amazon.com #Other services My addition reads as follow: ”In September 2011, Amazon announced its entry into tablet market by introducing Kindle Fire. Kindle Fire is a tablet computer based on customized version of Android operating system. The aggressively cheap pricing of Fire ( $199 USD) was largely perceived to be a strategy backed by Amazon’s revenue from its content sales, stimulated by sales of Fire.” I did the change as introduction of Fire was missing from ”Products and services” section of Amazon page. sharadsharma12 (2011-11-25 14:57:32) I edited the page on corporate governance. Link to that page is http://en.wikipedia.org/wiki/Corporate governance #See also The section I edited is the see also section on say on pay. I had worked on a report for corporate governance during the summers and based on my expreience I added the description and current trends of say on pay in this section myraelbayoumi (2011-11-25 17:32:14) I added content to the Nixon Watches page mentioning color varieties in the headphones. Here’s the link: http://en.wikipedia.org/wiki/Nixon Watches Check out the heading that reads Headphones. I just added one line about how the headphones come in a variety of colors. I included a reference and color options are always great to know! I love my blue Nixon headphones =) alicesisili (2011-11-25 21:40:01) I made some changes on Penny Tai’s bio on Wikipedia. The link is here: http://en.wikipedia.org/wiki/Penny Tai #Biography I added: ”She formed the band ”Buddha Jump” with ”D-power” and released their ﬁrst album, ”Buddha Jump”, on September 23, 2011.” Under the ”Album” section: ”On the Way Home (Þ¶ï ) (November 1, 2011)” Under the ”Other Albums” section: ”Buddha Jump ([óF) (September 23, 2011) with the Band ”Buddha Jump””. I also included the citation. I added the information about her new albums because I have been following her albums and I know that the information is correct and valid. nikhilmahendra (2011-11-26 09:39:04) I have edited a Wikipedia entry on the Merchant Navy - http://en.wikipedia.org/wiki/Merchant Navy I have added an additional paragraph on The International Maritime Organization (IMO) Having served in the Merchant Navy myself, I believe that the existing entry did not cover an essential description on IMO that is the main international governing and regulatory body of the Merchant Navy. kamaljeetsingh (2011-11-26 12:21:05) I have edited a page on Cricket World Cup - http://en.wikipedia.org/wiki/Cricket World Cup #Before the ﬁrst Cricket World Cup In the history section, a note on the World Series initiated by Kerry Pecker was missing. Al-
though this format was started in 1979 and the ﬁrst world cup was held in 1975, Kerry Pecker’s world series made limited overs cricket what it is today. It goes without saying that with this piece of info missing from the history section, the information on present day cricket was incomplete. Joshua Gans (2011-11-26 17:39:34) Isn’t it Kerry Packer? shunichirotago (2011-11-27 12:03:17) I have edited a page on OFS(Overseas Family School), an international school in Singapore which I used to go a long ago. http://en.wikipedia.org/wiki/Overseas Family School I added ”SPP has three levels and promotions are considered every quarter.” (Line45) according to my own experience and school website. It is a fact and might be a helpful information. See if this is accepted or not. Probably not.... patrickchoy (2011-11-27 13:37:00) I edited the ”Rankings” section of my undergrad school. University of Calgary. Here’s the link: http://en.wikipedia.org/wiki/University of Calgary #Rankings I basically updated their information using the same references that they used. In this case, ”Webometrics University Rankings”. Sadly, it showed that UofC has been downgraded from 50th in North America to 70th, 75th worldwide to 93th, and 5th in Canada to 6th. This way people have a more accurate depiction of the relative state of UofC compared to the rest of the universities around the world. sangwaic (2011-11-27 16:20:58) I updated the wiki page for one of my favorite novels, ‘The Rum Diary‘ by Hunter S Thomson; http://en.wikipedia.org/wiki/The Rum Diary %28novel %29 1. I added a section, ‘Quotes‘, for interesting lines from the novel that provide a peek into Thomson‘s ‘gonzo‘style of writing. 2. Also I added a reference/citation from IMDB for the movie adaptation of the book. jessicaanania (2011-11-27 19:59:50) I updated the Nike+ iPod page http://en.wikipedia.org/wiki/Nike %2Bipod Under the overview section I added the very last line stating that Nike+ has 5 million users. I made the edit because when I was looking for that information it took a very long time to ﬁnd. It is useful information to have that other wiki pages about apps have. It is useful information to have. markbelcarz (2011-11-27 20:27:00) I updated the MEGA Brands page: http://en.wikipedia.org/wiki/Mega Brands In the introduction section, there was only a mention of its Mega Bloks product line, so updated it to include the names of there other 3 lines: Mega Puzzles, Board Dudes and Rose Art. I updated this because I recently came across this information when working on a project for another class and thought it would add to the Wikipedia entry. vbork (2011-11-27 20:28:52) http://en.wikipedia.org/wiki/Rainn Wilson #Career. Added ”Wilson made the ﬁnal cut for the role of Gob in Arrested Development, but was was beaten out by Will Arnett for it”. Feel like it was a good addition to the page of a great actor. maryammoshiri (2011-11-28 13:13:14) 1. Entry updated: http://en.wikipedia.org/wiki/Joshua Gans 2. I included the grant that Prof. Gans received from the Alfred Sloan Foundation. 3. I think the fact that Prof. Gans received this adds to his credentials and it also highlights the caliber of Rotman’s professors. As such, I think it was important to include.
asadkhandigital (2011-11-28 16:51:57) 1. Entry updated: ”Oswald the Lucky Rabbit”, the ﬁrst animated short produced by Walt Disney. Title updated: ”Creation under Disney”. 2. I replaced the second paragraph under this section with information consistent with the Harvard Business School Case: The Walt Disney Company: The Entertainment King 3. The reason I made the change is that, according to Harvard Business School Data, Universal Studios played a sketchy move by hiding the fact that they would own the copyrights to Walt’s ”Oswald the Lucky Rabbit”, and basically pushed Disney out of the Oswald brand. The second paragraph that was there before I replaced it did not highlight this shady business practice that Universal carried out, did not have a source, and instead painted the episode in a favorable light towards Universal. asadkhandigital (2011-11-28 16:52:21) Here’s the link: http://en.wikipedia.org/wiki/Oswald the Lucky Rabbit #cite note-1 garyyip1985 (2011-11-28 18:13:40) 1) Entry updated: http://en.wikipedia.org/wiki/Richmond, British Columbia 2) I updated the shopping malls section with a more comprehensive listing of the various malls in Richmond, as well as a mention of Richmond’s most famous street - Alexandra Road. 3) Richmond is my home. I’m proud of the city that I was raised in and I want to share my insight with the rest of the world! Ivan Yuen (2011-11-28 23:13:55) I’m sure you’ve noticed the banner on Wikipedia from Jimmy Wales. Here’s a hint on how NOT to design your website Jimmy: http://techcrunch.com/2011/11/20/ligers-and-tigons-and-wales-oh-my/ Chen Sheng (2011-11-29 11:59:56) I updated entry ”major live performances” on the wiki for the singer Jam Hsiao. http://en.wikipedia.org/wiki/Jam Hsiao #Major live performances I added: Golden Horse Award Ñ¬N December 2011 ”The Unwritten Law (ﬁlm)|Dear Child” ª „ i (Original singer: Julie Su Ï®) ”A Beautiful Life” •“`d® (Original singer: Shu Qi Ç) ”The Game They Call Sex Yellow Story (1987 ﬁlm)|A Game A Dream” 4J2 4" (Original singer: Dave Wang ‹p) ”Cheer With The Past (1994 ﬁlm)|Cheer With The Past” ß€‹~o (Original singer: Johnny Jiang Ü²R) ”Seven Wolves (1989 ﬁlm)|Gate of Heaven” 8` Þ- (Original singer: Tom Chang è ) Alex Semine (2011-11-29 17:28:56) I’ve edited Zynga’s primary information of their revenue: I cited their S-1 IPO registration ﬁle. Changed from 850 Million to 600 million, and (2010) to (Consolidated 2010). Not sure the standards for reporting revenue on wikipedia, but that’s what will be reported on any ﬁnance website. anchenyi (2011-11-29 23:09:54) Please check my work! http://en.wikipedia.org/wiki/Henan Construction F.C. #Achievements I edited the information of a professional soccer team from my hometown, Henan Province, China. the content I corrected is under the title ”Achievements, league”. Before I edit, it is said ” Jia B” league, which may confuse the english reader because they probably don’t know what ”Jia B” is. Actually, it simply means that it is the second level soccer league, not the top one. I also edited the one below it from ” Division 3 league” to ” Third Tier league”. The reason why I did this? Because I am a huge fan of this team and I don’t want the English introduction to confuse others. topetra (2011-11-29 23:15:26) I edited a singer the page of ”Kana Nishino ” and the link : http://en.wikipedia.org/wiki/Kana Nishino #Life and career As being a j-pop lover, I would like more people to know how artist create their songs, so I have added how Nishino had wrote songs and a little bit of her past experiences: Since her debut, she had done most of the lyrics herself. She had no experience of wirting lyrics before until her debut, debut single ”I” Coupling ”Just a friend” was
the ﬁrst lyricist to work. Her writings are mostly from experiences or heard from friends, and deliberation rewritten many times. Everytime after hearing some songs,the listenings will become visible color which is like color, the movie phrase ,and have ﬁnally turn into script and act like ﬁlmmaking. digitalworldme (2011-11-30 01:47:02) I edited a Chinese American Comedian Joe Wong page.http://en.wikipedia.org/wiki/Joe Wong %28comedian %29 I added the awards that he won : ” Finalist at the Boston International Comedy and Film Festival (May 2003) Best Short Film award at the Cambridge Fringe Fest (March 2003) Six-time winner of Standup Comedy Contest at the Lizard Lounge in Cambridge, MA” This is a new information for the Comedian and it was previously miss on his Wikipedia page so it is important to add this information. luipuichun (2011-11-30 02:01:54) I edited Professor Joshua Gans page. http://en.wikipedia.org/wiki/Joshua Gans I added ”In 2011, Gans sold his iPhone4 on ebay in class for $450.” This is a new information and I put it up just to let people know how great Professor Gans is. Please give me a thumb up hahah Iwona Gwozdz (@voncs) (2011-11-30 11:04:34) I added a link for ”business design” on the Rotman School of Management wiki page (http://en.wikipedia.org/w/index.php?title=Rotman School of Management &action=history). Wikipedia made me jump through some loops before I could do so: registering for an account, text insert veriﬁcations, etc. I made the change because I found no information on Rotman’s Designworks or its initiatives in this area. Surprisingly beyond the statement ”The school has developed a curriculum built around Martin’s concepts of Integrative thinking and Business Design.” there was no information on wiki in regards to this. Alex Semine (2011-11-30 14:24:15) It’s still up, even after the 2 ’lurkers’ who keep modifying the page, they didn’t undo my change! I always thought 850 Mil was because of Bookings, not Consolidated revenue. Contributing to society ftw! hisashihamada (2011-11-30 15:15:02) I edited a mobile Internet service ”i-mode” on wiki. http://en.wikipedia.org/wiki/I-mode I’ve updated the number of subscribers, the server system location and so on because the information was not renewed at least for 5 years and more importantly I was in charge of this service before coming to Rotman. Eugene Oulman (2011-12-01 00:08:54) I’ve added to the entry on Phil Kessel, Toronto Maple Leafs leading scorer in 2011-2012 season. http://en.wikipedia.org/wiki/Phil Kessel #Toronto Maple Leafs I’ve added a line to the Kessel’s history in Toronto - ”As of November 30, 2011 Kessel led the NHL in regular season goals and points for 2011-2012 season”. The article already lists important milestones, and so I’ve added a piece of factual information to the record. I am very curious as to whether it will be removed. jytsao (2011-12-01 03:45:37) I’ve updated the entry ”List of Claymore Chapters” (http://en.wikipedia.org/wiki/List of Claymore chapters) Claymore is manga that’s published once a month in Japan. I’ve updated the list of chapters with the most recent one, Chapter 120. The screenshot of what it looked like before my edit is: http://imageshack.us/photo/my-images/822/claymorebefore.jpg And now it looks like: http://imageshack.us/photo/my-images/607/claymoreafter.jpg/ I edited this article because I’m sure that fans of Claymore would appreciate knowing that a new chapter has come out...that is, if they didn’t know it already! Because this manga is somewhat mainstream in Japan, I’ was surprised that no one had updated the entry yet.
Sharing and Google+ (2011-11-28 18:29)
You will recall the point from my lecture that Google+ is positioning itself to limit sharing. This ad from them makes the point well ... [youtube http://www.youtube.com/watch?v=sVf3UaZePC8]
Taylor O (2011-11-29 11:33:43) I agree. Facebook is a lot of information, too soon too fast for people just met. Learning about someone and why they believe what they believe should be more gradual through conversation that arrives naturally. For example, in a job interview would you discuss your entire thought evolution of your entire life on religion, politics and sex? If you would, more power to you but I’d rather take it slow so I have a chance to contextualize it for them and connect through understanding even if there’s disagreement. Full sharing sets up conﬂict immediately. That said, there’s a lot to be said for sharing the true you and not hiding what you truly value just to be liked. I’m just an advocate of introducing it more organically. For this reason, I even split my twitter accounts in to business (@BusinessTaylor) and personal (gotta ask me) ;) avitania (2011-11-29 11:15:28) It’s not really about the occasional drunk pic – or for the occasional goofy pic of, oh, I don’t know, a certain plastic crown we might have found in the trash. ;) At this point in my life, I have several categories of friends: 1. The professional friends, with whom I mostly share industry-related content and news 2. The school friends, with whom I share some social things but mostly school-related things 3. Personal friends. for whom I share things that are of our common interest. Even though none of the content I’m sharing is particularly sensitive or private, what I do share is tailored to the audience reading it. After all, my school friends likely have no interest in the weird music I listen to and aren’t interested in my posts about tours; likewise, my personal friends most likely don’t have any interest in the social media/pervasive communications things that I post to my professional feed. These things are easier to control in G+ than on Facebook, but I think diﬀerent social/sharing levels are really where things are evolving. The social space is becoming less about ”Me sharing EVERYTHING” and moving towards ”Me sharing what’s relevant for each type of follower”. tanvishetty (2011-11-29 10:54:17) This whole organising your friends concept is a little bizarre for me. Both Facebook and google+ have one thing in common, and that is the need for its users to categorise people. Google+ simply puts more emphasis on the categorisation. But the main reason that i don’t use either of these two sites is because I’m not really quite sure how to categorise people. It’s something i do subconsciously in my head, and I’m not sure this categorisation process can really take place through a bunch of rules. So when FB gives me a bunch of privacy controls, that control who can see my information, i’m not quite sure what to do. What i’m trying to say is that, what sites such as facebook and google+ have done is try to essentially break down your friends into groups. But in my head, these group of friends can’t be given a label. The relationship that i have with them can’t necessarily be described in one word. Whether that word be ”friend”, ”acquaintance” , ”creeper” or a ”maybe”. fredzhu (2011-11-28 19:41:27) This is preciously why I would use Google+ but not Facebook. I have no secrets to hide but once in a while I’d like to control to whom I release certain information. Information wants to be free but there are consequences if information ﬂow is not controlled in all circumstances. myraelbayoumi (2011-11-28 20:17:40) Here’s the thing... people don’t like managing all of this...
paulsmerchanski (2011-11-28 20:24:46) Agreed. Here’s some support http://techcrunch.com/2011/11/28/new-goo gle-ad-shows-oﬀ-the-social-networks-biggest-problem/ fredzhu (2011-11-28 20:45:12) Those who don’t like to manage their info ﬂow can choose Facebook. Google oﬀers a choice, a good one in my view. It’s true that managing info ﬂow in Google+ requires some eﬀort but so does human relationship in real life. Karan Mehta (2011-11-28 21:06:50) There are deﬁnitely pros and cons to each side of the argument - I believe both platforms can happily co-exist and cater to their respective segments of the population :). Google+ has tons of potential still with the imperative integration of their other tools that everyone uses. markbelcarz (2011-11-28 21:19:58) Of course, you can simply have just one large circle with everyone in it, to eliminate any management issues. garyyip1985 (2011-11-28 21:23:56) I wonder if all of this is really necessary. Do we really need this? I mean, are people really sharing conﬁdential information online? I can understand the odd party/drunk pic being slightly embarrassing in a professional setting, but what else are people sharing?? Will this open up the ﬂoodgates to real sensitive, private information to be uploaded online...? Also, how will people react when they ﬁnd out they’ve been downgraded by one of their friends? ie. One day I see all the pics you’ve posted, and the other day I don’t. Would this increase social tension? fredzhu (2011-11-28 21:42:14) I don’t think people should be encouraged to share conﬁdential information on any of the social networks. However, sometimes we would want to have an ability to control certain information (e.g. avoid sharing private life with your co-workers), or to re-frame same information diﬀerently depending on audience (e.g. the details about your wedding). People may, if they choose, tell others the same info. But the option (or the ability) to control the release of information is quite important. kumarsidhartha (2011-11-28 23:38:56) I completely agree with Karan. If Google+ is going to survive without allowing the level of sharing that Facebook has how is going to acquire a large enough user base? The only way I can see this happening is by creating a tight knit integration with other google services such as google music, search, books, youtube to make google + a focal point of sharing content through other google services. And if they get it right this should create a 2-sided network eﬀect by boosting google+ membership and also consumption of other google services as well. maryammoshiri (2011-11-28 23:59:02) I think it is diﬃcult to get this to become popular when most people have already set this up on facebook. If you want to do this on google +, you have to add your friends again and maintain it. Therefore, facebook had the ﬁrst mover advantage here. I don’t see enough of a diﬀerence to want to post on google +, as opposed to facebook which you have already invested time in. jessicaanania (2011-11-29 00:02:09) I think what is interesting is that Google+ has chosen to position itself this way in order to attract those people like me who are not a fan of Facebook. However the reason I love Google+ has nothing to do with information control, although I do REALLY appreciate it, what I love about Google+ is the ability to control everything from one interface. I have my email, my documents, my pictures ( Google+ makes sharing pictures with individual people through picasa super easy, ). Facebook does not facilitate the transfer of such item in the same manner, I actually think Google+
might being marketed wrong. markbelcarz (2011-11-29 00:06:00) I guess that is true if you already spent the time to set this up on Facebook. I, for one, have not sifted through all my friends to sort them into groups once this feature was added. I’m not even sure how to do it. I think Google+ achieved a nice clean way of doing it right from the get-go. I think there are deﬁnitely advantages, such as cleaner design, when you aren’t ﬁrst mover and don’t have to worry about backwards compatibility. You do, however, suﬀer from the high switching costs needed to port your entire network and convince them that the new platform is better. maryammoshiri (2011-11-29 00:06:41) Interesting point. I can see the ease of use with other google+ services, but what i see that hinders this is that in order for google+ to work, others must be signed up as well. If others are not, you cannot share with them. This is not the case with facebook. It is becoming more and more popular with time. The majority of my friends have facebook; this is not the same with google+. maryammoshiri (2011-11-29 00:08:56) Good point you raise, Mark. If you haven’t organized your facebook friends, then google+ does provide an easier and cleaner way to do this. My question then becomes, if you didn’t do this with facebook, what are the chances that you will do this with google+? You could decide to start doing this, but what about the portion of the population that doesn’t. How does google+ diﬀer from facebook in that case? Karan Mehta (2011-11-29 00:09:40) Yes, exactly! That’s what I was getting at with the integration of other services. It has a lot of potential assuming the integration with everything else stays smooth (I don’t see why not). It’s also interesting that celebrities are slowwwwly starting to get onto Google+ primarily to test out the Hangout feature, and have had an amazing experience. I see Google+ as an extension of the Google suite of products, not a standalone social network. jessicaanania (2011-11-29 00:11:54) I agree sorting your friends on facebook is a nightmare! fredzhu (2011-11-29 00:13:01) Where Google+ is now is not necessarily where it could be in the future. Let’s be reminded that Google+ is new and not too many people know about it. It also took a while for people to accept Facebook. So if we look forward, and assuming Google+ continues to improve itself, its user base will grow. maryammoshiri (2011-11-29 00:15:30) I agree, the bar will grow. I just think the switching costs are high at this point. I have google+ but i use facebook much more often. Without the majority of my friends on google+, it becomes useless for me. jessicaanania (2011-11-29 00:17:06) I could not agree more. I don’t see Google+ as a social media alone. What will be interesting to see is with the growth in the Android market, how Google+ will do. Will it become the medium of choice to organize a person’s ’life’ markbelcarz (2011-11-29 00:18:05) In my case, its not that I didn’t want to do it with Facebook, it’s just that the option wasn’t available initially so I slowly lost touch with it and never bothered to go sort through my list of friends. This new option allows me to build up my network from scratch again. Let’s face it, how many people have a personal relationship with the hundreds of Facebook friends they have. It does make sense to have the friends divided, so information can be shared appropriately.
Karan Mehta (2011-11-29 00:23:09) Deﬁnitely will be interesting! There are rumours ﬂoating around today about a potential Facebook IPO in early-mid next year, with them wanting to raise $10B and thus valuing them at around $100B. That is just RIDICULOUS. nikhilmahendra (2011-11-29 09:11:01) I agree with Kumar, Google+ value proposition is not only selective network building but also a tighter integration of Google s services between Google+ users. I think that this is huge driver that would be able to oﬀset the negative eﬀects of positioning itself as a limited sharing social media platform. I believe that one of the bigger agenda s for Google+ is promoting and integrating its other services such as Youtube, Google music through its very own social media. hank008 (2011-11-29 12:50:28) The Google+ users can easily import contact from other social platforms, like Yahoo! and Hotmail, but to import from Facebook is way more complicated. (good news are they may overlap) Almost everyone has his/her Facebook account and it has been operated for long times. Moreover, people s major social circles would not signiﬁcantly change, and Facebook owns them all. (First mover advantage) Thus we say, it is suﬀering for users to restart a similar social network (switch cost is too high). Certainly users can try to set feet in new circles (have diﬀerent experiences, or get new information), but in most cases these circles are not dominated. (those people in circles may have the same identities, interests as you, but they are not your closest friends somehow (or we say you do not see each other in the real life) To manage contacts is also tiring. As we see in the vedio, users need to move one person from here to there. That is what they say The right people, in just the right place , but it is time-consuming. ( only has one person in vedio, imagine some users have a lot of contacts and do these movements all the times ) Lastly, I would like to say most people have been spent too much time on social network platforms, the idea of devoloping a new one itself may not be wise, because at this point, it is better to do the substraction instead. elyte18 (2011-11-29 13:04:33) I think it’s really interesting that Google has actually bought airtime for one of their services. I have never seen any other Google ad on TV before this one, which coincidentally I saw last night. While the commercial is cute and shows what diﬀerentiates Google+ from the other social networks, I would have to agree with Myra - the need to constantly monitor circles, while initially a beneﬁt, would just become a bother over time. Facebook now has lists that divide contacts into groups which detracts value from Google+ since people dont need to move to a new platform. However, if they can increase their value proposition over time we may see a shift of (at least) Google users embracing the service. We should remember, there was a time where MySpace was the big name in social networks.... sangwaic (2011-11-29 15:30:05) To the point about limiting sharing, I believe that in itself is not not going to make or break Google+’s fortunes. There’s a huge network eﬀect in favor of Facebook right now which cannot be overcome by merely providing more privacy through limited sharing (assuming that is what a substantial portion of the consumer base wants). Google needs to leverage its network eﬀects in email, photos sharing and maps etc. to build an equally popular social media network and then maybe its superior privacy settings will be better appreciated. Taylor O (2011-11-29 15:44:38) @Elyte great point. When Robert Wong, Executive Creative Director at Google came to the Design Thinkers conference here in Toronto this month he made it a point to reiterate the Google philosophy of focusing mostly on the products and letting them tell their stories more naturally. The only exception being the super bowl ad of the Google search stories we mentioned in the class but that ad was mostly created just by a couple of young engineers. Google realizes how much is at stake with the future of search being social and failure really isn’t an option and at the same time recognizes their failure in achieving traction quickly enough. Timing wise, had they come up in when dissatis-
faction with Facebook and privacy issues was at it’s peak it would have been a huge boon but now I think it’s a bit lukewarm. jongsukjosephshin (2011-11-29 17:04:00) This is good for marketing. Interest Segments are clearly divided and Google’s algorithm can identify target markets more speciﬁcally (i’m not sure about privacy laws, but I write an email on Gmail and get the relevant advertisement). Assuming this takes oﬀ, Google allows companies to directly target their audiences with more relevancy. Limited sharing is not always negative. The more connections on Facebook, the more clutter one has to deal with. Moreover, Referring to Clay Shirkey’s problem, sensitive information sharing can be easily adjusted on Google+. In fact, this method of dividing groups of friendship will take more mental energy. But it will also promote more relevant sharing among various groups, hence may foster higher communication. Just a thought... Alex Semine (2011-11-29 17:22:51) I love Google ads.. They’re some of the best online, I still remember Google Search Stories with the Paris Love one, it was really well done, and emotional. They prompt imagination if anything. Agreed to the above with ’people don’t want to manage this’, but maybe that’s the point! As can be seen in the video, she doesn’t have that many connections, and that’s GOOD! Personally, I’ve been deleting about 2 friends per day on Facebook who I realised I don’t even remember the names of. I’m down from about 500 a month ago to less than 400! I’m going to continue ’trimming the social fat’ until I get down to about 200-300 connections, which is much more realistic. Martin W. (2011-11-29 18:29:29) I’m so lazy that Google+ requires too much work for me to get started. I probably *should* care about privacy and all of that, but I’ve grown up on the internet since I was a kid doing such wild stuﬀ and nobody has said anything that I just don’t care. If a picture of my bare ass from a crazy night of drunken debauchery shows up on the internet, so be it (it has, and much worse has as well). I have dropped so many F bombs online and said such stupid nonsense over the years and gotten into so many ﬂame wars that I’ve lost count. Nobody has said anything, not even my employers, managers and the like who have me on FB, etc. Maybe if I was running for president or something I should care, but that ship has sailed. I’m not that important. In short, the damage has been done. If I’m screwed, I’m screwed. Playing with circles isn’t going to ﬁx that for me. kelvinchunkileung (2011-11-29 18:52:26) In my opinion, i dislike Google+ because i have to do a bunch of set up in order to let who can view my proﬁles and who is in my ”circle of love”. This is hectic to me and i like Facebook ”one-clink then you are good to go” set up. Another good thing for Facebook is that it automatically cateogrize people into diﬀerent group according to their ”networks” or ”relationship status to you (say family, school buddies, etc.). This has almost the same functions as Google+, and so why would i bother to spend time on choosing WHO and WHICH to put into my circle? Last but not least, Facebook is still the nom nowadays so FACEBOOK wins ! anchenyi (2011-11-29 22:53:54) I really doubt that Google+ can be successful. I mean, privacy and conﬁdentiality are important but who would take the initiative to share the stuﬀ that he/she doesn’t want people to know? And, nowadays network website like Facebook start paying attention on privacy protection and you can control whom you want your information share with, what is the point with those diﬀerent friends circles? Same as Facebook, you will still have many strangers trying to add you to friends, which circle are you going to put them? If you refuse them, trust me you can do the same thing on Facebook so that you won’t have so many ”stranger friends”. kamaljeetsingh (2011-11-29 23:33:30) It is no doubt a good initiative for people who want to control what they want to share and with whom. I believe there is a market for such users but my concern is that Google cannot attract and retain net users based on this
factor alone. It should concentrate more on the integrative factor that comes in by using other Google services and platforms. Moreover as mentioned above, Facebook and other social networking sites have already enhanced their privacy setting. So I don’t see a huge market shift as of now. At least not on this factor!! Taylor O (2011-11-29 23:54:45) I agree that Google should focus more on integration with the rest of the powerful Google Suite. That said, while Facebook has added smart lists and other features for selected sharing, it’s not intuitive. While I love that new lists feature, even used it to merge my self-made Rotman list with the Smart one Facebook made with an algorithm.... there’s no way in h*ll this passes the mom test. Google has made this part almost fun, dropping people in to circles is almost like a game and quite enjoyable. It’s also more obvious when sharing than hidden in a tiny menu dropdown. It seems people use Facebook, don’t understand the privacy and resent it later. I think Google makes for a more pleasant experience in sharing in this respect at least. vbork (2011-11-29 23:59:37) As much as I love organizing my facebook friends into groups... digitalworldme (2011-11-30 02:12:36) Google + provides a good information sharing option for people, they can choose the certain group to share the information and receive news from them. For the groups that they don’t want to share some personal information or receive mass news feed from some social network crazy fans, Google+ makes the news massage management much easier than Facebook, they don’t have to delete friends or spend long time doing the privacy setting. It is a better way to organize the info ﬂow and it is more like real life situation as we don’t want to hear too much news from people that we don’t know very well or people we barely talk to each other. The info ﬂow feature will get more accepted by people. Iwona Gwozdz (@voncs) (2011-11-30 11:11:49) Does this just require training on the user’s part? I wonder if users would become accustomed to this or whether it’ll just become a hassle as one’s contact list grows. We have to keep in mind we aren’t just adding our friends but also people we just want to follow, in which case Google+ is like a bookmark. hisashihamada (2011-11-30 15:34:44) I also agree with Kamal and Taylor. Though Google+ circles’ UI looks much better than Facebook’s on this video, only this function would not encourage FB users to switch. They should integrate Google+ with their strong user based platforms such as search engine, maps, and You Tube, leveraging network eﬀects adriennefriesen (2011-11-30 16:12:35) I think the video is great from a marketing standpoint because it clearly explains the circle functionality of Google+, which has kept some people from adopting it because it has just seemed to vague. From a social platform standpoint, I don’t ﬁnd Google+ to be nearly as user friendly as Facebook because of the added eﬀort of managing diﬀerent circles. Facebook does this for you by creating networks based on school, geography, etc. I can see how Google+ would appeal to someone who feels weary about sharing all their info on Facebook, but I don’t think there are enough people that have that mindset for Google+ to rely on it. Eugene Oulman (2011-12-01 00:00:32) I ﬁnd the interface a little cumbersome ... there’s deﬁnitely a bit of overhead in managing the account. bharatbhardwaj (2011-12-01 01:06:16) completely agree...it just gives one more control over what they share and what they dont. moreover it just makes relationships more personal i believe which is something facebook lacks
roger678 (2011-12-01 15:25:08) Sharing is good for a sicocial network, it enhances interactions between users/friends thus creat more value for the users. However, since we are in information exploding era, we often ﬁnd it hard to manage the huge amout of information. In the traditoinal social network system like facebook, information will shared between you and another user if you allow him/her to be” a friend” with you on facebook. You’ll see the shared information on facebook about him/her even if you don’t care about him/her too much. Which means, you’ll get many useless and meaningless information on face, unless u change some settings. However, in Google+, there’s no such a thing called ”friendship”. U only need to ”follow” the people you want to follow. What’s more, as is shown in the video, Google+ makes it easier to classify people who u follow into diﬀerent categories. It helps users to categorise people who common interests with them. For example, the cars owners, the clubbers and so on. This funtion helps uers to get only the information that they are interested in. This is an advantage of Google+’s srategy. connietai (2011-12-01 16:03:37) I’m not sure how I feel about google+. I was really excited when it ﬁrst launched because it seemed like such a good idea and a good ’ﬁx’ to all of the privacy issues that Facebook has. However after hearing Joshua give some insightful feedback during class the other day, I realize that network eﬀects makes a big diﬀerence on whether a platform will be successful (i.e. google plus limits sharing and thus network eﬀects are not as great as FB). Although I have a google+ account and I love the interface, I’m not motivated to go on it too much because none of my friends are congregating on google+. It will be interesting to see whether google+ ends up being successful or whether it will have the same fate as google wave! Siamak Kolahi (2011-12-01 19:49:08) I agree Maryam. If you are already heavily invested in Facebook friend arrangements, you really need a good reason to spend same time on doing this somewhere else as well. Plus not only you, but your friends and circles should have done that as well, to enable you get to the same level of privacy. This in turn increases collective switching costs for users, something Google+ and its interface havent address (yet) Avi (2011-12-01 20:07:03) I think Circle is the best feature of Google+. Pretty simple and intuitive. Hmmm makes me wonder iPod click wheel might have been the inspiration :) Siamak Kolahi (2011-12-01 20:08:14) Google+ fans argue that Google+ has ramped up its user base much more quickly than Facebook back in times: http://www.buzzom.com/2011/07/growth-of-google-plus-vs-twitter-vs-fa cebook-stat/ What they are missing though, I would argue, is that this is not the same crowd Facebook was attracting in 2007. User awareness, expectations and reliance on social media is totally in a next level now than the time Facebook appeared. Now everybody expect his/her friends to be in some social network site, and every company to have a page on Facebook. Actually some of the rush to Google+ are Facebook addicts opening account in latest Google oﬀering. So I believe Google+ is just building on top of such social media hype, and I actually dont think they are doing a good job on convincing people the switching cost Siamak Kolahi (2011-12-01 20:12:48) I am wondering (just as a joke maybe!) if this is a legitimate business driver for Google. I mean using the appeal of integrated Google services to attract people to Google+ does not prove Google+ superiority of + over facebook. Microsoft has been (and still is) dealing with antitrust cases for doing similar with IE back in 90s. You know, just sayin...!
Siamak Kolahi (2011-12-01 20:23:26) Exactly Connie. What you get in a social media like that, is not look and feel, and I would say, is not even some privacy bug ﬁxes based on a retrospective insight into your competition. What you get is the entire network eﬀect of your circles. A new fancy (Google-style) look and feel with some privacy consideration ﬁxes is something you happily give away in favor of a huge community of friends you have already built-up, unless you have good reasons. We are here to share after all, not to constantly fear for privacy and play ”hide and seek” with our associates! Siamak Kolahi (2011-12-01 20:59:37) I want to take the opportunity and ask a question arose to me: Which one is harder to engineer and manage in social media settings? Inbound ﬂow of information or outbound ﬂow? In order to be qualiﬁed as an information overload (preceding privacy issues), which one is more challenging to address? My crack on this is that the problem of managing outﬂow of information to your circles, even if interfaces are unintuitive and hard-to-use, is still possible to be solved deterministically. You can have an interface to choose the exact people to share a certain information with (Facebook has one now). This to me sounds like solving the problem in a sound and safe manner. However its always hard to ﬁnd the optimum level of inbound information sharing. You can restrict the level of information you are willing to receive from certain individuals. But its easy to over-do it, and hence loose some valueable information they might share in future. You dont know what you can expect from people, and that makes it hard to manage through ﬁlters. Even the most comprehensive and ﬂexible interfaces can not guarantee you ﬁnding the optimum level of restriction on information inﬂow. This second problem, I would then argue, is undeterminstic in its nature, and hence much harder to solve and engineer for.
Last Day (Thurs 2nd) (2011-11-30 10:18)
Thursday, 2nd December is the last day for online participation assessment. I’ve enjoyed the comments and are somewhat sad to see it go. If you want to keep up with issues and also keep on commenting, head over to Digitopoly.
fredzhu (2011-11-30 10:24:41) Will do! I enjoyed your class and the on-line discussions. It’s a great learning experience. jongsukjosephshin (2011-11-30 17:48:22) Professor Gans, this experiment rocked. It was informative, multi-dimensional, and up-to-date. If you won’t mind, I’ll make some comments on your HBS blog and Digitopoly. I wish that some other courses would also adopt this method of communicating. It was amazing. Karan Mehta (2011-11-30 20:24:45) Likewise! Thank you for going beyond the norm and experimenting! It deﬁnitely enriched the experience and kept things relevant. There are numerous beneﬁts to tracking participation in this format. Alex Semine (2011-11-30 21:46:44) Quite seriously, this was probably my favourite course I’ve ever taken so far in University! Eugene Oulman (2011-11-30 23:57:19) thanks Joshua ... great course.
hank008 (2011-12-01 10:27:38) Lectures @ rotman + forums on the internet...Will that be a trend? It is deﬁnitely a good combination to learn knowledge. We can raise our voices (share information and opinions) here. To some extent, it can be seen as the second classroom. Time to say bye, and thanks! connietai (2011-12-01 16:06:01) I agree - this was a great way to do class participation! Thanks Joshua for a great class! natalka81 (2011-12-01 21:51:57) thank you! I really enjoyed this course!
BlogBook v0.4, EX 2ε & GNU/Linux. http://www.blogbooker.com
Edited: December 2, 2011