1. E-Commerce 2018: Business. Technology. Society
Fourteenth Edition
Chapter 10
Online Content and Media
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Copyright © 2019, 2018, 2017 Pearson Education, Inc. All Rights Reserved

2. Learning Objectives
10.1 Understand the major trends in the consumption of media and online content, the major revenue models for digital content delivery, digital rights management, and the concept of media convergence Understand the key factors affecting the online publishing industry Understand the key factors affecting the online entertainment industry.
Slide 2 is list of textbook LO numbers and statements

3. Cord Cutters and Cord Shavers: The Emerging Internet Broadcast System (I B S)
Class Discussion
Do you subscribe to any online video streaming services? If so, which ones?
What sites have given you the best overall viewing or entertainment experience, and why?
What are the advantages of watching traditional television over watching online T V and films?

4. Trends in Online Content (1 of 2)
Mobile platform accelerates the transition to digital content
Tech companies become significant players in content production business
Continued growth of number of Americans who watch digital video and T V online
E-book sales growth slows
Digital music sales top physical sales
Console games flatten as mobile games soar

5. Trends in Online Content (2 of 2)
Netflix the largest consumer of bandwidth
Cloud storage serves huge market for mobile device content
Conflict continues over net neutrality rules
Time spent with digital media exceeds time spent with television

6. Content Audience and Market
Average American adult spends 4,400 hours/year consuming various media
Over 50% U.S. population watches T V online
Desktop and mobile use: 5.8 hours/day

7. Figure 10.1 Annual Media Consumption in the United States
Figure 10.1, Page 661.
Americans spends around 4,400 hours annually on various types of media. People spend 30% more time on the Internet than they do watching TV.
SOURCES: Based on data from eMarketer, Inc., 2017a; authors’ estimates.

8. Insight on Society: Are Millennials Really All That Different?
Class discussion:
What are some of the defining socioeconomic and behavioral patterns of Millennials?
In what ways does the hard evidence about Millennials not fit stereotypes about them?
Why are Millennials so sought after by advertisers?
Do you self-identify as a Millennial? Why or why not?

9. Internet and Traditional Media
Cannibalization versus. complementary
Does time on Internet reduce time spent with other media?
Massive shift of audience to Web, tablets, smartphones
Television viewing, music consumption remains strong, reading has increased
Impact of Internet:
Increase in total demand for media, including traditional products like books
Physical products replaced by digital

10. Figure 10.2 U.S. Media Revenues by Channel
Figure 10.2, Page 665.
Traditional media (television, print, and radio) still dominate the entertainment and media market, but Internet media (video, music, and content) is the fastest growing segment.
SOURCES: Based on data from industry sources; authors’ estimates.

11. Digital Content Revenue Models
Online content delivery revenue models
Subscription
A la carte
Advertising supported (free/freemium)
Free content can drive users to paid content
Users increasingly paying for high-quality, unique content

12. Figure 10.3 Online Content Consumption in the United States
Figure 10.3, Page 647

13. Free or Fee
Early years: Internet audience expected free content but willing to accept advertising
Early content was low quality
With advent of high-quality content, fee models successful
iTunes
Millions of users buy from legal music sites
YouTube cooperating with Hollywood and New York film production studios

14. Digital Rights Management (D R M)
Technical and legal means to protect digital content from unlimited reproduction and distribution
D R M hardware and software encrypts content
Streaming content
Difficult to copy
Walled garden

15. Media Industry Structure
Three separate segments
Print
Movies
Music
Each dominated by few key players with little crossover
Delivery platform firms now becoming content producers
Two dominant players in each distribution market
A T & T’s proposed merger with Time Warner
Verizon's purchase of A O L and Yahoo

16. Media Convergence Technological convergence Hybrid devices
Content convergence
Three aspects: Design, production, distribution
New tools for digital editing and processing
Industry convergence
Merger of media enterprises into firms that create and cross-market content on different platforms

17. Figure 10.5 Convergence and the Transformation of Content: Books
Figure 10.5, Page 671.
The Internet is making it possible for publishers and writers to transform the standard “book” into a new form that integrates features of both text and the Internet, and also transforms the content of the book itself.

18. Online Publishing Industry
$80 billion based originally in print, moving rapidly to Internet
Three segments
Online newspapers
E-books
Online magazines

19. Online Newspapers Most troubled segment of publishing industry
Revenues shrunk from $60 billion in 2002 to about $29 billion in 2016
Four factors in decline
Growth of Web, mobile devices as alternative medium
Alternative digital sources for news
Failure to develop suitable new business models
Rise of social media and role of directing traffic to newspaper content

20. Figure 10.6 Newspaper Revenues 1981–2016
Figure 10.6, Page 673.
Newspaper ad revenues have declined by 50% since As a percentage of total revenues, circulation subscription revenues have become more important. Digital is a small source of revenue but growing up until recently.
SOURCES: Based on data from Newspaper Association of America, 2016; Pew Research Center, 2016.

21. Figure 10.7 Online Newspaper Models 1995-2017
Figure 10.7, Page 675.
Newspapers have gone through three different business models as they adapt to the Internet.

22. Online Newspaper Industry: Strengths and Challenges
Strength: Newspaper audience size and growth
Challenge: Digital ad revenue
Strength: Content is king
Challenge: Finding a revenue model
Challenge: Growth of pure digital competitors
Challenge: Can newspapers survive digital disruption

23. Insight on Business: Vox: Native Digital News
Class discussion:
How do you read news online? Which sites do you prefer, and why? Have you visited any Vox sites?
How are all digital news sites changing journalism?
What unique qualities have made Vox Media be seen as the future of digital news publishing?

24. Magazines Rebound Physical magazine circulation falls after 2001
Exception is special interest magazines
Digital replica magazines
Ad revenue growing
Total audience size increasing
Popular websites drive traffic to online magazines
The New Yorker Today app
iPad Subscription Service
Magazine aggregators

25. E-Books and Online Publishing
After several years of explosive growth, e-book sales have flattened in recent years—$7.9 billion in 2017
30% of all consumer book sales
New channel for self-publishing authors
Major publishers still dominant source of book content
While some large bookstore chains have disappeared, small independent bookstores have grown 27% since

26. Amazon and Apple: The New Digital Media Ecosystems
E-book hardware, software, combined with online megastores
Amazon Kindle: Linked to Amazon store and cloud storage
Apple iPad: Multipurpose tablet, linked to Apple stores
Authors able to bypass traditional agent, publisher channels

27. E-Book Business Models
E-book industry composition
Intermediary retailers (booksellers), traditional publishers, technology developers, device makers (e-readers), vanity presses
Wholesale model
Retailers pay wholesale price and establish retail price
Agency model
Distributor as agent must charge publisher’s retail price
Apple and book publisher price-fixing

28. Challenges of E-Book Platform
Control over pricing
Amazon controls largest market share for e-books
Amazon’s own book publishing brand
Further evolution of digital distribution platform
Kindle Unlimited subscription service
Digital marketplace exchanges for peer sharing of digital files
Converging technologies
Interactive books, iBook Author, iBook Textbooks

29. Figure 10.11 E-Book Sales Figure 10.13, Page 687
This figure shows the total revenues and the percentage that e-books sales constitute of total trade book sales revenues, as well as the change in the growth of revenues. As the graph shows, growth in e-book revenues has slowed significantly since 2013.
SOURCES: Based on data from AAP, 2017; authors’ estimates.

30. Online Entertainment Industry (1 of 2)
Four traditional players, one newcomer
Television
Radio broadcasting
Hollywood films
Music
Games

31. Online Entertainment Industry (2 of 2)
Internet is transforming industry:
Mobile devices
Social networks featuring video streaming
Download and streaming services
Growth in broadband access
Closed streaming platforms reduce need for D R M
Emergence of very large-scale, integrated technology media companies
Amazon, Google, Apple, and Netflix.

32. Figure 10.13 Projected Growth in U.S. Online Entertainment Revenue
Figure 10.14, Page 693
Online video games now engage the largest number of people and generate the largest online revenue, followed by online TV and movies.
SOURCES: Based on data from industry sources; authors’ estimates.

33. Television Transition to new Internet delivery platforms
Streaming and downloading services
O T T: Over-the-top (Internet) delivery
Mobile platform
Binge watching versus. linear T V
Social T V
F C C’s proposed “open set top box plan”
Social network influences
Uncertain future for cable T V growth

34. Feature-Length Movies
Hollywood maintaining control of content creation, delivery and revenue
D V Ds, rental D V Ds
Electronic Sell Through (E S T) – downloading movies
Subscription streaming
Video On Demand (V O D)
Challenges
Digital formats produce less revenue than physical
Pressure to change release windows
Growing strength of online movie distributors like Netflix
Sites streaming or providing downloads of pirated content

35. Figure 10.16 Major Online Movie Distributors
Figure 10.16, Page 699
Apple dominates downloading and purchasing of movies, while Netflix leads in streaming movies and TV shows.
SOURCES: Based on data from industry sources, authors’ estimates.

36. Insight on Technology: Hollywood and the Internet: Let’s Cut a Deal
Class Discussion
What challenges has the Internet posed to traditional Hollywood movie distribution? What is the biggest challenge?
Can Internet distribution work with the “release window” strategy?
Do you think Hollywood is doing a better job of protecting its content than the music industry?
What is the most realistic and profitable path forward for the Hollywood film industry?

37. Music Most disrupted of content industries
Move from physical to digital product
Distributor market dominated by Apple’s iTunes
Digital revenues: 78% of all revenues
Two types of digital music services
Streaming subscription services (Internet radio)
Digital download (download to own)

38. Figure 10.17 U.S. Music Revenues: Digital Versus. Physical
Figure 10.17, Page 704
Music industry revenues have fallen by 50% since 2000, and have only recently stabilized at around $7.8 billion, up around 6% for the first time in eight years. Digital music now makes up about 78% of all music revenues.
SOURCES: Based on data from RIAA, 2017, 2016, 2015.

39. Games Online gaming has had explosive growth Pokemon GO
Mobile platform
Types of digital gamers
Casual
Social
Mobile—fastest growing market
Massively multiplayer online (M M O)
Console
Business models in flux
E-sports, Twitch.tv

40. Figure 10.20 Online Gaming Audience
Figure 10.20, Page 709.

41. Careers in E-Commerce
Position: Digital Audience Development Specialist
Qualification/Skills
Preparing for the Interview
Possible Interview Questions

42. Copyright