1. IMS 6485: Content 1 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Topics The Role of Content in eCommerce The Economics of Information Themes Content Value & Revenue Models Publishing—Newspapers Publishing—Magazines Publishing—Books Entertainment—Music Entertainment—Everything Else Industry Structural Changes

2. IMS 6485: Content 2 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Auctions, Portals, & Communities on the Value Chain? Where do these topics fall?

3. IMS 6485: Content 3 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Role of Content in eCommerce What is content in an eCommerce context? –The text covers two broad categories of content Online publishing Online entertainment –What are examples of each? –What is the nature of the value of each? To consumers? To providers? What are examples of content not suitable for Internet distribution?

4. IMS 6485: Content 4 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU The Economics of Information Since the cost of collection of information is approximately independent of its use, although the cost of dissemination is not, there is a strong tendency toward monopoly in the provision of information George Stigler (1961) Nobel Prize Winner

5. IMS 6485: Content 5 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU The Economics of Information (cont.) The story of content is a story of leverage Content has some cost to create and digitize Content becomes an asset to its possessor Content has public good properties –Nonrivalrous consumption –Difficult to exclude nonpayers How has the digitization of content affected its public good properties? What advantages and disadvantages to owners have we seem stemming from this characteristic?

6. IMS 6485: Content 6 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Themes Watch for these themes (West's Themes) –The source of value of content in it's traditional delivery mechanisms –Economies of scale in the production of content –Economies of scale in the distribution of content –The impact of digitization and the Internet on these issues –New distribution channels and cross-channel cannibalization –Pure play vs. mixed distribution models

7. IMS 6485: Content 7 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Themes (cont.) Watch for these themes from the text –Competition for attention –Competition for dollars –Media convergence Technology Content Industry Structure –Complimentary investments & technologies

8. IMS 6485: Content 8 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Content Value What are the sources of content value to consumers? For each source of value, what characteristics of the content –Increase value? –Decrease value? How does the value of content to consumers affect its value to owners?

9. IMS 6485: Content 9 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Five Content Revenue Models Marketing—selling a product with online content –Manufacturer sites Advertising—giving away content to sell other products –TV, Radio, Portals Pay per View/Download –iTunes, Napster, Newspaper archival articles Subscription –iTunes, Napster, WSJ, Consumer Reports Value Added—adding premium online content to enhance the value of some other product –Technical manuals for products

10. IMS 6485: Content 10 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Publishing—Newspapers What were the revenue models for traditional print newspaper sales? Very few pure play newspapers making money –Why? What is the typical revenue model for online versions of traditional newspapers? –Why does this model make sense? What changes are influencing the online newspaper field? Why is the WSJ making money on subscriptions to the online version?

11. IMS 6485: Content 11 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Publishing—Newspapers (cont.) What are the advantages/disadvantages of online vs. offline newspapers? How are these features reflected in the revenue models of online newspapers? What technological advances affect online newspaper publishing? How does leverage apply in newspaper publishing? Are there economies of scale in newspaper content creation? How does consumer taste affect the value of online newspapers?

12. IMS 6485: Content 12 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Publishing—Magazines "The traditional print magazine industry is in trouble. Young readers are migrating to the Internet for news about fashion, politics, opinions, and a host of specialized topics that used to be the purview of magazines." What are the advantages/disadvantages of online vs. print magazine publishing?

13. IMS 6485: Content 13 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Publishing—Magazines (cont.) Online versions of print publications are using different revenue models –Enhance the brand name of the print publication –Subscription to online or online premium content –Advertising Revenue model choices flexible with circumstances Online magazines have many characteristics common to online retail –Established brands doing better online than pure play

14. IMS 6485: Content 14 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Publishing—Books How does a reader's experience with a book differ from that with a newspaper or magazine? How has this affected the popularity of electronic books? What technological challenge may affect part of this issue? What market niches may prove popular for eBooks? –Justify your answer

15. IMS 6485: Content 15 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Publishing—Books (cont.) Two widely used revenue models for eBooks –Pay per view/download –Bundling libraries into subscription-based access Why might these models make sense? What distinctions do you expect to see in publisher participation in these two models? Notice the emergence of competing standards for eBook publishing –Where have we seen this before?

16. IMS 6485: Content 16 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Publishing—Books (cont.) Digital Rights Management (DRM) for eBooks –Problem shared by digital film and music content –Without protection, one download can be nearly costlessly replicated any number of times. Internet-enabled small scale publishing –Self publishing/Vanity press –Niche publications –Enhancing the authoring, editing, and publishing process

17. IMS 6485: Content 17 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Entertainment Industries Five Major Components –Films –Television –Radio broadcasting –Music –Video games More than any of the content industries, the entertainment segment is undergoing a transformation brought about by the Internet. What is the value proposition for entertainment content?

18. IMS 6485: Content 18 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Entertainment—Music The Music market may be a leading indicator of the path the rest of the industry may take –What has determined this path? –What constraints apply to other media at present? Trace the delivery format, value proposition, and revenue model for music throughout history What technological changes have affected each of the above throughout history?

19. IMS 6485: Content 19 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Entertainment—Music (cont.) What are the economics of the record album? –Role of the 78 and 45 RMP records –Role of the entire record album –Advent of high quality tape recording –Advent of the cassette tape recorder –Advent of the CD –Advent of ripping technology –Current marketing channels for music

20. IMS 6485: Content 20 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Entertainment—Music (cont.) What are the economics of digital rights management? What instances of disintermediation have we seen in the music industry? –Niche markets? –Self publishing? What complimentary technologies and evolutions in consumer taste have also helped to shape the music distribution industry?

21. IMS 6485: Content 21 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Entertainment—Film & Television How is the film industry different from the music industry? –Ownership interests? –Technologies? Have you noted the popularity of whole-season DVD collections of popular TV shows (and some that maybe weren't so popular)? What precludes offering these shows on an episode-by- episode basis like music tracks?

22. IMS 6485: Content 22 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Entertainment—Games Video games are taking an interesting twist to avoid some of the DRM pitfalls besetting video and music content What are they?

23. IMS 6485: Content 23 Dr. Lawrence West, MIS Dept., University of Central Florida LWEST@BUS.UCF.EDU Industry Structural Changes Your book states that the Internet is transforming from a communications medium to an entertainment medium. Entertainment has always served as a medium for commanding users' attention—in the hopes they will either pay or also attend to your commercial message What is the role of content and/or entertainment in an eCommerce application in which you are involved? –Marketing yourself through content –Producing content –Distributing content