1. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-1 961622 邱鼎翔 971601 林冠輔 971609 康明仕 971701 黃天安 971735 劉恩銓 971756 林恆睿 971757 傅辰宇 Group Project 1: Getty Images Serves Up Profit and YouTube Grows Exponentially

2. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-2 Getty Images –Was found in 1995 with the goal of Consolidating the fragmented photography market Applying business discipline to the merged entity Developing modern information systems –By 2004, the company becomes a profitable company that earns $600 million per year –By 2007, had increased its revenue to more than $880 million –By 2008, was purchased by the private equity firm Hellman & Friedman, LLC for $2.4 billion Summarize - Getty Images (971757)

3. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-3 Owns the world’s largest private archive of imagery –Obtain its imagery from photographers and artists under contract –Employs staff photographers to shoot the world’s news, sports, and entertainment event Was the first company to license imagery via the web Three license models ： –Subscription Customers contract to use as many images as they want as often as they want –royalty-free Customers pay a fee based on the file size of the image and can use the image any way they want and as many times as they want –Rights managed – the largest in revenue terms User pay fees according to the right they wish to use – size, industry, geography, prominence, frequency, exclusivity and so forth Summarize - Getty Images

4. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-4 Getty Images

5. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-5 Summarize - YouTube YouTube –2005 On February 15, Chad Hurley, Steven Chen, and Jawed Karim registered the domain “YouTube” On April 23, they had posted their first video On November, YouTube had 200,000 registered users and was showing 2million videos per day –2006 On January, YouTube was showing 25 million video per day On May, YouTube was showing 43 percent of all videos viewed over the Internet On July, users were viewing 100 million videos and uploading 65,000 new videos per day –Final - A phenomenal success In October 2006, It was capped by Google’s $1.65 billion acquisition In just 20 months, YouTube’s founders had turned nothing but an idea into 1.65 billion.

6. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-6 YouTube

7. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-7 Q1.1 Visit www.gettyimages.com (961622)www.gettyimages.com

8. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-8 www.gettyimages.com

9. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-9 Q1.2 select”Images/Creative/Serach royalty free”

10. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-10

11. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-11

12. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-12 Q1.3 Search for an image of a major city of interest to you

13. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-13 Search Taipei city

14. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-14

15. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-15 Q1.4 select a photo and determine its default price

16. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-16 An image of Taipei city

17. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-17 The price of the photo

18. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-18 Q1.5 Follow the link of the photographer’s name to find other images by that photographer

19. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-19

20. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-20 Other images by Hung Chei

21. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-21 Q2 Explain how Getty Images’ business model takes advantage of the opportunities created by IT as descibed in Chapter 1? (961622)

22. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-22 Low communication cost Online service Online gallery Sale products on website communicate customer with e-mail Low storage cost save images in digital format digital images are easier to preserve

23. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-23 Question 3-1 Evaluate the photography market using Porter’s five forces. (971601)

24. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-24 1. The intensity of competitive rivalry: Industry competitive structure, Industry cost structure, Product differentiation level,Transfer cost, Strategic considerations, Exit barriers …etc, are all important factors to affect manufacturers. 2. The threat of new entrants: We need to consider Economy of Scale effect is big or not, if the Economy of Scale effect is significant, the aspiration and the threat power of new entrants will decrease. 3. The threat of substitute products: In the threat of substitute product, we consider several factors, including room for improvement of overall quality, Price-Performance, Switching Cost and Willingness …etc. When the substitute product is bigger and bigger, it will make profitability of manufacturers continue to decrease. Q3.1 Porter’s five forces

25. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-25 4. The bargaining power of customers: The bargaining power of customers affect existing firms profit level is high or low through Concentration, product standardization level, buyer profit level, Backward Integration or Forward Integration, Switching Costs …etc. 5. The bargaining power of suppliers: Relative to The bargaining power of customers, The bargaining power of suppliers is also affected by Concentration, product standardization level, buyer profit level, Backward Integration or Forward Integration, Switching Costs …etc.

26. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-26 I think its marginal cost is sustainable because they just pay once fee to the owner, so they can continue to use these pictures to supply to customers. Fast: Because of the internet, so customers can use the pictures in the short time. Convenience : Customers can just stay in house to use. Q3.2 Do you think Getty images’ marginal cost is sustainable?

27. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-27 Because the market of GETTY is very large, I think its price can be sustainable. In other words,if the price is too high, customers will do not use ; if the price is too low, company will do not earn. The price float: the price float is not too much. Other factors to the price: Government,Economy. Q3.3 Are its price sustainable?

28. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-28 1.Low cost: almost none physical cost 2.Convenience: Because of setting server in the NET. 3.Double wins between company and customers Q3.4 What is the key to its continued success?

29. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-29 Q4:What seems to be Getty Images’ competitive strategy? (971709)

30. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-30 Create loyal customers : Providing the best service and products. Let customers send the information to their friends. Composition a strategic alliance: Getty Images must link the companies into a alliance to get the resources together.

31. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-31 Having the own images support: Getty Images has many photographers to take pictures. The first company use digital images: Digital images can reduce the cost for many aspect like storage, transfer and preview.

32. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-32 Creating other discussion platform in the Net( facebook & twitter): Because it can be the community bridge between Getty Images and customers..(Community under resource bottom) More function to use(tools under resource bottom): Providing many useful tools to use which will make the customers more convenient.

33. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-33 Having the research store to research the trend of the world: Having own research institute to research the trend of the world to maintain its competitive. The products include pictures, movies and music: Getty Images create other sale items to have more incomes.

34. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-34 If someone can create useful picture, video or music Getty Images will give money to get the ownership for them..(Submit your work under resource bottom) Opening the new function with customers: Sharing the new technology and the new ideas to test the results. (labs under resource bottom)

35. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-35 Explain how Getty Images’ use of information systems contributed to the company’s value when it was acquired? (971701)

36. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-36 First Why did Hellman & Friedman purchase GettyImages? Strong, defensible franchises Predictable revenue and earnings growth Generate high levels of free cash flow or attractive returns on the capital reinvested in the business

37. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-37 Predictable revenue Subscription: Customer pays fixed fee to view the photograph

38. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-38 earnings growth Royalty-free and rights managed Elevate the earning by increasing the volume of photograph

39. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-39 Generate high levels of free cash flow or attractive returns on the capital reinvested in the business Take cash: Don’t have to worry about the Accounts Receivable like industrial company More cash: can invest on itself to earn more money

40. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-40 Q6. How did the availability of near-free data communication and data storage facilitate YouTube’s success? Would YouTube possible without them? (971735)

41. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-41 Answer YouTube set up a huge server to let the user be able to change the datas(videos) via the net, and use the database to store users’ information and videos. Their success can’t be without both of them.

42. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-42

43. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-43 Q7. Even though the cost of data communication and data storage is very low, for the volume at which YouTube operates they are still substantial expenses.How did YouTube fund this expenses? (971735)

44. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-44 Answer YouTube is funded from Sequoia Capital YouTube began as a venture-funded technology startup, primarily from US$3.5 million investment in November 2005 and US$8 in April 2006 by Sequoia Capital.

45. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-45 Q8.How does YouTube(now owned by Google) earn revenue? Answer-1 (971735) Before YouTube has been owned by Google ： Their master income are from Silicon Valley venture capital company,ad revenue and Google AdSense. Then They sign a contract with NBC and Warner to reduce the problem of right and bring a lot of money.

46. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-46 Answer-2 When Google announced that they bought YouTube ： They signed a contract with BBC,SONY and Universal music at the same time. They continue finding more cooperation of videos with another company. Example : Audi(next page)

47. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-47

48. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-48 Q9: Choose a corporation located in the geographic vicinity of your college or university. In what ways is it already taking advantage of the low cost of data communication and data storage? Q10: Using the corporation you identified in question 9, identify three innovative ways that the corporation could take advantage of the low cost of data communication and storage. (971756)

49. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-49 Sinyi Realty － Online Service Sinyi Realty originate iPhone APP and Android App. The User can have a look at the house at any where by using AR (Augmented Reality). Low cost – Pictures are becoming smaller and easier to restore that have replaced the traditional photos.

50. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-50 Housing details

51. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-51 Combine positioning system 、 AR and Google Map

52. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-52 KFC － E Coupons Allow consumers print the coupons on the internet. Replace the traditional coupons and decrease the cost of printing the coupons. Increase the profits – Consumers using the coupons when they consuming.

53. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-53 KFC － E Coupons

54. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-54 Badongo － Online storage system Easily store and access – Individuals worldwide can easily upload any type of large file from any type of computer. Easily share files – Badongo offers Applications that are compatible with today’s most popular social networking sites such as Facebook etc…

55. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-55 Badongo － Online storage system

56. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-56 Badongo － Online storage system

57. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 2-57 Answer for Q10 Create the discussion area for KFC, let the customer advise KFC of any suggestion. Badongo store the data on the internet, and user can download or share the files any times. Sinyi Realty use Augmented Reality and replace the traditional advertisemennt. Answer for Q10