Wednesday, October 24, 2012

Maybe print media is not comparable with online media

The definition of “good” could be changed in different times and places. When disruptive technologies appeared, the definition of good could have a brand new meaning. Therefore when we find the MP3 effect was emerged from many areas, maybe the new product is not an extension from any existing product, but a totally new product with a new function. Therefore, people do not change their requirements of the quality, they just have different requirements to different products. Although print media and online media both provide news to the audience, however, people could have different mindset to consume these two media. Just like sometimes we want to eat ramen noodles, even though we can have steak without worry the deficiency of money.

"Online news is an inferior good!" So, less gratifications?

It is said that inferior goods are not of poorer quality than other goods, but rather they are simply goods that people consume less when they have more income. In other words, inferiority is related to affordability rather than the quality of the good. Inferior goods are affordable and adequately fulfill their purpose, but as more costly substitutes that offer more pleasure become available owing to income increase, the use of the inferior goods diminishes.

From the perspective of “adequately fulfill purpose” or “offer more pleasure,” it seems to be associated with the theory of “uses and gratifications” whether a good is an inferior or normal one. In other words, normal goods should offer consumers more pleasure than inferior goods do. That’s because normal goods displace inferior goods when people have enough income to purchase normal goods. In this context, if the argument that while online news is an inferior good, the print newspaper is a normal good is correct, the print news media should more adequately gratify audience’ needs and desire. Does this make sense?

Some studies argue that “from the mostly comparable levels of perceived news gratifications obtained between offline and online news consumption, it is clear that these two news outlets are supplementary in their ability to serve the audience”(Uses and gratifications of online and offline news: New wine in an old bottle).
According to other findings, "news media substitution does not depend on functional equivalence of media in providing gratifications and gratification opportunities or types of content. Instead, media use depends on habit and media accessibility" (Are news media substitutes? Gratifications, contents, and uses).


Tuesday, October 23, 2012

Can you really compare print media and real-time media "all things being equal"?

I think the inferior good concept is a really enlightening way to think of the true value people place on various media forms, but I also think there's an inherent weakness there. Namely, in some cases you can't make a ceteris paribus comparison, and trying to do so cancels out one of digital media's biggest strengths -- timeliness. This isn't as big of a problem with the digital media landscape at the time Iris did her research as it might be if you tried to repeat that research now.

For example, if I asked people whether they preferred news on a newspaper or Twitter, if they had the same content at the same price, that would be kind of a ridiculous question, because it's simply not possible for them to have the same content. A major distinguishing feature (perhaps the major distinguishing feature) of Twitter is the fact that its content is always coming from just a few minutes or even seconds ago. You couldn't possibly produce a newspaper with that attribute to its content.

So in that case, asking the question of preference with the same content takes away the biggest strength of the digital media platform, which is that its immediacy indelibly shapes its content. If you ask me if I'd rather have a newspaper or have Twitter minus the immediacy (which is what ceterus paribus would be asking), I'd take the newspaper in a heartbeat. But in almost every actual situation, I'd take Twitter in a heartbeat. The ceterus paribus aspect of the inferior good comparison is necessary in some ways, but it's flawed when a medium's form is so inextricably linked to its content that its content can't be placed on another medium.

Inconsistency between perceptual traits of sensory and cognitive rationality

I cannot forget the moment at which I could download unlimited music files from the Napster without paying any money for those in 2000. There was a debate at that time whether music in MP3 format could be shared with others through a web host at no cost. For a while, people have taken for granted free consumption of music files, and there have been inertia to resist paying for this music files which anyone could get from many websites for free. There are still many file sharing websites now, but the perception that MP3 music files are free has changed dramatically. People are willing to pay for their music files on iTunes. This example shows that consumer behavior can change over time.

The article about ‘online news is a ramen noodle’ indicates how human behavior is hardly changed. In spite of the fact that information delivered both on print and website of traditional newspaper are almost identical, people are reluctant to pay for online news contents, which have been considered as free stuffs. So, their response brings a question of whether medium matters in their decision making. The survey results showed that people prefer medium to print, which is contrary to the recent trend of declining newspaper readership. I assume that there is an unresolved issue to be explained why strong preference to the print does not stop declining newspaper readership.

I assume that it is because preference to the print is a perceptual trait of human behavior.  People have been 
accustomed to read print version of papers for a long time. They do not forget the feeling of flipping pages. Since technology is an extension of human sensory, print medium has been a part of our sensory, which is optimized to read news. And, unconsciously, our sensory remembers old time traits. On the other hand, our cognitive rationality forces us not to pay for free news contents. Since nobody is paying for free news, why do we need to pay for the free contents? I believe that there is inconsistency between our cognitive rationality and perceptual trait of sensory.

As music industry claimed a copy right for music, similar action is required for news contents. Those contents are intellectual products of private company. Even though newspapers are devoting themselves for virtue of society, pursuing profits is quite natural for private companies. Therefore, their copy rights should be protected by a law, which will prevent individuals from copying and pasting news contents at their own. If newspapers cannot claim their right for their products, why are they not eligible for government subsidy in exchange with abandonment of copy right? There is no single private company who lays back and takes for granted the violation of their rights. Moreover, it will be fair to compare the willingness to pay for contents between online and print based on the same condition that people need to pay for same contents. It will be interesting to see which medium is chosen from the public.

Inferior goods

I'm interested by the idea that inferior goods are those that are perceived as inferior, for whatever reason. They may not actually be, objectively, inferior, but if they are perceived as inferior, then consumers are willing to pay less for them. I thought about this at the announcement of the new iPad mini today.

The new iPad mini is equal to or worse than its Android-powered competition in the 7-inch tablet market (Kindle Fire HD and Nexus 7). But it costs 65% more than the competition, which is a huge premium for being part of the Apple ecosystem. (And as we have seen, the ecosystem is a huge part of the tablet experience.) But as I thought more about it, I wondered if Apple made the price high as a conscious decision to separate it from those other 7-inch tablets. In other words, this is not a cheapo mini tablet that you are buying just because you can't afford an iPad, this IS an iPad. I wondered if maybe the price itself is part of the perception of quality and superiority. "Oh, it's more expensive, it must be better."

I don't think this would work for news products, mostly because of what (diffusion guru) Rogers calls observability. Nobody really sees you reading "fancy" news the way they could see your fancy iPad every time you conspicuously whip it out of its case. So the perception of superior/inferior rests entirely on personal preference, which could be based on any number of factors. I think it would be fun to develop a survey that would try to determine which factors of a person's experience with a news product make up their preference for it. I'm sure work has been done in this area already, but the news product landscape is changing so quickly that there's always room for an update.

Monday, October 22, 2012

The tablet presentation

Don't miss it!


Only disruptive thinking can handle disruptive technologies

Traditional media, especially print media, has been suffered from the challenge of new media more than ten years, however, just like the examples in the “Disruptive Technologies: Catching the Wave”, the more successful companies and more experienced managers could be more difficult to learn the disruptive technologies and would lose their predominance inevitably in the end. Although print media recognized that they had to accomodate to the communication technologies, and must take some measures, however, most of the executors were the same people who had been well trained to be professionals in print media and very proud of being newspapermen, therefore most of the “digitalization” of print media merely put the news from paper to internet.

Before the bursted of internet bubble in 2000, I had been worked in a new internet media, most of the managerial level, including the CEO and chief editor were very senior newspapermen from a well-known print media in Taiwan. The supreme rule of this new internet media was to create a newspaper-like media in the internet, because the target  audience of this new media still focused on the newspaper readers, so we had the masthead, dateline and nameplate in the internet media. Lacking of the sense and intention to understand the new media technologies might explain why most of the leading internet media are not the traditional media.

Sunday, October 21, 2012

Disruptive Innovation & Creative Destruction

While sustaining innovation does not create new market but just evolves existing value networks, disruptive innovation or disruptive technology - the former is now preferred - creates a new market and value networks. However, as Bower and Christensen mentioned, only few companies may be able to overcome the handicaps of size or success when they are confronted with disruptive technologies. So, they “kindly” offer several tips for spotting and cultivating disruptive technologies, such as “determine whether the technology is disruptive or sustaining.” That sounds great, but how to do so? It doesn't seem to be so easy to discern in advance what the disruptive technologies are. I think, thus, there should be first a change in “mental model”, for instance, from the convergent thinking to divergent thinking. For that fundamental change in existing companies not in start-up firms, I’d like to rely on the concept of creative destruction

As describing capitalism as the perennial gale of creative destruction, Schumpeter argues that “… the opening up of new markets, foreign or domestic, and the organizational development from the craft shop to such concerns as U.S. Steel illustrate the same process of industrial mutation—if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism …”

It seems to me that the perpetuity of capitalism itself is based on disruptive innovation because it is the “free market’s messy way of delivering progress.” It is, thus, sometimes said that the CEO (Chief Executive Officer) in the free market industry should be the CDO (Chief Destruction Officer).

The end of commodity journalism

According to a Bloomberg Businessweek’s article, an average life span for a multinational company – Fortune 500 or its equivalent is between 40 and 50 years. It is not surprising to witness that corporations have their own life expectancy and physical cycles. Corporations die off after having failed to adapt themselves to new environment, which is often affected by technological advancement. Many studies show the failure cases of the leading companies in the market, and point out their failure of adaptation to the cutting edge technology.

However, it is a challenge to decide on whether the companies need to incorporate the new technology into the product lines because technology, itself, does not have any useful meaning to us. For instance, innovative items, such as a robot pet, showed a technological advancement, but they did not succeed in the market. As seen in the case, it is critical for corporations predict the consumer reactions to the new technology. The bankrupted Kodak is a typical example, where it underestimated the audience behavior changes to digital camera.

I wondered why newspapers have struggled upon the arrival of new technology. The newspapers catch the new trends in technology and cover their stories firsthand. But, their resistance to adopt the new technology may be an indication of their lack of understanding of its implications.

On the other hand, the newspapers market may be in the normalized process resembling to that of private companies. I could not find the life expectancy of newspapers, but I assume that the life span for the newspapers is longer than that of the private companies because of its unique market structure. However, competition between newspapers, small or large intensifies in cyberspace, and the life expectancy of the newspapers will naturally cut short. The market structure of the newspapers is changing.

Therefore, I assure that it is time for newspapers to execute a constructive destruction for their survival. As Picard suggested a few options, such as vertical integration and one source multiple use, newspapers need to forgive some elements of their core duty. For instance, people do not seek newspaper reviews on restaurants or movies. Instead, they go to Yelp or Yahoo movie. I believe that newspapers should trim out those they lack the comparative competency. Since audience behavior is changing, newspapers should rapidly respond to the change for the survival in the new environment. The idea of commodity journalism should be terminated, if the newspapers are believed to be private companies. 

Disruptive innovation

"The 300-hundred year old print media industries, however, are highly resistant
to change."-Picard

Ya don't say! I have brought up simular ideas in class. Today we have different ways to digest print media-whether it be looking up newspaper articles on a phone or iPad, or reading/buying books on a Kindle Fire. As long as audiences are accepting these new forms of technologies, advertisers and publishers need to expand and evolve their craft. While we are not at the point where print advertising is dying, it is changing. In UT's creative program, we don't even think or talk or create advertisements for newspapers. When someone in class is talking about a print ad, it is automatically assumed they mean a magazine ad, full color.

I agree with Picard that right now the new technologies aren't a threat, because advertisers and readers haven't switched to new media in large enough quantities. But that could be because we still have that older generation who traditionally have read hard copies of books and newspapers. These people will be least resistant to change.

Harvard's Business school professor Clayton Christensen has a theory called disruptive innovation. The disruptors are the same in every industry, according to the theory. New disruptors enter the market, attract a different audience, with low cost and original content, and take over the original leader.

Three rules in this theory are:

  • Always consider the audience first
  • When times change, change your business
  • Build capabilities for a new world

"Thou shalt not kill...

[especially] the cash cow."

I can understand why the news media would pay attention to Christensen's disruptive technology (beyond the fact that Christensen's consulting firm serves many in the industry), but it remains unclear to me how the concept is useful to the news media, if at all...

1. While presenting a paper related to disruptive technology this summer, a pro-disruptive technology media scholar commented that the value, or essence of disruptive technology lies in the question of "when" -- i.e., it's not about whether the product based on disruptive technology will take over or not, to which its proponents believe unequivocally the answer to be 'yes,' but when it will take over the existing market in a landslide.

Maybe I'm wrong about this, but to me this is precisely where disruptive technology fails because it does not, and cannot predict when it will happen; only that it will happen "someday" and major players in existing markets better be ready when that "someday" arrives. How this is more helpful than, for example, "we better all repent before armageddon comes" is hard to say...

Is it unreasonable to propose that a "when" model is only useful when it actually predicts the "when?"

2. The examples given at the beginning of the article suggests that products based on disruptive technology are likely to replace the precursor; however, there is scant evidence suggesting that the Internet will be 'the' disruptive technology in media. The Internet has brought about sweeping changes in the media landscape since the early 1990s, but all existing media empires are still standing today, and most of them still profit predominately from their traditional products in 2012 (e.g., newspaper, book, music, magazine and movie industries). How much longer must the 'online experiment' on go before media industries recognize that maybe their core value, or 'cash cow,' lies in their traditional product and that this cow may remain healthy and prolific in the foreseeable future?

3. The article suggests that "the disruptive architectures created other important attributes..." (p.45). I agree that the Internet has many internet-specific attributes that appeal to news consumers (e.g., multimedia, immediacy, etc.), but the question is not about how appealing these "disruptive attributes" are, but whether they are "appealing enough" to lead to different viable business models. At least in the newspaper industry, the initial answer seems to be "not appealing enough."