Book review # 3

  

 

 

 

While Chris Anderson provides us with his brilliant insight of “free” approach to boost business, Charlene Li and Josh Bernoff are enlightening us with their fabulous experience and analysis of leveraging groundswell to further develop our business. They two are both great marketing books came off the press in a timely manner to catch up with the new digital environment. As people today are exposed to varies of social networking sites pervasively, needless to say, it is an environmental advantage that we should take to benefit our businesses. <Groundswell> is such an excellent book you should read if you have an intent to acquire a new fancy method of marketing without a high cost. Whether you are new to the social networking tools or have already know some of them, you can gain the very information you need when you complete reading it. It offers theories as well as vivid case studies both dedicate to demonstrate the strategies that you should implement when doing your business. It is a detailed guide-book that you can follow step by step from scratch without incomprehensible.

 

 

The context is organized in a clear style. Two authors divide the content into three main sections:

 

1 what the groundswell is and the introduction of the basic tools you need to understand

 

2 what to do about it

 

3 how to apply it to succeed within your company

 

 

Through the reasonable layouts, you can quickly reach the information which is most to your needs. As both the authors are Forrester researchers, they provide many concrete data helping us to better understand and absorb their analysis and recommendations. For example, the social technographics ladder is such an intuitive graph helping me to gain an overarching view of the social technographics profile of online U.S.adults. Online consumers are divided into six categories: creators, critics, collectors, joiners, spectators and inactive. It Is quite interesting that among all the consumers, only 18% of them are creators, which means only this certain amount of people are publishing a blog, publish web pages, upload videos, write articles or stories and post them. 44% of the online consumers are inactives which means they do none of these activities. It is necessary and crucial to understand this fundamental graph and data as it’s a critical step when it comes to the appropriate selection of social strategy: you need define your customers first, make sure to which category they belong and then can the decision makers take corresponding measures. The bottom line is : you should targeting accurately before shooting, otherwise, things may turn out to be inefficient or even futile.

 

 

Only After locating your customers can you start the next actions which includes five sequential steps: Listen, talk, energize, help and lastly, embrace. ” marketing departments will need to develop new skills to listen, and then respond to, feedback from the groundswell. ” Among those steps which I think most important is the listen part. Without patient listening, you won’t know what the needs of your customers and you cannot draw your solutions. We can only response appropriately after we figure out what the crux is. Then we can start our conversation with rapport. A specific case study is showed in the book presenting how to listen through brand monitoring: the American arm of BMW’s Mini Cooper brand (P89-93). Decentralization is a key feature in the networked world, so we are no longer remain in the traditional method of one-way communication, namely, from the top to the bottom;Instead, an equal conversation is what we advocate here.

 

 

” The transition from shouting to conversation will challenge your marketing department. It’s a fundamental change in attitude.” (p 125)

 

 

A good conversation is always a good start. Marketers should build a solid relationship with their customers through the medium of many social media tools. Why not take the advantage of these already existed media platforms and already formed communities for a free market research? Why not find enthusiast customers and turn them into evangelist? All this magic power can occur in this fertile land of groundswell. Once you can harness the power of your opponent for your own advantage just as playing jujitsu, you can thrive in groundswell.

 

 

 

I think all companies should take action to engage this irreversible trend of “social media marketing” as they are cost-effectiveness and powerful. The book is well written; however, it lacks some content that I was wondering when I started reading it. Besides the well-know brands, I wish they can talk more about the start-ups which may not have sufficient budget for high-cost marketing methods. Does groundswell magic can only work well among big brands or it can also be leveraged by small-scale business? Furthermore, I am also curious about whether it will become the dominant methods of marketing in the future.  

 

 

All in all, <Groundswell> is an outstanding book presenting tons of informative information that could help to guide a social media novice to set out her journey in this fantastic emerging marketing field. The knowledge you gain here is not abstract but practical. I am appreciate the two experts can share their insights as well as their experience and knowledge with us, simplifying and distilling the essence of social media marketing and pave an efficient way for us to follow. There is my favorite quote in the book, “psychic income is free- it’s paid in love, not money.” (161) Sure it is. Nothing could be done if there is no human nature of altruism. I am also appreciate this for its contribution to make all this magic happen.

Citations:

Li, C., & Bernoff, J. (2008). Groundswell: Winning in a world transformed by social technologies. Boston, Mass: Harvard Business Press.

 

 

Reflection week 8

 

Though crowdsourcing has already been there without Internet, its power is underscored by the appearance of Internet. It helps to connect all the scattered human resources behind the Internet in an unprecedented efficient way. In this process, Internet acts as an intermediary that provides a platform for those who has the same interests and ambitions to come together and pursuing their common goals. It is the convenience of the modern social media communication tools that facilitates the realization of  large-scale cooperation among people who are from different countries, races and backgrounds. They can now concentrate on one pure purpose regardless many other distracting factors such as the handling of interpersonal relations or the cost of human resources management. One benefit of this organization mechanism is its efficiency due to the social responsibility. The most obvious example, the content of wikipedia is reviewed by certain people who are keen to maintain it as accurate and unbiased as possible. The amazing thing is, many hard tasks that cannot be tackled before can now be break into many tiny pieces and distributed deftly to the masses who are willing to accomplish them. Crowdsourcing is such a fantasy way to make many creative ideas come true and make the maximum usage of human resources. I hold a positive attitude toward this new approach of HR utilization and development which has an epoch-making significance that distinguish this era from other times.

The YouTube Orchestra Unites at Carnegie Hall is a successful example of crowdsourcing. At first glance, it looks like a newly creative way of forming this fancy orchestra, however, the core method of selecting musician doesn’t change much, the only difference is the technology has made it easier to accomplish this screening process: it becomes more faster and less laborious. The TED Crowdsources Translation also takes advantage of the technology today, the digital network enables the reasonable and optimized distribution of a big task to the right people in an efficient manner which fully highlight and extol the charm of collective action. In sum, the technology is there, many things can be possible as long as you come up with a great idea.

Reflection week 7

 

 

Google’s launch of YouTube Direct is controversial since different individual holds different perspective towards it. I would like to present my opinions upon this debate. For the positive side, this tool offers a cooperative opportunity to citizen journalists and mainstream medias. I think both of them can gain some benefits from this innovative connection. Being exposed on a mainstream media could definitely be an efficient way to increase the content creator’s reputation and popularity. As a consequence, the individual self-realization can be somewhat achieved through the active participation of making news reports with a platform of powerful influence in terms of a relatively wider range of audience. To the side of news organizations, they receive an abundant pool of original news content for sifting and adopting, with the advantages of content diversity and creativity. Compared to the old method of footage collection which is prone to be confined in a certain amount of think tank, You Tube Direct provides media organizations a broader expanse of choice that helps uncover timely and diverse news. Furthermore, this tool can be seem as one of the possible approaches that can be conducive to deal with the chaotic status quo of You Tube videos. At least, it provides a feasible method of distilling that could maximize the utilization of You tube videos rather than leave them in their fates;however, the price is the concession to mainstream values, which at first glance, seems like it may turn the great outcome of social media into vain. Admittedly, it seems conflict with the very nature and spirit of social media, yet I don’t think things go that bad. As far as I am concerned, scale is the only factor that have the privilege to judge whether it goes worse or not. The release of You Tube Direct doesn’t mean all the You Tube video users are keen to join this game. As individuals own different motivations, I bet only a small portion of these users will take part in this competition, namely means it doesn’t possess the power to shake the already existed era spirit of de-centralization.

Book review: The Wealth of Networks

 

 

The Wealth of Networks: How Social Production Transforms Markets and Freedom is an insightful and informative book written by the author: Benkler, Yochai,  a Professor of Yale Law School. This book has a rich and comprehensive content regarding the impact of Internet to many aspects of our society today which including the economic, political and individual autonomy sides. It is a book that worth reading for gaining an in-depth understanding of the current digitally networked information economy of the Internet age: what its contemporary features  that distinct from previous Industrial production economy and how it influences the current society regarding media, freedom and democracy. Benkler accentuates the significance of the shift(from industry economy to digitalized networked economy, market-based production to non-market production) that was made possible by the Internet age, presents us a vivid picture of digitally networked environment through his detailed illustrations and arguments.

 

In his book, Benkler mentions “commons-based peer production” which is “radically  decentralized, collaborative, and non-proprietary; based on sharing resources and outputs among widely distributed, loosely connected individuals who cooperate with each other without relying on either market signals or managerial commands.” He gives some examples like the open source software, such as the GNU/Linux operating system and the Apache webserver to illustrate how this peer production works. In contrast to the coordination under a price system or a managerial structure, the “commons-based peer production” means a group of people effectively produces information goods cooperatively. Wikipedia is also a good and typical example of this production, people are donating their time and creative effort to this site entirely for free with a “meritocratic hierarchy”. It entirely depends on the self-conscious use of open discourse. Behind this human collective actions, there is a motivation which Benkler describes as ” Non-monetary incentives” which has the power to make you stop on the street for a moment to answer a stranger who asks you for the time or directions, or tell a friend a joke or listen to it. Comparatively, in Chris Anderson’s book, he explains these motivations as the phenomenon of “gift economy”: the things we do for each other without charge. The digitally networked environment has moved these motivations online and made this peer-production of information, knowledge and culture happen, which, cannot be so prominent in the previous industrial economy environment. 

 

The author holds a positive attitude towards the social production system although he doesn’t think it can replace the market-based production system:

 

“social production systems—-both peer production of information, knowledge, and culture and sharing of material resources—-can be more efficient than market—-based systems to motivate and allocate both human creative effort and the excess computation, storage, and communications capacity that typify the networked information economy……A society whose institutional ecology permitted social production to thrive would be more productive under these conditions than a society that optimized its institutional environment solely for market-and firm-based production.” (p115, 116)

 

This is where the wealth of networks lies:” we generate substantial amounts of human creativity and mechanical capacity.”  However, according to the author, there is an excessive concern with copyright law which apparently hinders the development of social production. The cost increased by the access to the copyrighted materials limits the creation scope of users. Sure it is, as there is a strong correlation between the prosperous of social production and the easily access of information, how we should tackle the copyright issue is important and necessary if we are willing to embrace this networked information economy. Although we are informed with the drawback of intellectual property restrictions by the author’s brilliant arguments,  it will be more perfect if he can bring in some insights regarding how to figure out a balancing point between the policy makers and the needs of users.

 

One minor shortcoming of this book is some unnecessary repetition of some sentences; it is more than once that you can find some similar ideas in different pages which may incur an illusion that you turned the wrong page. It is kind of redundancy and unnecessary. The paragraphs can be more succinct if those redundant sentences are eliminated.

 

In sum, this book is full of thought-provoking information concerning the impact of Internet to our society. It covers a wide range of topics which are currently contentious. Based on this book, the future of Internet is optimistic for it will  help to improve society democracy and makes it become more egalitarian. Thanks to the advantages of digitally networked economy, there may be a change in the way how we create and exchange information, knowledge, and culture, and that will be, a great value endowed by this Internet age.

 

 

References: Anderson, C. (2009).  Free: The Future of A Radical Price.  New York, Hyperion.

Benkler, Y. (2006).  The Wealth of Networks: How Social Production Transforms Markets and Freedom.  New Haven, Yale University Press.

 

 

 

com 548 Reflection week 6

 

 

 

 

Social media channels as a marketing tool? I had heard about that before, but the conception had been a vague image in my brain for a long time. It is worthwhile to hear some inspiring insights concerning  how conversations on social networking sites can be leveraged as a marketing approach to enhance your business’s branding through our guest speaker Blake Cahill. It seems to me that measuring all this chaos on the Internet is something without clue and necessarily exhaustive. However, Visible Tech not only came up with this idea but also implemented it. Thanks to the social media channels, people’s conversations are retained in the storage rather than vanished in the air. It is can not be said that it is not a gospel for the marketers : they can examine exactly what people are chattering about their products, what an intuitive way to be engaged! Anyway, the idea is simple just like other traditional marketing approaches: listening, learning, engaging, protecting, the difference lies in the ready data for analysis rather than conducting laborious focus groups, surveys, etc. Gee, we are all advanced with times! Nonetheless, the main clients of Visible Tech are big companies, I am just wondering how can small and medium businesses to leverage those social networking channels to improve their competitiveness?

 

Another interesting discussion in this class is to marry two sets of data for monetization—-data mash-ups. It is interesting because it requires people’s potential creativity to come up with new innovations. Data can be visualized and when it connects to other data, there are lots of fun to reveal some invisible relationships in between. Similar to the magic power of permutations and combinations, there can be myriads of variations. What you can do is only limited by your imagination. Data is no long a mess as long as you demonstrating it in an appropriate and relevant way.

 

 

 

 

 

 

 

 

 

 

Reflection week 5

The video〈did you know 4.0> we saw in the class proves once again that this ever-growing digital network is still continuing its expansion in a staggering speed. The world is changing as human beings are now being connected with each other much closer at a vast scope thanks to the blessing of technologies. We can now speak to anyone who holds a cellphone at anytime (except the time people don’t want to be bothered) around the world, the elimination of geographic barriers has provided us such a convenience! Most significantly, those sorts of convenience has helped to create invisible wealth in the midst of masses. This irresistible trend of network growing lends tremendous support  enabling the occurrence of the wealth of networks: cooperative sharing of information. It is cannot be neglected that the small pieces of individual power, if organized collected, will form a new great power that may complete a task that usually cannot be accomplished by small amount of people. Despite people may initially have had this willingness to participate in a large-scale of teamwork, it is impossible to achieve  such vision until the corresponding technology has come of the age. Fortunately, we are now living in this new well networked era that a lot of miracles are awaiting to be created. As the example of SETI@home , people who has a computer can donate their small pieces of computer power to the calculation process without disturbing their routine life, in such a effortless manner, we have no unwillingness to join it since you will become one of the contributors once there is a scientific outcome! Water droplets can be converging to the vast sea, similarly, the accumulation of tiny part will build up a huge resource, especially, we are now in the era of energy-saving: we are promoting wind energy, tidal energy, solar energy, bio energy rather than one-time energy; we are encouraging to recycle our daily necessities such as bags, papers, cans, bottles. Being green and thrift are the main theme of this era, this be in the case, we are welcome to extend this philosophy to the sphere of human resources. Combine those scattered small pieces together instead of ignoring their existence and their potential powers, we’ve already possessed the possibility to reach new marvelling masterpieces. Grasping both technology and human innovations in hands, we can fix as many puzzles as we could with an accelerating speed, the essence here is to deftly transform the unoccupied and detached collective power into one single force that could be dedicated to something meaningful.

Sure, another issue is critical as Benkler discussed in his book, besides the excellent conditions (share and collaborate ideally) people have already been experiencing,  do any information protection policies play a role of hurdle against these wonderful undergoing transformations? Perhaps, the cards should be shuffled to formulate a new balance which can gratify both players who are at-stake.

Reflection week 4

I agree with that one of the barriers preventing amateurs become professionals is due to the high cost of expensive professional equipment. Before the widespread of home video camera, the only way to shoot a film is rely on the bulky and intricate camera equipments, this high barrier to entry does make an amateur harder to become a professional. For instance, a finished product of film requires a significant amount of expenditure on its pre-production and post-production process. Generally speaking, the extravagant cost cannot be afforded by the general public. However, things have been changed these days. Thanks to the deflation of digital world, not only ordinary people can have their own digital cameras, but also can they spend less money year after year to reach higher-performance digital products. The screen image of digital cameras is getting better and better, such as a 1080p camera is sufficient to shoot a short film for uploading to Youtube. We can now shoot with a handy flip camera, transfer files effortlessly and edit them with i movie 9 which is so simple to use that it won’t cost you more than one hour to familiar with its basic functions. Such “low entry barrier” has brought benefits to everyone as every single individual can discover and develop their potential creativity.

 

 

Even though there are still quality distinctions between digital camera and traditional film camera, the image quality of digital camera is enough to meet the requirement of online viewing, as long as you are not a film camera enthusiast and always carping for film texture. In addition, quality isn’t a curial element when judging a video’s popularity, just like Anderson said,” we’ll always choose a”low-quality” video of something we actually want over a” high-quality” video of something we don’t.”All in all, the boundary between amateurs and professionals is blurring. It is not impossible that the amateurs may have the same inspirations and talent just like professionals did, and even, surpass them. 

 

 

What the future will be? Just as Super Bowl extravaganza are being produced not by ad agencies but through “user generated” contests. The world seem to be more diversity than it used to be. To some professions which ever require high entry barriers, once the barrier is vanished, many amateurs may influx, the competitive stage will be no longer dominated by professionals; although they are encountering challenges to their professional authority, on the flip side, it is a good opportunity for the industry to reflect and make improvement. Technology is not a monopoly of a few, its future will certainly flow to the masses. Just like the popularity of mobile phones in developing countries, the ultimate goal of technology is to bring convenience and benefits to the public.

 

 

  

Book review #1

 

 

BOOK REVIEW ON <FREE>

 

 

Overall, <free> is a book worth reading, especially for business people who are looking for some emerging business models that come with the times. <free> provides many different versions of profitable models around free that you and me can take advantage and apply them to one’s start-ups.

 

 

Just as the title the author gave to his book, the whole book has a centerpiece of discussion regarding “free”. This book just could seem as an encyclopedia of “free” that it depicts “free” in such a comprehensive and exhaustive manner: expounding its birth, history and even the further revelation of human inner psychological motivation that facilitate its occurrence. Undeniable, the author has a clear line of narration. From the old conception of “free” that was just a marketing gimmick like the free samples and prizes inside kind of thing to the “free” phenomenon of the digital era which has been endowed with a brand new interpretation to its implication, the outline of the book explicitly offers readers a magnificent landscape of “free” that enlarges their horizon. Additionally, throughout the argument, the author presents abundant anecdotes and examples which are intriguing and fun to read. The content within this book is so informative that you will not regret to open it and begin your journey of acquiring knowledge regarding free; obtaining a thoroughly overview about what has happening now over the entire digital domain. When reading, many of its insights ignite my thinking and open my mind to a deeper comprehension. It is a pleasure when reading since there are a lot of interesting and aptly metaphors the author utilize to deliver his thinking. Besides the merits side, however, there are still some viewpoints that I don’t so agree with. Some arguments may need more evidence as well as more rigorous reasoning to support its conclusions.

 

 

The demonstration of those examples that illustrating how “free” was applied as a powerful marketing method at past is ample while more wonderful exposition is his explanation of how the interplay of various factors contribute to digital era’s “free”. Thanks to the advanced technology today, the low content delivering cost round down to zero that it is almost free to reach the audience. It is interesting when I read chapter 4 that talking about” the psychology of free”. On the human psychological side, people prefer free stuff is due to “the penny gap” which means even a penny will have an impact on the purchase process of consumers. The “gap” causes “mental transaction costs” which may inhibit the buyers’ willingness to open their wallets. Hence, any price will create a mental barrier while “free” helps increase the number of people who will try something. Make this analysis more simple, I think due to the benefits that trying some free things is nothing to lose, most  rational people will be glad to have a try. To my concern, human psychology regarding to free is always there, no matter in the past or now. The essence of “free” doesn’t change, it plays as an “temptation” to customers and helps for promoting further consumptions. Although Anderson accentuates the boundary between previous free and digital era free, I still think they share some basic features in common. Back to the topic, the reason why Anderson illustrates the “penny gap” is trying to stress the advantages of “free”, in other words, it implies the irreversible trend that everything is better be free in the context of a digital world. According to his viewpoint, charging fees for digital content may bring negative effect for businesses. This insight could be a valuable reference for online publishers. It is true that ” free” will enhance your competitiveness over other rivals, but the premise is your rivals haven’t introduced free yet (there is a good example given in this book regarding the competition between Linux and Microsoft), nonetheless, there is one exception that:” if one product is vastly superior to another for your purposes the primary determinant of price is not marginal cost but ” marginal utility”–what it’s worth to you.”

 

 

Which I like most of this book is chapter 5. It discusses and applies ” Moore’s law”,  “Mead’s law” and “the compound learning curve” to explain the reason why the cost is so low in today’s digital world, I have learnt a lot from knowing nothing about how the low-cost happens to currently at least gain a deeper comprehension of its multi-faceted cause. I am quite enjoy going over “these laws” that contain interesting observations toward this new technology leading world. As it concludes, ” this triple play of technologies-processing, storage, and bandwidth-has combined to form the Web, the abundances have been compounded.” Thus we can safely come to this conclusion that the low-cost of content distribution lead to “Bertrand’s competition” which argues that “In a competitive market, price falls to the marginal cost.” Only in this digital era can enable “Bertrand’s competition” to be realized which in previous years it doesn’t gain a sufficient mature external conditions to make it happen. Once again, Anderson claims his argument that,” free is not just an option, it’s the inevitable endpoint. It’s the force of economic gravity, and you can only fight it for so long.”

 

 

Anderson’s argument is flawless to support his statement:free is prevailing in the digital world and it is an irreversible trend. It is undeniable that there does exist a low-cost bits world and a trend of free information flow; nevertheless, I don’t think there are too many differences between the past free (marketing method free) and digital era free. Here is a quote from the book’s last paragraph:

 

 

“……But it does mean that Free is not enough.It also has to be matched with paid.Just as King Gillette’s free razors only made business sense paired with expensive blades, so will today’s Web entrepreneurs have to invent not just products that people love but also those that they will pay for. Free may be the best price, but it can’t be the only one.”

 

  

There is no doubt that this book has a theme to discuss how to make money around the “digital era free”, just as what the last paragraph emphasizes. My confusion is: Since “digital era free” is still something that combined with business, is this equivalent to a” market gimmick”?  If so, to some extent, “digital era free” is also a powerful marketing method, at least, the essence of these two “free” is in resemblance, both of them are being integrated into the creation process of a business model. “Free” is relatively true for the low-cost of content distribution, for the nearly unlimited information exchange online, however, it doesn’t account too much into the consumer side. They are still paying by some means, for example, after using the free basic version of software, he began to pay the premium version (one of the examples Anderson has given), at least, I didn’t see any difference between the old marketing method of giving away the sample (low cost version) in reward of who like them will open their wallet to buy the whole package of the product (the premium version). Probably the only difference is just the shift from atoms to bits or offline to online. Nothing has changed in the commercial nature of “free”. 

 

At the end of this book, in the “doubts about free” section, doubt No.3. I would prefer to stand on Langham’s side who argues “we all have to pay an ISP to access the net so we are paying already for what’s on it.” For instance, the cost for purchasing a newspaper is mainly for the paper where the content is printed on. In other words, the cost of its content is close to zero just like what Anderson describes regarding online content (yes, I admit that the distribution cost has been reduced from printing to digital). It’s worth noting that there is no charge for the content in the previous media either. The change of media doesn’t change the nature of content these media are carrying. Consumers are still being sold to advertisers, the difference is that, digital media exposes their readers to a circumstance which may incur the privacy intrusion. All in all, they are still in a three-way market, aren’t they?

Citation:

Anderson, C. (2009). Free: The future of a radical price. New York: Hyperion.

 

 

 

 

 

 

 

Reflection week 3

 

 

I don’t agree with the notion that the web is truly “the land of the free”. It is true that the cost of distributing information is free due to the low marginal cost of digital media platform; however, you still pay a monthly fee to comcast gaining the access to the web. Besides the basic stuff such as computer, Internet service and electricity that are still charging your money, such called “free information or free content” is not really free in terms of their contribution to the old business model that your interests and attention are being sold to advertisers. It is just a variation of three-party market of traditional media. “Consumers ultimately pay, but only indirectly through the higher prices on products due to their marketing costs……In each case, the costs are distributed and/or hidden enough to make the primary goods feel free to consumers.”(Chris Anderson) It is just a change of displaying device which is shifting from print paper to computer screen, the business model is still there. At first glance, the web seems as ” the land of free “; nevertheless, one should not neglects some hidden tricky things inside it. 

 

 

Why happens when the supply of businesses outnumber the demand of advertisers? To this question, we can take a look at what Anderson says in his book <free>: “Given the abundance of alternatives online, is no empty threat.” Since the arrival of the digital era which has brought the distribution cost down so drastically that it nearly in a zero cost, it is quite logical that tons of business will rush into this online world just like Gold rush. If you have a blog with high visit rates, you are qualified to attract advertisers. Besides the expertise, there also have been a lot of amateur writers. They are all in the game of carving up the market cake and their opportunity to reach the audience is ideally equal (except the online monopoly companies). As the demand of advertisers is in a constant amount, it doesn’t change so much. Once the space where ads could be displayed increased, there is no suspense that the supply of businesses will outnumber the demand of advertisers.

 

 

I agree with that if things are free, the talented people work in those fields will have this possibility to take their creativity to fields where they can command monopoly rents (scarcity premium). Just as what Anderson points out, freemium is a feasible way of making money. Once you can specify the population who are really interested in your creations, it is not hard to make them to pay your money. Among abundance, there is still room for scarcity, that is, match your products with the exact people who desire them. 

Leading Discussion Reflection Week 3

 

Willingness to Pay for Online News: An Empirical Study on the Viability of the Subscription Model

 

The reading I chose is Hsiang Iris Chyi’s <Willingness to Pay for Online News: An Empirical Study on the Viability of the Subscription Model>. There is a core question this article is trying to figure out: What is the viability of the subscription model? In other words, how many users are actually paying for online news services and how many users will be willing to pay for online news services in the future? The empirical examination of online users’ response to paid content that the researcher has conducted revealed a result not optimistic, that is: “online news publishers may find it difficult to reply on the subscription model to achieve economic viability.” One of the issues that has been comprehensively discussed in Chris Anderson’s book<free> is how “the free phenomenon of digital area” will impact the current media industry. This discussion is quite pertinent to Hsiang’s research which is trying to seek the answer whether online news should put price on it or not. Anderson’s excellent analysis regarding this issue offers some insights that are sufficient to support Hsiang’s finally research result.

 

On the psychology aspect, Anderson discussed the phrase “penny gap” which means when charging a price, any price, a mental process will occur in consumer’s brain determining whether it is worth to pay that product. This process, which is also called” transaction costs” will reduce the possibility of purchase behavior. In the contrast, free “speeds right past that decision, increasing the number of people try something.”( Chris Anderson’s ) In this logic, the subscription model of online news is doom to fail especially in a digital environment in which people are so accustomed to receive free content. In addition, due to the abundance of online content, there are too many substitutes that readers can convert to, as Clay Shirky states,” in such an environment, anyone who begins charging for their work will be at a disadvantage.” That being the case, why do online publishers choose a way will undermine their competitiveness among all the rivals? The best solution is to embrace it and see if there any other feasible business model around free. Perhaps they can try ” give away ad-supported service, sell the ability to remove the ads model” (Chris Anderson’s )?

  

Another reason that helps to discourage subscription model is the low cost of digital distribution. Since “the cost of delivering the content is so low that publishers round down to zero” (Chris Anderson’s ), why online publishers are making effort to charge the readers? Since free provides the opportunity to reach the largest possible audience, why not take this advantage to expand their brand influence? Charging fees to all the users on the content will definitely be a bad decision-making. As Anderson claims,”free opens doors, reaching new consumers. It doesn’t mean you can’t charge some of them.” ( Chris Anderson’s ) However, the tricky thing lies in the word “some”, it is publishers’ job to locate the “some” and continue their business.

 

Here is another question in Chyi’s article:” is there value to maintaining digital media when profitability is not achievable?” The author’s answer is “yes”. That is in consistent with what Chris Anderson’s argument in his book<free> as well. See what Anderson points out, “free becomes not just an option but an inevitability. Bits want to be free.” ( Chris Anderson’s ) Since it could be seem as a simple force of nature just like water wants to run down-hill, any effort against it will turn out to be vain.  

Slideshare Link: http://www.slideshare.net/YunLi/ss-2361918

 

 

Citations: 

 

Anderson, C. (2009). Free: The future of a radical price. New York: Hyperion.

 

Chyi, H. I. (2005). Willingness to Pay for Online News: An Empirical Study on the Viability of the Subscription Model. The Journal of Media Economics. 18 (2), 131-142.